‘Malaysia can adopt Norway and Sweden models for state-owned enterprise Bill’
PETALING JAYA: Malaysia could emulate the models from Norway and Sweden for the proposed Bill to regulate state-owned enterprises, and it should come with provisions for stronger audits and vetting of appointments.
Malaysian Integrity and Governance Society president Datuk Seri Akhbar Satar (pic) said about 90% of directors of Swedish state-owned enterprises are independent and government officials would generally not sit on boards, while Norway practises strong separation between ownership and management.
Akhbar proposed that board members be selected for competence, independence and integrity but not influence, connections or political patronage, adding that thorough background and integrity checks for all prospective candidates were necessary.
“The key distinction is between structural governance and human governance in government-linked companies (GLCs).
“We may have excellent structures, policies and internal controls but if the people responsible for implementing and enforcing them lack integrity, those systems can be bypassed, manipulated or ignored leading to leakages, fraud and corruption,” he added.
He said even the strongest internal controls would have little value if the leaders and handlers lack integrity.
Akhbar also said the proposed law must ensure that public money is protected not merely through rules and regulations, but through a system that holds boards, executives, auditors and owners personally accountable when those rules are deliberately breached.
“This would transform the Bill from merely a regulatory framework into a robust accountability framework for protecting and safeguarding state assets,” he said, adding that proactive audits must be included in the Bill.
“In large and high-value projects, auditors should not wait until losses occur.
“When the audit team detects red flags or senses that something is not right, they should intervene early, investigate and recommend corrective action to prevent further losses.
“The audit task force must intervene when red flags emerge rather than waiting until the damage has already been done.”
Prime Minister Datuk Seri Anwar Ibrahim recently said that a new Bill to regulate state-owned enterprises and enforce strict corporate governance standards will soon be brought to the Cabinet.
Arief Hamizan, head of research & policy advocacy at the Center to Combat Corruption and Cronyism (C4) said the Bill must address the appointment of active politicians and politically-exposed persons to leadership roles in GLCs.
“As referenced by the Prime Minister, major state-owned enterprises in the past have been mired in scandal. A recurring theme within many of these scandals is the involvement of politicians in the management of these companies.
“The practice of appointing politicians to GLCs has been seen as a means of ‘rewarding’ political allies, causing a clear conflict of interest between the best interests of the company and their personal political consideration.
“C4 Center has consistently maintained that all politicians be banned from holding positions within these enterprises to ensure objective and impartial management of companies entrusted with handling public assets, and that any law must reflect this principle.
“Nonetheless, while it may not fall under this proposed Bill specifically, the government could legislate laws that impose sanctions against ministers who appoint their political allies to GLCs or against appointees who do not declare their conflicts of interest,” he said.
Arief said beyond appointments, there must be greater transparency in the standards imposed on state-owned enterprises to ensure transparent and accountable management of public assets.
“In the past, C4 Center has advocated for the inclusion of government corporations under the purview of a Freedom of Information Act, allowing the public to fully access information pertaining to their activities.
“By making this information publicly available, any mismanagement can be detected earlier,” he said.
“We have also stated in the past that Parliament, by way of Parliamentary Select Committees, needs to provide independent oversight over the management of state-owned enterprises.
“This Bill must reflect Parliament’s ability to scrutinise and hold accountable any potential mismanagement,” he added.
