[PRESS STATEMENT] Set Up an Independent Oversight Mechanism for GLCs

[PRESS STATEMENT] Set Up an Independent Oversight Mechanism for GLCs

Picture Taken from MalaysiaKini

The GLC Reform Group, along with the following NGOs and individuals are deeply concerned with recent developments regarding the appointment of various politicians to lead government-linked companies (GLCs) and statutory bodies.

The emergence of Covid-19 and the ensuing movement control order (MCO) have posed economic and public health challenges of a scale unseen by this country in recent history. During this time, millions in Malaysia have been unable to go to work to earn a livelihood. Even post MCO, many businesses will face grave challenges due to the long hiatus and the new normal of social distancing that will have to be imposed in a post-Covid-19 world.

Government intervention and assistance in these circumstances will be inevitable to ensure that lives and livelihoods are protected and to deal with the economic fallout. We have already seen the government announce large stimulus packages to assist businesses and individuals.

In this climate, the role of the thousands of GLCs under the various ministries and state governments is more crucial than ever to ensure that government aid and stimulus are properly targeted and utilized.

These GLCs include large government investment-linked companies such as Khazanah Nasional, PNB, Tabung Haji, and Lembaga Tabung Angkatan Tentera (LTAT), and also other government-linked companies and statutory bodies such as Maybank, Tenaga, Sime Darby, Petronas, Pharmaniaga, the Federal Land Development Authority (Felda) and Mara.

Together, these enterprises control and administer billions of ringgit and affect the livelihoods of thousands of employees. It is more important than ever that these assets and resources are not misused and diverted for political gain in bad faith or for improper purposes.

The GLC Reform Group has consistently called for an independent and transparent appointments mechanism for the leadership of GLCs to replace the current system where the ruling government can exercise its power arbitrarily to appoint and dismiss heads of GLCs.

We have also called for these bodies to be brought under independent scrutiny, whether through a separate commission or through Parliament. Professor Terence Gomez has emphasized the importance of identifying how many GLCs exist, in order for there to be proper accountability and transparency.

Unfortunately, other than the setting up of a Parliamentary Select Committee on major political appointments, these structural reforms were not implemented by the Pakatan Harapan government. Now, under the Perikatan Nasional government, we have seen a slew of dismissals of GLC heads appointed by the previous government and appointments of politicians in their place.

There has not even been an attempt to disguise the fact that these appointments are based on political affiliation. Minister in the Prime Minister’s Department and PAS secretary-general Takiyuddin Hassan, openly said that all government members of parliament (MPs) will be given the responsibility to manage GLCs. He further added that all of them are qualified because “they are MPs.”

Takiyuddin’s statement is worrying as it displays the arbitrary nature of the appointment process for heads of GLCs and statutory bodies. It indicates that political affiliation may become the sole criteria in these appointments. It is well-established that appointing politically-linked individuals to head such entities creates room for cronyism, patronage, abuse of power, and corruption.

GLCs play a crucial part in our economy, especially so in these difficult times. The leadership of GLCs cannot be utilized as political rewards or tools to foster loyalty towards the ruling party. In the best of times, such practices would hamper the alleviation of poverty and the equitable allocation of resources. In the worst of times, it would spell economic disaster for our nation and an increase in poverty.

Recommendations

Political appointments are just one of the larger structural issues that plague the management and performance of our GLCs. GLC operations are largely opaque and lack institutional checks and balances.

As stated above, we are not even able to ascertain exactly how many GLCs exist. As the government holds these entities in the public’s trust, it is important that there is proper accountability and transparency in the running of these entities. To restore the public’s confidence in our GLCs, we urge the government to immediately do the following:

a) Cease the appointment of politicians to positions in GLCs and statutory bodies at the federal and state levels until there can be public confidence that appointments are made transparently and post-holders can be held accountable; and

b) Work with stakeholders (the opposition, civil society organizations, experts, business leaders) to introduce a set of objective criteria to appoint leaders in GLCs and statutory bodies.

In the longer term, the government must commit to the following:

a) Introduce legislation regarding the management, governance, and performance of GLCs. Such legislation should provide for a central registry, access by the public to information on GLCs and their activities;

b) Institute an independent and transparent appointments mechanism within ministries and state governments for the appointment of heads of GLCs;

c) Form a Parliamentary Select Committee on GLCs, headed by a member of the opposition, whose duties include:

i) Scrutinising the annual reports and financial reports of GLCs;

ii) Evaluating candidates for top positions in GLCs; and

iii) Summoning heads of GLCs to answer questions that relate to the public interest.

Parliament Must Sit

Furthermore, we are extremely concerned that the prime minister decided to postpone Parliament to May 18 and more recently, to convene Parliament to sit for only one day. This decision undermines Parliament, an important institution that must play its role in keeping the Executive’s decisions in check, and in this case, to ensure that decisions regarding GLCs are made in the public’s interest.

We, therefore, call on the government to convene Parliament immediately so that, at the very least, appointments to GLCs can be scrutinized through the Parliamentary Select Committee on Major Public Appointments. A dormant Parliament not only casts doubt over the legitimacy of the current government, but it also gives rise to the Executive making unilateral decisions that do not stand up to scrutiny and undermine democracy.

Written by the GLC Reform Group

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