Tag: corruption

Categories
Politics & government

[2785] 1MDB, The Edge, two wrongs, institutional failure and the transfer of responsibility

It took some time to push the 1Malaysia Development Berhad scandal into the open. Now that it is firmly in the spotlight, I see some are troubled by a case of two wrongs making a right.

What are the two wrongs? One is the 1MDB scandal and another is how some info was obtained.

Here is some background for the uninitiated. A huge chunk of stuff we know about the scandal originates from stolen information. This is not to say everything we know came from stolen material. A large portion comes from 1MDB’s own sloppily published annual accounts that by itself raise questions. It is these questions that lead us here today.

A former employee of PetroSaudi International (PSI was 1MDB’s partner in a failed and suspicious deal) stole vast amount of data from his employer, which eventually ended up in the hands of several third parties. One of them is the Malaysian financial newspaper The Edge. Because the newspaper bought the info (or rather, tricked the former PSI employee into giving them the data) and used it to expose 1MDB, critics of the newspaper raised a red flag and said, “hey, hang on. two wrongs do not make a right.”

They are saying The Edge should not have obtained the data. And now that it has, The Edge is in the wrong. They claim there is a logical moral conundrum here.

I am firmly in the opinion there is no moral conundrum at all. If there is, then it exists only in isolation with incredible disregard for the context we live in: that context is the environment of pervasive institutional failure.

The institutions that were responsible to keep our government honest failed to do their job. The watchmen were not just sleeping, they ignored the signs, the warnings and the whistleblowers. They failed not because they were merely incompetent. They chose to fail. Truly, when the preliminary questions were asked several years ago before the leaks happened, the government simply dismissed the concerns with a nonchalant hand wave. When they could no longer ignore the scandal, they went for the whistleblowers.

The Edge did the investigation into 1MDB. What did the police do in the meantime? Why was it possible for The Edge to get to the documents but not the police? The authority lacked the necessary curiosity to do their job. Why?

I strongly feel the official investigation only began because of the leaks. Without the leak, the reasonably question to ask is, would there have been any investigation? I believe the answer is no. It is also arguable that the investigation started only out of political pressure and the need to be seen to do something. It is not out of their sense of responsibility. Those institutions failed and responsibility be damned.

The 1MDB scandal is not the first time our institutions are seen as biased in enforcing the law without fear or favor. How many times have the police been accused of selective prosecutions? There are enough instances to create widespread trust deficit in our society. In the 1MDB case, so far, the accused who are in power are being protected.

The check and balance mechanism is not working properly and the controversy (a minor appendix to the 1MDB scandal) surrounding The Edge demonstrates exactly the institutional failure.

Running parallel to the institutional failure is the function of the fourth estate, which is to keep the public informed. The creation of an informed citizenry is a form of check and balance. The function of the press is not merely trying to sell papers. Because some in the press have done their job, the press is possibly our last hope to right any wrong. And that what The Edge, the Sarawak Report and others have done: their responsibility.

The institutional failure of our government means the authority has transferred fully their responsibility to The Edge (and others as well).

Here is another related factor to consider. If the police had done their job and obtained the info either through polite request or by force, would the supposed dilemma arise?

Now, take the institutional failure and the implicit transfer of responsibility from the authority to the press. Once that is done, is there any more dilemma?

Categories
Books & printed materials Politics & government

[2525] The Star says nothing happened yesterday

I suppose there are times when there is a piece of news that the mainstream media rather not report, but it has to because it is still a news organization and the readers do want to know. If the news organization wants to keep its readers loyal, the readers have to be served lest they migrate to another comprehensive sources all else being the same. This is especially so when the news organization is the old-style media complete with deadwood newspaper section to manage in this digital age, and the reader profile is English-speaking and mostly better educated than the rest of Malaysians.

The big news yesterday was the success of Shahrizat Abdul Jalil in holding back insurrection in Wanita UMNO, complete with the backing of UMNO and BN President Najib Razak. Shahrizat is already controversy-ridden with her family members through and through involved in the NFC corruption scandal. For a coalition that is trying hard to shed its corrupted image even since the last general election, this controversy is a major setback. That the man who supposedly carries the transformation banner to be fully behind Shahrizat, this is beginning to develop into a story of a leopard and its spots, instead of The Ugly Duckling.

The Star realizes this and The Star is obviously owned by MCA, an ally of UMNO within the BN coalition. They need to keep their owners happy. They need to prop their owner up or at the very least, not make them look bad given the constraint of the digital age. Not to highlight the unfortunate news and not trying to blatantly pretend that nothing happened yesterday, on its front page, “Be phone smart”, trumpeting a clarion call for consumers to know their cell phone and their bills.

There is a small subsection about Shahrizat and Najib, telling readers that the news is somewhere inside. Somewhere, inside.

And of course, a picture of a top-South Korean girl band singing in Kuala Lumpur.

And a big KFC finger licking good commercial at the bottom.

Categories
Economics Poetry Politics & government

[2512] Of high-income economy

High-income economy,
sans the illusion of money,
some for you and me,
some more for the party’s crony.

Categories
Conflict & disaster Economics Liberty

[2402] The cost to the Beijing development model

The rapid and successful economic development of China so far has been presented as the superiority of central planning over the approach taken, for example, by India. It is the Beijing development model as some would say. Authoritarian top-down approach gets things done, unlike the messy democratic means from the bottom up. All those criticisms weigh things down needlessly.

The recent high-speed train disaster that killed nearly 40 persons[1] should give advocates of the authoritarian approach a considerable pause the next time they try to sell the Beijing model over democratic ones. Reports are coming out that these infrastructure projects were rushed for the 90th anniversary of the Communist Party.[2] Results do not look good for the Chinese government.

The Beijing way of doing things has become controversial, especially after the accident.

How much of infrastructure projects all around China suffer from abuse of power or corruption in general? Was the accident a symptom of a rotten system?

Between authoritarian and democratic states, the former lacks real mechanism to make the state accountable. It will be hard to answer the questions even in democratic states, much less in ones like China’s.

Typical of authoritarian governments, the Chinese government is trying to muzzle investigations into the incident.[3] This is amid angry allegations of corruption with respect to these projects and specifically, the high-speed train system. That is an example how there is little accountability in China. Any reprimand is for public show only. Such reprimands have proven to be inconsequential. In Malaysian parlance, small fish.

Even before the train disaster, the system was already suffering from service interruptions, barely weeks after its official opening. Something must be wrong when so many glitches happened so frequently so soon.

Something is rotten in the state of China. That rottenness is the cost of the authoritarian model. There is a cost to absence of check and balance, of accountability, of freedom. It is a shame somebody has to die to learn that.

While India suffered from embarrassing criticisms before and during the last Commonwealth Games due to perhaps their incompetence in meeting deadlines, at least we knew the problems before it was too late. Remedies were taken. For China, there is a guessing game: which one is the facade and which one is real. As the train disaster showed, we found out about the rotten apples way too late.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[1] — BEIJING—The first high-speed train passed through the tracks where a deadly train collision occurred in eastern China, as authorities sought to soothe public concern over safety and the handling of the accident as well as jitters about the future of its prized high-speed rail system. [Norihiko Shirouzu. Beijing Seeks to Soothe Train Jitters. Wall Street Journal. July 26 2011]

[2] — China’s high-speed rail line between Beijing and Shanghai has been beset by glitches in the two weeks since it opened to great fanfare on the eve of the Chinese Communist Party’s 90th anniversary celebration. [David Pierson. China’s high-speed rail glitches: Racing to make errors?. Los Angeles Times. July 16 2011]

[3] — BEIJING — China has banned local journalists from investigating the cause of a deadly high-speed train crash that has triggered public outrage and raised questions over safety, reports said Tuesday. [Allison Jackson. China seeks to muzzle reporting on train crash. AFP. July 26 2011]

Categories
Economics

[2388] Nudge, nudge, wink, wink

It is the practice of some labor unions to produce one or several publications annually to inform their members of various activities and developments related to the unions.

As with many things in this world, it costs money to produce these publications. These unions finance the publications through a number of ways. Membership fee is one example. Another is selling advertising space to non-members, especially to the business community. This, however, can be an ethically grey area.

This kind of funding can be ethically iffy if the union members comprise employees of public regulators or law enforcement agencies, like the police, the Fire Department or Customs. This particular interaction between the unionized employees and the business community through the sale of advertising space creates perverse incentive.

It is a potential channel for corruption. It has the ability to affect adversely the traditional relationship between the public and the government.

Everybody deals with some of these regulators and enforcers in one way or another. The police maintain public order. The Fire Department apart from firefighting ensures public adherence to certain codes. City Hall and other local councils enforce even more codes. Many other regulators and enforcers exist out there to match the hundreds or thousands of laws that govern too many things.

Services provided by the enforcers and the regulators are funded by public money. To put it simply, the public pays for the services and these government arms render the services to the public. This is the traditional relationship. It is simple and clean.

This traditional relationship between the two must not be influenced by any other factor, lest the regulators and the enforcers filter their customers for their own benefit.

The sale of advertising space by unions especially to business establishments twists the traditional relationship by creating another channel for the public to interact with the regulators and the enforcers. That new channel runs through the unions to form a special relationship between the space purchasers and sellers, who are part of the government or its agencies.

There are at least three ways this is detrimental to the traditional relationship.

One, the sale and purchase of advertising space can be done by the business community to return a favor previously done or will be done by certain unionized employees. This is downright corruption.

Two, the sellers, who are employees of the government bodies and agencies, will feel indebted to the purchasers. It is a profitable relationship and one always keeps profitable relationship intact.

By doing so, the purchasers will have special relationship with the seller and, implicitly, to the regulators and enforcers. Those particular employees or any member of the union may systematically handle future requests or transgressions by the sellers leniently. This runs contrary to the ideal that prescribes everybody as equal before the law.

Three, even without such favors or the feeling of indebtedness, a mere request by the unions may create consternation among the solicited. A forward-looking person, and especially businesses, upon receiving the advertising request would ask, how would this affect us? For those who conclude that a negative reply would affect the likelihood of approval to future transactions, they might feel compelled to purchase the space from the unions. This can happen even if there is no intention by the union to abuse its influence. In other words, it creates a perception of corruption even though there is no actual corruption.

The way the incentives have been perversely structured inadvertently or otherwise may make it necessary for the relevant authority to look into this particular activity of these particular unions.

Despite all that, this is not to say that there is actual corruption in the system. This may sound like a cop-out but the whole structure is an opportunity for corruption nevertheless.

Individuals are not inherently good or bad, clean or corrupt. Many times, it is the institutions that provide the incentives for corrupt practice to flourish.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on June 27 2011.