C4 Center launches “Business in Politics: Seeking Control of Malaysia’s Political System” Report

PRESS RELEASE

A major feature of Malaysia’s political system has been the persistent link between politics and business, a phenomenon commonly referred to as money politics or political business. This political-business nexus has a multi-dimensional form, with each trait subject to change. The Center to Combat Corruption and Cronyism (C4 Center) has prepared Business in Politics: Seeking Control of Malaysia’s Political System, a report that draws attention to previously unnoted forms of connections between politics and business that merit attention, what we have termed as business-in-politics, with a focus on sitting Members of Parliament. The MPs under review have been mired in controversial corporate-related matters, have off-shore accounts and foreign business interests, or have hopped out of the party or coalition under whose ticket they won a seat in Parliament.

Four forms of business-in-politics forms have been identified:

  1. politicians who belong to a family business or are closely related to owners of such firms;
  2. children of former government leaders who were active in business, but now are MPs;
  3. people in business entering politics; and
  4. former executives from the private sector and GLCs now in politics.

Group 1: Family business & politics

There is a growing presence of politicians who belong to a major family business or are closely related to owners of such enterprises. A related issue is that of marriage ties between children of politicians and well-connected businesspeople, suggesting new elite political-business links. The politicians in this group are Larry Sng, Fadillah Yusof, and Robert Lawson, all MPs from Sarawak (the attached notes provide a mapping of the family and corporate ties of these MPs).

Group 2: Children of former ruling politicians in business and now in politics

The children of former Chief Ministers and an ex-Prime Minister who were active in business and are now in politics are Hanifah Taib, daughter of Taib Mahmud, former Chief Minister of Sarawak; Yamani Hafez Musa, son of Musa Aman, former Chief Minister of Sabah; and Mukhriz Mahathir, son of former Prime Minister Mahathir Mohamad. The case studies focus on the business activities of Hanifah and Yamani, as the history of Mukhriz’s involvement in the corporate sector is well recorded (the attached notes provide a mapping of the family and corporate ties of Hanifah and Yamani).

Group 3: Businessmen in politics

This group comprises four politicians of which two, Hamzah Zainudin and Syed Abu Hussin, both originally with UMNO, are now in Bersatu. Tiong King Sing is a long-term Sarawak-based MP, while another businessman in politics is Adham Baba of UMNO.

Group 4: Private sector executives and GLC professionals in politics

This group comprises four politicians of which two have shifted from one party or coalition. They are Mohd Redzuan Yusof and Edmund Santhara, both first-time MPs. Santhara left PKR for Bersatu, but is now an independent MP. The other two are William Leong of PKR, who held a senior managerial position in the private sector, and Tengku Zafrul Aziz, CEO of a major GLC when he was appointed Finance Minister.

Key Findings of this report include:

  1. This business-in-politics trend, occurring in numerous ways, is a central factor in power struggles. Businesspeople in politics function differently. Different actors, differentially positioned in politics and business, collide, or collude with each other, leading to new elite networks and emerging business-politics power blocs whose composition can vary significantly.
  2. A new generation of children of politicians is active in politics and in business through family firms. In family firms, there is a complex mix of politicians, businesspeople, and bureaucrats.
  3. In Sarawak, family firms are key players in the state’s political system. A new trend: the second or third generation have sought to create ties with companies in the peninsula.
  4. Private firms co-opting politicians as directors is problematic because: a) an influential politician on the board is an avenue to secure access to government; b) elected representatives prioritize their own corporate interests over well-being of the electorate; and c) directorships are a major source of income, crucial to finance political ascendency.
  5. The presence in politics of wealthy professionals suggests they bring with them the funds they require to finance their electoral campaigns. Their personal source of funds for political activities ensures their importance as candidates during electoral campaigns.
  6. GLC directorships serve functions differently from those in private firms. Directorships are a form of employment; a method to learn how this business-in-politics system works; and used to develop a political support base. GLC directorships are a key political control method or source of reward, offered in a range of government-controlled institutions.
  7. GLC-private firm ties in Sarawak have occurred in a different manner. A former Chief Minister’s brother-in-law is a leading bureaucrat, as Chairman of a GLC, a nexus that facilitates implementation of land-based business matters.
  8. A serious lack of transparency in public procurement process allowing influential businesspeople access to federal- and state-level public contracts. Ministerial appointments are important to gain access to procurement contracts.
  9. Foreign ownership of firms seen in exposé by Pandora Papers, with Ministers and Deputy Ministers named. MPs who can shape tax-related matters have directorships or ownership of companies in tax havens.
  10. These companies have huge presence in plantations, infrastructure, construction, and property development, all land-based sectors. They also have a significant presence in services, but not in manufacturing and industrial sectors.

With these findings in mind, C4 Center has additionally identified further core concerns:

  1. Political strategy:Business-in-politics methods used to obtain access to government. The interests of businesspeople can be embodied in policies: they are privy to information that can enhance their corporate interests, and they have easier access to lucrative concessions.
  2. Shaping policies: How will politicians-cum-businesspeople vote in Parliament on matters that do not serve their business interests? Will they shape budgets to favor their companies? How will they vote on environmental policies if they have an interest in infrastructure and in plantations? How will they approach welfare systems, featuring social benefits for employees, and the minimum wage?
  3. Abuse of GLCs: A family member, who is a bureaucrat, in a GLC is vital to obtain access to concessions. GLCs serve as a training ground for politicians to learn how the political-business nexus works. GLC directorships are a means to reward or pay off politicians for political support.
  4. Escalating rent-seeking: Selective patronage has contributed to a heightening of corruption. Conflicts of interest occur when businessmen venture into politics, an expected outcome as persistent political-business nexus has constantly resulted in corporate controversies and political feuds.
  5. Dysfunctional politics: MPs involved in party hopping, between parties and between coalitions, suggests a search for access to power. The setting up of parties and coalitions, as well as the shifting of parties between coalitions have contributed to fall of federal and state governments, creating a highly dysfunctional political system. These trends are inextricably linked to growing concerns about how the political system is funded and how the government’s vast GLC ecosystem is being abused, signifying key outcomes of growing business-in-politics trends.

This report underscores the important point about candidate selection by parties. As Malaysia heads towards its 15th General Election, party leaders should be aware that since the problem of money in politics is a growing concern, they are duty-bound to nominate candidates who have an unblemished corruption record. C4 is of the view that politicians who have corruption cases pending in court should not be nominated to run in this general election.

The expansion of the business-political nexus has major implications, with an increasing number of businesspeople in politics and politicians in business. Given this blurring of the lines between business and politics, all candidates must declare their assets and corporate ties. This is fundamental towards ensuring transparency and accountability in the governance and administration of the country when the next government is formed.


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Issued by:
Center to Combat Corruption & Cronyism (C4 Center)
For further enquiries, please contact:
[email protected]
012-379 2189 / 03-7660 5140
Website: https://c4center.org/

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