14 Mac 2012
Malaysia, Cronyism, And The Art Of The ‘Good Resignation’
Look, people really like it when you go just a bit early! You know; steely jawed, faraway look in your eyes! Before you get to the point when they’re sitting round in the pub saying “Oh, that f***er’s got to go!”, you surprise them! “Blimey, he’s gone! I didn’t expect that! Resigned? You don’t see that much anymore! Old school! Respect! I rather liked the guy! He was hounded out by the f***ing press!” How about that, eh? What a way to go!
And so to Malaysia, where two federal officials have announced their departure in recent days, long past the point where the proverbial man-in-the-pub (or teashop) might have praised their decisiveness. Shahrizat Abdul Jalil, Minister for Women, Family and Community Development, has agreed to step down as her husband faces prosecution for allegedly bilking a program for cattle farmers. The scandal has been brewing for several months and has been dubbed, inevitably, Cowgate by Malaysia’s feisty online media. Shahrizat’s family is accused of diverting millions of dollars earmarked for Malaysian farmers to buy luxury condos in Kuala Lumpur and pay for foreign vacations. She isn’t yet out of national politics, though, as she remains the head of the women’s wing of UMNO, the influential Malay party that has led Malaysia’s ruling coalitions since independence in 1957. Its present leader, Prime Minister Najib Razak, has been trying to rebuild the party’s image after a surge in support for the opposition, in part because of frustration over cronyism and mismanagement. He may have succeeded on a personal level, according to recent polling. This has added to speculation that he may call a general election in the coming months.
The second case, which has attracted less attention, contains curious parallels with Cowgate. Zarinah Anwar, the chairwoman of the Securities Commission (SC), has said that she won’t seek a second term after her six-year posting ends on Apr 1. A respected managing director of the commission will replace her. On the face of it, this is a routine federal appointment. But Zarinah’s term has been dogged lately by controversy over her husband’s business affairs and the conflict of interests that these have posed for her. The most recent arose from last year’s acquisition by state-owned conglomerate Sime Darby of 30% of Eastern & Oriental (E&O), a hotel group. The deal was announced on Aug 28. By then, the chairman of E&O had bought nearly half a million shares, as had other directors of the firm, over a period of four months. The stock had already climbed sharply by the time that Sime Darby said it would pay a 60% premium for its stake. Naturally questions were soon raised in online forums and news websites about possible insider trading in E&O stock. And who was that foresighted share-trading E&O chairman? Zarinah’s husband, Azizan Abdul Rahman. Not an easy case for the SC, which later concluded that no rules had been broken. Zarinah’s recused herself from the investigation. For his part, Azizan argued that the E&O board wasn’t aware of the Sime Darby acquisition as it was a private sale by shareholders.
This wasn’t Azizan’s first brush with notoriety, as Asia Sentinel reports. His construction company was delisted after it ran into trouble with a hospital project. He also straddled the ownership of two oil and gas services companies prior to a takeover offer. Sure, Azizan was just doing what other investors do in Malaysia and other markets, which is to take advantage of opportunities. But as the husband of the SC chairwoman, and the director of several public companies, he isn’t an ordinary investor. That’s why his trades have drawn more scrutiny. In other jurisdictions, he would be hiring a lawyer. Zarinah’s successor as chief regulator will need to take a much tougher line in order to convince investors that Malaysia’s rules aren’t rigged in favour of the powerful and connected. Maybe he should hire a good spin doctor.