Alternative Views: 1MDB trials reveal weak checks on power

This article first appeared in Forum, The Edge Malaysia Weekly, on June 13, 2022 - June 19, 2022.
Alternative Views: 1MDB trials reveal weak checks on power
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Behind the testimony of former chief secretary to the government, Tan Sri Mohd Sidek Hassan, at the 1Malaysia Development Bhd (1MDB) trial is the basic but ever important question of a breakdown in the check-and-balance function of government due to the close nexus between the executive and legislative branches.

Sidek, as the chief secretary of the government (KSN), was head of the executive branch. The other two branches — legislative and judicial — are headed by the prime minister and chief justice respectively.

In principle, the three branches of government are supposed to act as a check and balance on each other. Even the appointments and terminations of the heads of the three branches are made by the Yang di-Pertuan Agong on the advice of the prime minister.

This was designed to give the heads of the three branches of government some form of protection from being removed easily. However, in reality, the prime minister has more powers than the other two heads.

Sidek testified that he received a monthly allowance of RM30,000 from 2010 for being a member of the 1MDB advisory board chaired by then prime minister Datuk Seri Najib Razak. He continued to receive an allowance of RM10,000 after he retired as KSN, from January 2013 to June 2015, even though no meetings were held.

Sidek claimed that he knew something was wrong with 1MDB through media reports but never asked the then prime minister about it.

Essentially, Sidek — like many others in the civil service and ruling government — turned a blind eye to what was happening at 1MDB. They knew that all was not right with the entity that went on a fundraising spree within four years of its founding, backed by its ties to the federal government.

The testimonies of Sidek and several others show a complete blurring of the lines between the executive and legislative branches. Even ministers in Najib’s cabinet and board members of 1MDB knew that there was an abuse of the funds raised by the so-called strategic development company. But they chose not to question the prime minister.

A handful resigned, not wanting to be involved with 1MDB. Apart from Tan Sri Mohd Bakke Salleh, Tan Sri Azlan Zainol — who headed the Employees Provident Fund (EPF) — also resigned from the 1MDB board. But neither spilled the beans on what was happening.

Apart from Sidek, among those who sat on the advisory board were former second finance minister Tan Sri Nor Mohamed Yakcop, who had made a name for himself for his leadership skills in the revamp of government-linked companies following the 1997/98 Asian financial crisis.

The others included the late Tan Sri Ali Hamsa and former secretary-general of the Treasury Tan Sri Mohd Irwan Serigar. Irwan has been jointly charged with Najib for alleged criminal breach of trust involving 1MDB payments to International Petroleum Investment Company (IPIC) amounting to RM6.6 billion.

Another second finance minister, Datuk Ahmad Husni Mohamad Hanadzlah, was well aware in 2009 that 1MDB was not experienced enough to go into an oil and gas venture with PetroSaudi International (PSI). In the subsequent years, he also warned Najib about 1MDB’s financial woes.

But nobody was prepared to spill the beans. In fact, they were all sucked into a system that does not allow room for dissent against the prime minister.

The public knew very little of what was happening at 1MDB because of its obscure disclosures in its annual reports. Its financial year ended in March and its accounts were only made available, through the Companies Commission of Malaysia (CCM), in late October or November.

By the time anyone got a copy of the annual report, even more events pertaining to the fund would have happened. Moreover, the external auditors had signed off on the accounts, meaning that there would be no reason to doubt the investments.

Only those who were working with 1MDB knew what was really happening. And nobody was prepared to speak out until the goings-on were exposed in 2015. The exposés were mainly by foreigners.

A Swiss national, Xavier Justo, released reams of evidence on those who benefited from the first RM5 billion that 1MDB raised in 2009. The US Department of Justice investigated further and traced the money trail of another US$6.5 billion that 1MDB had raised in 2012 and 2013.

Has anything changed since the 1MDB fiasco came to light in 2015? Would civil servants or ministers dare to defy the system or the prime minister if they discover any wrongdoing?

Not really, although the situation has improved.

Prior to the 2018 general election, nobody ever thought there would be a change in government. Hence, they worked within the system hoping that the next leader would be better.

But since May 2018, Malaysia has had two changes in government and three prime ministers. It woke the civil service and politicians out of their complacency. Now, nobody takes for granted that the government will continue to rule for years without any change to the alignment of political parties.

This has resulted in the civil service being generally more aware that they cannot be part of any blatant abuse of public funds because they could be caught if there was another change in government.

As for the members of parliament in the ruling party, there are more criticisms against the leadership. The days of “toeing the party line” are over for now. The prime minister and the members of his cabinet face scrutiny from the MPs and warlords within their party.

There is more awareness of the handling of public funds. However, the quality of leadership is still lacking. There is a lack of decisiveness on the part of Putrajaya on important matters that affect the economy. From the rollout of 5G to the supply of chickens, there appears to be some hesitancy.

This does not help to shore up investor confidence. And it is particularly telling when the economy is going through a challenging period.

Until the blurred lines between the executive and legislative branches are made clear, the vision of quality leadership will remain a mirage.


M Shanmugam is a contributing editor at The Edge

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