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Transparency and Integrity in Political Financing – High Time for Change

Transparency International-Malaysia (TI-M) released the findings of the Malaysian Corruption Barometer (MCB) 2014, which surveyed the public’s experiences and views on corruption and their willingness to combat the issue. The MCB 2014 survey found that 45% of 2,032 Malaysian respondents ranked political parties as the most corrupt among top 6 key institutions in Malaysia. The police scored a close second (42%), followed by public officials/civil servants (31%), judiciary (24%), parliament/legislature (23%), and business/private sector (23%).

In the current context of economic crisis, the public in general and civil society at large are demanding for more transparency in public life. In particular, concerns are daily being expressed on risks relating to the integrity of the politicians and the independence of public office holders arising from conflicts of interest, undue influence and corruption, and especially now more than ever, in the sphere of political financing.

Laws to govern this area must be implemented immediately, as political parties are seen as the most corrupted among the top six key institutions in the country, as shown by the fact that Malaysia ranked fifth from the bottom in a recent survey of 54 countries in The Money, Politics, and Transparency Campaign Finance Indicators (MPT) 2014. The “Checkbook Elections” study by the Electoral Integrity Project, based at the University of Sydney, Australia, in collaboration with Global Integrity and the Sunlight Foundation, also showed Malaysia with an average score of 19 out of 100, compared to the highest score of 79 by Georgia, and compared even to our South East Asian neighbours like Thailand (50), Indonesia (47), and the Philippines (43).

In December 2014, Prime Minister Datuk Seri Najib Razak agreed that political funding should be regulated for parties across the spectrum, putting it forward as a joint task for the ruling government and opposition. He added that corruption is a disease that can ruin everything in this country that we have built. Sad to say nothing has materialized so far in this area.

To fix the system, we have to make some serious changes to it.

The government must come up with a practical formula or mechanism to regulate and channel political financing. Political candidates are often too dependent on financial backer. This is unhealthy and can lead to corrupt practices as there is always no such thing as a “free lunch”.

Transparency International-Malaysia (TI-M) has repeatedly called for reforms in this area, so that political parties are more transparent and accountable in the way they receive and spend donations for both sides in the political divide.

The key factor in enforcing rules in political financing is of course the integrity of and powers to be granted to the Election Commission (EC) as it is the institution which is constitutionally established to protect the sanctity of our elections process.

On May 5, 2011, TI-M submitted its 22-point memorandum on reforms in political financing in the country to Prime Minister Datuk Seri Najib Razak, based on its research on the state of political financing in the country (2009-2010). The memorandum submitted with the proposed 22 points is a good starting point to improve transparency, integrity and accountability in political financing, focusing on three key areas: institutional, legislative and media reforms.

Our earlier TI-M political funding research included interviews with past and present politicians including Tun Dr Mahathir Mohamad, Tengku Razaleigh Hamzah and Tony Pua, surveys with the Election Commission (EC), Malaysian Anti-Corruption Commission (MACC), politicians, academicians, political analysts, companies, civil society, journalists and the general public.

TI-M conducted conferences, workshops and state level consultations on reforms in political financing in Malaysia.

Below is the list of recommendations, in summary form made by TI-M with again hopes that they would be implemented by the government:

(a) State Funding

This is crucial to improve transparency, accountability and fairness in political financing, and to ensure that parties and candidates have sufficient resources to run viable campaigns. It is recommended that the Federal Government provide funding for parliamentary elections, and state governments for state-level elections. A formula can be worked out based on the following factors: urban, rural and number of voters.

A UK advisory body recommended increased public funding as one way to avoid future scandals and limit the influence of big donors in elections, but the three main political parties rejected the proposal. In the Scandinavian model practised by Norway the use of public funding has cut down party dependence on large donations and has given the election system more credibility.

(b) Regulation for Reporting of Political Financing

(i) The Election Offences Act 1954 should be amended to require party election expenses to be independently audited by certified auditors before submission to the EC.

(ii) The Elections Act 1958 should be amended to empower the EC to carry out investigations and verify financial reports of candidates.

(c) Full disclosure of Political Party and Candidate Financing

(i) Political contributions should be channeled into party accounts and not individual accounts.

(ii) Political parties should be required by law to make full public disclosure of the amounts and sources of their financing and expenditure. There must be public disclosure and access to political party accounts,

(d) Regulating Political Donations

(i) There must be limits on contributions by Malaysian individuals and organisations or companies to political parties. Ideally, companies should be prohibited from making political donations. This is the best means to curb the capacity of those with private agenda to influence election outcomes.

(ii) A list of non-permitted donors should be prepared. These should include government-linked corporations, non-citizens and foreign organisations.

(e) Equal and Fair Coverage by and Access to Public Media

Provide fair and equal coverage for all parties during campaigning. Parties and candidates should have access to all public media.

Based on current practices are the above recommendations too far-fetched, a “pie in the sky” and not matching the political realities of Malaysia? TI-M hopes and prays that this is not so, that there will be the political will and the will of the people to ensure a free and fair elections, not to be compromised by vote buying and manipulative use of uncontrolled funds. We need to start the transformation process. If not now, when?

For any press enquiries please contact

Dato’ Akhbar Satar
President, Transparency International-Malaysia
E: [email protected]

Dr KM Loi
Deputy President, Transparency International-Malaysia
E: [email protected]

Dr Muhammad Mohan
Secretary General, Transparency International-Malaysia
E: [email protected]