Reforming our political funding culture to be more transparent

Due to the lack of constraint, the misuse of such funds is an “open season”.

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Published in Malay Mail, Astro Awani, Focus Malaysia & Asia News Today, image by Malay Mail.

 In Malaysia, our political and, by extension and inclusion, economic system has been largely driven by and over-reliant on patronage, especially in the form of “money politics” (within the party concerned) and cronyism (in government). Money politics, in the form of cash or in kind (eg, government contracts), are the embodiment and personification of how corruption is so embedded and “enshrined” within our society — as the “tentacles” and nexuses (ie, linkages) spread throughout the complex networks of the inter-dependent political and economic relations of the actors and stakeholders.

One particular area, however, that has not received adequate coverage and attention is in the relationship between charitable bodies or social entities otherwise also known as trusts, namely foundations, and their political patrons.

Foundations are supposed to be not-for-profit in nature and hence should be managed as such even if registered as a company/corporate entity under the Companies Commission of Malaysia (CCM) instead of typically under the Registrar of Societies (RoS).

The C4 (Centre to Combat Corruption & Cronyism) in its report on the specific nexus between foundations and political financing/funding — “Foundations and Donations: Political Financing, Corruption, and the Pursuit of Power” (Prof E Terence Gomez & Lalitha Kunaratnam) — has revealed the “shocking” extent to which such arrangements run deep in our political culture and system.

The 57-page report is replete with damning evidence of the complete lack of transparency and accountability in the source, use and purpose of the funds that flow into the foundations set up by the political elite concerned.

Due to the lack of constraint, the misuse of such funds is an “open season”. As the media release/press statement of C4 states, “[the intersection between foundations and political donations [results in murky waters] as the vulnerability for quid pro quo [something for something] arrangements exist, meaning the system itself is vulnerable to corruption by those in power”. And these, of course, include foundations or trusts set up by the federal government for the purpose of the Bumiputera empowerment agenda.

And there’s the direct and straightforward cases involving criminal breach of trust (CBT). For example, the prosecution of Nasharuddin Mat Isa (former Deputy President of Pas and former Member of Parliament for Yan in Kedah as well as Bachok in Kelantan) has proceeded with 17 counts of CBT and three money laundering charges even as he was given a discharge not amounting to acquittal (DNAA) for the other 16 counts of CBT. 

The report traces back the origins of foundations as vehicles for “slush funds” (particularly for a party’s war chest to be activated for electoral campaigning) to the 1980s when patronage politics had begun to emerge under the guise of corporatisation and privatisation as part of the overall policy to expedite the nation’s industrialisation and ensure the creation of a Bumiputera commercial and industrial community (BCIC).

For example, concessions (ie, government awards) were directly given to selected private proxies of which the ultimate beneficiary or owner was the then ruling party of Umno — the household names in those days were Renong and UEM (now merged into the UEM Group controlled by Khazanah, our “sovereign wealth fund”).

To be sure, Malaysia isn’t unique in this as Prof Terence Gomez has highlighted in the book, Political Business in East Asia (Routledge, 2002). See also China in Malaysia: State-business relations and the new order of investment flows (Palgrave MacMillan, 2020) in relation to the nexus between politics or, more precisely, the State (government) with business, including GLCs/state-owned enterprises (from both Malaysia and China).

Hence, just as there are government-linked companies (GLCs) that are deployed to funnel low-key donations, there are Umno-linked companies (“ULCs”) which also served as conduits for the party’s source of secret slush funds. It’s from these practices involving the nexus between politics and business (corporate) that foundations too became entangled in the orbit of political patronage.

As a quick summary, according to the report, the lessons learnt from the current or on-going court cases involving prominent erstwhile ruling elites are, among others:

  • (mis)use of family-controlled foundations as convenient cover for personal lucre;
  • wielding absolute control over foundations in their capacity as cabinet members;
  • complete lack of transparency, e.g., total absence of audit exercises;
  • in most cases, donations weren’t even used for genuine party political purposes, e.g., to cover full-time staff and other expenses; and
  • except for the politician concerned, the rest of the party were unaware of existence of the donations. Even if the existence is known, in terms of the subsequent expenditure trail, it’d be off-limits. This meant that these secret war chests could well have been derived from corrupt intentions. In other words, the funds weren’t donations as such in the first place but had the sinister quid pro quo aim (of securing favours in exchange for cash). 

Notwithstanding, this doesn’t mean that State capitalism or pro-active government intervention in the economy in the form of GLCs is necessarily unhealthy and, therefore, bad. Rather, there needs to be (greater) transparency and accountability in how the myriads of our GLCs operate and are run.

By the same token, we need to move towards a more transparent political funding culture even as we cannot expect to, realistically, eradicate the practice and culture of “business donating to politics”, including not least in the context of foundations.

As such, the issue is corrupt practices and, thus, how best to control and minimise abuse.

The courts cases have shown that we only need the political will to prosecute wrongdoing. As for prevention which is certainly better than cure, perhaps it’s far better to:

  • limit the number of foundations (e.g., to only 3 as the maximum) that can be set up and managed by politicians, family members and politically-connected persons;
  • establish an independent “ombudsman” or auditor whose role is to audit and monitor flow of funds into foundations and the expenses as well as act on irregularities and complaints; and that the report is available to the public online;
  • make it mandatory under legislation (e.g., under the Political Financing Act as called for by C4) for the financial statements of foundations to be made available to the public online.

More broadly, the National Centre for Governance, Integrity and Anti-Corruption (GIACC) is currently pushing for a rule that requires the disclosure of the source of political funding above RM10,000. To complement and supplement this policy proposal, layers of corporate veils deployed to mask the identity of the funder — as a common tactic — should be countered with the mandatory requirement for the disclosure of beneficial ownership analogous to proxy share ownership holding in trust for the real owner. In the same vein, such proposed measures would strengthen and enhance the existing Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act/Amla (2001) and Banking & Financial Institution Act/Bafia (1989).

Not least, we should be seriously studying the political funding models in other countries. In Germany, the government provides funds for political parties during elections.  Germany’s Political Parties Act (1967) stipulates that the State will fund the parties to partly finance their general activities, and the criteria for the distribution of public funds would be the parties’ performance in the European Parliament, Bundestag (federal parliament) and Landtag (state parliament).

Public funding would reduce political parties’ dependency on corporate donations, thus preventing corporations from undue influence on policy-making. This system also ensures that the elected government and representatives work for the public interest, thus upholding democracy. However, a political funding system that’s completely tax-payer dependent would be unsuitable and not feasible.

In the final analysis, the right approach is probably to find or strike the right balance – with the ultimate purpose of eradicating corrupt practices.

Jason Loh Seong Wei is Head of Social, Law & Human Rights at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.

Bahasa Malaysia

Published in Astro Awani.

Di Malaysia, politik dan sistem ekonomi sebahagian besarnya didorong dan terlalu bergantung kepada nepotisme, terutama dalam bentuk “politik wang” dan kronisme. Politik wang, dalam bentuk wang tunai atau dalam bentuk lain (misalnya, kontrak kerajaan), merupakan penjelmaan dan pencirian bagaimana korupsi begitu berakar dan “termaktub” dalam masyarakat kita.

Namun, satu isu yang belum mendapat liputan dan perhatian yang sewajarnya adalah hubungan antara badan amal atau badan sosial yang juga dikenali sebagai yayasan dengan penaung politik mereka.

Yayasan tidak bersifat keuntungan dan oleh itu harus diuruskan sebegitu walaupun didaftarkan sebagai syarikat/entiti korporat di bawah Suruhanjaya Syarikat Malaysia (CCM) kalau bukan seperti biasanya di bawah Pendaftar Pertubuhan (ROS).

C4 (Pusat Memerangi Korupsi & Kronisme) dalam satu laporan mengejutkan mengenai pertalian khusus antara yayasan dan pembiayaan/pendanaan politik – “Yayasan dan Sumbangan: Pembiayaan Politik, Rasuah, dan Pengejaran Kuasa” (Prof E Terence Gomez & Lalitha Kunaratnam) – telah membongkar sejauh mana pengaturan sedemikian meresap ke dalam budaya dan sistem politik kita.

Laporan setebal 57 halaman itu penuh dengan bukti mengenai kurangnya ketelusan dan kebertanggungjawaban dalam pencarian sumber, penggunaan dan tujuan dana yang mengalir ke yayasan dibentuk elit politik yang berkenaan.

Oleh kerana kurangnya kekangan, penyalahgunaan dana terbuka luas. Seperti yang dinyatakan kenyataan media C4, “persimpangan antara yayasan dan sumbangan politik menjadi rentan bagi pengaturan quid pro quo [sesuatu untuk sesuatu], yang bermaksud sistem itu sendiri rentan terhadap rasuah oleh mereka yang berkuasa”. Sudah tentu, ini termasuk yayasan yang ditubuhkan kerajaan pusat untuk tujuan agenda pemerkasaan bumiputera.

Dan ada pula kes secara langsung melibatkan pecah amanah jenayah (CBT). Sebagai contoh, pendakwaan terhadap Nasharuddin Mat Isa (bekas Timbalan Presiden Pas dan bekas Ahli Parlimen Yan di Kedah serta Bachok di Kelantan) telah diteruskan dengan 17 tuduhan CBT dan tiga tuduhan pengubahan wang haram walaupun beliau dibebaskan tanpa lepas pertuduhan (DNAA) bagi 16 tuduhan CBT yang lain (lihat ms. 53-56).

Laporan ini juga menjejak semula asal-usul yayasan sebagai wadah khas untuk “dana rahsia” dari 1980-an ketika politik wang mulai muncul di bawah tajaan korporat dan samaran penswastaan sebagai sebahagian daripada keseluruhan dasar untuk mempercepatkan perindustrian negara dan memastikan pembentukan komuniti komersial dan industri bumiputera (BCIC) (ms. 5).

Sebagai contoh, konsesi (iaitu, pemberian kontrak kerajaan) diberikan secara langsung kepada proksi swasta terpilih yang mana benefisiari atau pemilik sebenarnya adalah parti pemerintah Umno ketika itu.

Oleh itu, seperti juga adanya GLC yang digunakan untuk menyalurkan sumbangan dana, terdapat juga syarikat berkaitan Umno (ULC) yang berfungsi sebagai saluran untuk sumber dana rahsia parti itu. Dari amalan sebegini yang melibatkan hubungan antara politik dan perniagaan (korporat), yayasan-yayasan juga terjerat dalam orbit naungan politik.

Sebagai ulasan ringkas, menurut laporan itu, pengajaran yang dapat diambil daripada kes-kes mahkamah yang sedang berjalan melibatkan golongan elit pemerintah yang terkemuka, antara lain, adalah:

• salah guna yayasan keluarga yang dikendalikan sebagai penyorok yang sesuai untuk kepentingan peribadi;

• memegang kuasa mutlak ke atas yayasan dalam kapasiti mereka sebagai ahli kabinet;

• tiada ketelusan sepenuhnya, mis., tiada perlakuan audit;

• dalam kebanyakan kes, sumbangan derma tidak pun digunakan untuk tujuan politik parti yang tulen, mis., untuk menampung kos kakitangan sepenuh masa dan perbelanjaan lain; dan

• kecuali ahli politik yang berkenaan, ahli parti yang lain tidak mengetahui kewujudan sumbangan tersebut.

Dan kalau pun bukan begitu, pengetahuan terhad/terbatas dan tidak merangkumi penjejakan dan pengesanan perbelanjaan berikutnya. Ini bermaksud bahawa dana rahsia mungkin berpunca daripada unsur rasuah. Dengan kata lain, dana tersebut bukan merupakan sumbangan derma pada mulanya tetapi mempunyai tujuan quid pro quo atau rasuah (mendapatkan manfaat melalui pemberian wang tunai).

Kita perlu bergerak ke arah membudayakan pendanaan politik yang lebih telus walaupun kita tidak dapat mengharapkan, secara realistik, pembasmian sepenuhnya amalan dan budaya “perniagaan memberi sumbangan kepada politik”, termasuk paling tidak dalam konteks yayasan.

Oleh itu, masalahnya adalah amalan rasuah dan, dengan itu, cara terbaik adalah mengawal dan mengurangkan penyalahgunaan.

Kes-kes mahkamah telah menunjukkan bahawa kita hanya memerlukan iltizam dan tekad politik untuk mendakwa kesalahan tersebut. Sudah tentu, pencegahan lebih baik daripada mengubati. Oleh itu, mungkin jauh lebih baik untuk:

• hadkan jumlah yayasan (mis., hanya maksima tiga) yang dapat ditubuhkan dan dikendalikan ahli politik, ahli keluarga dan individu yang berkaitan dengan (ahli) politik;

• menubuhkan “ombudsman” (pegawai bebas pengaruh yang memainkan peranan sebagai penyiasat dan pemantau) atau juruaudit yang berperanan untuk mengaudit dan memantau aliran dana ke yayasan dan perbelanjaan serta bertindak ke atas penyelewengan dan aduan; dan bahawa laporan-laporan boleh diakses dalam talian (oleh orang umum);

• mewajibkan di bawah undang-undang (misalnya di bawah Undang-Undang Pembiayaan Politik sebagaimana disarankan C4) agar penyata kewangan yayasan tersedia boleh diakses dalam talian oleh orang umum.

Secara lebih luas, Pusat Governans, Integriti dan Anti Rasuah Nasional (GIACC) kini mendorong peraturan yang menetapkan pendedahan sumber dana politik melebihi RM10,000. Bagi menambahbaik cadangan dasar ini, lapisan tabir/kerudung korporat yang digunakan untuk menutupi identiti pemegang dana – sebagai taktik biasa – harus dilawan dengan syarat wajib bagi pendedahan pemilikan bermanfaat. Pada masa yang sama, langkah yang dicadangkan ini akan memperkuat dan memperkasakan Akta Pencegahan Pengubahan Wang Haram, Pembiayaan Keganasan dan Hasil Kegiatan Tidak Sah/Amla (2001) dan Akta Perbankan & Institusi Kewangan/Bafia (1989).

Tidak kurang juga, kita harus serius mencontohi model pendanaan politik di negara lain. Di Jerman, pemerintah menyediakan dana untuk parti politik semasa pilihan raya. Undang-Undang Parti Politik (1967) di negara Jerman menetapkan bahawa pemerintah membiayai parti-parti dalam aktiviti umum masing-masing, dan kriteria pengagihan dana awam bergantung pada prestasi para parti di Parlimen Eropah, Bundestag (parlimen persekutuan) dan Landtag (parlimen negeri).

Pembiayaan awam akan mengurangi ketergantungan parti-parti politik terhadap sumbangan korporat, sehingga mampu mencegah pengaruh keterlaluan dalam pembuatan dasar. Sistem ini juga memastikan bahawa pemerintah dan wakil rakyat bekhidmat untuk kepentingan umum serta menegakkan budaya demokrasi. Namun, sistem pendanaan politik yang bergantung sepenuhnya kepada pembayar cukai tidak bersesuaian dan hakikatnya tidak dapat dilaksanakan.

Dalam analisis terakhir, pendekatan yang betul mungkin adalah mencari atau mencapai keseimbangan yang tepat – dengan tujuan utama membasmi amalan rasuah.

Jason Loh SeongWei merupakan Ketua Bahagian Sosial, Perundangan dan Hak Asasi di EMIR Research, sebuah organisasi pemikir bebas berfokuskan saranan-saranan dasar strategik berdasarkan kajian yang menyeluruh.

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