KUALA LUMPUR: Corruption remains a major problem in Malaysia despite anti-graft measures undertaken by the government as the “message from the top is not right”, says Malaysian Institute of Corporate Governance (MICG) president Datuk Yusli Mohamed Yusoff.
“I think in this country today, corruption remains a big problem. It is one of the NKRAs (national key result areas) that are being pursued,” said Yusli, adding that despite the prominence given by the government to combat graft, “it is still happening [and] we read about it all the time”.
“You look at the auditor-general’s reports. Why are we not able to deal with it better? I think the culture is still not right. The message from the top is still not right, within organisation and even within the government.
“The classic case that we read about everyday … what happened to entities like 1Malaysia Development Bhd (1MDB),” Yusli told The Edge Financial Daily after taking part in a panel discussion at the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) Annual Conference 2016.
1MDB, which has been making news for the wrong reasons for some time now, hit the headlines both within and outside the country recently after the US Department of Justice filed civil suits to seize assets worth more than US$1 billion (RM4.03 billion) allegedly siphoned off from the troubled state fund.
During the panel discussion, Yusli referred to the seemingly weak corporate governance shown by 1MDB with its frequent change of external auditors. He said: “The first question that ought to be asked is whether 1MDB followed all the global best practices when it comes to corporate governance that is expected of them.
“It’s not a small company. The size of 1MDB is bigger than most of the public listed companies in the country. Can you imagine a public listed company of that size not having all these checks and balances?
“My question is, where were all these controls? Was it there in the first place? Did the board ensure that all these checks and balances were in place? Let’s not forget that the board members are all experienced members who sit in big companies,” he said.
Yusli, a former Bursa Malaysia Bhd chief executive officer, noted that Khazanah Nasional Bhd, the sovereign wealth fund, uses different coloured books for best governance practices.
“So, I will be surprised if the ministry of finance (MoF) is not aware of what is best practice from a corporate governance perspective and what kind of checks and balances should be within MoF-linked companies including 1MDB,” he said.
One of the ways that the government could improve on this is to stick with the best governance practices, said Yusli.
“My personal view is that a company like 1MDB which is responsible for so much public funds … their board should be made up of majority independent directors.
“Majority independent directors should be people independent of [the] government. It (they) shouldn’t be coming from government-linked companies because these people are depending on [the] government for their jobs,” he stressed.
Yusli also said that some public listed companies had adopted a “box-ticking” approach to corporate governance, leading to a disconnect between what is being said in the annual report and what actually happens at the company, despite a higher level of awareness of corporate governance.
He said the challenge lies in seeing corporate governance being put to practice within the company itself, starting from the board level. The board’s seriousness towards corporate governance will set the tone for the company.
“The board has to say zero tolerance for fraud, corruption [and] bribery, and if anyone is doing that in the company, you’re out. The board has to send that kind of message,” said Yusli.
Noting that corporate governance is really about having checks and balances, he added that for it to be effective, honesty, a high level of ethics and integrity form a crucial part.
MICG is a non-profit public company whose mandate is to raise the awareness and practices of good corporate governance in Malaysia. Its founding members are the Federation of Public Listed Companies Bhd, Malaysian Institute of Accountants, Malaysian Institute of Certified Public Accountants, MAICSA and Malaysian Institute of Directors.