Critical to plug corruption floodgates in 12th Malaysia Plan budget splash

PRIME MINISTER Ismail Sabri Yaacob has tabled the 12th Malaysia Plan (12MP) in the Dewan Rakyat announcing that the government will allocate RM400 billion for existing and new development projects.

Public projects can be very costly as big sum of money are being spent by the government for these mega projects. This allows for those involved in awarding the projects to take opportunity to abuse their power and to commit corrupt practices. The situation is made worst where some mega projects are awarded through direct negotiations and limited tenders to their cronies or certain companies.

Even in the open tender it should not be tainted by corruption and bid rigging.

According to the World Bank, it is estimated that 20-30 percent of budget for public contracts is wasted.

This finding matches with what Tan Sri Ambrin Buang, the former Auditor General predicted ie that up to 30 percent of Malaysia's public projects' value was lost owing to mismanagement and corruption.

Consider the amount of savings the government would have obtained if it paid 30 per cent less for goods and services the contractors and vendors provided out of total RM400 billion in the MP 12.

If left unchecked, the present crisis may develop into a worst case scenario and one can expect another full-blown corruption scandal.

Datuk Seri Azam Baki, the chief of Malaysia Anti-Corruption Commission stated that corruption cases resulting in leakages and wastage of government procurement involving civil servants (the top leadership) are seen to be increasingly critical procurement and topped the significant financial loss list.

Approximately 50% of such cases involve government agencies (who are in power in deciding a matter) due to abuse of power and unlawful manipulations of the procurement process and fraud.

When there is a leakage of government procurement, investigation shows that there is an element of corruption that causes a certain value of government procurement to rise.

Ambrin has said, simply giving oral warnings to erring civil servants is not sufficient and ineffective.

Under the current laws, civil servants who are off the hook for power abuse and corruption due to insufficient evidence or other technicalities merely face internal or disciplinary action.

The MACC is of the opinion that without a specific law to address such misconduct, it may become a loophole for the offenders, who may simply be let off with disciplinary action.

In order to overcome this problem, MACC is pushing for laws known as Misconduct for Public Service Act to punish civil servants who cause high losses in public funds through negligent and unethical practices in their respective government departments with criminal charges. In Hong Kong this common law carries the maximum penalty of 7 years’ imprisonment.

The law would act as a powerful deterrent and key weapon to those tempted to abuse their powers. It is to send out a strong message to wayward public servants that they cannot escape after causing substantial losses or responsible for the losses to public coffers they might have caused and prudent when comes to spending public funds while discharging their duties, even after they are cleared for offences of corruption and abuse of power.

Some suggested that the definition of Misconduct for Public Service should include ministers and also politicians. The ministers are also responsible for the final decision in awarding the ministry’s contracts.

The auditor general department should be given the power to conduct spot checks on big government projects when there is any sign of red flags that the company which has been awarded projects is engaged in false claims or fraudulent activities. This apart from giving assurance that the projects are being monitored will also act as the preventive measures and can reduce leakages, losses or low quality and non-quality constructions.

When there is a project delay, project cost will increase, and it will be the taxpayer money which will be used to rescue the project with additional cost. As such when contracts are awarded there should be a mechanism of continuous monitoring to ensure that the projects are progressing according to the timeline agreed upon in the contract.

The existing “sick projects” or failed to complete projects mostly awarded by direct nego based on technical know who, poor monitoring due to integrity of persons involved not only undermined the government and people aspirations but also caused project cost to increase.

Contracts should be awarded to those contractors with evidence of reliability, capability, responsibility, and with a good track record of both technically and financially. As a matter of good governance a proper checking on the pricing and due diligence on the contractors should be conducted before awarding the contracts since nowadays getting information via the internet is easily especially on the market price.

Modernizing government payments and collections through digitization can help policy makers achieve these goals. The Ministry of Finance should introduce a “flying squad team” to check the completed projects before payments are approved to be paid to the contactors.

Ideally, the public budget process should allocate public resources in a strategic, transparent, accountable, fair and democratic way. Unfortunately, this ideal is rarely met.

In the absence of the culture of integrity, no one will bear the responsibility or feel embarrassed by their wrongdoings while corruption would get further aggravated.

Point to ponder: After 11 Malaysian Plans covering 55 years, it is still necessary to build more physical projects? We don’t need the costly more mega projects that entail more tenders and procurements where unethical public servants tend to abuse powers or manipulate via direct nego and cronism.

Datuk Seri Akhbar Satar

Former President Transparency International Malaysia