INTRODUCTION

Corruption is defined by the World Bank and Transparency International (TI) as “the
misuse of public office for private gain.” As such, it involves the improper and unlawful behavior
of public-service officials, both politicians and civil servants, whose positions create
opportunities for the diversion of money and assets from government to them and their
accomplices. Corruption contradicts basic ethics and value systems. It leads to wastage,
inefficient allocation of national funds, and is a direct cost to society. Often the least privileged
will bear the highest cost of corruption.
Corruption is a source of concern in many societies. This is certainly true for Malaysia.
The Corruption Perception Index (CPI) established by the Transparency International has put
Malaysia in the 44th position in 2006 in the tally of 163 nations; the positioning 2005 was 39 out
of the total 159 nations. In 2006, Malaysia’s scored was 5.0 compared to 5.1 in 2005. Over a
span of about 10 years, between 1995 and 2006, Malaysia’s scored was between 4.8 and 5.2.
Malaysia aims to improve its score to 6.5 in 2008.
Corruption is the abuse of entrusted power for private gain. It is damaging to a country because
decisions are taken not for the public benefit but to serve private interests. Corruption undermines
good governance, fundamentally distorts public policy, leads to misallocation of resources, and
particularly hurts the poor. Controlling it is only possible with the cooperation of a wide range of
stakeholders in the integrity system, including most importantly, the state, civil society, and the
private sector.
In Malaysia, the prevalence of corruption has been acknowledged by the Government and
various steps have been taken to prevent and eradicate it. Anti-corruption legislation has been
enacted, an Anti-Corruption Agency established and other administrative mechanisms like the
Public Complaints Bureau set up. Despite these measures however the incidence of corruption
has escalated. The spread of corruption, incompetence, malpractices, abuse of power, fraud and
other unethical behavior as well as the lack of work motivation, have been attributed to the
decline in integrity among individuals, organizations and society at large.

Definition of integrity

Integrity, can be defined as “continuous adherence to moral principles, honesty, wholeness, the
quality of being unimpaired; soundness”. The Malaysian Integrity Institute or IIM defines
integrity as wholesome attributes of an individual or organization based on values such as
honesty, trustworthiness, fairness, competence, transparency and accountability. When we
deliberate the topic of integrity, the general take is to link integrity to corruption. The level of
corruption is a reflection of the state of integrity of a public service and the effectiveness of its
delivery systems. But integrity is more than just fighting against corruption. Integrity lies in the
conduct of both institutions and individuals. It can be reflected in the implementation of control
mechanisms and level of compliance with prescribed rules as mandated by an institution. It is
also evident in the conduct of public officers in the execution of their duties.

Public Anti-Corruption Initiatives

Legislation: Malaysia ratified the United Nations Convention against Corruption in September
2008. The Anti-Corruption Act 1997 used to be the most important legal instrument in the
government's fight against corruption. It established the former Anti-Corruption Commission
(ACC) and provided for offences and penalties for private and public sector corruption, including
active and passive bribery, attempted corruption and abuse of office, corruption through agents,
corruption in public procurement and electoral corruption. The Anti-Money Laundering Act 2001
criminalises money laundering and contains provisions for the freezing of assets and the seizing
of assets obtained through corruption. However, in December 2008, the government introduced a
new and improved anti-corruption bill to Parliament, the Malaysian Anti-Corruption Commission
Act, which was enacted on 1 January 2009 and repealed the Anti-Corruption Act 1997 as well as
the structure and mandate of the ACC. In particular, the new bill aims at strengthening the anti-
corruption body to combat the system of political patronage, where well-connected Malay
businesspeople are favoured for state contracts. It has also introduced better protection of
whistleblowers. A new whistleblower protection bill, the Witness Protection Bill 2008, was also
put forward, but has not yet been enacted. The government, furthermore, introduced two new
bills concerning the judiciary, the Judges' Ethics Committee Bill 2008 to discipline judges who
are in violation of the judicial ethics code, and the Judicial Appointments Commission Bill 2008
for transparent selection of judges. Access the Lexadin World Law Guide for a collection of
legislation in Malaysia.

Government Strategies:

In 2004, former Prime Minister Abdullah Badawi launched the National Integrity Plan (NIP, in
Malaysian) and the Integrity Institute of Malaysia (IIM). The NIP identified five key objectives,
including reducing corruption and abuse of power, increasing the efficiency of public service
delivery, and enhancing corporate governance. The IIM is responsible for the implementation of
the NIP and organises seminars and workshops for citizens and companies to encourage
involvement in anti-corruption work. Abdullah also took steps to create a more open and
accountable government. He decided in March 2008 that all Barisan Nasional ministers and
deputy ministers must publicly declare their assets twice throughout five-year terms and gave
responsibility to the Malaysian Anti-Corruption Agency to develop the declaration forms and
process. However, civil society urged decisionmakers to extend this requirement to include
spouses and family members as well as to all those who hold office, including local councils and
the newly-formed opposition-led state governments. The government has also launched a Code of
Corporate Governance, where all listed companies are required to disclose their level of
compliance with the code.

Anti-Corruption Agency: The Malaysian Anti-Corruption Commission (MACC) officially

began its operations on 1 January 2009 with the enactment of the Malaysian Anti-Corruption
Commission (MACC) Act, thereby replacing the former Anti-Corruption Agency (ACA). The
aim of this restructuring has been to revive the fight against corruption in Malaysia by creating an
anti-corruption entity with full independence and greater capacity, as the former ACA was
criticised for lacking independence and for being heavily politicised. For example, while
conviction rates for those arrested on corruption charges were relatively high, only a few political
elites or big business leaders were arrested by the ACA. With the MACC Act, the MACC has
now seen a tripling of the number of employees and new comprehensive protection for
whistleblowers. The MACC is advised by a panel of seven independent advisors and must
ultimately report to a Parliamentary Special Committee on Corruption, whereas the ACA reported
directly to the Prime Minister. It was initially hoped that the MACC could have a mandate to
initiate prosecution, but this was turned down by the ruling party. As it stands, prosecution by the
MACC can only be initiated with the approval and consent of the Attorney General. Between
January and June 2009, the MACC opened 533 investigation papers, out of which 254 have been
forwarded to the MACC's prosecution deviation, and 104 have been taken to court. While the
objective of the establishment of the MACC is to create an independent entity, it is still to early
too say whether it will be more successful than the ACA in bringing down the high level of
political corruption in Malaysia.
Public Complaints Bureau (PCB):

The PCB is an online complaint system, functioning somewhat like an Ombudsman's office,
where the public can lodge complaints against departments and agencies of the Government of
Malaysia. However, unlike international standards for Ombudsman offices, the PCB is not an
independent intermediary organisation, but instead falls under strict government control. The
PCB has started to set up temporary integrated mobile complaint counters manned by PCB
personnel at various districts in order to enable the public to forward their complaints in person.
In the Transparency International Malaysia Transparency Perception Survey 2007, 63% of
corporate respondents acknowledged their awareness of the PCB; however, 67% of the
respondents felt the work of the PCB to be ineffective. There was a higher awareness of the
bureau among foreign-owned companies than locally-owned companies.

Police Commission (PC):

The PC was established in 2004 in order to enhance the operation and management of the police
force. In that year, the PC made 125 recommendations focusing on three main areas of reform:
crime reduction, eradicating corruption and observing human rights. According to Amnesty
International, there is a major concern regarding lack of transparency in the process of
implementing these recommendations. One of the main recommendations was the establishment
of an independent commission for police complaints and misconduct, but it is yet to be
established. The police's refusal to establish the commission and political reluctance to follow up
on the recommendations have slowed down the process of reducing police corruption.

Public Procurement:

Procurement in Malaysia is largely decentralised and the implementation of central regulation

varies. While there is no code of conduct for procurement officials, conflict of interests
provisions do exist and the procurement process has been positively influenced by new
procurement rules and guidelines and greater financial auditing oversight. The government e-
procurement system provides links to supplier registration forms and guidelines, e-bidding,
pricing, and a tender notice board. However, the official policy of Malaysia is explicitly
discriminatory, as procurement processes are meant to support national public policy objectives,
including the preferential treatment of bumiputera. Open tendering is used for procurements
above MYR 200,000, closed tendering for procurements between MYR 50,000 and MYR
200,000, and direct purchasing for procurements below MYR 50,000. Generally, foreign bids are
invited only where domestic goods and services are not available. A series of tender committees
opens and evaluates the technical and financial aspects of bids anonymously and according to a
standard scoring system. Depending on the value of the procurement, a tender board or the
Ministry of Finance, or the Cabinet in exceptional cases, makes the final selection. Procurement
officials are required to report all attempts of bribery to the police or the Malaysia Anti-
Corruption Commission (MACC). The government has the discretion to blacklist a company that
has engaged in corruption and determine the duration of debarment. Bidders can access several
complaint mechanisms through the Public Complaints Bureau, the MACC, the Public Accounts
Committee and procuring agencies, which can cancel tenders if irregularities are revealed. In
addition, the Monitoring and Control Division of the Ministry of Finance monitors adherence to
procurement rules, and may also set up special task forces to investigate complaints. The minister
of finance has the ultimate decision-making authority regarding complaints.

In order to ensure the prevention of corruption, the Government, through Parliament, passed
the Prevention of Corruption Act, 1961 to replace the Prevention of Corruption Ordinance 1950.
In 1967, the Anti-Corruption Agency was set up whose main purpose was to eliminate
corruption, and prevent the abuse of power and malpractices. After taking into consideration the
developments taking place in the country and elsewhere, this Act was revised in 1971 and
subsequently repealed and replaced with the Prevention of Corruption Act 1997. Since its
f~rmation, the Anti-Corruption Agency has played a significant role in comba~ng corruption,
maintaining the integrity of government administration and promoting awareness among
members of the public of the dangers of corruption and abuse of power.

In order to ensure the prevention of corruption, the Government, through Parliament, passed
the Prevention of Corruption Act, 1961 to replace the Prevention of Corruption Ordinance 1950.
In 1967, the Anti-Corruption Agency was set up whose main purpose was to eliminate
corruption, and prevent the abuse of power and malpractices. After taking into consideration the
developments taking place in the country and elsewhere, this Act was revised in 1971 and
subsequently repealed and replaced with the Prevention of Corruption Act 1997. Since its
f~rmation, the Anti-Corruption Agency has played a significant role in comba~ng corruption,
maintaining the integrity of government administration and promoting awareness among
members of the public of the dangers of corruption and abuse of power.
Instituting Witness Protection Programme
The findings of the study on the “Public Perception of Corruption in Malaysia” concluded that
Malaysians
would be willing to cooperate in various efforts in the war against corruption if there is incentive
for whistleblowing
and that a witness protection programme is instituted. Towards this end, the Government is
currently working on a draft bill on witness protection to be tabled in Parliament soon.

Intensifying the Fight against Political Corruption in the Ruling Party

Money politics or political corruption has been endemic in UMNO, Malaysia’s ruling party. To
combat this
scourge, the Prime Minister who is also UMNO President has ordered tough action against
political
corruption within the ranks of his own party. While earlier actions against the lower party ranks
were seen as
only acting against “the small fries”, the six-year suspension from the party imposed on UMNO
Vice-
President, Mohd. Isa Abdul Samad -- a cabinet minister and the third most senior party leader --
for
breaching party discipline by indulging in vote-buying in the September 2004 party elections
indicates that
Abdullah is keeping to his words in rooting out corruption not only in the government but also in
his party,
and in acting against “the big fish”.
The impact of the action is best summed up by a front-page editorial in the UMNO-aligned
mainstream daily,
Utusan Malaysia, on 27 June 2005 which states that the action against Mohd. Isa shows “political
courage”
on the part of Abdullah, and that it gives a new breath of hope in the efforts at rooting out
political corruption
within the ruling UMNO. It goes further to argue that, “after action has been taken against Mohd.
Isa, there is
no stopping to effect further actions. This cleansing act cannot stop as long as the situation [in
UMNO] is not
fully clean…. The fight [against corruption] has to be waged to the finish.”
At the same time, the Prime Minister has also introduced the Key Performance Index (KPI),
which is an
instrument to measure the effectiveness of Members of Parliament from the ruling party in
delivering the
public goods.

Reforming the Police Force

The study on “Public Perception of Corruption in Malaysia” also proposed that the Government
enhance the
integrity of frontline agencies and strengthen their capability and capacity. In this regard, to
improve and
strengthen the Malaysian police force -- the foremost law enforcement agency that has been
criticised for
abuses of power, violations of human rights and corruption – Prime Minister Abdullah Badawai
who is also
Minister for Internal Security proposed the setting up of the Royal Commission to Enhance the
Operation and
Management of the Royal Malaysia Police. The proposals of the perception study were one of the
catalysts
that led to this. The Royal Commission which came into effect on February 4, 2004, is headed by
the former
Chief Judge, Tun Mohammed Dzaiddin Haji Abdullah. In its tour of duty, it travelled the length
and breadth of
the country to hold hearings for the public to air their views on the police, and submitted its report
to the
Government early this year.
The Report takes note of the changes in the political and social environment governing policing,
namely “the
rapid development and empowerment of civil society”, “greater consciousness regarding issues
affecting
human rights”, as well as rights of women and children; “expectations of better service from
public agencies
including the police”; “demands for greater transparency and accountability from government”;
as well as “the
trend towards engaging civil society and the private sector in policy making and governance”
(Report 2005:
2-3).
The Commission hopes that the recommendations in the report will be able to achieve the
strategic
objective of transforming “the Royal Malaysia Police into a world class, twenty-first century
organisation that
is efficient, clean and trustworthy, dedicated to serving the people and the nation with integrity
and respect
for human rights”. A number of the Commission’s recommendations are currently being
implemented
by the Government.

Raising Public Awareness

Educating and involving the public in building integrity is the key to preventing corruption
and thereby the key challenge and the keystone of this holistic integrated strategy and can take
different forms:
 P ublic education and awareness campaigns (radio, news papers, TV);
Conduct annual broad based national/municipal integrity workshops were all
stakeholders are invited to discuss problems and suggest changes;
Inform citizens about their rights (Citizens’ Charter); and empower the citizens to
monitor the government through periodic service delivery surveys;
production and dissemination of a national integrity strategy and an annual corruption
survey at national, municipal and sub-county level;
production of integrity surveys at the municipal or sub-national level;
investigative journalism and information by the media; and
dissemination of the TI Source Book and experiences of other countries in combating
The Anti-Corruption Academy
The creation of the Anti Corruption Academy was announced by the
Prime Minister in December 2003. Believed to be the first of its kind
in Asia Pacific, it is a specialized training academy established by the
Anti-Corruption Agency for the purpose of training anti-corruption
officers from Malaysia and across the region. The Academy will
function as a regional centre for anti-corruption capacity building,
promoting best practices in investigations, monitoring and enforcement,
and in newer areas such as forensic accounting and forensic
engineering. Although the Academy is not yet operational, it has
already gained the confidence of multilateral institutions such as the
Asian Development Bank (ADB) and the Organisation for Economic
Cooperation and Development (OECD). The ADB/OECD Anti-
Corruption Initiative Steering Committee meeting in Hanoi in April
2005, comprising anti-corruption agency heads from 20 countries and
representatives from world bodies such as the World Bank, US AID,
Transparency International and Pacific Basin Consultative Council,
agreed that the Academy could make a valuable contribution to the
training of anti-corruption professionals and that a first regional training
course on “Mutual Legal Assistance” will be held at the Academy.
Countries present agreed to send their anti-corruption officers to the
Academy for training. This is seen as a vote of confidence by the
international community for Malaysia’s anti-corruption efforts.8

The Role of the Private Sector in Curbing Corruption

The private sector is perceived as the “giver” of bribes while public
officials are regarded as the “receivers”. However both aspects of
bribery do occur in the private sector. The seriousness of the situation
led to the formulation of the Anti-Bribery Convention in 1999 of the
Organisation for Economic Cooperation and Development [OECD] to
control and prevent multinational companies from giving bribes.
Enforcement in signatory countries however has been poor.
In Malaysia, the financial crisis in 1997 led to the setting up of a High
Level Finance committee a year later. This led to the formulation of the
Malaysian Code of Corporate Governance [MCCG] in 2000. The code
sets out best practices for corporate governance for companies to apply
to their organizations. Initially the private sector did not heed the
MCCG but this changed in January 2001 when the Malaysian Securities
Exchange Berhad [MSEB] enforced the Revamped Listing
Requirements and implemented the Code. While MSEB does not make
it mandatory for listed companies on the Kuala Lumpur Stock Exchange
[KLSE] to comply with the principles and best practices of MCCG,
these companies are required to be transparent by making disclosures as
required by Listing Requirements. Every company is required to
include in its annual report a statement concerning corporate
governance, to indicate how the principles contained in MCCG are
being applied and how far the code is being observed. In cases where
there is non-compliance with the code, the company must provide an
explanation of alternative practices that they have put in place. In this
way, the companies have to enhance their transparency and
accountability.4
Freedom of the Press55
Access to information can result in a deluge of information. What
society needs is a diligent and professional media to sift through the
mass of information on a daily basis and to select with wisdom, matters
of public interest, and convey the information in a fair and responsible
manner. The media however is conflicted by the desire to attract a wide
readership, ample advertising and a healthy profit margin.
Nevertheless, a free media is a powerful counterforce to corruption in
public life. The media has a special role to play in countering corruption
but it can only do this if it is independent. Independence of the media
focuses on the notion that journalists should be free from any form of
interference in the pursuit and practice of their profession. Apart from
the restraints imposed by laws on defamation and sedition, journalists in
Malaysia are controlled by the owners of the newspapers who are
concerned about the law that regulates licencing.
Malaysia is No.56 in Transparency International’s Corruption Perception Index (CPI

Malaysia suffered a major blow in terms of combating corruption today when it fell to its worst
ranking and score in 15 years in Transparency International’s corruption perception index for
2009. In the ranking which was revealed today Malaysia plunged nine places from last year’s
47th CPI ranking to 56th position.

At the same time, Malaysia’s CPI index score plunged to the lowest in 15 years to 4.5. It previous
worst scores below 5 were 4.8 in 2000 and 4.9 in 2002. Malaysia has been continuously sliding
down in the TI index since it best ever placing of 33 in 2002.
Challenges

The efforts to promote a culture of integrity and good values will no doubt face a variety of
challenges. Changing values and promoting good ethics cannot be done by laws and
enforcement. The people themselves must accept those values and are prepared to initiate the
changes.

It is in this regard, that it is observed that changes in the individual and the social levels need
more attention. For example people need to queue, people need to observe good driving ethics,
people should not liter around, people should promote a good neighborhood and the society must
respect the need for good environment.

In many instances, changes in these regards are not yet visible. Road accidents are still plenty,
many rivers are polluted and many acres of forest reserved are being cut in the name of
development. Consumers interest is still compromise by private sector enterprises as reflected in
the statistics of claims registered with the Consumer Claim Tribunal.

Notwithstanding these challenges, promotional efforts will be done extensively in order to

increase the awareness and the appreciation of the importance of integrity, ethics and good values
among the members of the society. For these purpose, the Government will continue to support
the activities of Malaysian Institute of Integrity and efforts of NGOs to promote a culture of
integrity.
Recent Cases
Government bailouts between 1970 and
2007 totalled more than RM100 billion, the
most recent being the RM4.6 billion Port
Klang Free Trade Zone.
• Selangor municipal councilor Datuk
Zakaria building enormous mansions without
a permit.
• Deputy Internal Security Minister Mohd
Johari Baharum was accused of accepting
bribes in 2007
Judicial corruption was revealed in the
recent Lingam video, exposing casefixing
at the highest levels.
• ACA Director-General Zulkipli Mat
Noor was investigated of corruption in
2007
• The Public Accounts Committee’s
report on 2006 Auditor-General’s report
revealed that items were paid for
disproportionately more than actual cost.
(payment of RM224 for a RM32 set of
screwdrivers, amongst others)