PAC findings expose massive misgovernance issue at the heart of migrant labour recruitment, police investigations must ensue

6 JULY 2024


On 3 July 2024, the Public Accounts Committee (PAC) led by Mas Ermieyati reported that the migrant labour recruitment system under the supervision of the Ministry of Home Affairs had been operating for six years without having been formalised in a contract. The Center to Combat Corruption and Cronyism (C4 Center) is appalled at these findings as as well as other related issues raised by the PAC, and calls for further investigations to be made, those found responsible to be held accountable, and for Parliament to introduce the necessary good governance reforms as a matter of utmost urgency. 

The Foreign Workers Centralised Management System (FWCMS) is a crucial aspect of migrant labour recruitment in Malaysia, as the point of liasing for 5,400 recruitment agencies. It was reported that the letter of acceptance for the FWCMS was issued on 12 January 2018, but the contract remained unsigned between the government and the service provider, Bestinet Sdn Bhd, up to 13 March 2024, implicating the Home Ministry in violations of standard government procurement as well as public-private partnership procedures. Additionally, PAC was also told that 24 unauthorised users had been approved by the Human Resources Ministry officers to bring in foreign workers. 

Bestinet Sdn Bhd has long been besieged with controversy — the company was raided by the Malaysian Anti-Corruption Commission in July 2022 for alleged corruption and abuse of power involving the selection of 25 Bangladeshi agencies for migrant worker recruitment. Independent investigations into the company also uncovered that it was linked to politicians and other powerful individuals through the composition of its board members.When Bestinet first bid for the FWCMS contract back in 2015, questions were raised regarding its board membership which included former Home Minister Tan Sri Azmi Khalid and previous director of the Labour Department Datuk Tengku Omar Tengku Bot. At the time, Zahid Hamidi was Home Minister.

Absurdly, on 24 June, Home Minister Saifuddin Nasution Ismail announced that the government had decided to extend Bestinet’s contract to run the FWCMS for another three years, despite there being no contract to begin with. In light of the numerous instances of misgovernance, how did this decision by the government even come to pass?

Furthermore, the government’s continued engagement with Bestinet is extremely questionable in light of the numerous criticisms relating to the company and its practices.This reflects especially poorly on the Home Ministry, which should be taking immediate accountability for this fiasco. 

Frustratingly, the path to a solution seems to be obstructed by a “mutual termination” clause in the agreement between the government and Bestinet, requiring that the termination of the contract be agreed upon by both parties. In the absence of mutual termination — more accurately, Bestinet’s refusal to terminate — the Malaysian government would be rendered financially liable to Bestinet, or at least render them open to legal action. Why the Malaysian government would place themselves in such a delicate situation truly defies logic — while it provides possible context for the government’s decision to extend Bestinet’s contract, it is not a satisfactory one and cannot serve as a substitute for all the outstanding issues that need to be addressed in relation to the misgovernance that had to take place to get to this point.

This leads us to the question of who the individuals we should be looking to now to provide avenues for redress as well as to be scrutinised for their role in cementing the deal at the point of offer. Currently, it falls upon Home Minister Saifudin Nasution Ismail to inform the public as to what steps the Home Ministry is planning to take in order to address the issues raised, correct the misgovernance that has taken place, and the policy changes that will be necessary to mitigate the risk of a similar event repeating. Just as if not more importantly, however, is that the leaders overseeing the contracting of Bestinet when the letter of acceptance was issued — 12 January 2018 — must be questioned and their role in the engagement explained. This includes disgraced former Prime Minister Najib Razak, who was also Finance Minister at the time, and current Deputy Prime Minister Zahid Hamidi who was Home Minister at the time.

Several extremely important questions must be inquired into and answered by the Home Ministry. Were internal audits or performance reviews ever conducted to ensure that the contracting party was meeting their targets and reporting financial statements? If such reviews and audits were conducted, why was the issue of the non-existent contract never flagged and addressed? How were these audits even conducted in the absence of a terms of reference document? 

It further calls into question the legal status of immigration emerging as a consequence of the use of this botched system — if 24 additional users of the FWCMS were allowed to bring in migrant workers without detection up until this point, were they bringing in more migrant workers than allocated in the national quota? If so, who is held accountable when there is an over-supply of foreign workers in the country unable to find employment and  secure proper documentation to remain in Malaysia? Inevitably, it is the foreign worker who is exposed to the harms and precarity of the situation — despite intending to find legal means of work in Malaysia — while the individuals ultimately responsible for the illegalities are never truly held accountable. 

C4 Center calls upon the government to take immediate strong action in remedying the situation:

  • The relevant authorities must investigate who is responsible for such an integral contract to be left unsigned at the point of awarding of the letter of acceptance, as well as the administrative failures that resulted in this issue escaping detection, or even possibly being obscured from scrutiny for this long;
  • Once investigations have taken place, those individuals found responsible must be held accountable and subject to administrative sanction, and in the case where corrupt activity or motive is ascertained, they must be subject to criminal sanction as well;.
  • For future projects of similar national importance, the Auditor-General’s Office must be empowered and equipped to carry out audits on government projects, especially in light of the recent amendments to the Audit Act 1957 that expands upon the Auditor-General’s powers to be able to audit entities receiving government funding — oversight should be made a priority over the lifespan of a project, not only when misgovernance has already taken place and the harm irreversible;
  • The government must introduce reforms to the procurement process that would guarantee oversight, stringent and transparent selection processes, performance audits, regularly reporting of financial documents, and protocols for remedy in the instances of non-performance of contract to be enshrined in law through the legislation of a Government Procurement Act.

While the discussion has focused on the misgovernance of a public function, we cannot forget that a core aspect of this issue is the movement and rights of migrant labourers who form an integral part of Malaysia’s economic and productive capabilities, yet are constantly sidelined and reduced to an afterthought. 

Official statistics state that Malaysia has a migrant working population of approximately 2.3 million as of the fourth quarter of 2023. Unofficial estimations have previously stated that a further 1.2 to 3.5 million migrant workers are undocumented as of July 2023,  which strongly indicate that migrant workers form a larger proportion of the total labour force than is officially accounted for. The government has recognised Malaysia’s increasing dependence on migrant labour in many industries — in retaining these workers, it is imperative that our systems for recruitment are transparent in order to ensure humane working conditions and to prevent exploitation and corruption.


Issued by:
Center to Combat Corruption & Cronyism (C4 Center)
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