Think tank, IDEAS views with grave concern the decision of the Pardons Board on the former Prime Minister Dato’ Sri Najib Razak’s SRC case, for which he was convicted in the court of law. On 2 February 2024, it was announced that his sentence had been halved from 12 to 6 years of imprisonment, and fines imposed on him were reduced to RM50 million ringgit from RM210 million ringgit.
The sentence was to penalise the former Prime Minister for receiving RM42 million for securing a government guarantee for a RM4 billion loan that the SRC International Sdn Bhd (SRC) obtained from Kumpulan Wang Amanah Persaraan (KWAP). The loan was meant for SRC, a wholly-owned subsidiary of 1MDB, to be a strategic vehicle to hold major stakes in key resources such as coal, aluminium, uranium and iron as well as oil and gas (O&G). The RM42 million was transferred, through complex layering, into his personal bank accounts and used, among other things, to pay credit cards, and to fund charities and political activities.
The RM4 billion loan was given a government guarantee by the federal government led by Najib Razak as Prime Minister and the Minister of Finance, who was also 1MDB Chair and SRC International Advisor Emeritus. As of 28 March 2022, this loan has been fully serviced by the government of Malaysia using taxpayer funds. The SRC is a straightforward case of abuse of power and corruption by a public official who is supposed to be the guardian of public funds. This also serves as a timely and grave reminder that any state-owned enterprise (SOE) loan that is given a government guarantee runs the risk of having to service debt if the enterprise fails.
The decision to reduce the sentence signals that abuse of power and misappropriation of public funds is easily tolerated. IDEAS CEO Dr Tricia Yeoh stated, “The public sees that the Federal Territories Minister and Attorney General, who are appointed by the Prime Minister, both sit on the Pardons Board. With their inclusion, the public may assume that the reprieve would have been considered with agreement from the current political leadership. The decision directly contradicts the Madani government’s commitment to tackling corruption, where in fact Prime Minister Dato’ Sri Anwar Ibrahim had ambitiously set a target for Malaysia to reach the top 25 countries in Transparency International’s Corruption Perception Index (CPI) by 2033. Najib’s crime was directly related to the biggest corruption scandal in the nation’s history. The sentence reduction may, in fact, reverse the positive move Malaysia has most recently achieved in its latest ranking, having moved up four positions to 57th rank.”
Further, the decision has serious consequences for an administration that has publicly stated its intentions to implement institutional reforms. This will immediately erode public trust in the government’s ability to uphold its moral position on any matter related to good governance.
In addition, this will have negative implications on the perception of the international business community. Among this government’s reform commitments have been the separation of the roles of Attorney General and Public Prosecutor, enacting of the Government Procurement, Freedom of Information, and Political Financing Acts, as well as amending the Whistleblower Protection Act.
Moving forward, the think tank calls on the government to provide clarity over its position over democracy and good governance. Specifically, how the administration intends to renew its efforts towards combating corruption. Dr Yeoh concluded, “If the government still intends to seriously combat corruption, the new National Anti-Corruption Strategy, which is slated to be launched soon, should state clearly what its plans are to strengthen the nation’s institutions so that a case of 1MDB and SRC, which have greatly drained the nation’s financial resources and severely damaged our international reputation, will never again occur.”
