It’s who you know: Changing the culture of big business

FEB 23 — Around the world, from Washington lobbyists to Indian businessmen turned politicians, there is a perceived nexus between business and politics. In most democratic countries though, these connections and relationships are subject to public scrutiny and judicial oversight. Anti-trust and anti-corruption legislation and enforcement is designed to expressly create a level playing field for all business to operate.

As custodians of the taxpayers’ money, it is incumbent on administrations to prevent leakages of public funds due to nepotism and corruption, and also to encourage the growth of productive investment in a manner that promotes inclusive, sustainable development.

This implies that decisions to award government contracts like the MRT or award licences for rare earth mining or telco spectrum need to be transparent, encourage the participation of smaller players, consider the social and environmental impacts of such decisions, and ultimately benefit the taxpayer and overall citizenry.

Malaysia has been dogged by allegations of crony capitalism from the Dr Mahathir years on the back of controversial awards of monopoly contracts for pay-TV, among others. Counter to the global trend fuelled by the Arab Spring towards opposing corruption and nepotism through a return to functional democracy and the right to information, Malaysia under Barisan Nasional remains steadfast in its preference for negotiated contracts, opacity in revealing its decision making process on contract awards, and reliance on a relatively small set of favoured corporates to execute big ticket projects.

For example, the proposed transfer of shares of FELDA settlers in the profit-making FELDA Holdings into the allegedly loss-making FELDA Global Ventures by the government without due consultation has left the affected parties suspicious of the true motives of the transaction. Also, its refusal to explain the terms of the Tajudin Ramli-Danaharta out-of-court settlement, which allegedly might cause a loss to the exchequer to the tune of RM589 million, seems to portray the government as secure in its belief that it knows best, and that the terms of large business deals are no concern of the Average Joe.

Every time there is a perception of alleged insider trading accompanying large deals between listed firms like those of Air Asia-MAS or Proton-DRB Hicom which are not adequately rebutted, it reinforces the notion that to make serious money in Malaysia, “who you know” is much more important than “what you know.”

But as public concern over public spending rises on the back of scandals involving politicians families who are also businessmen accused of alleged financial misconduct like the National Feedlot Corporation (NFC), this ostrich-in-the-sand attitude may cost the ruling coalition dear in the upcoming polls.

As the average voter begins to understand the impact of such decision making on her individual chances of employment, wage growth and a sustainable lifestyle expect to see a much stronger backlash if adequate explanations from both business and politicians on the nature, terms and ramifications of big business transactions are not forthcoming.

Whether it’s Pakatan Rakyat or Barisan Nasional, an open declaration backing ethical, transparent relations between business and government followed by effective implementation are a must if Malaysia and its citizens are to develop in a manner that benefits all stakeholders, and not merely those who know the right people.

* The views expressed here are the personal opinion of the columnist.


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