:00:09. > :00:10.Malaysia's one MD scandal has blown open the discussion around
:00:11. > :00:14.This region is home to some of the fastest-growing economies in the
:00:15. > :00:16.world, but also some of the most corrupt.
:00:17. > :00:18.What are the challenges facing those who were trying to
:00:19. > :00:21.battle corruption here and some of the solutions they're coming up
:00:22. > :01:02.Welcome to Talking Business. I'm in Malaysia, a country involved in a
:01:03. > :01:09.large corruption scandal. At the centre of it is One MDB. The
:01:10. > :01:14.allegation is that billions of dollars of funds were siphoned from
:01:15. > :01:26.One MDB by those running it in the used it as the own personal bank
:01:27. > :01:33.account. The Prime Minister has denied wrongdoing frustration has
:01:34. > :01:38.been brewing on the streets of Malaysia. Mostly contained, but
:01:39. > :01:42.persistent. Just over a month ago, students in its capital city Kuala
:01:43. > :01:48.Lumpur gathered to call for Malaysia Prime Minister -- for the Prime
:01:49. > :01:57.Minister to step down. A precursor to a larger rally called by civil
:01:58. > :02:03.society groups. These students say he has disgraced the country by
:02:04. > :02:11.being involved in high level corruption at 1MDB. The whole world
:02:12. > :02:16.knows about problems in our country and 1MDB has bought problems to our
:02:17. > :02:23.country, so why should we be silent, as if we are oppressed? There is
:02:24. > :02:42.possibly nothing that shows how in trench to corruption is in Malaysia
:02:43. > :02:53.more than Najib Razak. Najib Razak set it up in 2009. In 2015 it was
:02:54. > :02:57.revealed that the were financial irregularities. At least $3.5
:02:58. > :03:12.billion of public money had been stolen. Most of that has gone to
:03:13. > :03:18.Najib Razak's associates. However, he has said it was a donation from
:03:19. > :03:23.the Saudi royal family, allowed on the Malaysia in law, most of it has
:03:24. > :03:28.been returned. That is a parliament are behind in, 100%... More
:03:29. > :03:32.importantly, he and his ministers have stressed there is no proof of
:03:33. > :03:35.his involvement. The Prime Minister has made it clear from the beginning
:03:36. > :03:42.that we welcomed the investigation by the Department of Justice and if
:03:43. > :03:46.there are any crimes committed, those people will be dealt with
:03:47. > :03:51.according to the law, but as it is right now there is no indication, or
:03:52. > :03:55.there is no judgment at all, whether in Malaysia or the International
:03:56. > :04:02.Court, that says these issues have criminal elements to them. Yes, we
:04:03. > :04:06.have some issues with the proper governance of 1MDB. That is why two
:04:07. > :04:18.years ago the Prime Minister decided to have a new CEO of 1MDB and revamp
:04:19. > :04:23.and have a proper strategised policy to revitalise 1MDB. So you accept
:04:24. > :04:31.there were some issues of corporate governance at 1MDB? Even if the
:04:32. > :04:37.Prime Minister wasn't directly involved, he has been named, but as
:04:38. > :04:40.the leader of a country, this mass corruption taking place under his
:04:41. > :04:46.watch, shouldn't he stepped up and resign? I didn't think so. As it is
:04:47. > :04:53.right now, we know that 1MDB operates on its own. The Prime
:04:54. > :04:59.Minister is the head of the advisory council, but 1MDB has its own
:05:00. > :05:04.corporate structure. Decisions are made at the bottom level and then
:05:05. > :05:10.brought to the Prime Minister. What is important is that the Prime
:05:11. > :05:15.Minister has a plan to rationalise 1MDB. Remember this, we are talking
:05:16. > :05:27.about a few billion, but if 1MDB is allowed some space, some latitude,
:05:28. > :05:37.the land they are going to develop will generate approximately 172
:05:38. > :05:42.billion worth of great value. Give them time and at a business level it
:05:43. > :05:45.will be resolved. But none of that really explains what the sovereign
:05:46. > :05:49.fund is being investigated by at least half a dozen countries,
:05:50. > :05:55.including the United States, Switzerland and Singapore. And how
:05:56. > :05:58.this was all allowed to go on for so long, grow so big and climbs so high
:05:59. > :06:07.in the power chain in the first place. This is where the Ministry of
:06:08. > :06:10.Finance, the Palace of Justice and the Prime Minister's office sits.
:06:11. > :06:13.It's the heart of government in Malaysia were all the big decisions
:06:14. > :06:18.are made, but the political landscape is shifting and the
:06:19. > :06:22.opposition is gathering pace. The former Prime Minister has set up a
:06:23. > :06:26.new political party to challenge the current administration, but critics
:06:27. > :06:30.said he would Malaysia for more than 20 years with an iron fist from the
:06:31. > :06:34.late 1980s and much of what he is trying to challenge today flourished
:06:35. > :06:41.under his watch. As far as corruption is concerned, do I have
:06:42. > :06:48.cases like 1MDB where people accuse me of stealing money? Until now,
:06:49. > :06:56.after I resigned, when the people who took over against me, they
:06:57. > :07:01.couldn't find anything against me. If they could, by now I will be in
:07:02. > :07:05.jail. With all due respect, sir, you are saying to me, show me the proof
:07:06. > :07:10.I have done something wrong, then I can talk about it. But isn't that
:07:11. > :07:13.what the Prime Minister is saying? He's saying I haven't done anything
:07:14. > :07:19.wrong, so show me the proof then I will respond it. The proof can only
:07:20. > :07:23.be found outside the country. All these charges made by outside the
:07:24. > :07:29.country, all the reports about him, this was possible because within the
:07:30. > :07:34.country, no one is allowed to speak on this issue. His own party was
:07:35. > :07:41.instructed not to talk about 1MDB, or the 2.6 billion in his account.
:07:42. > :07:46.So in the country, you can't do a thing. If it is open, if the rule of
:07:47. > :07:51.law is sustained, we can report about this. We have enough evidence
:07:52. > :07:57.to go to the courts, but you can't go to the courts. The moment you
:07:58. > :08:03.reports, he goes to the Attorney General and the Attorney General was
:08:04. > :08:08.recently appointed by him, he will always say, I've found nothing wrong
:08:09. > :08:13.with what Mr Najib has done. Would you accept that there was corruption
:08:14. > :08:19.and an abuse of power during the time you were in office? Yes.
:08:20. > :08:25.Corruption is found everywhere, even in Britain, even in the US. Found
:08:26. > :08:28.everywhere. But during my time, we didn't have corruption on this
:08:29. > :08:42.scale. It's described by the US as the biggest fraud and
:08:43. > :08:46.money-laundering that they have had. There has been corruption in my
:08:47. > :08:55.staff. Not me. They have not proved that I've been corrupt. What damaged
:08:56. > :09:01.you think this scandal from 1MDB has had on Malaysia internationally?
:09:02. > :09:06.Today, people laugh at Malaysia and say, what has happened to your
:09:07. > :09:12.country? Everywhere we go people make nasty comments about Malaysian.
:09:13. > :09:16.The reputation is really very bad. Only in Malaysia we have people who
:09:17. > :09:22.say there is nothing wrong. That is because Mr Najib controls the press.
:09:23. > :09:26.They cannot say anything. If you say something, you might be hauled up by
:09:27. > :09:31.the police, questioned and may be beaten. But that happened while you
:09:32. > :09:39.were in power, sir. Yes because there were reasons for it. I didn't
:09:40. > :09:45.catch people for no reason. They were opposed against me. Two of my
:09:46. > :09:54.closest leaders, senior leaders, contested against me. They lost
:09:55. > :10:02.during a proper election. Mr Najib doesn't allow anyone to contest
:10:03. > :10:07.against him. He has his deputy because -- he had his deputy sacked
:10:08. > :10:10.because he deputy did not agree with the management of 1MDB. During my
:10:11. > :10:16.time I had five or six ministers who went against me, I retain them as my
:10:17. > :10:19.ministers after they have doubled that. Malaysia isn't the only
:10:20. > :10:25.country in the region to see corruption on such a large scale.
:10:26. > :10:30.I've come to Jakarta, the capital of Indonesia, south-east Asia largest
:10:31. > :10:35.economy which has been ranked as one of the most corrupt countries in the
:10:36. > :10:39.world, but in recent years, global trackers of corruption have shown a
:10:40. > :10:42.slight improvement here. In a moment I will be speaking to a panel of
:10:43. > :10:46.experts who will tell me what has worked here and some of the
:10:47. > :10:52.solutions they see in battling corruption. But first, an
:10:53. > :10:57.alternative look at the situation from our comedy consultant.
:10:58. > :11:07.That's more like it. I've always wanted to be a Private investigator,
:11:08. > :11:13.like the ones in the movies, down at heel gumshoe, fighting powers around
:11:14. > :11:18.world. But in reality, a big issue is being investigated. This week I
:11:19. > :11:22.am in search of answers about corruption and businesses. Keep it
:11:23. > :11:26.to yourself. For businesses around the world corruption is a real
:11:27. > :11:31.issue. There's even an index of countries which tells you which of
:11:32. > :11:36.the most and least corrupt. The corruption perception index looks at
:11:37. > :11:41.public sector corruption in about 180 odd countries and generally the
:11:42. > :11:44.ones that do better of the Scandinavian countries, Singapore,
:11:45. > :11:49.New Zealand, and generally the ones that do worse are fragile and
:11:50. > :11:54.conflict or post-conflict states like North Korea, Afghanistan,
:11:55. > :11:59.Myanmar. Any country is susceptible to corruption and it's a mistake to
:12:00. > :12:03.think that others are and some aren't. It's about the robustness of
:12:04. > :12:09.your systems and when it takes root it is hard to eradicate. And it's
:12:10. > :12:14.not a victimless crime. There was a direct cost to business from
:12:15. > :12:18.corruption. It increases the cost of doing business by 10%. That is paid
:12:19. > :12:24.by the customer or eats into profits. One thing I would like to
:12:25. > :12:27.know more about is how does it work, this bribery and corruption
:12:28. > :12:36.business. Not that I'm going to be doing anything of it, of course.
:12:37. > :12:42.million if you're engaged or committing to pay a bribe, you
:12:43. > :12:46.create the finances for that from the business model, internally from
:12:47. > :12:51.the business? Often what we see is the use of third parties, in many
:12:52. > :12:54.cases, international bribery. That could be an agent working in a
:12:55. > :13:03.foreign jurisdiction on your behalf who would pay a bribe. You have to
:13:04. > :13:06.try and deflect -- deflect the finances, the funds on your behalf,
:13:07. > :13:09.whether in cash or not. In those cases, we see the use of corporate
:13:10. > :13:18.vehicles, or offshore financial centres, to try and conceal the
:13:19. > :13:20.movement of finances. I have got to go, I am about to crack this case
:13:21. > :13:21.wide open. How did you stop people who practice
:13:22. > :13:24.corruption from enjoying It is how we reshape cultures
:13:25. > :13:31.within business to ensure that the dominant narrative
:13:32. > :13:32.is one about ethical, socially responsible behaviour,
:13:33. > :13:36.and not about ensuring their objectives are met
:13:37. > :13:38.through bribery and corruption or The London Anticorruption Summit
:13:39. > :13:42.was interesting because many international treaties
:13:43. > :13:43.and conventions have failed They have gone to the lowest
:13:44. > :13:52.common denominator route. That has meant they are not
:13:53. > :13:55.as strong as they should be. The London Summit tried to bring
:13:56. > :13:58.together governments that really were serious about
:13:59. > :13:59.tackling corruption, It looks like investigators,
:14:00. > :14:06.proper ones, not me, are part of a global momentum
:14:07. > :14:09.to take down the bad guys. If you will excuse me,
:14:10. > :14:16.a new case has just come in. If you like that, you can catch
:14:17. > :14:18.more of his material at our website,
:14:19. > :14:22.bbc.com/talkingbusiness. For more on this issue,
:14:23. > :14:26.I am joined by a panel of experts. We have the co-founder
:14:27. > :14:33.of a law firm. The international board member
:14:34. > :14:39.for Transparency International. And the managing director
:14:40. > :14:41.of the American Chamber We have been talking about how
:14:42. > :14:45.corruption throughout south-east Asia has become
:14:46. > :14:49.an increasingly pervasive problem. Perhaps you can jump
:14:50. > :14:57.in right off the bat. In the last year, we have seen
:14:58. > :15:00.a massive corruption A lot of the reason for why
:15:01. > :15:05.that was able to get to the scale it did was money flowed within borders
:15:06. > :15:08.and outside of borders quite easily. How do you prevent something
:15:09. > :15:11.like that happening? Grand corruption cases like this,
:15:12. > :15:13.we see happening all We cannot get to the people
:15:14. > :15:23.because illicit money is being flowed through such
:15:24. > :15:26.complicated structures, hence we are calling for greater
:15:27. > :15:28.transparency of corporate This is part of the G20
:15:29. > :15:38.conversation also. The G20 anticorruption working group
:15:39. > :15:47.is really pushing for this. Disclosure of information,
:15:48. > :15:51.that is something we have to demand. What happened eventually
:15:52. > :16:00.in Malaysia, the other thing is the system
:16:01. > :16:03.in Malaysia is not open. It is a controlled democracy,
:16:04. > :16:10.semi-authoritarian. Now in the region,
:16:11. > :16:12.we have seen a retreat We thought Malaysia would become
:16:13. > :16:17.more open, it did not. Thailand is under a military
:16:18. > :16:19.government for the Myanmar, better, things are moving
:16:20. > :16:24.ahead, but it remains to be seen Is the region going to go the way
:16:25. > :16:39.of Malaysia and Thailand, That openness, I think,
:16:40. > :16:43.in a more open system, I do not believe 1MDB
:16:44. > :16:46.could have happened. The political fallout in this
:16:47. > :16:50.country, in Indonesia, against a scandal of that
:16:51. > :16:53.magnitude would be so great It is not just a matter of having
:16:54. > :16:57.to deal with international financial systems, we have
:16:58. > :16:59.to work with the lawyers, the gatekeepers, the financial
:17:00. > :17:04.analysts, the lawyers, there are so many ways
:17:05. > :17:07.that the illicit gains We need to work together,
:17:08. > :17:16.international cooperation What are the sorts of changes that
:17:17. > :17:24.can be made in terms of regulations to make them more stringent
:17:25. > :17:30.about catching these things we have discussed, but they do not
:17:31. > :17:40.seem to be working. Malaysia has an anticorruption
:17:41. > :17:42.commission as well. I think we have all the regulation
:17:43. > :17:45.that we need, at least to get us What is still challenging
:17:46. > :17:51.is the implementation. The difference between Indonesia,
:17:52. > :17:57.the anti-corruption commission, and Malaysia, Vietnam,
:17:58. > :17:59.other countries, this was a truly Not answering to the president
:18:00. > :18:09.or the Parliament. Also, they have significant
:18:10. > :18:12.support from the media, which is free, and from the civil
:18:13. > :18:16.society organisation, which also pretty much
:18:17. > :18:21.have their own freedom. This combination, I think,
:18:22. > :18:28.is very critical, but I do not Then the government
:18:29. > :18:31.is expected to do more. I think they have done,
:18:32. > :18:34.quite a few, I will Setting up companies in Indonesia,
:18:35. > :18:42.a limited liability company, in the past, let's say 15 years
:18:43. > :18:44.ago, it takes months. Right now, pretty much
:18:45. > :18:53.all the processes online. You can set it up in,
:18:54. > :18:55.the actual setup process is, the notary will click,
:18:56. > :18:58.and you will get approval One other significant
:18:59. > :19:09.progress, the Supreme Court. In the past, it was very difficult
:19:10. > :19:14.for us to get the court judgements. If you were party to a dispute,
:19:15. > :19:17.once it is decided you If you're a lawyer, you want to be
:19:18. > :19:22.able to access the past decisions, There was no access
:19:23. > :19:30.to the court decision. The Supreme Court has
:19:31. > :19:51.published more than 1 million It is accessible to everyone. Having
:19:52. > :19:57.said that, the whole process is not just about the government making
:19:58. > :20:02.changes. The private sector also has a responsibility. They also have a
:20:03. > :20:09.role to play. We have to ensure that companies live up to the ideals of
:20:10. > :20:15.transparency. They, too, report their anti-corruption mechanisms,
:20:16. > :20:23.they report their financial Holdings, beneficial ownership. They
:20:24. > :20:26.report the payments they make, facilitation payments. There are
:20:27. > :20:32.lots of things that the private sector also needs to do in order to
:20:33. > :20:38.clean up. Corruption takes two to tango. It is a two-way dance. Is the
:20:39. > :20:41.private sector clean-up in Southeast Asia? You know who the good
:20:42. > :20:48.companies are in any country. There are some great companies in the
:20:49. > :20:51.Philippines that are pretty clean. There are some great companies here
:20:52. > :20:53.that are pretty clean. When you want to do business here is a foreign
:20:54. > :21:00.company, you need Indonesian partners. There are no shortage of
:21:01. > :21:07.partners. You can do good business with them. There is lots of clean-up
:21:08. > :21:09.going on, and it is improving. But it is a lifelong struggle. One last
:21:10. > :21:20.thing I would mention that I am struck by, the popularity of the
:21:21. > :21:25.Governor of Jakarta, and the rise of certain other district head around
:21:26. > :21:31.the country, we are also seeing in Indonesia, something quite
:21:32. > :21:37.remarkable in this reform period. Political power is deriving from
:21:38. > :21:41.actually providing services to your constituents. You cannot provide
:21:42. > :21:45.services to your constituents and be stealing the money. It does not
:21:46. > :21:55.work. You either provide services or steal the money. I have visited
:21:56. > :21:59.districts around Java where you can visibly see that this ambitious
:22:00. > :22:05.politician has figured out, I can rise higher by delivering services.
:22:06. > :22:09.Look what he did. That kind of thing, that is rewarded at the
:22:10. > :22:15.ballot box, and has a public dimension to it, I think that sort
:22:16. > :22:19.of thing will have a real impact on corruption as well. Finally, I want
:22:20. > :22:24.to ask you, if Indonesia, the largest economy in Southeast Asia,
:22:25. > :22:29.appears to be getting it right, or better, is there hope for the other
:22:30. > :22:36.economies in the region? Of course. If we can do it, anyone else can.
:22:37. > :22:40.Indonesia is so big. We are such a complex country, so diverse. If we
:22:41. > :22:45.can get our act in order, I do not think the other countries will have
:22:46. > :22:51.any problems. They can learn from us what to do and what not to do. Yes,
:22:52. > :22:56.I am optimistic we can get there together. Thank you so much for
:22:57. > :23:00.joining us for this edition of Talking Business. That is it for the
:23:01. > :23:05.show. Next week, Tanya Beckett will be in Brussels where she will be
:23:06. > :23:24.looking at the future of the European Union. Do join us then.
:23:25. > :23:29.Variety is the spice of life and we have had plenty of that this
:23:30. > :23:32.weekend. Some have had sunshine others have had wet weather. This
:23:33. > :23:33.was