Dave Anthony says that an escape clause should be inserted into contracts to ensure that corporate projects unfriendly to the people and/or the environment can be terminated without compensation by subsequent administrations.
Why should a new government carry the baggage of the previous government?
How independent are governments of the corporate sector? Does a government, even if democratically elected, run the country while industrialists run the government? It appears to be the case from the least developed to the most developed countries of the world.
Money makes the world go round and it is not an untruth. Democracy, a choice of government by the people, is run on money. A leader who has no money cannot stand for election because he or she has to pay a deposit and run an election campaign. The more money spent the more effective the campaign.
There appears to be greater hope of winning if the candidate is sponsored by big industrial corporations who will not sponsor without an ulterior motive. So when the candidate we vote for wins we may think it is victory for us but the real winner is the big sponsor. Within one month (August), Obama received US$10m (The Star, 9 September 2012) to boost his election campaign. One wonders what conditions were attached to those dollars!
In Malaysia we have repeatedly witnessed the government and its ministers and for that matter the judiciary and the police and other government enforcement agencies take the side of the industrialists against that of the people especially the poor and marginalised people like the squatters and Orang Asli and the less educated. Eventually the people with vested interests win.
There have been more and more examples of MoUs and business contracts signed between the government and corporations without proper announcements and knowledge of the people. When concerned people get to know of those projects that could be harmful to the people and the environment and protest a new ball game begins.
Some of the examples are:
Lynas Advanced Materials Plant (Lamp)
The government has been rather hasty to approve Lamp without proper public consultation and public disclosures have been sparse and contradictory. The Malaysian High Court recently sided with Lynas, denying an application for a judicial review of the temporary licence granted to Lynas.
Hillside projects in Penang
The current state government says that the previous administration approved 37 high-density and hillside projects above 75m. Now it says there is nothing it can do because it will have to pay millions in compensation if it stops these projects.
Kampung Buah Pala land issue
This plot of land, donated in trust by a British planter, was occupied by Indians of the locality. The Penang Pakatan government says that the land was sold when the state government was held by the Barisan. The company won its case in the Federal Court and the settlers were ordered to vacate. When they protested, they were arrested. The chief minister said that if the state government intervened, it would have to pay millions in compensation and so it would not defy the court order.
Malaysia is the largest exporter of tropical wood. The concessionaires in Sabah and Sarawak are mostly politicians (or their cronies) who receive substantial fees for logging contracts which can amount to $20m for a single contract. Apart from the destruction of a valuable natural resource and the extinction of countless plants and animal species, the high rate of logging has had a negative impact on native people there.
The Malaysian government is going ahead with its plans to build two nuclear reactors without sufficient public information, consultation or debate. The nuclear power plant, according to the Malaysian Nuclear Power Corporation and Tenaga Nasional Berhad, has reached an advanced stage of development to be completed in the coming years with an investment of RM21.3bn.
There are many others like highway tolls, water concessions and sand issues in Selangor, gold mining in Pahang and Johor and coal-fired power plants in East and West Malaysia.
People without local standi
There is no avenue for arbitration because the people are not party to the contracts between government and corporation. An issue may have to be taken to court and it is the people against both the government and the contractors. As it stands, the people could be considered as having no locus standi and hence the court could dismiss the case as frivolous and vexatious. If the court decides that the locus standi rule is inflexible, then public interest litigation in judicial review is barred.
The more basic question to raise is should governments be a party to industrial contracts? By winning an election, the government receives a mandate from the people to govern. It is fair to expect the government to exercise good judgement in making decisions even by themselves on most ordinary matters.
It is, however, paramount that at all times the government decides and acts on behalf of the people. Where decisions affect the welfare of people’s health and the environment’s sustainability the government must consult the people. The locus standi of the people must take priority because the government is an agent of the people. Alas! It is often difficult, if not impossible to get a unanimous voice from the people.
An unanimous voice is not necessary so long as a sizeable number of people make a demand. If in doubt there should be an immediate referendum to resolve the matter.
The Government Contracts Act 1949 states in 3.(1) that all contracts made in Malaysia on behalf of a State Government shall, if reduced to writing, be made in the name of the Government of that State, and may be signed by the Chief Minister of the State, or by any public officer duly authorised in writing by the Chief Minister, either specially in any particular case, or generally for all contracts below a certain value in his department or otherwise as may be specified in the authorisation. The last part practically opens the door for any kind of contract.
No.8 further says that no public officer shall be liable to be sued personally upon any contract which he makes in that capacity… This literally not only cuts the people out but also any attempt to reverse the deal by a subsequent government.
If a business venture in the corporate sector oversteps its limits, the government could nationalise the venture and take over. How much can the people trust a government which has a bad track record?
The government does control information in so far as it enforces businesses to provide proper labelling on goods to protect public health and safety.
But when the government itself is party to the business who is to control the information? The bulk of the contract laws deal with transactions between the marketer and the purchaser and is silent when it comes to the third party, which is the people or the environment.
The Municipal Research and Services Centre (MRSC) based in Washington raised the question: when may a current local government legislative body contractually bind future members of the body for some period after the end of the terms of the current members of the body?
The answer it provided was that a county’s legislative authority is generally prohibited from entering into contracts that bind the future legislative actions of the county. However it qualified that a local government should be bound by a contract made by its previous governing bodies when the subject of the contract involves a proprietary or administrative activity.
Call for escape clause
Taking this as a guideline, now that elections are close at hand, the people should urge the party and candidates whom they wish to vote for to make a pledge that when they take office and become law makers, they will see to it that laws, at least an escape clause binding on contracts, are put in place to safeguard the right of the people to have the locus standi, even after a change of administration, to challenge any law that is deemed detrimental to the people and the environment.
Government officials have no individual capacity other than representing people when it comes to signing contracts with corporations. An escape clause binding on contracts should ensure that projects unfriendly to people and environment can be terminated without compensation. This should be made mandatory in the court of law.
This would, at least, deter industrialists from indiscriminately initiating projects with scant concern for the people and environment. Both governments and industrialists have to calculate the risks they take in entering into contracts and not expect the courts to take their side when challenged by the people. The laws should be clear and not ambiguous for the judge in court to pass sentence.
Otherwise talking of a government of the people, by the people would make no sense.
Dave Anthony is an Aliran member based in the Klang Valley. He is the author of Love and Struggle: Beyond the rubber estates (2012).