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Phone Taps Considered in Malaysia’s War on Graft: Southeast Asia

Malaysia may allow phone tapping and Internet monitoring as it steps up the war on corporate and government graft, which costs the country as much as $9 billion a year, a minister said.

It also plans legislation to make company directors liable for corruption involving staff and will appoint chief integrity officers in government ministries, Paul Low, the minister in the Prime Minister’s Department in charge of fighting graft, said in an interview. He said talks on electronic monitoring are in early stages and didn’t provide specifics on how sweeping powers might be or how they might be used.

“Does Malaysia want to be a failed state or does it want to rise up?” the 67-year-old former country president of Transparency International said in Kuala Lumpur yesterday. “Malaysia has lots of potential but hasn’t lived up to it.”

Malaysia’s move comes amid a global debate over the merits of state-sanctioned snooping after computer security contractor Edward Snowden exposed a secret U.S. government electronic-surveillance program designed to foil terrorism. President Barack Obama responded by saying he’ll ask Congress to amend legislation to increase transparency and oversight.

Bribe-taking was found to be the most rampant in Malaysia among 30 countries surveyed last year by Transparency International, even as it improved to 54th from 60th place among 176 nations in the institution’s Corruption Perceptions Index. Prime Minister Najib Razak responded by appointing Low to his cabinet to lead the war on graft, after his government was returned to power in a May election.

Photographer: Goh Seng Chong/Bloomberg

Paul Low, Malaysia's minister in the Prime Minister's Department overseeing graft and human rights. Close

Paul Low, Malaysia's minister in the Prime Minister's Department overseeing graft and human rights.

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Photographer: Goh Seng Chong/Bloomberg

Paul Low, Malaysia's minister in the Prime Minister's Department overseeing graft and human rights.

‘Ample Laws’

Almost half of Malaysians surveyed in a Merdeka Center for Opinion Research poll published in February said fighting graft was a more urgent issue for the government than taming inflation or boosting foreign investment.

Merdeka Center political analyst Ibrahim Suffian doubted that electronic monitoring would help the government tackle graft. “The laws as they currently exist are quite ample,” he said yesterday by phone. “They don’t need to engage in additional surveillance. What the public is expecting them to do is to go after the major perpetrators that are generally publicly known but protected due to politics or so on.”

Najib has experimented with public humiliation, with an online gallery of more than 1,000 convicted graft offenders, including former Selangor state Chief Minister Mohd Khir Toyo, who was sentenced to a year in jail in 2011.

He’s also introduced specialist corruption courts, passed a Whistleblower Protection Act, and published tenders for state contracts online to boost transparency, according to the government’s Performance Management and Delivery Unit.

Directors’ Onus

The Malaysian Anti-Corruption Commission Act may be amended to put the onus on company directors to show they have anti-bribery policies in their organizations, Low said.

“Not many Malaysian companies take fighting corruption seriously,” said Low, a former vice president of the Federation of Malaysian Manufacturers. “They still believe that corruption is part of a strategic weapon for competition.”

National energy company Petroliam Nasional Bhd. said in a July 5 statement that two employees were charged with corruption. State-linked Telekom Malaysia Bhd. (T) said it boosted its internal processes two years ago after Alcatel-Lucent SA said its staff paid bribes.

The authorities must ensure that any laws to allow phone tapping and Internet monitoring are clear to prevent abuse of power, Loi Kheng Min, secretary-general of Transparency International Malaysia, said by phone today.

Government ministries will hire chief integrity officers and ensure clean and transparent procurement processes, said Low. A plan is also being deliberated to ban relatives of ministers and top civil servants from doing business with relevant ministries, he said.

Money Politics

Police and political parties are perceived as Malaysia’s most corrupt institutions, according to a survey by Transparency International between September and March. Donations to political parties should be made transparent, said Low.

“Dealing with grand corruption is my biggest priority because of the financial implications as well as the impact on the creditworthiness of the institutions and the economy,” said the minister, who also oversees human rights.

Shahrizat Abdul Jalil stood down as minister for women, family and community development at the end of her term as senator last year after her husband was charged with corruption. Two former transport ministers in a ruling coalition party were separately charged over financial irregularities at an industrial zone. All three have said they have not committed any wrongdoing.

Najib wants to eradicate corruption to attract investments and create jobs as part of a plan to turn Malaysia into a high-income nation by 2020. The country has drawn commitments from companies such as German chip maker Infineon Technologies AG (IFX) and International Business Machines Corp. under its $444 billion development blueprint.

“If you want to move beyond the middle-income level, you must have economic decisions that are based on sound decisions,” Low said. A corporate liability law is the missing piece of the jigsaw needed “to get the private sector to buck up.”

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net

To contact the editors responsible for this story: Barry Porter in Kuala Lumpur at bporter10@bloomberg.net; Rosalind Mathieson in Singapore at rmathieson3@bloomberg.net

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