Corruption and Malaysia Inc.

MGG Pillai

Jumada' al-Akhirah 14, 1418 1997-10-16

South-East Asia

by MGG Pillai (South-East Asia, Crescent International Vol. 26, No. 16, Jumada' al-Akhirah, 1418)

The economic miracle, now mired in political, economic, financial and ecological setbacks, was to foster a Malaysia Inc, that would lead to a Valhalla of an industrialised Malaysia in 2020. An ambitious programme bereft of a philosophical base and conceived in secret, touted in grandiloquently lofty terms by its progenitor, the prime minister, Mahathir Mohamed, was implemented in the usual Malaysian fashion of haste, anger at criticism, and to ensure that its principal beneficiaries were financial and political courtiers of the ruling establishment.

What this ensured was that while Dr Mahathir framed the philosphical framework of his policies, the beneficiaries of this largesse used it to enrich themselves. He made it easier by dismantling the “steel frame” of the civil service and replacing it with a “money” frame, that encouraged greed and corruption not only to them, but to the country at large; the beneficiaries not wanting to be left behind, broke the bank as a matter of course.

A policy without a philosophic base cannot survive. And so it is in Malaysia. The first Mahathirian foray into dismantling the system was the alleged “sogososha” - multinational Malaysian companies that spearheaded the Malaysian march into industrialisation and global market presence, but that quickly became a haven for hoodlums: many of its leading lights ended in jail, the experiment collapsed, but not before billions were bilked or lost. The privatisation of government assets is a refined model of the sogososha concept, and it quickly became an avenue for widespread looting. They were handed on a plate to the coterie, who wasted their new found wealth in the classic indulgences of the nouveau riche: holiday houses in Gstad, a jet aircraft to ferry him there, houses in London, Paris and New York with mistresses and wives to match.

For the economic miracle under Dr Mahathir spawned not Empire Builders but Empire Holders. This multiracial group of Chinese and Malay businessmen, by virtue of their holdings and their closeness to the political fulcrum, then presumed an inviolability that included frequent libel actions to enforce that. And with good reason. They were also buffetted from the slings and arrows of the market. One Chinese Empire Holder, cash-strapped, was given a cash cow to tide him over: The government investment company, Khazanah Holding, sold him land it had bought at RM100,000 an acre in Kuala Lumpur for RM30,000, so that with one fell stroke, his financial problems were resolved.

The privatisation of government assets was restricted to those who bid first for them - the coterie - so that the public knew of them only when it was announced. Deals were done to ensure that they got a bonus in that they could write their own contract. UEM, when it got the North-South Highway contract, got not only an escalated guaranteed highway usage with the government taking up the shortfall, but also a RM2,000 million (then US$800 million) start-up interest-free loan repayable when able. No one knows what happened to that, but when the finance minister, Anwar Ibrahim, insisted on an accounting of that before he would consider UEM’s request for another loan for the same amount on the same terms got the privatisation lobby very upset and angry. That RM2,000 million has, to all intents and purposes, gone with the wind.

Into this group of Empire Holders came a new element: the three sons of the prime minister became important cogs in the march to Valhalla. In almost any mega-financial deal undertaken in the past decade, one or more of them are brought it to smoothen the rough edges of intrusive civil service questioning. They became prominent business men in their own right. And they were soon followed by the 27-year-old son of the minister of transport who moved in from obscurity to a multi-billion ringgit Empire Holder; the works minister’s son, not to be outdone, also attempts to follow the trend of carving a business empire out of his father’s ministry: he is a key figure in the proposed privatisation of the Public Works Department. All of them are cash-strapped now, with their total loans threatening to sink more than a few financial institutions should they default.

Orchestrating this, although he would never even admit to having any role in all, is the former finance minister and currently financial adviser to the government, Daim Zainuddin. Most of these Empire Holders are beholden to him, although their lawyers would shoot off “cease-and-desist” letters to those who suggest otherwise. Which is how I have come to be lumbered with two libel suits - one for RM100 million (US$30 million) and another, which awaits adjudication in the Supreme Court, for RM2 million (US$600,000); the first had to do with the Bakun hydroelectric dam project, given in the usual way to a former Chinese lorry driver, but which has collapsed in the house of cards that Dr Mahathir has built.

All this has been done at a cost that is intangible, but would nevertheless cast a pall over the country in the years to come: the breakdown of moral authority. The unrestrained chase for wealth induced a national gambling craze which the government made easier by relaxing the rules of the stock exchange, and most companies showed fantastic growth in a frenzy of stock speculation that palls into insignificance the South Sea Bubble in England in the early 18th century, or the Tulip Mania in Holland in the late 17th century. There probably is not an incident as selling a French brewery for one bulb of the rare “Tulip Brasserie”, but several has come close to that.

What makes the present situation volatile is that when the dust settles on the stock and currency market debacle, what is left is a shell of a system devalued and corrupted by an executive who encouraged this mania with a single-minded focus of good intention sullied by poor strategy and tactics. The downside was not taken into account, nor the systemic devaluation of the cultural, religious and social ethos that gives the community a stake in its surroundings. Four years ago, when I suggested that Dr Mahathir would at best rate a footnote in a history of Malaysia written in the year 2100, I was clearly wrong. He would rate a chapter on how his well-meaning schemes - and there is no doubt that their “fundamentals”, a favourite word of his, were sound - floundered because his coterie translated them to easy riches and easier paths towards insolvency. At the end of it all, Dr Mahathir finds himself bankrupt of ideas, his coterie of their money, the country retreating into the Pharaonic wilderness of the Seven Lean Years. That is the tragedy Malaysia endures today.

M.G.G. Pillai is a Malaysian journalist and political commentator on Southeast Asian affairs, and lives in Kuala Lumpur.

Muslimedia: October 16-31, 1997