SAPURA Energy Bhd’s financial meltdown, which led to calls for the government to rescue, is the result of moral hazards started and continually perpetuated by the government.

One common factor in government bailouts of businesses such as Bank Bumiputra, Perwaja, Perwira Habib Bank, MAS, Proton, Silterra, Felda and Sime Bank, was the disruptive individual wealth accumulation manifesting in all these companies prior to their collapse.

The government “rescuing” selected businesses on a “regular basis” by the government creates gross complacency and helps to ignite moral hazard problems.

The financial losses from the “collapse” of all these businesses are costly for the society at large.

If these were to happen in the private sector, lessons will be learned quickly and measures put in place to address this.

But the government seems to ignore this at will. Maintaining a healthy business environment and investor confidence seem alien to the government.

All these did not happened overnight, by chance or due to unforeseen circumstances. The problems accumulated over the years, culminating in their financial insolvency.

Yes, there are too many factors that contribute to scandals beyond the management’s control and therefore it is not possible to eliminate them. But all those responsible for the scandals must be brought to justice. The authorities should not in anyway protect those responsible and accountable for their part in nurturing the financial debacles.

If no precedence is set to deal with those responsible justly, especially when involving public money, it is a recipe for future debacles.

There is a need for a continuous system of evaluation and clear guidelines on how to deal effectively with any irregularities. Irregularities will occur from time to time, but the government should formulate and implement proper policy responses to effect recovery from scandals in the shortest time possible, at minimal cost to the public.

There should be no precedence for moral hazards.

Restoration of confidence must be top priority. It has to do this by ensuring the highest standards of austerity, efficiency and accountability.

It is mind boggling to observe the quick shift from the dogged racial tendency, anchored on the pride of identity, that drove the struggle for the betterment of the race to the personal greed and selfish attitude that accounted for and still accounts for the squandering of the country’s shared resources.

Also, a question that begs an answer is the revelation of the final destinations of the massive looting of our shared resources.

The burial ground of human endeavours is dotted with beautiful hallmarks of failed enterprises.

History keeps repeating itself. Humans never seem to be making any effort at changing the narrative. A venture fails when it voluntarily becomes unable to attract new equity or debt funding to reverse the decline, consequently, leading to a change in ownership, as well as management.

Corporate failure is an age-old phenomenon that has been in existence for as long as we can remember. Stakeholders are fully aware of the high failure rates of business activities.

The responsibilities of Sapura Energy’s board of directors surpassed four pertinent departments – finance and accounting, administrative, corporate banking and management information system – which suggests weak internal control system and poor corporate governance. – April 9, 2022.

* FLK reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.