Malaysian PM’s battles have only just begun

Malaysian Prime Minister Najib Razak was cleared by the country’s attorney general this week of any wrongdoing after nearly $700m was discovered in his personal bank account. The money was a “personal donation” from the Saudi Royal Family, according to the ruling.

Prime Minister Najib Razak must be commended for his ability to remain composed under pressure and stick to his story. But it is uncertain if those associated with him can do the same. The systematic nature of the leaks that are damaging him and his party, the United Malays National Organisation (UMNO), must certainly come from those in the highest echelons of power.

The leaks continue, despite the sacking of the previous deputy prime minister, Muhyiddin Yassin, and the previous attorney general, Abdul Gani Patail, as well as the reshuffling of cabinet ministers. Added to this is the gruesome murder of the deputy public prosecutor,Anthony Kevin Morais, who was investigating corruption in 1MDB [a strategic state fund $11 billion in debt] and the pressure on Malaysia’s top civil servants investigating 1MDB not to mention the direct intervention in investigations into 1MDB. This must certainly be unnerving even for seasoned warriors.

The Sarawak Report and, more recently, the Wall Street Journal have alleged that Najib is involved in activities that are illegal under Malaysian laws and, possibly, international laws. The systematic nature of these allegations as reported by [those newspapers] appears to be built on good journalism, robust investigation and, after Attorney General Mohamed Apandi Ali’s press conference, authentic data and information.

The government of Malaysia, and certainly the new attorney general, never questioned the veracity of the data and information used by Sarawak Report and the Wall Street Journal. So the question then becomes: who is feeding these organisations such highly classified information?

It is certainly not the opposition. The opposition does not have the connections within the public sector at such high levels. Neither does it have connections with individuals within government-linked corporations (GLCs) at such high levels. It is common knowledge that only individuals who… UMNO find not objectionable reach the highest echelons of the public sector or GLCs.

The real issue for UMNO is not about resolving corruption. This is a political party built on patronage and that thrives in a political system that relies on patronage. The real issue is whether they can win the next general election and if Najib can be the one to deliver that win.

Judging by the systematic nature of the leaks, it is almost certain that there are groups within UMNO who are not confident that Najib can lead them to electoral success. There are sound reasons for this assessment. Although the electoral system is stacked in their favour, Barisan Nasional (BN) [the ruling coalition] has done badly at the past two general elections – in 2008, by losing the psychologically important two-thirds majority and, in 2013, unbelievably losing the majority of the popular vote. And projections suggest that ­– if there is no further gerrymandering – the BN will lose at the next elections. Most worrying is perhaps that even among Malays, Najib’s approval ratings are now at 31% – the lowest ever in his seven-year administration, with approval ratings for the BN below 50%.

It is entirely plausible that it is groups within UMNO that are hostile to Najib, with access to senior civil servants, who are providing the damaging evidence to Sarawak Report and the Wall Street Journal. Why are they doing it? The answer is simple: there is simply no room within UMNO to democratically replace its leader. Ever since Razaleigh Hamzah’s unsuccessful challenge for the leadership of UMNO in 1987, there has been no contest for the top post. A succession of changes to the rules by the incumbent has made it impossible for challengers, especially those who lack the adequate resources, to go for the top post.

Najib has also successfully fended off other democratic options such as a vote of no confidence in parliament, here with the abetment of the opposition. They would rather face him than another UMNO candidate not linked to the 1MDB scandal.

Yet, because the leaks are now so damaging, it is impossible to find an exit strategy for Najib. Hence his battle cry of “No retreat, no surrender” is not about saving face, but about ensuring that he is not convicted.

The important question now is how far Najib will go to stop the leaks.

Greg Lopez is a Malaysian research fellow at Murdoch University’s Asia Research Centre in Perth, Australia.

This article first appeared in Southeast Asia Globe

 

 

The business of ethics

Is the nature of business prone to unethical behaviour?

Are widespread business malfeasances a reflection that the business case always trumps ethics?

The Volkswagen emissions scandal, price gauging by the pharmaceutical industry, the LIBOR scandal, the sub-prime crisis, the Enron and Arthur Anderson scandal, Milken and junk bonds, the TESCO accounting and horsemeatscandal, the China milk scandal, the Rana Plaza fire, the exploitation of workers, all add to an endless litany of unethical business practises. These unethical behaviours appears to be widespread traversing many industries in developed and developing economies across small and large firms involving individuals at all levels of authority.

What is driving this malfeasance?

One way to analyse this complex issue is by framing it as the choice firms make in maximising profits and the consideration they have for societal welfare (e.g. valuing the workers, consumers, families, communities, and the environment) in their pursuit of profits. Stated simply, do businesses prioritise the business case over ethics.

There has been an increased focus on business ethics. A contentious subject, it is broadly explained as the philosophy that scrutinises the ‘rights’ and ‘wrongs’ of business behaviour. Many-a-theory and ideas contribute to modern business ethics but the utilitarian theory appears to dominate. In the utilitarian conception, business ethics is one that optimises pleasure and minimises pain while considering the preferences of those affected by the decisions businesses made (making the most number of people happy).

But in reality whose ‘pleasure’, whose ‘pain’, and whose ‘preference’ is considered?

Revisiting the Volkswagen (VW) case, the complexity becomes apparent.

There is no doubt that VW was involved in unethical behaviour and was practising bad business ethics. It actively pursued deception to penetrate the US auto market. It had an elaborate scheme that involved external partners (Bosch) to design a sophisticated cheat device.

But why a world leading company, from a country known for its precision engineering and industrial prowess, in an economic union known for high regulatory standards, selling a sophisticated product and service, in the world’s most sophisticated market, would resort to such behaviour remains puzzling?

Several hypotheses have emerged to explain this puzzle. They range from firm specific factors such as the governance and corporate culture and style of its CEOand corporate amnesia; to external factors such as low consumer buy-in for green technology; business schools that produce graduates who have little conception of ethics or are ‘blind’ to ethics; the failure of regulatory systems or to a widespread culture of gaming the system across all industries.

The inability to come to a consensus on the primary factor demonstrates the complexity of the issue but also why business ethics remains a contentious subject.

Returning to the trade-off between the business case and ethics may provide a parsimonious explanation. Corporate profits and shareholder value are tangible while ethics may not be so. Certainly the hit that VW has taken makes ethics tangible now to the firm. But if those hits (the pain) do not outweigh the gains (pleasure) that VW and its key stakeholders (the board, senior management, partners such as representatives from the state of Lower Saxony and Bosch) derived from 2009-2015, then it may be that the preference for the business case over ethics was the rational choice.

What do you think?

Sumesh Nair is a senior lecturer in marketing at Murdoch University (Singapore campus) and Greg Lopez is research fellow at Murdoch University Executive Education Centre.

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This article first appeared in Pulse