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What would make the corrupt sing?

Animah Kosai  |  Published:  |  Modified:

COMMENT | Tony Fernandes’ dramatic confession on social media that he buckled under pressure reveals some hard truths about the cosy business-government relationships that have prospered for decades.

Granting favours to politicians and government officials had become so commonplace that many, perhaps Fernandes included, were not aware that favours are really bribes.

Supporting politicians was just business sense. In a heavily-regulated environment, approvals came easier when you were known to be backed by a big name.

Sometimes the favours or gifts may seem small - hosting a Ramadan breaking of fast. A little bigger - flight tickets, a scholarship. Bigger still - sponsoring a political event, donating to a politically-connected charity, gifting property to politicians.

Fernandes admitted that in order to preserve additional flights for election day, he publicly endorsed Najib Abdul Razak and provided a plane in BN colours for Najib to fly from Kota Kinabalu to Kuala Lumpur. That fulfils the elements of bribery under the Malaysian Anti-Corruption Commission Act.

On March 23, a music video was released with a number of GLC heads singing a rather catchy tune. It would have been fine if they’d got together and merely sang a song about Malaysia. But this was called Hebat Negaraku (BN’s slogan is Hebatkan Negaraku), with images glorifying Najib and BN and timed close to elections.

There was power in that video - a message to Malaysians that Malaysia Inc. believed in Najib and supported him. What were they getting in return? Did they, too, “buckle under pressure”.

What other favours have they given? How much “buckling” has gone on in Malaysia? How many businesses were pressured to award contracts to well-connected but incompetent companies? How many officers were pressured to close one eye to wrongdoing? How many companies were pressured to host politicians or government officials with expensive holidays and luxurious gifts?

We all hear stories and then dismiss them with an all-knowing, “Well, that’s how you do business in Malaysia.” And that makes it okay?

Back in 2015, not long after the news broke about the “donated” millions in Najib’s account, I was chatting with some senior GLC executives - people who I knew could make a difference. How can you condone this, I asked? We are very unhappy, they said, but what can we do? After all, the deputy prime minister stood up to Najib and got sacked.

To me the obvious solution was to resign. How could you work for someone whose integrity you doubted? The response? We are working on good projects, and if we don’t do them, who will? We are doing this for the people.

Wait, that’s exactly what Fernandes said. He was doing it for the thousands of people who could return home and vote. That was their rationalisation - I will sacrifice my ideals of integrity for the greater good. And the element of personal benefit - I will keep my job, I will get a coveted board position, I must think of my family.

These are the same people who would tell me, I can’t go to Bersih because of my position, but you, you go, I will be with you in spirit.

These powerful people who could, as a group, have addressed corruption at the highest levels, instead abrogated their responsibility, leaving it to the common Malaysian to make that change.

They stood stoically silent as ordinary Malaysians and students who demanded Najib step down were jailed, suspended and harassed.

Tough or gentle?

Now that the new government has announced its drive to reduce corruption, what should it do? While I would not advocate a witch-hunt, there are some cases which demand a review, investigation or reparation.

Cases which involve the people and government’s money like 1MDB and Felda. Contracts which can impact public safety, especially in infrastructure, construction and transport. Projects adversely impacting the environment and communities.

In each of these cases, there may be people or companies who were pressured to approve despite non-compliance, or to favour connected businesses over more qualified candidates. They are likely to clam up and destroy evidence. We need them to speak to get to the truth. How do you get them to cooperate?

You can go tough Brazilian or gentle American.

Brazil tackled this problem strategically. Their corruption was far more entrenched. It still is, but first, they had to address that big case. By watching a car wash outlet for suspected money-laundering and following its trail, the police found that contractors of Petrobras were paying bribes that went straight to the ruling Workers’ Party, implicating then president Dilma Rousseff and former president Luiz Inacio Lula da Silva.

A key factor allowing Operation Car Wash to come to light was that Lula had ensured independence of the judiciary and prosecutors when he was in power. The same time Malaysia’s 1MDB investigation was stopped with officers removed, their Brazilian counterparts had free rein.

The Brazilian authorities got to the truth by arresting key businesspeople and made deals with them for reduced jail time in return for information and evidence. Throwing rich men into jail cells with hardcore criminals and denying them their daily luxuries made them sing - names and juicy details.

The American way evolved over several decades. For a while now, the US Department of Justice (DOJ) has been entering into deferred prosecution agreements (DPAs).

To avoid prosecution, companies give access to government investigators and provide evidence. Once the exact charges are identified, a penalty is determined, taking into account profits earned from the wrongdoing. The company pays the penalty and takes steps to improve compliance. A government-appointed compliance monitor makes sure the company stays on track.

Many of the companies signing DPAs with DOJ are not American - Brazilian Odebrecht (US$2.6 billion penalty to the US, Brazil and Switzerland), German Siemens (US$1.6 billion to the US and Germany) and Singaporean Keppel (US$422 million to the US) paid the top 10 FCPA fines (Foreign Corrupt Practices Act) to avoid prosecution.

DOJ realised huge penalties were not effectively deterring wrongdoing. Fines would hurt the bottomline, impacting shareholders but leaders continued to receive their high salaries and bonuses.

In 2015, DOJ issued the Yates memo (named after ex-deputy attorney general Sally Yates) focusing on holding senior executives accountable. Volkswagen’s Deiselgate and Wells Fargo’s fraud affairs were the first two high-profile cases to get the Yates treatment. Today, two Volkswagen senior engineers are in US jails and ex-CEO Martin Winterkorn and five other senior executives have been charged for fraud. Volkswagen agreed to pay US$4.3 billion as part of its plea bargain.

An initial amnesty 

Volkswagen is interesting in that it resisted cooperation with law enforcement authorities. DOJ noted that the legal team in Germany attempted to obstruct justice and the German authorities cannot access Volkswagen’s internal investigation report. DOJ has come down hard on them.

Compare that with Rolls-Royce who admitted bribery to UK’s Serious Fraud Office (SFO). Instead of putting up legal privilege shields, Rolls- Royce allowed SFO access to its documents and people. Its £671million fine would otherwise have been higher. Several individuals were charged by the DOJ for bribery. The Indonesian authorities are also currently investigating ex-Garuda CEO, Emirsyah Satar, for receiving kickbacks from Rolls-Royce.

Getting companies to cooperate is important as this allows the full story to unfold. With several stories of different cases, you would notice a theme emerge. I suspect it may have to do with the strong political interference in business (notice I say political interference, not government interference) and the culture of deference. But I am speculating. A series of comprehensive investigations which should be publicly available would identify the root causes.

Corruption does not occur in a vacuum. Understanding context is key. Why would an ordinary person bribe? The Fraud Triangle identifies three factors:

Opportunity - can they do it without being caught? Easier with weak systems and no oversight.

Pressure - external factors which drove them. Example: losing their jobs or contracts which will impact shareholders and employees.

Rationalisation - how they justified the act to reconcile with their own moral compass. For example, everyone does it, so I’m not really a bad person, or I will have to retrench people if I don’t do it.

These elements will emerge as a theme during a detailed investigation. For example, in the Fukushima nuclear reactor, the investigating commission discovered the Japanese tendency towards blind obedience - that workers obeyed and didn’t question senior officers even in the face of wrongdoing.

Understanding the underlying theme will help the government address corruption in the longer term.

Today Malaysia is in transition. Would-be colluders are waiting to see - is it business usual? Or is the government really serious about taking action?

A big 'YES' - the government has declared it will re-open investigations on 1MDB and Felda. It has set the Institutional Reforms Committee which must review the independence of law enforcers.

Now is the time to allow businesses and government officers to confess. If they come forward and confess to bribes in the first 100 days, give them some leeway. But if they stay silent and the crime is discovered, they will face full strong penalties including jail terms for senior executives and directors.

The new government is listening. It’s time to sing.


ANIMAH KOSAI, a former lawyer in the oil and gas industry, formed Speak Up to support organisations in enabling their employees to speak up on wrongdoing. She also writes and speaks on corporate whistle-blowing, harassment and sexual harassment. Follow Animah on LinkedIn, Twitter and Facebook.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

 

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