PRIME Minister Datuk Sri Ismail Sabri Yaakob has tabled the 12th Malaysia Plan (12MP) in the Dewan Rakyat announcing that the government will allocate RM400 billion for existing and new development projects.
Public projects can be very costly as big sums of money are being spent by the government for these mega projects.
This allows for those involved in awarding the projects to take the opportunity to abuse their power and commit corrupt practices.
The situation is made worst when some mega projects are awarded through direct negotiations and limited tenders to their cronies, or certain companies.
Even in the open tender it should not be tainted by corruption and bid rigging.
According to the World Bank, it is estimated that 20% to 30% of the budget for public contracts is wasted.
This finding matches with what Tan Sri Ambrin Buang, the former auditor-general predicted, that is up to 30% of Malaysia’s public projects’ value was lost owing to mismanagement and corruption.
Consider the amount of savings the government would have obtained if it paid 30% less for goods and services the contractors and vendors provided out of total RM400 billion in the 12MP.
If left unchecked, the present crisis may develop into a worse case scenario and one can expect another full-blown corruption scandal.
Malaysia Anti-Corruption Commission chief Datuk Seri Azam Baki stated that corruption cases resulting in leakages and wastage of government procurement involving civil servants (the top leadership), are seen to be increasingly critical in procurement and topped the significant financial loss list.
Approximately 50% of such cases involve government agencies (who are in power in deciding a matter) due to abuse of power and unlawful manipulations of the procurement process and fraud.
When there is a leakage of government procurement, investigations show there is an element of corruption that causes a certain value of government procurement to rise.
Ambrin said simply giving oral warnings to erring civil servants is not sufficient and ineffective.
Under the current laws, civil servants who are off the hook for power abuse and corruption due to insufficient evidence or other technicalities merely face internal or disciplinary action.
The MACC is of the opinion that without a specific law to address such misconduct, it may become a loophole for offenders who may simply be let off with disciplinary action.
In order to overcome this problem, MACC is pushing for laws known as Misconduct for Public Service Act to punish civil servants who cause high losses in public funds through negligent and unethical practices in their respective government departments with criminal charges. In Hong Kong this common law carries a maximum penalty of seven years’ imprisonment.
The law would act as a powerful deterrent and key weapon for those tempted to abuse their powers.
It sends out a strong message to wayward public servants that they cannot escape after causing substantial losses or are responsible for losses to public coffers, which they might have caused, and ensures prudence when it comes to spending public funds while discharging their duties, even after they are cleared of offences for corruption and abuse of power.
Some have suggested that the definition of the Misconduct for Public Service should include ministers and also politicians. The ministers are also responsible for the final decision in awarding the ministry’s contracts.
The auditor-general’s department should be given the power to conduct spot checks on big government projects when there are any signs of red flags that the company, which has been awarded the projects, is engaged in false claims or fraudulent activities.
This apart from giving assurance that the projects are being monitored will also act as preventive measures and can reduce leakages, losses or low quality and non-quality constructions.
When there is a project delay, project costs will increase and it will be the taxpayer’s money that will be used to rescue the project with additional costs.
As such, when contracts are awarded there should be a mechanism of continuous monitoring to ensure that the projects are progressing according to the timeline agreed upon in the contract.
The existing “sick projects”, or failed to complete projects, mostly awarded by direct negotiation based on technical know-how and have poor monitoring due to the integrity of people involved, not only undermines the government and people aspirations but also causes project costs to increase.
Contracts should be awarded to those contractors who are have proven their reliability, capability, responsibility, and have a good track record both technically and financially.
As a matter of good governance, a proper checking on the pricing and due diligence on the contractors should be conducted before awarding the contracts since nowadays getting information via the internet is easily obtained, especially on the market price.
Modernising government payments and collections through digitisation can help policy makers achieve these goals.
The Finance Ministry should introduce a “flying squad team” to check the completed projects before payments are approved for payment to contractors.
Ideally, the public budget process should allocate public resources in a strategic, transparent, accountable, fair and democratic way. Unfortunately, this ideal is rarely met.
In the absence of the culture of integrity, no one will bear the responsibility or feel embarrassed by their wrongdoings while corruption would get further aggravated.
Point to ponder: After 11 Malaysian Plans covering 55 years, is it still necessary to build more physical projects?
We don’t need the more costly mega projects that entail more tenders and procurements, where unethical public servants tend to abuse powers or manipulate the deal via direct negotiation and cronyism.
Datuk Seri Akhbar Satar is former president for Transparency International Malaysia. Comments: firstname.lastname@example.org