Ideas: Asset declaration a tool for trust building

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This article first appeared in Forum, The Edge Malaysia Weekly, on December 14 - 20, 2015.

 

MANY parliamentarians and members of the public felt let down when the Parliament session ended on Dec 3. The lack of a credible answer to the question of the RM2.6 billion “donation” to the ruling party has compounded the problem of trust deficit in the government.

Trust in the government is an integral part of mature democracies. It is the cornerstone of the social contract between voters and the state, as voters place their trust in the state to govern. Elected leaders, ergo, must rely on credibility and trustworthiness to be re-elected.

Leaders signal this “contract” to voters by limiting their powers through check-and-balance mechanisms to show that they will not and cannot abuse their powers. Increasingly, they also have to put in place good governance and transparency measures to enhance credibility.

Asset declaration — the act of publishing personal wealth and declaring conflicts of interest — is another signal to the public that power will not be misused. Members of the government have direct control over state resources, which means there is always a potential for abuse and misappropriation of funds.

By declaring one’s personal wealth and allowing for independent audits to be conducted, senior public officials create confidence among voters by demonstrating that these public funds have not been misused for personal gain. The practice also gives members of government the opportunity to clarify the origins of their wealth, which further eases concerns.

Historically, asset declarations have been a common practice. In ancient Greece, Athenians unilaterally declared assets and opponents could challenge their validity before a judge.

During the Caliphate of Umar al-Khattab — the second caliph after the death of Prophet Muhammad (peace be upon him) — political officers declared financial assets before their appointment. The declarations were even recorded and audited annually as part of Umar’s commitment to eradicate corruption.

In modern times, the framework has become more sophisticated but the goal of curbing corruption and establishing trust in public officials remains.

A study by the Institute for Democracy and Economic Affairs found that asset declaration systems are most effective when laws are in place to detect illicit enrichment of wealth and prevent conflicts of interest.

The scope of assets has to be large (for example, to include gifts, equity, directorships and so on) and has to apply to personnel from all branches of government, including their immediate associates and family members. The declaration has to be frequent — at least annually — and must include sanctions as a means of enforcement.

Most importantly, in order for the system to be effective, the law has to make provisions for an independent verification of the assets declared. The public must also have access to that information.

In Malaysia, where the present government is facing the problem of trust deficit, a comprehensive asset declaration law must be enacted. To be certain, there are asset declaration frameworks in place, but they are largely informal with little means for verification and public scrutiny.

Currently, members of parliament are subject to a code of ethics that does not require them to declare their assets. Instead, public declarations have been made on a voluntary basis by a select few members of the executive council in Penang and Selangor. As for the Cabinet, the practice is also informal, as members declare their assets to the prime minister directly.

On the other hand, civil servants have the most comprehensive system, as they are subject to circulars that ensure compliance. These declarations are only made every five years internally instead of the recommended annual requirement.

The lack of a legal framework raises questions about the effectiveness of Malaysia’s asset declaration system, as there are no key features that make systems like those in the US and Hong Kong a powerful tool for building trust and credibility.

Studies have revealed a direct correlation between improvements in Corruption Perception Index scores and asset declaration systems that include strong verification mechanisms and public access. This is probably why over 70 countries have since adopted these features, according to a survey conducted by the World Bank.

If an asset declaration system in Malaysia was in place, then perhaps the lapse in trust could be addressed. There would be a proper procedure for officials to readily relay credible information to the public.

Unfortunately, the question of the government’s commitment to build trust may remain yet unanswered.


Shaza Scherazade Alauddin Onn is senior researcher, Political Economy and Governance, at the Institute for Democracy and Economic Affairs