Political Reform: Money Politics

By:

John Ku, Len Hew, Rashid Ahmad

Affiliations:

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Policy Code:

3d Anti corruption

Problem Statement:

The confluence of corruption and politics creates some of the most egregious instances of abuse of power. An infamous example is the 1Malaysia Development Bhd (1MDB) case involving former prime minister Datuk Seri Najib Razak - it has been almost five years since the fallout, and the trial is still ongoing today. Research by the Centre to Combat Corruption and Cronyism (C4) has shown that one of the more common vehicles for corruption are the many dubious foundations, or Yayasan, that were established to launder money for political funding purposes.

Value(s) and Belief(s):

The proper functioning of Malaysia’s political system is undermined by the deep-seated problem of money politics, centring on the buying of votes during general elections and internal party elections. Money Politics also refers to politicians and parties being involved in business, whether directly (through active ownership of companies) or indirectly (via proxies or trustees), which causes unfair competition.

Proposal of Solution:

Political interference in businesses was part of the reign of the Barisan Nasional, predominantly headed by the United Malays National Organisation (Umno). It is known that many proxies were formed through extensive networks, enabling Umno to hold its money in multiple different channels and, through these proxies, mobilise funding for the party and especially for general elections.
One of the examples is the politicisation of government-linked companies (GLCs) where political appointments to the boards and managements are often used as a reward to consolidate the ruling party’s power. The domino effect from these political appointments is clear: procurement systems and access to government grants and contracts are more opaque than ever.
A Political Financing Act is urgently needed. This Act must include the rules and procedures for a political party to raise money, how to keep that money and, most importantly, how that money can be spent. There should also be a requirement for their accounts to be audited annually; with financial reports made available to the public.
To create a fair system of political financing, a three-pronged approach should be taken:
(1) reforms in political parties to enhance transparency and accountability of funds
(2) government policy that fairly allocates direct and indirect financing of politics
(3) empowerment of the public through civic and voter education
Clear enforcement mechanisms should be put in place for those who violate the rules, and a limit must be imposed on the amount of money that can be donated as well as tax exemptions. Learning from the 1MDB scandal, donations from foreign corporations or individuals and GLCs should also be prohibited. Funding declaration is also imperative in rebuilding the public’s trust.

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