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Allegations raised in a Bloomberg investigative report about possible collusion between certain MACC officers and a “corporate mafia” network have been circulating for weeks; claims the anti-corruption agency has firmly denied. What do these allegations reveal about the relationship between political power, regulatory power, and corporate power in Malaysia? On this episode of #ConsiderThis Melisa Idris speaks with political economist Prof Emeritus Dr Edmund Terence Gomez from Universiti Malaya, who has long researched the linkages between politics, policies, and enterprise. In 2021, he resigned from the MACC’s Consultation and Corruption Prevention Panel, citing concerns over how Chief Commissioner Azam Baki’s conflict of interest allegations were being handled.
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00:10Hello and good evening. I'm Melissa Idris. Welcome to Consider This. This is the show
00:14where we want you to consider and then reconsider what you know of the news of the day. Allegations
00:19raised in a Bloomberg investigative report about possible collusion between certain MACC officers
00:25and a so-called corporate mafia network have been circulating for weeks. These are claims
00:33that the anti-corruption agency has firmly denied. But what do these allegations reveal about the
00:40relationship between political power, regulatory power and corporate power? That is what we want
00:46to explore on the show tonight and joining me to do this is political economist Dr Edmund Terence
00:52Gomez. He is an Emeritus Professor of Political Economy at University of Malaya. He has long
00:57researched the linkages between politics, policy and enterprise and in 2002 he resigned from the
01:04MACC's Consultation Corruption Prevention Panel citing concerns about how allegations were being handled
01:13over conflict of interest concerning MACC Chief Commissioner Azam Baki at the time. Terence,
01:20it's good of you to join me. Thank you for being here on the show. Let's start with the Bloomberg
01:24report. It alleges collusion and between MACC offices and what it describes a corporate mafia network.
01:32How concerning are these allegations for you? This report describes a complex system where enforcement
01:40powers are being used to pressure companies in terms of transferring power, corporate power. So when you hear the term
01:50corporate mafia, how concerned are you? I must say I'm extremely concerned. If you look at Malaysian history,
02:00we talk about the state business nexus or political business nexus. Now before it used to be political
02:06parties in business, this was in the 1990s. Then we had GLC's in business, another kind of state business nexus.
02:15When we talked about political parties in business, already we were concerned about the different kinds
02:22of state business linkages in play which was contributing to corruption. Now we are hearing
02:28there's a different kind of state business nexus. Now it's between the state on one side and private
02:37enterprises owned by individuals and these kinds of nexus which we are hearing is also involving the MACC as an
02:47enabler at the centre to allow for the abuse of this what they call the corporate mafia system. This is
02:55extremely disconcerting. The term corporate mafia, mafia, organised crime that feels very coordinated and
03:08concerning but also underworld, it's part of the shadowy underworld. Why do you think it was described
03:19it that way and is it an accurate representation? I'm glad you brought it up and you use certain terms
03:25like underworld. A kind of nexus which suggests it's a form of organised crime. Now if we are talking about
03:36a kind of nexus which has implications about organised crime, this is very serious. For organised crime to work,
03:45it means there must be someone within the state which allows for this kind of organised crime
03:50operations to function. That is by definition what organised crime is. And there seems to be elements
03:57of or suggestions that this may be a form of organised crime. But what is really troubling is that here
04:05the
04:05state institution in the middle of it all is none other than the organisation that is supposed to be
04:12checking organised crime. That is, it's been alleged, it is MACC itself. So if the person who is supposed
04:19to be checking such activities is part of this nexus as alleged by Bloomberg, then this is something for
04:25which we really need to start an immediate investigation into this. Now this is where it gets even more
04:32interesting. In the Bloomberg report it was also mentioned that an ex-political aide to the Prime Minister himself
04:41was mentioned in the report. Now this makes it even more disconcerting if an ex-aid of the Prime Minister
04:50himself is mentioned in the report. Now this means we really have to look into this matter immediately.
04:57What I am really troubled about is that the Prime Minister seems to be procrastinating in creating
05:04this Royal Commission of Inquiry which everyone has been asking. So you think that we need to have a Royal
05:10Commission of Inquiry into these allegations. What would that realistically achieve in a case like this?
05:16First of all, the important point is the RCI will be or has to be independent. The members of the
05:24RCI must be
05:25truly independent of the state. Second, the state is implicated here and state here I mean the MACC itself.
05:34It also has drawn attention to a person who has been aligned with the Prime Minister no less.
05:40So of course we have to have an independent institution or independent inquiry into this
05:46with comprising people who have got no links with MACC or no links with the political system.
05:53And it has to be done now because if there is any truth to what the Bloomberg report has alleged,
06:00then we have to act now to nip this in the bud. If we don't, you know what is going
06:05to happen?
06:05We are going to have a problem of state capture. Organised crime, capturing control of the state.
06:11If that happens then we are really in a mess. Now I am saying this because, look Melissa, let's get
06:17to the heart of the matter.
06:18Malaysia has a history of a nexus between state and business, politics and business, which goes back to the 1980s.
06:26It has led to serious corruption and before we had the BMF scandal during Mahathai's time.
06:32Now, under Najib, we have taken a new form. We have 1MDB, which we have emerged as a kleptocracy.
06:40And today we are talking about allegations which suggest there may be elements of state racketeering.
06:48How does that happen? So, from a political economist's perspective, how do those networks of influence expand over time?
06:57Because they don't happen overnight, clearly. They develop slowly over time.
07:01So, when you laid out all these different types of nexus, of intersections of power, to avoid state racketeering, how
07:12does it develop?
07:13What are the signs we need to recognise?
07:15I prefer to put it as, what are the factors that led to this?
07:21We have to go back to the 1980s, when we first began to see this trend of parties in business
07:27in a big way.
07:28It was at that time, we saw the monetisation of politics. Money was now being used in party elections.
07:35It became worse over the years. In 1987, there was a split in Amno, because of money politics.
07:41In 1990, when there was an election which Anwar ran for, for the post of Deputy President,
07:47the volume of money spent in that election was just stupendous.
07:51So, what this means is, we also have another phenomenon that we have to look at.
07:54The growing monetisation of the political system.
07:58That monetisation has not diminished in spite of exposés of serious corruption in this country.
08:05In fact, it has become worse.
08:07Now, why has it become worse? Because parties have split.
08:10And now we have seen that if before money politics was within the party,
08:14now it's being brought into the state elections and the general elections, which means you now need even more money.
08:19Today, we have a problem. In the last election, we had a hung parliament.
08:25The trend really started in 2008, when five state governments were lost, the Barca National lost them,
08:31and they also lost a two-thirds majority. That was a defining moment.
08:34Suddenly, the political system was really fractured, and many parties could now become part of the governance system.
08:42And then, the contestation for politics became more monetised.
08:46That's when we saw 1MDB. 1MDB came to the fore, because by 2013, the elections was now really a battleground.
08:54We needed tons of money, and we saw in the 2013 general election, a lot of money was spent.
08:58And we were all asking, where did the money come from?
09:01And suddenly we found out, two years later, it was from 1MDB.
09:06Today, we have a hung parliament. No party has been able to capture power.
09:11The coalition we have to get now is a coalition, not of Anwar Ibrahim's making, but of an outside,
09:16the king himself coming in to form this coalition.
09:19Today, we have a real struggle to capture power.
09:23When you have a problem with capturing power, what do you need?
09:28Especially in our deeply monetised system.
09:30Money.
09:30You need money. So, the root of all evil, looks to me, is money.
09:38Now, here's the crunch. Way back in 2009, we argued we needed a Political Financing Act.
09:45In 2007, we had the first Berset rally where they said,
09:48money politics is a big problem, we must stop it. Opposition were behind us.
09:522008, they come to power. They even captured control of two state governments.
09:56We said, now, now is the time. You have enough power.
09:58Let's introduce the Political Financing Act.
10:01And they said, no.
10:03And since then, because they captured power in two highly industrialised states,
10:07they captured the GLC ecosystem within these highly industrialised states,
10:11they now had access to money.
10:13Parties didn't want to make any changes.
10:17So, today, our problem is, and this is a tragedy, it's a real tragedy,
10:20there's no political party, governing political party, whether in opposition,
10:23at the federal level or state level, who wants to have this Political Financing Act.
10:28And that's exacerbating the problem, making the system even more monetised.
10:33Okay. So, there had to be checks and balances put in place, right?
10:37So, the idea of MACC, when it was established in 2009,
10:43was that they were going to be modelled after the great, the top anti-corruption agencies of the world,
10:50in Hong Kong, in New South Wales, in Australia. That was the idea.
10:55But in the 17 years since its establishment, it's not managed to get the public trust that an
11:06anti-corruption agency needs to operate on. It needs the public trust, the public confidence in it.
11:14What do you think needs to happen for MACC next? Because we have the
11:21Chief Azambaki's tenure coming up in May 12th. According to reports by Singapore Straits Times,
11:28he's not going to be renewed as the MACC Chief. Is this a problem of replacing one man?
11:36Or is this more structural? What needs to happen from this point on to rebuild trust into MACC?
11:43The issue is structural. You can replace Azambaki with someone else, but you're going to have the same problems.
11:50Still in place. The person, the new MACC Chief may be committing the same kinds of things that
11:57Azambaki is alleged to be doing. Now, here's the thing.
12:01When the MACC came as an institution, you used the word checks and balances.
12:07The checks and balances in the case of MACC was there were supposed to be five independent
12:12institutions within MACC to check the Chief Commissioner and how the MACC operates.
12:21I was appointed to one of these panels and I thought at that time, good, I can serve as a
12:27check
12:27on the MACC Chief. I can even help the MACC do their work properly. I can bring my research to
12:33bear in helping MACC.
12:36The reason I believe I was brought in is because I wrote a book called Minister of Finance, Inc. where
12:40I exposed the GLC ecosystem. And I can tell you now, the MACC officers came to see me and said,
12:46we don't understand the system. We need your help to get into the system because we know there's a lot
12:52of corruption there. So I was more than happy to go in and help the MACC. But then it was
12:57brought to
12:58my attention that the MACC Chief, Azam Baki, had committed something which he was not supposed to do,
13:06investing in shares, which was over and above what he was allowed to do. So my immediate reaction was,
13:11check and balance. I said to my committee chairman, we must now look into this matter and ask Azam Baki
13:19to account for this. I even wrote to the chairman of the advisory board and said, look into this matter.
13:27If you want, I will come and I'll speak to the members of the advisory board, explain the problem
13:30to them, as told to me, so that we can begin this investigation. And that's when I saw there was
13:36no check and balance. Although the power is supposed to be with the oversight bodies to check Azam Baki,
13:45I came away from it realizing Azam Baki controls their oversight institutions and was dictating the agenda
13:53to a large extent. This was my personal experience which I saw for myself. When I saw that they were
14:00refusing
14:00to act on this matter, that's when I resigned from the MACC and I brought it to the attention of
14:06the public
14:06that this was what is happening in the MACC. Now here's again the most unfortunate point. The whistleblower
14:15who exposed this was sued by Azam Baki and silenced. And now recently the case was dropped. She was silenced.
14:23Nothing happened. The executive arm of government, the prime minister who appoints
14:29the chief commissioner, refused to act on the matter. Why is it that the prime minister at that time
14:35refused to act on this matter? The prime minister who had appointed him, Mohideen, also washed his hands of
14:40this matter. So the two prime ministers, Ismail Sabri, Mohideen, washed your hands of this matter.
14:45Which is a very shocking thing to see. The prime ministers who were responsible for the appointment
14:52of the MACC chief, who now has a serious allegation against him, who should be investigated, refused to
14:59pursue the matter further. It showed there was something fundamentally wrong with this system.
15:05But no change occurred. Now here's the real interesting thing. The person who was a critique of this
15:10system was none other than the current prime minister Anwar Ibrahim who was out there on the streets too
15:16calling for an investigation into Azam Baki. And then he became prime minister. And the first thing we
15:23thought that would happen was Azam Baki would be removed from his position and proper investigation
15:27would be done about the allegation against him. But nothing of the sort occurred. And since then,
15:34under Anwar Ibrahim, Azam Baki's position as chief commissioner has been renewed three times. After
15:41he retired, it was renewed three times. Which shows, to my mind, this system has to be cleaned up. The
15:49MACC,
15:49as we envisioned it when it was set up, is nothing like what it is supposed to be. That is
15:54the lesson we
15:55now know. And yet there is a refusal to reform the MACC.
16:00I recently interviewed the C4 Centre, the Centre for Chronism and Corruption. And they, in that interview,
16:09raised the question of whether the chief of MACC is currently the most powerful man in Malaysia.
16:16And I have to say, I've been thinking about that statement for several days now. And I do wonder,
16:22what do you think, Terence, if I were to pose that question to you?
16:26I think that's a valid question. Because we come back to what I said earlier. Why is it that even
16:33the prime minister, not one, not two, three prime ministers have refused to act against the MACC chief,
16:40even though there have been serious allegations against him? What is it that the MACC chief has,
16:47that prevents the prime ministers, no less, from acting against him? That's why, as I said,
16:54we do need an independent inquiry into what is happening here within the state.
16:58What do you think, what message do you think it might send if the government ultimately decides not to
17:06establish an RCI? Now, that's a very important question, Melissa. Because if what is alleged in
17:13the Bloomberg report is true, it raises questions about property rights, it raises questions about
17:20investments by domestic investors in the economy. As it is in this country, we have a problem with the
17:28volume of domestic investments in this country. It suggests that there's an element of lack of faith,
17:34a lack of trust in the government. And now this report comes out. And this report suggests that there are
17:41forces colluding with the state, which are so powerful, which can come and expropriate their wealth at will,
17:48their companies at will. This is a serious concern for business figures, investors.
17:55And this will further undermine domestic investments in this country. And let me remind you, the corporate sector,
18:01especially the SME sector, they constitute 98% of the corporate sector. We need a vibrant SME base.
18:05The corporate mafia conspiracy is affecting many medium-scale enterprises. And if they see this
18:14is happening, what do you think about future investments in this country? There will be a
18:19reluctance to invest. And this means, in the long run, this country will become even more dependent on FDI
18:26to run this economy. It's already happening. We're becoming so dependent on FDI to run this economy.
18:33We don't have enough trust on the ground from domestic investors to invest in this economy.
18:37So this is a serious allegation we have to look into. We have to regain the trust of investors. We
18:43have to investigate what is happening and inspire confidence in the private sector that this is a
18:49transparent, accountable governance system that we have here. Please invest.
18:54So to do that, you argue that an RCI is critical, that it's pivotal to regaining the confidence. But you
19:03also said it has been an independent RCI. And previous RCIs in Malaysia's history results that the findings
19:11of which have not been made public. It's all been kept under confidentiality clauses. How do we make sure
19:18that if there is an independent RCI, and I know many political parties and different quarters are
19:23pushing for an independent RCI, that it materializes in a way to benefit the public? It doesn't become yet
19:33another exercise of inquiry. You know, times have changed. Okay, that's good to hear. You saw what happened
19:40in 2018. The politicians were disciplined. The governing politicians were disciplined. The Barisan
19:45National was, UMNO was thrown out of office. You saw what happened in the last general election. We had
19:51a hung parliament. The message being sent to politicians is that we are watching you and we don't like what
19:59we
19:59are seeing, which is why we had a hung parliament. Have things improved since then? No. The volume of confidence
20:05in politicians has diminished even further because of what is happening. Now, the most vocal force
20:11that we see today are civil society members. And we have a social media too, which is very active.
20:20And they are putting a lot of pressure on politicians. And they are the ones who are also today actively
20:27out there asking for this RCI. So when this is constituted, the first thing they're going to do is
20:33they're going to look at the membership. The second thing they're going to do is they're going to wait
20:36for the outcome. And if there's any attempt to cover up what the RCI has found, there's going to be
20:43a
20:43serious backlash against the politicians. The difference between today and previous years is today the
20:49government can be disciplined and the government can be taken to task, which we see happening today.
20:56Okay. So then now my final question I think is, looking at everything that's concerned you, and
21:04you've been looking at this for a really long time, this hasn't been an overnight issue that's cropped up
21:10for, that's come into the spotlight. But you've been looking at this, not just the nexus between political
21:17power and state power and corporate power, but also in MACC, the enforcement power, the checks and balances.
21:27What are you hoping happens next? If the reports are true that after May 12th, the tenure of the current
21:38MACC chief is not renewed, is there an opportunity to reset this agency?
21:47Yes. You know, Melissa, what has been happening over the past few years is
21:51NGOs have come together and they have been putting on the table certain demands of the government.
21:58Yes. Which even Pakatan Harapan in the run after election put it in their manifesto,
22:03they have adopted some of these recommendations and they said they will institute it. One of the
22:08recommendations is reform of the MACC. And we have actually stipulated very clearly certain reforms
22:15of the MACC Act, which will immediately make the MACC more independent and make them independent of the
22:20executive arm of government, independent of the prime minister. This can be done tomorrow. That must be
22:25done now. The second one is, and we've been discussing this, the Political Financing Act.
22:33We cannot wait any longer. The system is getting more and more monetized. It's becoming more and more
22:39corrupt. And it's becoming more and more covert, opaque. And there's a lot of wastage in the
22:46DLC ecosystem. And now we hear there's a lot of nonsense going on in the private sector.
22:50So the private sector is being corrupted. The DLC system is being corrupted. How pervasive is corruption
22:56in this country? And all of this, we can link it back to the issue of mechanisms to raise money,
23:01to feed into the political system, which is already deeply fractured and dysfunctional.
23:06So introduce the Political Financing Act, amend the MACC Act, and then I can say,
23:14with all honesty, we're already moving forward in terms of cleaning up governance in this country.
23:21Terence, thank you so much for your time and sharing some of your candid thoughts with us. I appreciate
23:25you. Thank you. Thank you. That's all the time we have for you on this episode of Consider This. I'm
23:30Melissa Idris, signing off for the evening. Thank you so much for watching and good night.
23:49Thank you, ladies and gentlemen.
23:49I have honored to be here.
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