PUTRAJAYA should rethink its decision to appoint Prime Minister Dr Mahathir Mohamad as the chairman of the Khazanah Nasional Bhd board of directors, said a graft watchdog.

Centre to Combat Corruption and Cronyism (C4) executive director Cynthia Gabriel said the appointment raises serious questions about the statutory governance structure and good governance practices within government-linked investment companies (GLICs) and government-linked companies (GLCs).

“We are concerned about how the restructuring takes place to ensure professional competence, especially in GLICs as they are under the purview other GLCs too.

“What are the criteria for restructuring? Is there is a second minister on the board? How can we ensure that cronyism and political appointment are avoided? Malaysia certainly doesn’t need old wine in new bottles,” she said in a statement, today.

On Monday, the Prime Minister’s Office announced the appointment of Dr Mahathir as the chairman of the directors’ board of Khazanah, a holding company and strategic investment company wholly owned by Minister of Finance Incorporated (MoF inc).

Gabriel said there are concerns the appointment contradicts the electoral promise in Buku Harapan, PH’s manifesto.

She said according to the manifesto, the Pakatan Harapan government will ensure state and national (government-linked companies) board members are appointed according to merit and qualification, not politics.

“Putrajaya should rethink this convention of the prime minister chairing Khazanah, regardless of the company’s performance.

“Appointments should follow principles of good governance which are needed not just during peak performance periods but to ensure that Khazanah does not stumble during darker days in the future.”

Gabriel also cited GLICs such as Felda Global Ventures, Felda Investment Corporation which have been found to suffer serious mismanagement and corruption issues due to the centralisation of power in the leadership and the cronies.

“Khazanah as a GLIC is at greater risk of corporate mismanagement because it is not governed by a statutory act which stipulates what powers the respective ministers-in-charge are entitled to, and who they can appoint.”

She said MoF Inc, Employees Provident Fund (KWSP), Lembaga Tabung Haji (LTH), Lembaga Tabung Angkatan Tentera (LTAT) or Kumpulan Wang Persaraan Diperbadankan (KWAP) were governed by such incorporating statutes.

“Effectively, these statutes maintain good governance by keeping the concentration of power in check for GLIC, but not for GLCs which are typically owned by the GLICs.”

Gabriel said the recent appointment of Petronas chairman Ahmad Nizam Salleh appears acceptable due to the vast experience he brings to the table.

“However, his appointment gives rise to the same question. By what criteria does the prime minister consider these appointments? Are they truly by merit, or are there still political strings attached?

“In this light, C4 cautions against the repeat of questionable governance leading to malfeasance and corruption mega-scandals involving GLICs.

“Since Khazanah is without an incorporating statute, the method of appointing a chairperson ‘by convention’ does not inspire confidence in the spirit of checking the concentration of power in the political and economic nexus which is a key factor that contributed too many other corruption scandals, including the 1MDB scandal.”

Gabriel said the government should form a committee to vet new candidates to chair the GLICs/GLCs and advised the prime minister to ensure that there was no conflict of interest.

“We aspire to have rules for accountability and transparency in place within the PH government in the governance of GLICs/GLCs. And a total restructuring of the GLC ownership structure that prioritises good governance and service delivery to the people, while maximising the barriers against corruption and illicit enrichment.”

She said PH should keep its promise of not appointing politicians to the boards of GLCs and GLICs. – August 2, 2018.