PETALING JAYA: Political intervention, is an issue surrounding government-linked investment companies (GLICs) which controlled an estimated RM1 trillion in investments and account for 42% of Bursa Malaysia’s total market capitalisation in 2013, according to IDEAS senior fellow Professor Dr Edmund Terence Gomez. “The problem with GLICs is political intervention,” he said at the launch of his book Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia yesterday. The book highlights corporate ownership patterns of the country’s leading enterprises in 2013 through government-linked investment companies. 2013 was the year Prime Minister Datuk Seri Najib Abdul Razak introduced his administration’s affirmative action in business, named the Bumiputra Economic Empowerment (BEE) policy. Edmund said this is a problem in view of the “complex pyramid structure” of ownership and control consisting of several layers of companies, as well as block shareholding patterns by state arms in such companies. It was also noted there has been a growing presence of state enterprises in larger public-listed companies through takeover and stake buying exercises, predominantly in the construction and property development sectors. Addressing the issue of indirect interest held by ministries in GLICs, he said the portfolio for the Finance Ministry should not be helmed by the prime minister. The Finance Ministry through its outfit Minister of Finance Incorporated (MoF Inc) has “direct control” through equity ownership in GLICs namely investment arms Khazanah Nasional Bhd (Khazanah) and Permodalan Nasional Bhd (PNB). It also has interests in Kumpulan Wang Persaraan (KWAP), the Employees Provident Fund (EPF), Lembaga Tabung Haji and Lembaga Tabung Angkatan Tentera (LTAT). Edmund added that the Minister of Finance Incorporation Act 1957 stipulates that the Finance Minister can acquire and form companies, give direction to board of directors and approve borrowings and investments among others. Also touching on the appointment of key officials, he said while the managing directors of GLICs are corporate figures, the chairman appears to be politically influential individuals and bureaucrats. The state he said also has a say in the appointment of key officials. On privatising GLICs, Edmund opined that privatisation may not solve the issue of corporate governance surrounding GLICs, as stakeholders can still be held accountable in public companies while that may not be the case in private organisations. Amongst the suggested reform measures are internal managerial reforms, institutional autonomy and formation of government body with operational oversight on GLICs.