1997 crisis, Mahathir-
A new book tells of the Asian Financial Crisis destroying the governing political-corporate elites, leading to the growth of a new political-GLC web.
However, the government’s subsequent vast ownership of businesses eventually led to a new form of grand corruption, Edmund Terence Gomez writes.
Gomez, an emeritus professor of Universiti Malaya, said prior to the financial crisis the corporate sector was “awash with different but interlaced political-business ties” which were led by different elites who solicited government concessions and resources.
And as political meddling in the corporate sector grew, these governing elites became more involved through their proxies and families, he said.
Privatised projects
One constant criticism in the early 1990s, Gomez observed, was the opaqueness surrounding the awarding of major privatised projects, with discussions between the governing elites and their closest allies taking place behind closed doors.
“This nexus between politics and business came to an abrupt halt when the AFC occurred in 1997,” Gomez writes in his book “Misgovernance: Grand Corruption in Malaysia”.
Gomez says many Umno-linked businessmen who had become corporate captains found themselves either mired in debt or bankrupt.
Bailouts at public expense
Some were bailed out “at the huge expense of the government”, as these were nationalised companies, he added.
However, the bailouts sparked criticism from Umno members asserting that the AFC debacle had been caused by rampant cronyism, collusion and nepotism.
Cataclysmic feud
The intense criticisms subsequently led to a “cataclysmic” feud that saw then party president Dr Mahathir Mohamad oust his deputy, Anwar Ibrahim. This in turn saw businessmen aligned to the would-be PKR president lose control of their corporate assets.
The fallout of the AFC didn’t end there.
Gomez wrote that numerous enterprises under politicians-in-business and well connected businessmen were brought under control of the government and classified as government-linked companies, or GLCs.
New political-GLC web
However, politicians in control of the government now found that they had direct control over a vast corporate base that could be abused to serve their political and economic interests, he said.
What subsequently emerged, according to Gomez, is a “political-GLC complex”, a nexus that has perpetuated, even exacerbated, cronyism, nepotism and abuse of power through the practice of selective patronage during the implementation of policies.
A different form of grand corruption has emerged, one that is so endemic that it has deeply undermined public trust in the governance of the government’s vast GLC ecosystem, he added.
“Misgovernance: Grand Corruption in Malaysia” is on sale at MPH and Kinokuniya, Eslite, Tsutaya and Gerakbudaya bookshops.
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