G25: Integrity of Bank Negara and attorney general

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Image: freemalaysiatoday

Safeguards are needed on the appointment and removal of the attorney general and the (proposed) director of public prosecutions, says G25.

Malaysia envisages reaching developed nation status by 2020, expounded in Vision 2020 launched by Dr Mahathir Mohamad in 1991 and in the New Economic Model launched by Prime Minister Najib Abdul Razak on 20 March 2010. What defines developed status goes beyond per capita income.

Developed nations are defined by good governance and the supremacy of the rule of law. Developed status is defined by strong institutions with integrity of leadership and people, able to practise the highest level of governance in performing their functions.

Bank Negara Malaysia was established in January 1959 based on the time-tested traditions of the developed economies of England and Australia, with the highest levels of governance. The early draft of Bank Negara statutes were undertaken by a small group in the Bank of England and the first governor of Bank Negara Malaysia was from Australia.

From the very beginning, it was deemed necessary to grant independence to Bank Negara Malaysia, with the Bank having access to Parliament in the event of any difference with the Minister of Finance. Since its establishment, there has never been a need to invoke this provision in the Central Bank Act as Bank Negara Malaysia has consistently operated within its powers and exercised its responsibilities to the advantage of the nation.

Bank Negara Malaysia not only promotes a sound financial system — it has helped to set it up, expanded the financial services industry and weathered several crises to make Malaysia a country with one of the strongest financial systems in the world, able to ensure that institutions make available appropriate and adequate financing to fund economic growth.

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Bank Negara Malaysia has been able to achieve this because its consistently good performance has given confidence that the independence has been exercised prudently and benefited the economy.

There has never been a reason before to dispute Bank Negara Malaysia’s actions. There is no reason today to dispute the ability of the Bank to exercise its powers for the good of the country.

If Bank Negara Malaysia wishes to take action against 1MDB under Section 239, 2013 of the Financial Services Act for failure to comply with the direction of BNM to repatriate to Malaysia US$1.83bn, BNM can do so on its own, independently of the attorney general.

True, the power to prosecute, under the law, will always belong to the attorney general. But when BNM acts under Section 239, BNM does not prosecute. So the question of BNM exercising the powers of the attorney general does not arise.

When BNM takes action under section 239, it is taking civil action, as opposed to taking criminal action, against 1MDB.  A decision on criminal action can only be made by the attorney general.

When BNM takes civil action against 1MDB under Section 239 for non-compliance with BNM’s direction, BNM can ask the court for any of the orders under section 240(1) of the Act. For example, BNM can ask the court to compel 1MDB to pay BNM US$1.83bn or, in the alternative, to ask the court to compel 1MDB to pay BNM any civil penalty.

Once the court makes an order against 1MDB under section 240(1), and should 1MDB fail to comply with such an order, then BNM can institute contempt proceedings against 1MDB.

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Legal experts have verified that this need for civil action is appropriate and has only arisen because the attorney general has decided there are no grounds to prosecute and has denied Bank Negara’s request that the case be reviewed and re-examined.

Bank Negara has withdrawn approval to 1MDB under the Exchange Control Act relating to approval for investments abroad and requested repatriation of the amount kept abroad. The money having been spent is no reason that plans for repatriation cannot be submitted to Bank Negara Malaysia. Under Section 239 of the Financial Services Act, the bank has options on further actions to force 1MDB to comply.

In the interest of the country and exercising its powers fairly, Bank Negara must indeed follow up with the necessary action under the law. Since the bank’s action to date is within its powers to take up the civil suit, Bank Negara can therefore proceed to take action independently without consultation or any manner of involvement of the attorney general.

This case begets a reiteration of the G25 recommendations in its earlier statement on Protecting the Integrity of Institutions (August 2015). There is a fundamental conflict of interest in the functions and powers of the attorney general which enables him to take actions against national interests. It is poor governance that the attorney general is the legal advisor for the government of Malaysia and also the final arbiter on decisions to prosecute.

G25 seeks that this conflict be redressed. The office of the attorney general should not combine the advisor role to the government and the public prosecutor. G25 would like to recommend the transfer of the prosecutorial powers to an independent office of the director of prosecutions.

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In the same vein, greater safeguards are needed on the appointment and removal of the attorney general and the (proposed) director of public prosecutions (DPP).

G25 recommends that the appointment of the attorney general and the DPP should be in the same manner as the appointment of a judge (see Article 122B(1)) or the auditor general (see Article 105(1) of the Federal Constitution), that is to say, by the Yang Di-Pertuan Agong on the advice of the prime minister after consultation with the Conference of Rulers.

Likewise, the removal of the attorney general or the DPP should be in the same manner as the removal of a judge (see Article 125 of the Federal Constitution) or the auditor general (see Article 105(3)). In other words, the attorney general or the DPP should enjoy security of tenure so that he/she can carry out his/her duties without fear or favour; and so that he can be seen to be independent and commands the public trust and confidence.

G25 is a group of individuals dedicated to the cause of a moderate Malaysia.

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Gan Sc
9 Nov 2015 11.49am

No way wit all those rascist thieves robbers … prevailing in piratejaya More like bankrupt nation than developed nation