Although much attention has been focused on the fight against corruption, the evidence shows that this problem has in fact worsened. According to the Transparency International ranking of how corruption-free Malaysia is, the country has shown a steady slide downwards. Malaysia’s placing has declined from 36th position in year 2000, to 43 in 2007, and 56 in 2010. (Note: First place ranking means least corrupt.)
Table: Malaysia’s ranking in perception of being free of corruption, 2000–10
|
Year |
Ranking |
Total countries |
|
2010 |
56 |
178 |
|
2009 |
56 |
180 |
|
2008 |
47 |
180 |
|
2007 |
43 |
179 |
|
2006 |
44 |
163 |
|
2005 |
39 |
158 |
|
2004 |
39 |
145 |
|
2003 |
37 |
133 |
|
2002 |
33 |
102 |
|
2001 |
36 |
91 |
|
2000 |
36 |
90 |
Source: Transparency International Corruption Perception Index, 2000–10.
Massive illicit financial outflow
The latest evidence of worsening corruption comes from a report by Washington financial watchdog Global Financial integrity (GFI) which found that Malaysia lost US$291 billion or RM889 billion through illicit outflows in the period between 2000 and 2008 (Malaysiakini , Jan 20, 2011)
The report shows that there has been a massive illicit capital outflow from the country during the past decade. What is especially worrying is that the outflow has tripled in the period of eight years monitored. No country can afford the systemic outflow that Malaysia is experiencing. It could well bankrupt the country and lead to instability.
An unknown quantum of this outflow is due to financial gains accumulated through corruption, kickbacks and other illegal means. How much specifically is due to these various causes is disputable, and can only be determined by a thorough investigation such as through the establishment of a Royal Commission.
An offer by Dev Kar – one of the two authors of the report and a former senior economist with the International Monetary Fund – to help Malaysia find out the reasons for the outflow, has predictably been met with deafening silence.
In the meantime, the authorities are having their knickers in a twist in trying to respond to the GFI report.
On Jan 21, the Prime Minister Najib Razak, according to a Bernama report, stated that Bank Negara would provide specific comments on the report.
On Jan 25, the Deputy Finance Minister Donald Lim claimed that Bank Negara had already begun its probe and that the public could expect a response shortly.
On Jan 26, the Deputy International Trade and Industry Minister Mukhriz Mahathir contradicted the two earlier statements and said that the government would not look into the report.
Why the government refuses to investigate and stop the illicit financial outflows (which could be contributing to the country’s ultimate financial bankruptcy) is beyond anybody’s comprehension.
All citizens and taxpayers must demand that the government establishes a Royal Commission to investigate the astounding US$291 billion illicit outflow and to determine the extent and the reasons for the outflow.
Connection between wealth accumulation and illicit outflows
It is important to emphasize what the GFI report author Dev Kar pointed out when he made the offer of assistance to the government, i.e. that Malaysia’s income distribution is highly skewed.
According to the latest (albeit slightly dated) 2004 World Bank survey data, the poorest 20 percent of the Malaysian population on the lowest income ladder rung accounted for just 6.4 percent of total gross national income.
By way of rough comparison, India’s poorest quintile accounted for 8.1 percent of total national income in 2005.
India’s skewed distribution of income was found to be an important driver of illicit flows. The reason is that a skewed distribution of income means that there are a relatively larger number of high net worth individuals than in a country with a more equitable distribution of income. These individuals are one of the primary – if not the main – drivers of illicit flows.
We do not have far to look for high net worth individuals. Besides the people that appear on Forbes list of richest Malaysians who can account for their wealth, there are many names that have not found their way into the list of extremely wealthy Malaysians for various reasons, including lack of proper accounting or disclosure.
These names are slowly but surely beginning to be exposed in this new era of transparency and Wikileaks.
The latest name to be in the limelight is the son of the Sarawak Chief Minister Taib Mahmud. According to his estranged wife who has filed a RM400 million divorce claim against him, Mahmud Abu Bekir Abdul Taib has income and properties running in the billions of ringgit. She has asked the court to declare Mahmud Abu Bekir’s other assets including seven luxury cars, thousands of hectares of land in Sarawak and shares in 15 companies as jointly-acquired property.
This court listing of merely one of the Taib family members’ wealth is only the tip of the fabulous wealth accumulated by the Sarawak Chief Minister and his family members (four children, brothers and sister and numerous other kin). An important question would be whether this wealth estimated at many billions of American dollars has remained within the country or been transferred out.
The greater possibility is that much of the Taib family wealth – as well as that of other members of our political elite – is parked outside the country. This is clear from the behaviour of similar elites in the countries of the Middle East whose populations are presently rising up in anger at the way in which their country’s economies have been pillaged and ruined by their political elites.
What next?
So is Mukhriz’s response the end of the Barisan Nasional government’s concern on this matter? If it is, I predict that it will become the final nail in the coffin for their rule over the country which may eventually go the way of Tunisia and Egypt.