'Private funds crucial to political parties'

Political parties need financial backing from private companies or they will not be able to function, said former premier Dr Mahathir Mohamad.

“There were suggestions in America, for example, that the government funds the political parties but that idea has not been well accepted, maybe because it is quite impractical. How do we know how much to give to each party?” he asked.

He was commenting on Transparency International-Malaysia (TI)’s concern, expressed in its Global Corruption Report (CGR) 2009, that the inter-relationship between the government, civil service and private sector negated the concept of check and balance.

TI-M president Paul Low had lamented that the “practice of revolving and rotating doors and active government” participation in the economy is improper.

Mahathir, who delivered the keynote address at the Corporate Governance Summit 2009 in Kuala Lumpur today, took another view of this.

“In (almost) every country, funds have to be raised by political parties. And where do you get the funds from? The business people because they have the money.

“Initially in Umno, for example, we thought we (could) accumulate enough property and earn enough money from the property.

“We hoped with the shares we could be able to do away with funding from the private sector but we find that the amount of money (to fund party events) is so big that, even if we hold a lot of shares in company, it is not sufficient.”

This happens all over the world, even in Japan, he said, but added the caveat that parties should account for the funds in their financial statement.

GLCs ‘ignore’ corporate governance

Speaking on corporate governance in his keynote address, Mahathir said there is “more awareness” of this locally.

In the past, he said Malaysians did not care how companies were managed. Neither were there rules, for example, for the appointment of independent directors.

Citing the example of national oil and gas giant Petronas, Mahathir said: “If corporate governance is to take Malaysia to the next economic level, then the role of corporate governance must be respected and honestly practised.

“We see this in Petronas. The structure of Petronas, as a corporation with a system of governance is clearly respected.”

He added that although Petronas is owned by the government, it has never interfered with the management.

Mahathir, who is Petronas adviser, noted that corporate governance is often ignored in government-linked companies.

“Various people, including governmental heads and family members as well as cronies, are often allowed roles not provided for,” said Mahathir.

“On top of that, this (form of) governance does not provide for transparency, or if provided for is often ignored. Government power is often used to steam-roll decisions and brush aside the interests of others.”