Ideas: Money politics and the erosion of people’s trust

This article first appeared in Forum, The Edge Malaysia Weekly, on June 19, 2021 - June 25, 2021.
Ideas: Money politics and the erosion of people’s trust
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Corruption is not a word that is foreign or unfamiliar to Malaysians. At the root of most corruption cases are money and politics. An infamous example is the 

1Malaysia Development Bhd (1MDB) case involving former prime minister Datuk Seri Najib Razak. It has been almost five years since the fallout, and the trial is still ongoing today.

Research by the Centre to Combat Corruption and Cronyism (C4) has shown that one of the more common vehicles for corruption are the many dubious foundations, or yayasan, that were established to launder money for political funding purposes.

Political interference in businesses was part of the reign of the Barisan Nasional, predominantly headed by the United Malays National Organisation (Umno). It is known that many proxies were formed through extensive networks, enabling Umno to hold its money in multiple different channels and, through these proxies, mobilise funding for the party and especially for general elections.

One of the examples is the politicisation of government-linked companies (GLCs) where political appointments to the boards and managements are often used as a reward to consolidate the ruling party’s power. The domino effect from these political appointments is clear: procurement systems and access to government grants and contracts are more opaque than ever. Many have criticised the procurement system as a black box, as decisions are made with minimal objectives and little to no clarification over the decision-making process.

The problem with political funding runs much deeper than just the absence of legislation. What Malaysians expect their elected representatives to do for them also plays a role in why politicians require large amounts of money. The job scopes of members of parliament (MPs) and state assemblymen (ADUN) are wider than most would assume.

The primary task of MPs and ADUNs should be to debate policies and legislations at the state and federal level, but they are often obligated to fulfil other “social” tasks within their constituency. These tasks include distributing food, electronic goods like laptops, books, clothes and other basic necessities on top of cash handouts to needy constituents.

Should they fail to carry out these social responsibilities, they risk losing their seats. This points to a flaw in the state’s welfare system — why must the people expect cash handouts from their MPs and ADUNs when it is the state’s responsibility to provide welfare?

A common feedback from those residing within the urban-poor and rural communities is that official state channels for aid are often too bureaucratic, inefficient and slow. Therefore, the next best option is to demand from the MPs and ADUNs, which is a faster and easier process. This is where we find the importance of political funding reform that focuses on the constituency’s size and location, whether it is urban/urban-poor/rural, to determine the average amount of funding required. The systemic flaw in funding distribution has driven political parties to compensate by raising funds from questionable sources — causing corruption to worsen.

To create a fair system of political financing, a three-pronged approach should be taken: (1) reforms in political parties to enhance transparency and accountability of funds; (2) government policy that fairly allocates direct and indirect financing of politics; and (3) empowerment of the public through civic and voter education.

A Political Financing Act is urgently needed. This Act must include the rules and procedures for a political party to raise money, how to keep that money and, most importantly, how that money can be spent. There should also be a requirement for their accounts to be audited annually; with financial reports made available to the public.

Clear enforcement mechanisms should be put in place for those who violate the rules, and a limit must be imposed on the amount of money that can be donated as well as tax exemptions. Learning from the 1MDB scandal, donations from foreign corporations or individuals and GLCs should also be prohibited. Funding declaration is also imperative in rebuilding the public’s trust in the political institution.

We must learn from other countries that have adopted a public funding system for politics, such as the UK and Germany. Implementing direct and indirect public funding enables political parties to have access to a regular source of funds for elections and campaigns, which in turn decreases their dependence on private funders.

This is a fairer, more transparent and accountable system that could help to curb corruption in Malaysia. A sum of funds could also be channelled to educate voters and increase political literacy. Citizens would be able to make more informed political decisions and act as checks and balances on the system. When voters are empowered, they are able to effectively exercise their democratic right to make informed choices during elections and also express concerns regarding the transparency and accountability of political parties. With enough public pressure, corrupt practices in politics can be eradicated slowly.

Corruption has unfortunately become a culture in politics. The culture is then taught and learned by new players in the political landscape, often leaving newcomers no choice but to participate in the vicious cycle. Only serious action to reform the entire political financing ecosystem can bring about the change Malaysia truly needs.


Iman Amran is a research intern at the Institute for Democracy and Economic Affairs (IDEAS)

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