Tag Archives: Malaysia

Corrupt State Officials and Companies Are Razing Malaysia’s Ancient Forests. Here’s How to Stop Them.

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Malaysia is home to two of the world’s oldest rainforests. Dating back 130 million years, the Taman Negara and Borneo Lowland forests are older than even the Amazon and the Congo Basin. As of 2016, Malaysia had 19.3 mega-hectares of forested land, which is close to 60% of the country’s total land area. But these forests are under the constant threat of their destruction by private commercial exploiters that engage in logging and development. Already in various parts of Peninsular Malaysia and Borneo Island, forests have been transferred to private ownership and used to develop palm oil and rubber plantations, durian farms, and mines. Once-serene forests are now plagued by mudslides and logjams, their biodiversity has suffered, and the indigenous communities that used to cultivate the forests have been displaced.

The reckless exploitation of Malaysia’s forests has many causes, including poorly-designed conservation regulations. But corruption is one of the most important root causes of unchecked and unsustainable deforestation. Such corruption comes in two main forms:

  • The first is the corrupt award of land titles and logging concessions to cronies, or in exchange for bribes. This sort of corruption is epitomized by the sale of the Sarawak State’s land and forests bordering the Mulu UNESCO World Heritage site.  by to cronies and family. In 2013, several NGOs reported that the powerful Chief Minister Abdul Taib Mahmud had arranged for the state to sell these lands to his cronies and family members at cut-rate prices, after a non-transparent process with no formal tendering. The new (crony) owners planned to raze the forests to develop palm oil plantations. To the frustration of anticorruption activists and lawyers, the Malaysian Anti-Corruption Commission (MACC) found no grounds to charge Taib Mahmud for abuse of power, due to insufficient evidence of his specific personal involvement in the sale decision.
  • Second, when commercial exploiters want to log in areas where they do not have a concession, they have been known to bribe local officials to overlook these illegal logging activities. To take just one example, in 2017 the authorities prosecuted corrupt forestry officials for taking kickbacks of RM340,000 (about US$76,800) from a logging company over several months. The only thing unusual about this case is that it was uncovered and prosecuted. Bribery of local government officials and law enforcement officers is widespread in Malaysia, and typically goes undetected. In the forestry context, the costs of such corruption are massive: The Deputy Natural Resources and Environment Minister reported in 2017 that the losses from illegal logging in Peninsular Malaysia amounted to RM15.2 million (about US$3.5 million).

To curtail the rampant destruction of Malaysia’s vital and irreplaceable forest resources, the government needs to do more to combat both these forms of corruption.

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Why and How Malaysia Must Radically Reform Its Anticorruption Institutions

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Back in mid-2018, Malaysia looked like it might have finally reached a turning point in its fight against corruption, following the country’s first democratic transfer of power. The winning parties in 2018 promised significant anticorruption reforms, including swift action to respond to the 1MDB scandal that had led to the ruling government’s defeat. Unfortunately, the hoped-for clean-up of Malaysian politics has not occurred. Part of this is due to the fact that, since the 2018 elections, Malaysia has been embroiled in seemingly unending political turmoil, with two governing coalitions collapsing in fairly rapid succession as a result of shifting party alliances. But part of the problem concerns longstanding problems with Malaysia’s main anti-graft body, the Malaysian Anti-Corruption Commission (MACC).

The MACC was created by statute in 2009 as an “independent” body. But like far too many anticorruption agencies around the world, in practice the MACC suffers from a lack of genuine independence from the executive branch. This leads to the public perception, and possibly the reality, of improper political bias. (Indeed, the MACC’s lack of true independence may explain its slack response when investigative journalists and opposition politicians first raised concerns about the 1MDB fund.) Even if Malaysia’s politics stabilizes, it will not be possible for the country to make genuine progress against corruption without reforming the MACC’s structure in order to ensure that it is truly independent of the executive, and seen to be so.

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How To Improve Whistleblower Protection in Malaysia

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Malaysia’s poor reputation on corruption took a serious hit with the 2015 scandal concerning the 1Malaysia Development Board (1MDB), and things have not improved much since then. If the Malaysian government is serious about cleaning up the country, and improving its international reputation, it needs to do more than just hold accountable those responsible for 1MDB and other scandals. Looking forward, Malaysia must also improve its legal framework for the detection and prevention of corruption. In this regard, as leading anticorruption advocacy organizations have emphasized, stronger whistleblower protection is essential. Most forms of corruption are hard for outsiders to detect, and those with first-hand knowledge of possible wrongdoing will be reluctant to report what they know unless they have, at a bare minimum, sufficient protections against retaliation.

Malaysia does already have a dedicated whistleblower statute, the Whistleblower Protection Act 2010 (WPA2010). But while the existence of this law is a good first step, its provisions are not satisfactory. Even the government has acknowledged this: Noting the gaps and weakness of the current statute, the Minister for Parliament and Law recently placed the question of amending the WPA2010 on Parliament’s agenda. As Parliament takes up this vital question, the following improvements to the law should be high priorities:

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Walking Free on Stolen Time, Najib Sees 1MDB Appeal Prospects Improve

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When $681 million ended up in the personal bank account of then-Prime Minister of Malaysia Najib Razak, he thought it was a political donation from the King of Saudi Arabia. Sure, it’s strange that the King transferred such a large sum directly into Najib’s personal account as opposed to that of a government institution, and yes, such a personal donation to a foreign leader was an unprecedented move by the Saudi royals. But the late King had assured Najib that some sort of donation was coming his way, so why not over half a billion dollars? Perhaps Najib would’ve examined the transfer a little more closely if he wasn’t so accustomed to lavish gifts. Indeed, when the financial anomaly came to light and the police raided his properties, that’s what filled the nearly 300 boxes the police discovered: gifts! The 567 luxury handbags (including a $219,000 Birkin bag) stuffed with $30 million in cash, the 423 designer watches, the 234 pairs of sunglasses, 14 tiaras, and 12,000 pieces of jewelry—all gifts from friends and admirers. So of course Najib was shocked—shocked!—to discover that the $681 million that appeared in his bank account actually came not from the Saudi royals, but from 1MDB, a government-run strategic development company where he served as chairman. Poor Najib was simply the unwitting victim of a network of 1MDB officers who embezzled $4.5 billion from the fund, kept comparatively meager amounts for themselves, and then deviously planted the lion’s share of the loot in Najib’s accounts to implicate him as the mastermind behind their corruption.

Unconvinced? You’re in good company. Neither was the trial court that convicted Najib last July on seven criminal charges including money laundering, criminal breach of trust, and abuse of power for his role in the 1MDB scandal, the world’s largest kleptocracy scheme. Najib faces 12 years in prison and a $49 million fine if this verdict is upheld. (And this is only the first case—he faces another 35 criminal charges in related cases.)

But alas, there is a very real possibility that Najib’s conviction will be set aside on appeal. Not because his account of how the $681 million ended up in his account has gotten any more plausible (despite Najib’s new legal strategy), but because Najib and his party—which is now back in power—are drawing out the process as best they can in order to give themselves sufficient time to subvert the judicial process and manipulate public opinion.

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New Podcast, Featuring Tommy Thomas

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A new episode of KickBack: The Global Anticorruption Podcast is now available. In this week’s episode, I interview Tommy Thomas, who served as the Attorney General of Malaysia in 2018-2020, and who in that capacity headed the investigation and prosecution of cases arising out of the so-called 1MDB corruption scandal. Our conversation covers both the 1MDB scandal and the broader political and economic circumstances that contributed to and facilitated this and similar sorts of corruption. We also discuss Malaysia’s anticorruption institutions, the factors that are most important to ensuring the independence and effectiveness of these institutions, and possibilities for reform. Toward the end of the interview, Mr. Thomas explains recent political developments, including those that led up to his resignation in early 2020, and also touches on the challenges of finding and recovering stolen assets. You can also find both this episode and an archive of prior episodes at the following locations: KickBack is a collaborative effort between GAB and the ICRN. If you like it, please subscribe/follow, and tell all your friends! And if you have suggestions for voices you’d like to hear on the podcast, just send me a message and let me know.      

How Ethno-Religious Divisions Stymie Anticorruption Reform in Malaysia–and What to Do About It

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In 2018, Malaysia surmounted the biggest test of its democracy since gaining independence from Britain in 1963—the first democratic transfer of power in the country’s history. That change in leadership occurred in the wake of the 1MDB scandal—one of the largest kleptocracy schemes ever uncovered—which implicated former Prime Minister Najib Razak. The repudiation of Najib and his party, UNMO, in the 2018 election was seen by many as a hopeful sign that the Malaysian people were no longer willing to tolerate the systemic corruption that had long been seen as business as usual. To be sure, the leader of the victorious coalition in the 2018 election—nonagenarian Mahathir Mohamed, who had previously served as Prime Minister from 1983 to 2001—was an unlikely champion of anticorruption and good governance reform. Yet in 2018, Mahathir’s victory was cause for hope that there would finally be genuine systemic reform.

Within two years, that hope had all but vanished. Prime Minister Mahathir was forced to resign in the middle of his first term in office and was replaced by UMNO politician Muhyiddin Yassin, who had served as Deputy Prime Minister under Najib. What went wrong? In an earlier post, I explored how a free press and multi-party government may have contributed to the failure of Mahathir’s coalition. But that is not the whole story. Those democratic institutions were susceptible to manipulation because of the deeply embedded ethnic and religious divisions that have been a defining feature of Malaysian politics since independence. By exacerbating racial and religious tensions, UMNO managed to convince key voting blocs that the biggest threat they faced was not corrupt politicians, but rather their neighbors who look and pray differently. In short, the reformist coalition ultimately failed because the Malaysian populace lost sight of their common enemy: the corrupt system of governance robbing them all.

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A Lesson in Democracy? The Bitter Irony of Malaysia’s Failed Anticorruption Coalition

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The tools of democracy may combat tyranny, but they do not always combat corruption. That’s not to suggest that democratic values run counter to anticorruption efforts. Indeed, a free press and a competitive multi-party system remain powerful tools in ensuring corruption does not take root. However, once corruption has snaked its way throughout a government, democratic values and institutions may be too easily manipulated to fight corruption effectively. Perhaps no world leader illustrates this seeming paradox better than Malaysia’s Mahathir Mohamad, who served as Prime Minister twice. His long first tenure, from 1981 to 2003, earned him notoriety as a near-dictator whose autocratic regime contributed to a deeply-rooted culture of corruption and cronyism. During his short-lived second tenure from 2018 to 2020, Mahathir was heralded as a champion of democracy—but the liberal democratic pillars that he had suppressed during his first tenure, most notably genuine political competition and a free press, contributed to the failure of his anticorruption efforts and ultimately to the fall of his government. The bitter irony is that the suppression of both political competition and press freedom helped to create Malaysia’s entrenched corruption during Mahathir’s first tenure, while the flourishing of political competition and the free press contributed to the failure of Malaysia’s attempts to root out this entrenched corruption during his second tenure.

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Will Hosting the UNCAC Meeting Prompt the UAE to Comply with the Convention?

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The largest, most important anticorruption conference of the year is underway this week in the United Arab Emirates. Formally known as the eighth session of the Conference of States Parties to the United Nations Convention Against Corruption, the 186 nations that have ratified UNCAC are convening to examine how they can strengthen the fight against corruption.  They have not said why they chose to meet in the UAE, a collection of seven tiny, wealthy monarchies.  Perhaps it is because the Emirates’ location on the eastern end of the Arabian Peninsula makes it an easy place to reach from anywhere on the globe. Or perhaps it is because of its top-notch conference facilities and first-rate restaurants and hotels.

Or perhaps something more subtle is at work.

It’s no secret that the UAE and the governments of its seven federated emirates, especially Abu Dhabi and Dubai, have repeatedly flouted their UNCAC obligations.  In researching The Despot’s Guide to Wealth Management, author Jason Sharman was told by staff from the World Bank/UNODC Stolen Asset Recovery Initiative, the IMF, and the governments of Switzerland and the United States that “the UAE and particularly Dubai . . . were the leading haven for international corruption funds,” a conclusion Susan Hawley confirmed on this blog, writing that an “increasing numbers of corrupt money trails lead” to the UAE. Mozambique’s Prosecutor General reports that the UAE has stonewalled her request for help in prosecuting the accused in the “hidden debt” scandal, and evidence presented in the recently concluded U.S. trial of one of the accused revealed numerous violations of its anticorruption laws that the UAE has ignored.

Perhaps the other 185 parties to UNCAC hope that holding the meeting in the UAE will persuade its government to finally meet the nation’s obligations as an UNCAC party. Five indicators of whether their stratagem is succeeding: Continue reading →

2018: Five Great Reads on Corruption

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Twenty eighteen produced many fine analyses of corruption and how to fight it. The five books pictured above, four by journalists and one by a former Nigerian Finance Minister, are among the best.  Combing in-depth reporting with thoughtful analyses, all merit a place on corruption fighters’ book shelf. Continue reading →

Malaysia’s Anti-Fake News Bill Breaks Dangerous New Ground

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Since at least 2016, complaints about “fake news” have become increasingly common all over the world. But “fake news” refers to two separate phenomena. In some cases, “fake news” means stories that are actually untrue (not just distorted, but fabricated, and deliberately disguised to make it appear that they come from a legitimate media outlet rather than a propagandist or troll). Shanil posted about the dangers that this sort of fake news poses to anticorruption efforts last December. But politicians, notably President Trump, have appropriated the “fake news” label and applied it to any coverage that they deem unfavorable or unfair, even when the news comes from a legitimate media outlet and there is no credible argument that the story is a deliberate fabrication.

The conflation of these two kinds of “fake news” is dangerous, not least because concerns about the former may provide politicians with a pretext for suppressing the latter. Case in point: in April, Malaysia enacted a new law—the Anti-Fake News Bill—that purports to criminalize fake news. The purpose of the new law, which gives the government has the power to prosecute those who create or spread “fake news” with jail terms of up to six years and fines up to about $123,000, seems to be giving the government more authority and discretion to stamp out unflattering news. Other Southeast Asian countries such as Singapore and the Philippines are considering similar measures.

While the anticorruption community should fight against corrupt actors using fake news to spread false stories, it should also resist efforts of governments to misuse the “fake news” label as a pretext for more extensive regulation of legitimate media and free speech. Censorship laws like Malaysia’s reduce transparency and scrutiny, and ultimately hurt anticorruption efforts by entrenching corrupt, illiberal governments.

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