By Ioannis Gatsiounis
KUALA LUMPUR - It has become evident to many Malaysians that Prime
Minister Abdullah Badawi's war on graft never really got started.
But few would have predicted that three years on, Abdullah and his
family would become the target of a mounting chorus of accusations,
linked to the same allegations of corruption, nepotism, and abuse of
power that the once-reform-minded premier has so publicly campaigned
against.
Much attention has focused on the meteoric rise of Abdullah's only
son, Kamaluddin, and his son-in-law, Khairy Jamaluddin - both for the
most part political and business unknowns before Abdullah assumed the
premiership in 2004. While their role cannot be overlooked in what
increasingly has the markings of a family business empire in the
making, Abdullah's approach to managing the country has done little
to break the endemic patronage that has long hobbled Malaysia's
political and economic progress. Indeed, his style of governance may
in fact be encouraging it.
A turning point in Abdullah's premiership arguably came last October
in the run-up to the general assembly for the ruling party he heads,
the United Malays National Organization (UMNO). At the time,
Abdullah's promise to battle corruption "without fear or favor" was
meeting resistance among the conservative party's old guard. Then, on
the eve of the assembly, in an apparently unprecedented move by a
Malaysian prime minister, Abdullah reportedly distributed RM3 million
(more than US$856,000) to each division chief for "development"
purposes.
Opposition critics at the time said the gesture smacked of vote-
buying. Abdullah for his part has denied any foul play. At the very
least, the gesture signaled to the party's old guard that Abdullah is
as committed as his predecessor - former premier Mahathir Mohamad -
to oiling UMNO's patronage machine. And even where the UMNO elite
have not benefited directly from Abdullah's style of governance, they
have been able to take stock in what appears to be a man being
swallowed by the system he had earlier promised to change.
Most recently, Abdullah was accused of procuring a new $50 million
jet for his personal use. The plane, he explained, was being leased
from a government company for use by top officials, including the
king. Either way, Abdullah's administration has shown a special
fondness for the country's royal sultanates. His government directly
awarded a RM400 million palace project to two little-known companies,
Kumpulan Seni Reka and Maya Maju.
In response to the contract, opposition leader Lim Kit Siang asked in
Parliament: "Who are [the companies]? Are they a crony company? Why
wasn't there an open tender? Why wasn't there a contract? Why do we
need this new palace?" Those questions are still being debated, but
the opposition is making much hay of the allegations for its own
political benefit.
Meanwhile, Abdullah's own family members have during his term
likewise, fairly or unfairly, found themselves at the center of
controversy. His son Kamaluddin's business activities, including his
position as leading shareholder of Scomi Group, a local oil-and-gas
company, have come under particularly sharp scrutiny. Scomi's share
price skyrocketed 588% four months after listing on the local bourse
in May 2003.
While the growth of Malaysia's energy industry has since certainly
played a role in pumping up the company's shares, Kamaluddin's family
clout is also thought to have inflated investor confidence. Mahathir,
now a vocal Abdullah critic, estimates that Scomi has secured RM1
billion worth of government contracts during Abdullah's tenure.
Industry analysts, meanwhile, are perplexed as to how Kamaluddin, 38,
could suddenly be worth an estimated $90 million.
More controversially, a Scomi subsidiary, Scomi Precision
Engineering, was fingered in 2004 by US and European intelligence
officials for supplying dual-use centrifuges to Libya, which
allegedly could have been used in the country's covert nuclear-
weapons program. The company was hastily cleared of any wrongdoing by
both the Foreign Ministry and police, even as the United States was
applying pressure for full disclosure about Scomi's business dealings.
Defending family honor
Meanwhile, Abdullah has stoutly defended his son's independence as a
businessman, saying that Kamaluddin "has never abused his ties with
me ... He has never asked help from the government or anything that
required a bailout for him." Abdullah has likewise defended his son-
in-law Khairy's recent advances in politics and business, which have
drawn opposition scrutiny.
Khairy, deputy chief of UMNO's youth wing, has been described in some
political circles as "Malaysia's most powerful 31-year-old". Several
of Khairy's closest confidantes are also known to be close to
Abdullah, including businessman and newspaperman Kalimullah Hassan,
whom the premier appointed editor-in-chief of the UMNO-controlled New
Straits Times newspaper.
Both Khairy and Hassan have been linked to controversial financial
dealings at ECM Libra-Avenue Capital. On December 27, 2005, ECM
chairman Hassan along with two other company co-founders announced
that they would each sell 1% of their shareholdings in the company to
Khairy in a deal that was transacted at 71 sen per share, for a total
of RM9.2 million. Khairy is on record saying that the deal was
financed through the company, but many viewed his invitation to join
ECM as a way to earn the company valuable political connections.
Soon thereafter, ECM acquired government-linked financial company
Avenue Capital Resources and reportedly was not required to raise any
outside capital to make the multimillion-dollar acquisition. Critics,
including most prominently former premier Mahathir, say the deal
lacked transparency. ECM has persistently denied any foul play.
Khairy has also been loosely linked to Khazanah Holdings, the state-
run investment arm that Abdullah chairs and which manages an
estimated RM25 billion worth of government funds. Two years ago,
Khairy was widely tipped to become Khazanah's chief operating
officer, but amid a public outcry the appointment didn't go through.
However, Ganendran Sarvananthan, 29, Khairy's close friend during his
time in school in England, was in February 2006 appointed to the
surprisingly senior position of Khazanah's executive director of
investments.
It is of course entirely possible that there is no political
connection to any of Abdullah's family's growing businesses, as the
embattled premier has consistently argued. But with opposition
criticism mounting, if Abdullah were true to his word about an
"unconditional" anti-corruption drive, the authorities should have
probed at least some of the allegations. To date, no such probes have
been launched.
Rather, top appointments in the government's fight against graft
could be viewed as hindering that process. Former Anti-Corruption
Agency (ACA) officer Mohamad Ramli Manan recently filed a police
report alleging that the ACA's current director general, Zulkipli Mat
Noor, was involved in various crimes - from living beyond his means
to sexual misconduct - when he was a top cop with the Royal Malaysian
Police.
Ramli said the ACA had begun to investigate Zulkipli's conduct
beginning in 1997, but since he filed his original complaint to the
attorney general's office last July, there have been no signs that
the relevant authorities plan to move on the case. The Parliamentary
Select Committee on Integrity last week decided to call both Zulkipli
and whistle-blower Ramli in for closed-door hearings.
As currently constituted, the ACA is not an independent outfit, but
rather reports to the Prime Minister's Office. The agency's
corruption-related arrests have risen from 339 in 2003, to 497 in
2004, and 485 in 2005, but critics contend that the ACA has merely
netted minnows and not any big fish. Indeed, some of the agency's
once-prime suspects have later landed in the Prime Minister's Office
as top-level appointees.
Transparency and accountability have also arguably been impaired by
Abdullah's frequent use of the Official Secrets Act (OSA), which
gives the government the right to classify as a state secret any
document it deems to be sensitive to national security. The
government has used the OSA in many instances to avoid scrutiny,
including for deals it strikes without tender with politically
connected private companies, opposition politicians say.
No-man mission
Abdullah has frequently said that the fight against corruption cannot
be a one-man mission. But his actions have hardly inspired
cooperation among the ruling elite, let alone at the grassroots.
Instead, his government has moved to take down self-fashioned
whistleblowers and maintained sharp curbs on the media. The UMNO-
backed New Straits Times newspaper group, for instance, is currently
suing two bloggers for defamation over postings that were sharply
critical of the government, and Abdullah has in press interviews
supported the legal action.
To be sure, an anti-corruption campaign waged by the leader of a
party that arguably institutionalized the practice in Malaysia was
bound to be a slippery slope. And after three years in power, should
Abdullah try to recommit himself to the fight he would run the risk
of dissent within UMNO with new general elections on the horizon.
"Abdullah has learned that this is the way to do business in UMNO if
you want to stay in power," contended Tian Chua of the opposition
Justice Party.
If it all sounds familiar, that's because it is. Corruption and
patronage within UMNO reached endemic proportions during Mahathir's
22-year rule. He sought through any means possible to catapult the
nation rapidly to developed world status by 2020. If someone could
get the job done - in business or politics - to Mahathir it often did
not matter how as much as when. Those practices continue largely
unabated under Abdullah's government, in part because their
consequences are not readily visible.
Malaysia still makes a convincing show that economically things are
humming along. In the capital city, shiny modern trams dart and
slither between glass office towers. Well-groomed highways connect
the peninsula's far corners. Unemployment is low. The state-run media
gloss over government abuses to paint a picture of economic progress
and social harmony. And the unquestioning feudalistic masses digest
what they are fed by pontificating politicians.
All the while, however, Malaysia has seen foreign direct investment
drop from $3.8 billion in 2003 to $1.4 billion last year. Leaders
have struggled to come up with a new vision for the country, with
grand pronouncements about becoming an agriculture, biotech and high-
tech hub showing few signs of materializing. Meanwhile, corruption is
also having long-term adverse social consequences.
Recent opinion polls prioritized the need to tackle graft above
rising inflation and unemployment concerns. political analyst Bakri
Musa recently noted on his blog: "We are sending precisely the wrong
message to our people. That is, in order to succeed or afford a
mansion and other trappings of the 'good life', we do not have to
study diligently or work hard but merely ingratiate ourselves to the
powerful in order to hog our own little spot at the public trough."
Abdullah's sagging anti-graft campaign promises to become a big issue
at the next general elections, which some believe could be called in
the coming months. The opposition Justice Party has promised to weed
out corruption should it come to power, and it has singled out
corruption issues as the main plank for building up its meager
support base. Yet the party's figurehead, Anwar Ibrahim, has been
curiously silent on allegations of corruption linked to Abdullah,
UMNO and his family.
Despite his insistence to the contrary, Anwar may be looking to re-
enter UMNO, the party he was ignominiously ousted from nearly a
decade ago on charges of corruption and sodomy. Rumors abound that he
has quietly been cultivating close ties with Abdullah in preparation
for just such a move. Despite opposition grumblings and signs of
business-as-usual, the general public has hardly shown a level of
outrage over recent corruption allegations that would indicate they
intend to abandon Abdullah or UMNO's ruling coalition at the next polls.
Ioannis Gatsiounis, a New York native, is a Kuala Lumpur-based writer.
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