Review all financial deals for good governance

Review all financial deals for good governance

External Debt (ED) in Malaysia decreased to 897049 MYR Million (RM897 billion) in the first quarter of 2017 from 908704.13 MYR Million in the fourth quarter of 2016.

Also in 1997, the ED was RM90 billions rising to RM188 billions in 2003, then in 2009 was RM376 billions and 2015 was RM847 billions. (source: IMF and The Economist).

How accurate are these figures especially in recent years?  I think the figure should be much over a Trillion Ringgit already given that our largest company in Petronas can contribute something nearer to RM300billions in its global dealing in many countries especially the failed Canadian case is subject to speculation.  There are also a few major companies like 1MDB, FGV, Mara, EPF, Khanzanah also very much involved in global deals worth many more hundred of billions Ringgit.

Isn’t it a terrible experience that Malaysia is so rich in resources especially in Sabah and Sarawak that we do not have any substantial sovereign fund as national security when many other countries have tremendous sovereign fund.

Instead, we have such massive external debts or national debts rising very steeply since 2003-2009 (5^th PM term) as doubling and further doubling from 2009 to 2017 (6^th PM and still on ) even if these figures are not properly verified for accuracy.  Such development in spite of GST’s massive collection since 2015.

So the important question is that how can Malaysia under the same Government since 1957/1963 going to repay those massive debts without knowing the causes of such financial development. 

Aren’t the root causes of such financial burden due to range of reasons known to us? I would like to identify them such as corruption or corruption culture of top greedy leaders, mismanagement, profligacy, poor governance and also embezzlement of public fund.  These have been largely exposed in string of scandals for decades and such scandals appear to have no “criminals” when the few ones that come up to the legal Courts albeit belated.  

So what we then see the rising fast of the national debts or ED to stop the “swamp” deepening.

The other item to expose our ED is that Malaysia lost up to about US$431 billion (RM1.8 trillion) in illegal flow of money between 2005 and 2014, a Global Financial Integrity (GFI) report estimated.

Why do we need outsiders to tell us how to have such massive unresolved debt burden?

Where is Malaysia Boleh when financial matters are so essential to keep abreast once to 2020 now deferred to 2050?  If the past and present practices are continued as business in bad governance is pursued, 2050 is also already a gone case.  We need a new agenda to restore what had been lost.

I do not know how can the slippery slope as aforesaid scenario can be arrested if the three branches namely the Parliament, the Executive and the Courts plus the Royalty have been seen to be lacking in their “divine” responsibilities?

We have seen how Parliament had passed laws and then the debates are extended to the market places with questioned bargaining pleas with the ministers concerned.

I wonder if it is not the Federal Audit Department to ensure that the very important financial deals that may precipitate decades of burden for the people had been verified as check and balance to ensure that the figures of ED, capital flights resultant of corruption, bad governance, profligacies, mismanagement, and embezzlement are realistic especially for the recent decades since 2003.

Just a glimpse into the performance of Federal Audit Department (FAD), I append below a press comment for my illustration such as deliberated by the new Auditor General Tan Sri Dr Madinah Mohamad in the AG’s Report of 2016.

 On financial management performance rating, she said 25 ministries,18 federal departments, 38 federal statutory bodies, 138 state ministries/departments, 41 state statutory bodies, 41 local authorities and six Islamic Religious Councils had been audited.

Madinah said 63 performance audits were conducted on government projects/activities/programmes and 21 management audits, on government companies at federal and state level.

She said the Finance Ministry had also given a feedback on the report with comments from the secretary-general and relevant department heads on the latest action undertaken.

According to her, 187 of 307 ministries, federal departments and statutory bodies, state ministries/departments, state statutory bodies, local authorities and Islamic Religious Councils received 'excellence' (5-star) rating.

"Twenty-five ministries achieved excellence compared to 16 in 2015," she said.

Is the mandate of the FAD just limited to such items and nothing is referred to other areas of very important financial developments like the ED, illicit money outflows, Bank Negara reserves, GDP and other new taxes?

If FAD is incapable to deal with such scenario, a special group of related enforcement agencies should be formed to tackle such corrosive financial items for national security. 

Another area that may need urgent attention is that some State Governments / State Departments may over time be allocated special grants from the Federal Ministries and Federal Agencies for implementation of certain essential projects.  Do we have any standard operating procedure (SOP) where such implementation is done or accomplished by the State Governments/ State Departments concerned?  Can we treat such effort like a sub-contract in the commercial sense whereby the implementing agency or agencies would be entitled to certain remuneration by a certain percentage of the initial outlay?  If such unwritten understanding of say 10 percent is done, can it be considered as “commission” usual practice in the commercial arena? 

If there is such an unwritten “SOP” in the Government sector in any new development, then such “commission” would be retained by the said implementing agencies/agency for own operating expenses, but such “commission” should not end up with those individuals concerned hidden in assets and cash in some houses unaccounted for.

Would such incidences be considered “corruption”?  Would the said State departments/state agencies do a special favour to the Federal counterparts for free and the Federal counterparts gets all the credits?  Most state departments/ state agencies would be lacking in finance to implement such massive projects unless such agencies are re-imbursed accordingly.

Unfortunately for lack of “understanding” of the “SOP”, mismanagement may have arisen and such circumstances should be treated as embezzlement and criminal proceedings should be instituted by the State Government concerned and no selective “persecutions/prosecutions” as some “arrested” were not charged for same offences.

Is there also a SOP as money/assets so recovered by MACC be retained for that said implementing agency to be used to complete the intended job?

Redefining and refining definition of such transactions would enhance performance in all such deals.  Would a review board be instituted to clear the Federal and State relation in such deals for good governance?

Joshua Y C  Kong  1/8/2017