Dodgy deals and mismanagement

THE recent scrutiny of government-linked companies’ (GLCs) and government-linked investment companies’ (GLICs) expenditures and the remuneration of their top executives has shone a spotlight on questionable practices and governance in these taxpayer-funded companies.

In the news is Pelaburan Hartanah Bhd (PHB), Khazanah Nasional Bhd and Permodalan Nasional Bhd (PNB).

For the former, the Public Accounts Committee (PAC) has called for an investigation into governance practices after a report last month revealed PHB’s chief executive officer received a massive three-month salary bonus of RM210,000 despite the company’s inferior performance in achieving only 42% of its key point indicators (KPI).

PHB, which is the property investment arm of Yayasan Pelaburan Bumiputera, seemingly luxurious executive benefits were also questioned after it was revealed there were also plans for an overseas luxury holiday for employees which was shortly scrapped once it was reported.

The Malaysian Anti-Corruption Commission (MACC) has commenced investigations on the latter two after their multi-million investment losses in a local start-up, FashionValet.

Interestingly, FashionValet posted five straight years of losses before Khazanah and PNB’s investments. In fact, in 2018, FashionValet already had RM54.2mil in accumulated losses.

Despite this, both Khazanah and PNB chose to invest RM27mil and RM20mil respectively in 2018. Khazanah and PNB’s current excuse is that it was a tiny investment based on their assets under management. But honestly, do they expect Malaysians to be gullible in this day and age?

PNB has a major duty to its unit holders and Khazanah has an even bigger duty since it is responsible for taxpayers’ money. But this sudden scrutiny of GLC accounts is just the tip of the iceberg.Just a few months ago, there was a brouhaha over the Human Resources Development Corporation’s (HRD Corp) mismanagement of funds.

The Auditor-General in July said HRD Corp failed an audit and investigations found mismanagement of hundreds of millions of ringgit involving training grants, investments and property purchases.

Predictably, the MACC commenced an investigation into the organisation and its CEO, but as of now, we have yet to find out the results of this investigation.

Will anyone be charged? Or will this be another case of another investigation swept under the carpet?

I recall the huge outlay of funds for the Automated Enforcement System (AES), the road safety enforcement system to monitor all federal roads, highways and expressways in Malaysia.

From the start, there were question marks on the exorbitant price of the cameras as well as the feasibility of the system.

In the end, the Armed Forces Fund Board (LTAT) decision to take over AES for RM555mil was an “indirect bailout by the government”, according to the PAC.

Here again, the PAC report is damning. It points out that the terms of the contract for the service fee that is paid to the concessionaires “did not benefit and was detrimental to the government”.

“The MACC (Malaysian Anti-Corruption Commission) must review and investigate the recurring issues on the investigation’s report, and especially this PAC report, on whether any individual was involved in receiving kickbacks in the AES’ takeover process by LTAT,” the PAC said in its recommendation.

These questionable deals and mismanagement by GLCs are not new. Look at how Malaysia Airlines has suffered and continues to flounder despite the numerous bailouts by the government. Khazanah has already spent RM28bil since 2000 trying to revive our national carrier.

But it is mind-boggling that these state-owned enterprises (SOEs) are not put under greater scrutiny because they play a significant role in Malaysia’s economy, with the country ranking fifth highest globally in SOE presence among its largest firms.

In Parliament yesterday, it was announced that all benefits, trips and bonuses for GLCs and GLICs must now receive ministerial approval.

The Prime Minister recently said those chosen to lead GLCs should be aware that they have a responsibility to achieve the goals of their respective companies.

Well and good, but where is the accountability?

When was the last time you heard of a government-linked CEO stepping down and accepting responsibility for shortcomings?

Today, Malaysia is a trillion-dollar economy and all public institutions must come clean and become transparent with how they invest their money.

Gone are the days of “semua boleh kautim”.Public institutions owe a fiduciary duty to Malaysians on how they run their funds.

They need to make sure their accounts are uploaded on their website just like how public limited companies do it and, most importantly, they need to indicate the investments they have made a loss on.

I would go further and demand that government agencies, municipal councils and the like are all made transparent with regard to how their funds are managed.

This unity government claims to have reforms in mind. Transparency at the GLCs should be the most basic of reforms.