Focus 80% of your resources in the 20% of areas that are likely to yield the biggest wins, says Anil Netto.
Latheefa Koya’s appointment as chief commissioner of the Malaysian Anti-Corruption Commission has been widely welcomed despite certain reservations over the selection review process.
It is now clear that the PM had not even consulted the cabinet over the appointment. “Sometimes we get surprises, lah,” he said.
This itself negates the system of checks and balances as it places too much power in one person to decide. In normal circumstances, it would only be human nature for the MACC chief to feel beholden to the leader who appointed him or her. And given the lack of a consultation process, not everyone appears happy with the appointment including some within PKR.
That said, Latheefa’s appointment has been described by others as a Raya gift to the nation. Many believe the corrupt now have good reason to quake in their boots. Her appointment was welcomed in much the same way the appointments of Art Harun as Electoral Commission chairman, Mohamad Ariff Md Yusof as Speaker of Parliament, Tengku Maimun Tuan Mat as Chief Justice and Abdul Hamid Bador as police chief were lauded.
Even though there are these reservations about the selection process (or rather, the lack of it), the decision to appoint Latheefa could prove an inspired choice – mainly because of her outspoken character and courage, evident over the years. These traits are something that would be badly needed in the battle against corruption.
We need people of integrity to helm our public institutions – who will be willing to take a stand against abuse of power and to check on those in power, no matter how powerful they are. People with principles can push the reform agenda forward. Remember, 1MDB would not have happened if we had enough people of integrity helming independent institutions of government.
There may be some initial resistance when persons of integrity are appointed to head these institutions – that is to be expected. But Latheefa’s courage and outspokenness as a human rights lawyer should serve her in good stead. She would have thought long and hard before accepting the position as MACC chief. A heavy burden rests on her shoulders – including the weight of public expectation.
Latheefa should consider six approaches or priority areas as she prepares for the gargantuan task before her.
1) The 80/20 rule
Most Malaysians hope that the MACC can crack down on corruption in all levels of society.
In the past, the commission has usually cracked down on cases of bribery involving upper to lower-ranking government officials and even those hoarding cash and jewellery or siphoning millions of ringgit into their accounts.
But we know that major corrupt practices can run into hundreds of millions or even billions of ringgit, sometimes involving top government officials.
The MACC will be overstretched if it attempts to deal with all these cases. So it should follow the Pareto principle or the 80/20 rule – which means that about 80% of the effect or results could come from 20% of the causes or cases.
In the case of corruption, this would mean the MACC should focus 80% of its personnel and resources on 20% of the major sectors of the economy where corruption could involve vast sums of money.
Possible sectors to consider would be logging concessions, the oil and gas industry, arms purchases, land deals – eg sales of government land (is the price per acre too low?), changes in zoning, land swaps – and mega projects – all of which should come under the microscope.
Let’s not forget the illicit outflow of funds, amounting to US$419bn (RM1.7 trillion) from 2004 to 2013. That’s huge! So we need to check the movements to offshore havens, over-invoicing, “sales commissions” and money laundering. The cross-border transfers we witnessed in the 1MDB scandal could be just the tip of the iceberg.
To handle all this, the MACC staffing requirements and budget should be assessed. Does the commission have enough skilled white-collar crime busters, forensic accountants and experienced corporate lawyers to handle all this?
2) Procurement, procurement, procurement
The purchase of materials for infrastructure and other supplies makes up a huge chunk of the government’s operating budget. One economist has estimated that the government spends about RM150bn per year on procurement per year — but 30% could be saved if “leakages and wastage” are cut.
That is RM45bn per year – equivalent to what we used to collect from the Goods and Services Tax!
Malaysians have grown tired over the years looking at the annual auditor general’s reports showing the same old irregularities and wastage of public funds. Can the MACC intervene and put a stop to all this nonsense?
Again, the procurement list should be looked at to identify the top 20% biggest items to devote 80% of the MACC resources. Random checks can be carried out on the remaining 80% of items.
3) Examine mega projects
Corruption is now more sophisticated, less often involving “money under the table” or in stuffed envelopes. So MACC investigating officers should be given the latest training on investigating the latest tricks. In particular, they should be highly skilled in evaluating the process of kicking off mega projects.
One possible reason why many politicians seem to like mega projects is that it offers so many avenues for questionable, even corrupt, practices.
The MACC needs to play a major role in reviewing the tender process of each mega project as well as the regulatory approval processes involving local authorities and federal agencies.
The commission should clearly indicate that all major projects should involved open competitive tenders with all parties on an equal footing. But having an open tender does not mean that all is well.
The MACC should review the selection of bidders especially examining the experience of each bidder, including their local partners, in the sort of work the project entails. The anti-corruption watchdog should also make it clear the specific situations when a “request for proposals” or “project delivery partner” can be used, in accordance with international best practices.
The MACC should look out for abnormally low bids or possible collusion among the bidders in the tender process. It should study carefully World Bank guidelines on what constitutes fraud and collusion in the tender process.
The anti-corruption body should also look out for any contacts, meetings and correspondence between government decision-makers and tender bidders in, say, the nine-month period before a tender is called – to minimise the likelihood of any bidder receiving an unfair advantage through insider information.
Finally, the MACC should examine any unusual means of raising financing for mega projects, including swap deals, as billions of ringgit could be involved.
4) Look at GLCs and other government bodies
If there is one thing the 1MDB saga has taught us, it is that we cannot afford to close an eye to government bodies handling vast sums of money.
State-run investment and pension funds hold massive amounts of public funds in trust. Their investments in companies must also come under the microscope to see that they are not siphoned into dubious ventures.
So lift the veil of opacity in the management of government-linked companies as well as the various menteri besar/chief minister incorporated entities (MBIs or CMIs).
The MACC must also review major government guarantees given out to ensure there is no abuse and to minimise the possibility of default.
In the case of governments bonds, we now know we have to be especially alert to the high commission fees (see Goldman Sachs fee in the 1MDB case) as well.
5) Look at private sector corruption too
Why should we care about private sector corruption? After all, private companies have their own directors, shareholders, even external auditors.
Well, if a company’s profits are siphoned away through corrupt practices in say, the purchasing department, it would eat into the company’s available cash surpluses which could have otherwise been used to give higher dividends to shareholders. These shareholders could include government-run investment funds (managing public money) and pension funds (managing workers’ retirement savings).
So any corruption in private firms could also hurt the wider public if the returns to shareholders are affected.
Again, 1MDB has shown us that in certain situations, where the internal controls are non-existent, we cannot rely on external auditors’ reports to spot or highlight corruption to the wider public including shareholders.
6) The big fish in Sarawak
No need to elaborate. Just check out Sarawak Report. It’s all there. No wonder some quarters in Sarawak have already expressed uneasiness over Latheefa’s appointment.
Latheefa has a lot on her plate to chew on.
But if she and her new colleagues could prioritise key areas and cast their nets in the right direction, they should be able to haul in some huge corrupt sharks instead of the usual ikan bilis.
The new MACC chief should take comfort in the knowledge that civil society will support all her efforts in the battle against corruption. As such, she should be ready to act without fear or favour and fight tooth and nail in this must-win battle.
Good luck, Latheefa! Malaysians are counting on you.