Can Malaysia’s Ruling Party Survive Without Donations From Abroad?


Partyforumseasia:  Cleaning up Malaysia’s Wild East – style political finances? 

The National Consultative Committee on Political Financing, established in August 2015 after the 1MDB-Scandal had come to light, has proposed 32 recommendations last Friday, 30 September. Its chairman, Minister in the Prime Minister’s office and former Transparency International Malaysia head, Paul Low, stated that “The good governance of the nation cannot be resolved unless we have political integrity and as such we need regulations for political funding”. Nobody would deny that, but what can be expected if the recommendations will be implemented?

The background: Malaysia’s Prime Minister Najib Razak has come under pressure since The Wall Street Journal revealed in June 2015 that the unbelievable sum of nearly 700 million US$ had been found in his personal accounts. So far, he surprisingly got Corruption 2away with the unbelievable explanation that it was a personal donation from the Saudi royal family for his support of Islam. The international pressure is not yet over. Several countries, including the USA, are investigating the obscure money flows, because at the same time billions are missing from 1MDB, a sovereign wealth fund deep in debt, whose chairman of the board of advisers happens to be PM Najib Razak.

What the commission recommends: The media headlines are all highlighting the proposed ban on foreign donations. Surprise, surprise, should Saudi largesse no longer be accepted? Of course, it won’t come again so handily, so better ban it… A new law, the Political Donations and Expenditure Act, will regulate the patronage and money politics heaven the country has been so far, clean it up and control it ever after. According to Mr. Low donations to political parties and individuals will be “robustly regulated” with all donations deposited into a specific designated bank account set up at the federal, state and divisional level. Donations in cash or in kind above MYR 3,000 (725 US$) per annum must be declared to the Controller.

What can be expected in real life: Committee chairman Paul Low carries the Transparency International label, but as Minister in the Prime Minister’s office his neutrality may be questioned. The recommendations will be vetted by the cabinet which decides which to implement and which to drop. The legislative process will take time so that full implementation cannot be expected for the next general election due by 2018 but anticipated much sooner to take advantage of the divided and weak opposition.
On the background of UMNO’s patronage system, e.g. the 50.000 MYR (12,100 US$) which go monthly to the 190 branch leaders for expenses, the cash flows can hardly be changed overnight. In a regional and world wide comparison, political parties have always found their way to cut corners and find the money they felt were needed to win.

bersih-1The increasingly turbulent domestic scene: With the festering 1MDB corruption scandal, criticism of the ruling coalition has reached new hights. Prime Minister Najib has weathered the storms with remarkable cold-bloodedness, firing internal dissidents and installing cronies wherever needed, but calls for his resignation are multiplying. Since 1 October, a broad reform movement bersih-2called Bersih (Malay for clean) prepares rallies against Najib. While Bersih supporters wear yellow shirts, an organized counter movement of UMNO supporters wear red shirts and provoke clashes. The development reminds of the infamous street fights in Bangkok which led to the military coup in 2014.

Useful related articles:
Channelnewsasia, 
Malaysian political financing body recommends new laws, ban on foreign donations (LINK)
Intelligent Money,
Political Donations Here & Other Countries: Where Does Malaysia Stand? (Link)
International Idea,
Political Finance Data for Malaysia (LINK)
Sachsenröder, Wolfgang,
 Political Party Finances in Southeast Asia (LINK)

 

 

 

Malaysia’s UMNO: Rich Party – Poor Voters


Partyforumseasia has been quoting the Philippino version of the golden rule: “Who has the gold rules”. Plutocracy (Merriam-Webster: Greek ploutokratia, from ploutos wealth) was rampant throughout history, from ancient Greece and Rome to Italian merchant republics like Venice and Florence and up to our days. Campaigning without money is practically impossible and political parties cannot survive without sufficient funding. The crucial question of the legitimacy of party funding is simple: Where does the money come from? Clean democracies in Northern Europe use membership fees, state subsidies and controlled and transparent donations.Corruption 2
In the case of Malaysia, membership fees are symbolic, direct state subsidies for parties don’t exist, and donations are anything but transparent. Nevertheless, UMNO and its component parties in the Barisan Nasional (National Front) coalition have no  funding problems at all. On the contrary, they seem to print the money themselves.

In an article with the headline “The Secret of Malaysian PM Najib’s Staying PowerKeeping the cadres fed well“, the asia sentinel (Link here) explains the cash flows which keep Prime Minister Najib and his party machinery liquid and in power:

The money river flows The reason that Najib is unassailable, however, is the unceasing river of money that flows from government coffers to UMNO cadres. Thus the unanimous confidence vote in early March, when the prime minister called together 160 of the 191 UMNO division chiefs to a party meeting in Kuala Lumpur. That was followed a strong confidence vote from other component Barisan parties.  It is money that not only appears at election time, to pay for lunches or small items like tin roofs for constituents’ whose kampung houses leak, but pays them wages between elections.
The payments are made through various government agencies including the Village Security and Development Committee, to which the cadres are appointed.  They are also appointed to four propaganda agencies under the Ministry of Information Communications and Culture, which have offices in each of Malaysia’s 13 states and three federal territories. The bulk of the money to support these propaganda agencies comes from the 1MDB Foundation, from which more than RM1 billion was siphoned off, purportedly for charity work, a well-placed source told Asia Sentinel.”

The article lists quite a number of dubious practices in Malaysia, how the business conglomerate controlled by the state and its cronies generates the necessary wealth.

The IRONY of this transfer system lies in the fact that UMNO depends on the votes of mainly poor Malay voters in the rural areas. With the highly gerrymandered first-past-the-post election system they have guaranteed UMNO’s grip on power over five decades. But Malaysians are increasingly fed up with these corrupt practices and propelled a shaky opposition coalition called Pakatan Rakyat (People’s Coalition) into a position to challenge the ruling party. No wonder that UMNO is all out to destroy it.

“Who owns Jokowi?” or Political Funding in Indonesia


Partyforumseasia: In “Indonesia”, no. 96, October 2013, pp. 1-121, the Cornell Southeast Asia Program focuses on the political science debates about Indonesia’s political funding in the democratic era. The volume contains five essays by prominent researchers, namely Jeffrey A. Winters, Vedi R. Hadiz and Richard Robison, R. William Liddle, Thomas B. Pepinsky, and Edward Aspinall. Jokowi
Three of them are working on the importance – and problem – of oligarchic influence on the politics of Indonesia. Hadiz, Robison, and Winters share the concept that material resources as a form of both economic and political power count most in Indonesia’s politics. The breathtaking speed with which the well-oiled and well-funded machinery of candidate Prabowo managed to reduce the twenty odd percent lead in most opinion polls of rival Jokowi during only some weeks of campaigning in June and July this year seems to support the theory. And Prabowo, his billionaire brother Hashim Djojokusumo, Golkar’s chairman Aburizal Bakrie and other allies and supporters must have been of the same opinion. Obviously they did not expect that Jokowi could win with a clear majority of over six per cent or eight million votes, which seduced Prabowo to jeopardize a lot of his credibility by not accepting the results and being seen as a bad loser.
Winters, Hadiz and Robison come to the conclusion that only a revolutionary degree of political change could disrupt the nexus between wealth and political power. Liddle, Pepinsky, and Aspinall, on the other hand, challenge the oligarchy paradigm and focus on other and new political actors with mobilization power beside the remaining power brokers from the old Suharto “New Order”. Published in October 2013 and irrespective of their competing hypotheses, probably none of the scholars could have predicted that an outsider and political newcomer like Jokowi could have so successfully challenged the political and economic establishment of Indonesia.
But Winters also highlights the effect of the scandalous corruption which allows even oligarchs with moderate means to “buy and distort the legal system, from the police and prosecutors up to the judges and politicians.” (p.19). Since variety and freedom of the media have been exposing these multiple “pathologies” and their undercutting of the reformasi gains, the voters have reacted the way they did on 9 July 2014 buy giving Jokowi a convincing majority over Prabowo and the oligarchs behind him.
But wait a minute, this simplified picture is too nice to be true. Jokowi is certainly not an oligarch, only a “minor millionaire” with assets of something between three and five million USD. The typical Indonesian shadow play (wayang) is hiding some rather interesting details about Jokowi’s election as Jakarta governor in 2012. Tempo magazine on 24 July of that year offered some juicy details of the funding behind candidacy and victory under the title “Who owns Jokowi?“. Prabowo, his oligarch brother Hashim Djojohadikusumo, ex-president Megawati Sukarnoputri, the Gerindra and PDI-P parties were involved, but also many grassroots organizations. Only at that time Prabowo could not imagine or foresee that Jokowi was to become a rival for the presidency. Winters has detailed background information on the oligarchic support for Jokowi in 2012 (p. 23 ff). As usual in politics everywhere, façade, perception, tactics and strategies make it difficult to see the reality. The office gives president Jokowi a chance to make himself more independent financially (in both meanings..) and to reduce oligarchic influence on his administration, but he must play his cards skilfully and ruthlessly.

Thailand’s Politicians: Pluto- or Kleptocrats?


Partyforumseasia: In the case of Thaksin Shinawatra there has been little doubt that he made his billions with the help of political connections. And comparative research on party financing in Southeast Asia has shown that political entrepreneurship is one of the most lucrative business lines.1) The region, more or less independent of the political system, is full of “unusually rich” politicians. Corruption 4The Thai situation is being discussed in an article by Tan Hui Yee, Thailand correspondent of Singapore’s Straits Times (25.2.2014, p. A22). With a Gini coefficient of .484, higher than that of the US, Thailand is one of the most unequal societies in Asia. The regional imbalance has opened the flood gates for populist policies and the landslide victories of Thaksin’s political parties. According to Chulalongkorn University’s economy professor Pasuk Phongpaichit the minimal taxes on land are not being adjusted because most politicians are big land owners.  As protest leader Suthep Thaungsuban, himself confronted by graft allegations, tries to hurt the business empire of the Shinawatra clan, it is evident for the Thai citizens that too many politicians are millionaires in a too conspicuous way, and there seems to be no difference between the competing parties. Frustration and cynicism are growing with the number of scandals, the duration of the stand-off and the negative impact on the economy.
Money politics is all too entrenched in Thailand and Southeast Asia to be eradicated by well-intentioned reforms. Only rich enough candidates can win an election, and few will sacrifice part of their assets to get elected. That simply means that millions invested into an election campaign have to be recouped one way or the other.

1) See: Sachsenröder, Wolfgang, Party Finances and Money Politics in Southeast Asia in the reference archive.

Where is the Ethical High Ground in Malaysia?


Partyforumseasia: There are probably few lawmakers world-wide who live on their official income alone and certainly even fewer who seriously bare their financial situation to the voters. The common tricks are sufficiently known. If you have to declare the financial status of spouse and children as well, proxies are easily found.
As laudable as the newest move towards transparent pockets by 30 Penang state assemblymen may be, doubts are allowed that this move can really put pressure on the financial networks of the Barisan Nasional elite. Though a lot of evidence of corrupt practices has been published so far and the image is sufficiently tarnished, full transparency will be too nice to be true.
Malaysia assets 2

Penang assets

Source: Straits Times, Singapore, August 13, 2013