Of Accountability, Transparency and Vigilance

I have learned from scholars that in order for someone to be held accountable, the person must first be given authority and responsibility for which he/she will be held accountable. This article intends to look into our government’s accountability, transparency and vigilance and what we could learn from it.

By Mohd Prasad Hanif, Secretary, PAS Kawasan Klang

In March 2008, more than half of the Malaysian people granted Pakatan Rakyat the authority and the responsibility to govern five states, including two highly industrialized states. The remainder granted Barisan Nasional the authority and responsibility to govern the Federal Government as well as other states. Therefore, both these coalition of parties are answerable to the people of Malaysia.

On the 28th of April 2008, Malaysiakini reported that CEO of UEM, Tan Sri Tajudin Ali, requested all the members of the ruling party, UMNO, to support the Prime Minister and Deputy Prime Minister. The CEO is the Chairman of UMNO Veteran’s Club.

UEM was established from the tax coffers of the people to induce growth for the nation as a whole. In terms of accountability, the loyalty of this CEO is clearly compromised. The goal of economic progress and development becomes secondary, loyalty to the ruling party and government becomes the primary goal. We gave the government the authority to establish UEM and the responsibility to ensure this GLC acts in the best interests of the people, to help the country’s economy to grow and prosper. Instead, the lines are blurred such that public property is naturally assumed to be a property of UMNO and therefore, conflicts of interest such as these are common.

Pakatan Rakyat must learn from this and clearly establish the line between maximization of profit for the benefit of the people and the interference of government to gain political mileage. If this line is clear, the public will be able to clearly gauge the performance of government linked companies and their effect on the economy of the country. Most importantly, it is expected that a company that has a free and independent management would be able to compete more effectively. Therefore, Pakatan Rakyat was given authority and responsibility to act on behalf of the people of Malaysia and for the people of Malaysia, not the party or coalition.

Let’s revert to older news. On November 3rd, 2000, Asiaweek had this to report:

“The outcome will resonate throughout Malaysia's economy. Halim does not have the estimated $1.3 billion for the purchase. Three bank consortiums are reportedly finalizing offers to arrange new loans — despite the fact that this will raise the banking system's exposure to Renong and Halim to 7%. Because Renong's interests reach the spectrum of Malaysia's industries, it is considered a proxy for the economy. But it is also a poster company for the murky corporate-governance practices that foreign investors complain about. Prime Minister Mahathir Mohamad has asked one of his special advisers, Nor Mohamad Yacob, to brief analysts and foreigners on what the country is doing to improve corporate transparency and accountability. All that effort may well go to naught if Halim is seen as enjoying special treatment at the expense of minority shareholders. "This is an important test for Malaysia," says Yeoh Keat Seng of the online stock advisory Malaysiastreet.com.

Why would the banks be willing to make the loan? Halim, 47, is a protégé of Mahathir confidant Daim Zainuddin, who has worked closely with the country's top leaders for years. Since his company was formed in part from the assets of the United Malays National Organization, Malaysia's dominant party, Halim once described himself as the business proxy for the organization. And it may be in the banks' interest to save Renong: Its debts are so big that if the company failed, the whole financial system would suffer.”

In terms of transparency, despite the ‘murky corporate governance’ reported of Renong, the government supported the idea of the bail out and did not require the company to publish its corporate governance details. Due to the fact that the CEO reports only to the President of UMNO who is also the Prime Minister of Malaysia, the government never requested the information to be revealed. This not only misleads the investors but reduces investor confidence in the company and the country.

Another case of a murky deal is revealed in CNN:

“Terms of the deal weren't revealed, but the government agreed to pay Malaysia Airlines $236 million to compensate it for giving up domestic routes. Air Asia also got a number of unspecified incentives; including what some say is a $5 million subsidy to service some rural routes.” – CNN

When public money is used to offer a solution to a problem, the government must be prepared to divulge all information if the process falls short of the people’s expectation. It is a democratic right of information. Politicians have advisors and civil servants to advise them on a project and are very well informed. However, the public can only ascertain whether proper attention has been paid to the relevant costs and benefits of the project if this information is disclosed. Else, the public cannot gauge the government’s response, knowledge or efficiency.

Vested interests by political parties in public properties breed corruption. The goal of maximizing profit such that investors are satisfied as well as the economy is induced to develop, is ignored in cases where the decisions are politically motivated and preserves the elite. The Asiaweek report below shows how our government’s vigilant nature in Malaysia is undermined:

“As Renong's finances deteriorated, Halim persuaded subsidiary UEM to buy 32.6% of Renong for 3.24 ringgit a share — 35% higher than Renong's then stock market price of 2.40 ringgit. Naturally, UEM's minority shareholders felt their company was being used to bail out Renong — at an inflated price too. To appease them, Halim promised to personally buy back the Renong shares at the original price by Feb. 15, 2001 if the stock was trading below 3.24 ringgit then. That pledge is coming back to haunt him. Renong closed at 1.73 ringgit a share on Oct. 25 and is unlikely to improve given its debt and negative investor sentiment toward Halim.”

In good governance, the Government must act bona fide and in the interest of the people, to use powers for their intended purposes, to avoid conflict of interest and to exercise care diligence and skill. Therefore, the government must be vigilant in utilizing public’s properties and exercising the authority and responsibility granted to it. Looking at the case above, we notice that Halim has violated every duty and responsibility of a director and the Barisan Nasional Government followed suit by deciding to rescue him. To add salt to the wound, Halim is neither punished nor reprimanded and this sent a distressing signal to investors.

The concerns that have been raised are primarily related to the fact that our representatives’ actions in and outside the government have immense effect on every facet of the people’s lives. Therefore, it is imperative that each and every one of us demand that our representatives are accountable, transparent and vigilant – whether they are from Pakatan Rakyat or Barisan Nasional. Therefore, we must know how to judge the performance of our representatives.

The March 2008 political tsunami is not just a victory but it is also very much a reminder to the Pakatan Rakyat representatives. Since the representatives took over, and the dust has settled, we find meager performance and much complaining. We have elected the representatives to offer solutions to the problems that Malaysia faces, not inform the public of the problems that they face.

It is imperative that we hold our Pakatan Rakyat representatives accountable for their actions and words. We expect every promise to be followed through to completion. It was every easy for the representatives and the political parties to promise the mountain during and immediately after the election. The people, I think, should not accept and expect anything but a mountain.

The representatives should be judged based on the issues they raise and fight for. The representatives should address issues that are vital to us such as democratic freedom and rights, education, health care, private members’ bill, and quality of life. If hudud is indeed a necessary and important matter to discuss urgently, then discuss it. Else, the representatives should clearly focus on more relevant matters.

Their performance should also be directly proportional to the number of issues and voices raised in Parliament and State Assemblies. We definitely do not want to send representatives to the parliament and state assemblies to simply warm the cushion.

Therefore, it is also imperative that we should hold ourselves accountable, transparent (by being informed and keeping others informed) and vigilant in judging the performance of our representatives. I came across Lord Denning’s quote some time ago, which holds true, if we, the people, are not heedful:

“The House of Commons starts its proceedings with a prayer. The chaplain looks at the assembled members with their varied intelligence and then prays for the country.” 
— Lord Denning