113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS

INTERNATIONAL CASE STUDY :STAMPING OUT CORRUPTION IN MALAYSIA
Tunku Abdul Aziz*
I. PUTTING CORRUPTION IN AHISTORICAL CONTEXTIn 1957 when Malaya1 became
independent, corruption was hardly an
issue. Both British and Malayan officers
maintained the highest standards ofintegrity and the proud traditions of the
Malayan Civil Service and were, on thewhole, incorruptible. They lived wellwithin their means. Ten years on, in 1967,
the Government, sensing a gradual shift
of attitude towards corrupt practices, anattitude that could be fairly described asambivalent, felt constrained to create a
special bureau to combat corruption, theforerunner of today’s Anti-Corruption
Agency. As you can see, the ACA has alonger history than, for example, the ICAC
of Hong Kong, arguably the most successful
corruption-busting organisation in theworld today. It all goes to show that age is
not always everything in fighting
corruption. Political will is!
In my experience, it is impossible for us
to even begin to understand the impact of
corruption on a country without our being
acquainted, however superficially, withthat country’s social, economic and politicalbackground. I make no apology, therefore,
for delving a little into Malaysia’s recent
history, so that we may have a clearer ideaof the causes of corruption in Malaysia and* Vice-Chairman of the Board of Directors,
Transparency International, Malaysia.
1 Malaya became Malaysia in 1963 following themerging of British North Borneo, Sarawak andSingapore with the Federation of Malaya.
Singapore was given independence by Malaysia in1965.

the efforts made to curb it.
When Malaya became independent in
1957, it inherited a form of government
based on the Westminster model which,with a few local adaptations, remains verymuch in place. Of equal significance, it also
inherited an economy based on Britishcolonial mercantile interests, centred
almost exclusively on the export of rubber
and tin. Palm oil came a little later.
Malaya boasted the most efficientplantation economy in the world, so
efficient, in fact, that in the immediate
post-war years, Malayan foreign exchangeearnings enabled Britain to repay much of
its American war debt. It was not fornothing that Malaya was known as
Britain’s Dollar Arsenal. Economic
prosperity, by the standards of Asia, isnothing new to Malaya or Malaysia, as it
became later on. But it was a different kindof prosperity, an agriculture-based
economy, offering nothing like theopportunities on which corruption was able
to thrive in the 1970s.
As a result of the race riots in Kuala
Lumpur in 1969 between the Malays andthe Chinese, the Government, recognisingthat economic disparity between the two
major races was at the heart of the tension,
decided that unless the politicallydominant, but economically deprived,
Malays were brought into the mainstreamof the nation’s modern economic life,
prospects for lasting peace and economic
prosperity would be greatly reduced. The
prescribed solution came in the form of
massive social and economic engineering,
going under the somewhat grand name of393

RESOURCE MATERIAL SERIES No. 56
the New Economic Policy or the NEP, forshort.
A. Opportunities for Corruption
Unlimited
The NEP was to be implemented over a
30 year period. It ran into controversy fromday one, and was seen by Western liberals
as unwarranted discrimination against asection of the Malaysian population. Its
motive, though, was wholly transparent;
it did not pretend to be anything other thanpositive discrimination, in the interest ofnational unity.
The Malaysian Government’s diagnosis
was spot on, and the prescribed remedy,
painful and unpopular though it was,produced the desired results.
Economically, the country took off, and with
it came political stability which Malaysia
continues to enjoy to this day. In less than
30 years, an agricultural economy was
totally transformed, and, apart from a
hiccup here and there, the country has notlooked back. The lesson that Malaysia
recognised, and learnt quickly, was that ina multi-racial and multi-cultural society,extreme economic disparities along racial
lines, if neglected, could and would quickly
create political and social instability, to thedetriment of the democratic values we
profess to uphold and cherish.
While the NEP has generally beensuccessful in meeting nearly all of its mainsocial and economic objectives, the creationof dozens of public enterprises toimplement hundreds of socio-economic
measures (enjoying wide discretionary
powers) produced some not totally
unexpected results. As with most
government-inspired initiatives anywherein the world, more often than not operating
without the benefit of effective central
coordination, they soon create enormous
problems of their own; the most pervasivewas corruption, both grand and petty. In394

the closing years of the 1970s, corruption
had become a factor of quite considerable
significance in the national businessequation.
Corruption and abuse of power had
reached such unprecedented heights thatthe normally staid The New Straits Times,
Malaysia’s oldest English language
newspaper, was moved to run an editorial
on the subject;“There was a time when a Malaysian
could indulge in a little smile ofcondescension when stories about
corruption in developing countries other countries, of course-weredetailed. That pride was entirely
justified: virtually every aspect ofpublic administration was clean,abuse of power was unheard of,departmental morale was high,public confidence vibrant. Perhaps
there was a tendency to take this stateof affairs for granted. For whateverreason, the present conditions havecalled forth a litany of exhortationfrom the various rulers, the Prime
Minister, his deputy, and a numberof ministers and departmental
heads.”
Malaysia had taken the first eager stepon the slippery slope of national
degradation.
II. GOVERNMENT ANTICORRUPTION MEASURES
A. The Early YearsA s m e n t i o n e d e a r l i e r, t h e A n t i Corruption Agency was set up in 1967. Its
main function was to combat corruption,
previously handled by the police. It wasthought that with the growing
sophistication of the economy, specialists
were required to deal with white-collar
crimes, including corruption. In the initial

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
years, the ACA, with full government
backing, notched several notable successes,
including the prosecution and conviction ofseveral political leaders and senior civil
servants.
Harun Hashim, the first Director of the
ACA, and arguably the most effective in along line of dedicated officers, recalled
recently that his first duty was to know theextent of corruption in the country - what,
where and who. Let him tell us what hedid in his own words;“Initially, pleas for information on
corruption from the public, with theassurance that their identities would
be kept a secret, did not meet withmuch response. The people wereafraid of being victimised by the very
people they had bribed. Bribery is asecret transaction between two
individuals and if the secret is not
kept, it must have been revealed by
the giver. Victimisation is a naturalconsequence. But I had to know. So I
established P.O Box 6000. The public
were invited to write to me onanything they knew about corruption
in government, or by any of its
servants, without having to disclose
their identity if they did not want to.
Postage was free. The response wastremendous. Sometimes I received
about 200 letters in a single day fromall over the country. I read them all.
I was then able to implement a planof action of instituting measures toprevent corruption (the primaryobjective of the Agency) and where
there was sufficient evidence, tosanction criminal prosecutions. The
public would not have kept writing to
the Agency if they did not see any
result. Indeed the Agency could nothave functioned without theassistance rendered by the thousandsof anonymous letter writers who gavevital information.”
I have quoted Harun Hashim at somelength because there are important lessons
to be learnt from his pioneering work. The
most important lesson is that combating
corruption requires public support andcultivating public confidence in the systemis crucially important. This involves,
among other things, guaranteeing an
informer that their anonymity will not becompromised, and they will not be
victimised. Every scrap of information isimportant, nothing should be consigned to
the waste paper basket without checking
out and verifying the information given. As
the saying goes, “nothing succeeds likesuccess”, and nothing is more encouraging
to the public than a few successfulprosecutions. The ACA, under Harun
Hashim, was perceived to be free to act.
The fact that he also had the power of adeputy public prosecutor was not lost on
the corrupt.
B. Methods of Stamping Out
Corruption in Malaysia
In the 1970s, when the NEP was
installed, the Government intervened
actively in economic activities, setting up
large numbers of agencies to regulate andcontrol every aspect of commercial andindustrial life. Licensing, in particular, was
the key instrument used to enforce the newrequirements of the NEP. It is said thatthe British invented the red tape and theIndians subsequently improved it by tying
it up in knots. The Malays, everresourceful, turned it into a profitablepersonal revenue service.
Without naming names, thedepartments of government that exploited
the opportunities presented to them by theneed to obtain various approvals before amanufacturing license was granted, were
those with powers to grant or withhold
specific approvals. The approval process

395

RESOURCE MATERIAL SERIES No. 56
was complicated and extremely time
consuming. Several departments wereinvolved and many businessmen wereforced by circumstances to oil the wheelsof bureaucracy. I speak from personal
experience as a former businessman of theprocedures involved, though not,mercifully, of having to bribe anyone.
Foreign investments soon dried up, and theGovernment, recognising the need toreduce opportunities for corrupt practices,
streamlined the procedures and introduced
what came to be known as a one stop
approving authority. The new system
worked like magic; foreign, as well as local
investments, poured in and, the rest, as
they say, is history.
In time, various administrative reforms
were put in place to improve civil service
discipline. Among the more visible ones:(i) Clocking-in and clocking-out,
involving every member of the civil
service, the police, the armed forces
and members of the cabinet,
including the Prime Minister. Even
judges are not exempt.
(ii) The wearing of name tags by civil
servants so that they can be
identified.
(iii) The introduction and improvementof the desk file and office procedures
manuals.
These measures were intended to
improve time management, accountability
and facilitate work and decision-making
p r o c e s s e s . S u b s e q u e n t l y, o t h e rinnovations, including quality control
circles, total quality management, clients’charter, and more recently, the ISO 9000
were introduced. While the emphasis has
been on making the civil service more
efficient, attention has also been given to
improving the conduct and discipline of396

public servants (a recent Hong Kong based
survey put Malaysia just behind Hong
Kong and Singapore in a public service
efficiency poll. The comparison of two tinycity states with vastly different problems,
is not, in my view, strictly valid. Malaysia
is placed ahead of Japan, Taiwan andSouth Korea in terms of efficiency).
In 1993, the Public Officers (Conduct
and Discipline) Regulations came into
force. Disciplinary Board Regulations wereintroduced. In December 1994, the Judges’
Code of Ethics was put in place, followed
in 1995 by the adoption of Ethics in the
Administration of the Institution of His
Majesty the King. The recently retired
head of the Anti-Corruption Agency, Dato’
Shafee Bin Yahaya, believes that “all thesemeasures have made the Malaysian Civil
Service more efficient and less prone tocorruption. This has definitely contributed
towards Malaysia’s high rate of growth in
the last eight to nine years.”III. FURTHER MEASURESAGAINST ABUSE OF AUTHORITY &FINANCIAL MISMANAGEMENT
As early as 1988, the government
recognised the need for a high-level
national body to address weaknesses inpublic service financial administration.
For this purpose, a Special Cabinet
Committee on Government Management
was set up under the chairmanship of the
Minister of Finance. Matters highlighted
by the Auditor-General, the AntiCorruption Agency and the Treasury, aregiven serious attention, and remedialaction taken. Compliance by heads ofdepartments is crucial to the success of theCommittee’s work. Creative switchingfrom one expenditure head to another goeson all the time, and eternal vigilance is thename of the game as far as the Committee
is concerned.

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
In Malaysia, members of the public whoare aggrieved by bureaucratic misconduct
may take their complaints to the Public
Complaints Bureau or PCB. The PCB
comprises of the Director-General of the
Public Services Department, the DirectorGeneral of the Anti-Corruption Agency, theSenior Secretary-General of the Prime
Minister’s Department and the DirectorGeneral of the Malaysian Administrative
Modernisation and Management Planning
Unit. The PCB is responsible to the Chief
Secretary of the Government, the country’s
top civil servant. To date, more than 70%of the complaints received have beensuccessfully resolved.
A. Conflicts of Interest in the PublicService
The Federal Constitution prohibits amember of the Executive Council fromengaging or taking part in any decision of
the Executive Council respecting any trade,business or profession which may have abearing on their pecuniary interests.
Members of the Administration and Public
Officers who abuse their position in orderto obtain financial or other advantages will
be subject to criminal proceedings, as
provided under the Emergency (Essential
Powers) Ordinance No. 22/70. The
Ordinance has been enacted “to widen the
campaign against bribery and corruption,and now makes a penal offence any practicethat comes within the definition of corrupt
practice in the Ordinance, which previously
would have escaped the net of the Penal
Code”, Mr. Justice Chang Min Tat in a
Federal Court ruling. In practice, theOrdinance has proved to be an important
instrument in preventing corrupt practices
among members of the Administration,
Members of Parliament, both State andFederal, as well as public officers. “Overthe years, the Anti-Corruption Agency has
been fairly successful in taking action
against the corrupt practices of public
officers and politicians....”, Director

General, ACA, August 1997.
IV. INTEGRITY - A NEW FOCUS
A. New Legal Framework & Greater
Resources
In April 1997, the Government took
another important step to develop andstrengthen its own integrity system bysetting up a high-powered Cabinet
Committee on Integrity in Government
Management. It is significant that theGovernment has chosen to embrace
integrity, a word first used widely in thecontext of good governance when TI started
to be active in Malaysia with a series ofintegrity seminars, as part of its anticorruption public awareness programme.
Coalition building is TI’s strong point;
working with individuals, civil society andorganisations, both government as well as
the private sector, fighting the same battle.
In Malaysia, we have been able to develop
an active, and effective, professional
relationship with the Anti-Corruption
Agency.
To give practical effect to public concerns
about the damage caused by corruption tonational life and prestige, the Government
passed the Prevention of Corruption Act
1997, the most important weapon in the
Government’s legal arsenal with which todeal with the new, more sophisticatedforms of corruption the country was facing.
For the first time, the ACA was given wider
investigative powers. Other features new
to the corruption-busting scene are:(i) Minimum of 14 days mandatory
imprisonment and a ten thousand
ringgit fine or 5 times the amount orvalue of the bribe received, whicheveris the higher.
(ii) Requiring a suspect to explain how
s/he has acquired their assets to thesatisfaction of the Public Prosecutor.

397

RESOURCE MATERIAL SERIES No. 56
If s/he fails to do so, s/he will be
presumed to have acquired theirwealth by corrupt means. The court
may order forfeiture of the assets insuch circumstances.

more inclined... to come forward to giveinformation on corruption and othermalpractices when their identities areconcealed and protected.”
The relevant provision in the Act states:

As part of its ongoing “cleaning up”
process, the government has established,in departments and agencies in a position
to engage in corruption, a departmental
Committee on Integrity, Quality andProductivity. Quite apart from improving
efficiency and transparency, the inculcationof “high moral values and good work ethics”
is an important element in preventing
corruption in the public service. The ACA
has been revamped. Its functions havebeen expanded, and it is now required to:(i) Examine the practices, systems andprocedures of public bodies in orderto facilitate the detection anddiscovery of corrupt practices and tosecure such further improvements as
to make it difficult for corruption torear its ugly head.

“Except as hereinafter provided, nocomplaint as to an offence under thisAct or any prescribed offence shall be
admitted in evidence in any civil or
criminal proceeding whatsoever, andno witness shall be obliged or
permitted to disclose the name oraddress of any informer, or state any
matter which might lead to his
discovery.”I have taken you through a maze ofmethods, measures and legislation whichhave been put in place to minimise
opportunities for corruption in my country.
You may well ask, at this juncture, howeffective the various measures have beenin stamping out corruption in Malaysia?
V. CONCLUDING REMARKS(ii) Instruct, advise and assist any
person, upon request, on ways inwhich corruption can be prevented.
(iii)E d u c a t e t h e p u b l i c a g a i n s t
corruption.
(iv) Enlist and foster public support incombating corruption.
The ACA is committed to working in
partnership with civil society, and isprepared to ensure, under the law, thatmembers of the public reporting corruption
cases, are protected against victimisation.
In this context, the Director-General has
said “Through public support, cases ofcorruption could be brought to light, theperpetrators prosecuted, and punishment
meted out accordingly. The ACA also
believes that members of the public will be

398

The measures I have described,
unfortunately, have not succeeded instamping out corruption. No anticorruption measures known to man, andno country in the world, can claim to havesucceeded in stamping out corruption. All
that we can hope to do is contain it, andmake corruption a risky and an
unprofitable business.
That is precisely what Malaysia has
been doing since the ACA was firstestablished in 1967. The seriousness withwhich the Government views corruption isevident in the range of legal andadministrative measures and resourcesthat it has put at the disposal of the ACA.
The political will is apparently there, but
it is important for the Government toaccept that corruption is not just about

113TH INTERNATIONAL TRAINING COURSE
VISITING EXPERTS’ PAPERS
bribery; corruption is about the abuse of
entrusted power for personal profit, adefinition widely used by Transparency
International. Corruption thrives in theabsence of transparency and accountability.
A grave shortcoming in the Malaysian anticorruption mechanism is that the ACA is
not an independent commission. It is agovernment agency, and members of the
public suspect its impartiality, reporting as
it does to the Prime Minister.
Happily, for the present at any rate, theGovernment has taken to heart the lessonsof good governance, and the days of crony
capitalism, the misuse of public funds forrescue operations of politically connected
corporations and negotiated contracts arenumbered. Malaysia, therefore, remains
a good place in which to do business
precisely because corruption, unlike inmany countries, is not a major factor in ourbusiness equation.

399