Prime Minister Tan Sri Muhyiddin Yassin may have decided to reward loyalists in Perikatan Nasional (PN) with plum positions at government-linked corporations (GLCs), but market observers have raised the spectre of possible conflict in balancing political as well as business or organisational roles.
While there had been nothing explicit mentioned in the law to prohibit politicians from holding posts in GLCs, conflicts could potentially arise between the appointees’ fiduciary duties to the organisation and their political leanings, Minority Shareholders Watchdog Group (MSWG) CEO Devanesan Evanson told FocusM.
“There is no prohibition to the appointment of active politicians as chairman or as directors of PLCs (including GLCs) in the law, Listing Requirements or the Malaysian Code on Corporate Governance. What is really required is a clear policy statement on the appointment of active politicians on the boards of PLCs (including GLCs).
“Political appointments tend to increase the risk profile of a PLC because there is a potential for conflicts of interest between the politician’s political obligations vis-a-vis their fiduciary duty to act in the best interest of the shareholders of the PLC,” said Devanesan.
In the majority of cases, he added, political appointees were not a majority on the boards of GLCs, and an important check and balance mechanism was for other board members to exercise greater vigilance of any risk to the organisation ensuing from the decisions of political appointees.
University Malaya’s Edmund Terence Gomez, a political economy specialist, said that such a move to reward politicians with GLCs was uncalled for as the country had to still weather the Covid-19 crisis.
“The prime minister by his own admission had said that the government would utilise GLCs to mitigate the economic impact of Covid-19 and one case in point was the discount offered by Tenaga Nasional Bhd for a six-month period. By extension, the government strengthened its control on some GLCs by appointing MPs under its umbrella to boards,” he said.
But the issue of whether the appointment of an MP or non-MP to a board of GLC was immaterial, Institute for Democracy and Economic Affairs (IDEAS) research manager Lau Zheng Zhou told FocusM.
Lau noted that political appointments were an old phenomenon but became more apparent in the PN government.
The more important consideration, he added, was whether the performance of the organisation was enhanced by the appointment.
“We have done some research on this matter and it was discovered that it does not make a difference whether it was a political appointment to the board of a GLC, but rather the performance of the GLC under the leadership of the person,” he said.
Lau cited the case of MARA where financial irregularities were discovered under the leadership of both politicians and non-politicians.
But he insisted that reforms were still needed in the appointment of politicians to the boards of GLCs.
Malaysia could take a cue from Singapore which had upped the ante on governance reforms by unifying the appointments onto all GLC boards into a single Act known as Public Sector Act, Lau added.
Malaysia could also set up Public Select Committees to enhance the vetting process of politicians onto the boards of GLCs, he said, adding that this would enhance transparency and promote a performance-based culture. – May 27, 2020
