Browse content similar to 15/10/2016. Check below for episodes and series from the same categories and more!
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Malaysia's one MD scandal has blown open the discussion around | :00:09. | :00:10. | |
This region is home to some of the fastest-growing economies in the | :00:11. | :00:14. | |
world, but also some of the most corrupt. | :00:15. | :00:16. | |
What are the challenges facing those who were trying to | :00:17. | :00:18. | |
battle corruption here and some of the solutions they're coming up | :00:19. | :00:21. | |
Welcome to Talking Business. I'm in Malaysia, a country involved in a | :00:22. | :01:02. | |
large corruption scandal. At the centre of it is One MDB. The | :01:03. | :01:09. | |
allegation is that billions of dollars of funds were siphoned from | :01:10. | :01:14. | |
One MDB by those running it in the used it as the own personal bank | :01:15. | :01:26. | |
account. The Prime Minister has denied wrongdoing frustration has | :01:27. | :01:33. | |
been brewing on the streets of Malaysia. Mostly contained, but | :01:34. | :01:38. | |
persistent. Just over a month ago, students in its capital city Kuala | :01:39. | :01:42. | |
Lumpur gathered to call for Malaysia Prime Minister -- for the Prime | :01:43. | :01:48. | |
Minister to step down. A precursor to a larger rally called by civil | :01:49. | :01:57. | |
society groups. These students say he has disgraced the country by | :01:58. | :02:03. | |
being involved in high level corruption at 1MDB. The whole world | :02:04. | :02:11. | |
knows about problems in our country and 1MDB has bought problems to our | :02:12. | :02:16. | |
country, so why should we be silent, as if we are oppressed? There is | :02:17. | :02:23. | |
possibly nothing that shows how in trench to corruption is in Malaysia | :02:24. | :02:42. | |
more than Najib Razak. Najib Razak set it up in 2009. In 2015 it was | :02:43. | :02:53. | |
revealed that the were financial irregularities. At least $3.5 | :02:54. | :02:57. | |
billion of public money had been stolen. Most of that has gone to | :02:58. | :03:12. | |
Najib Razak's associates. However, he has said it was a donation from | :03:13. | :03:18. | |
the Saudi royal family, allowed on the Malaysia in law, most of it has | :03:19. | :03:23. | |
been returned. That is a parliament are behind in, 100%... More | :03:24. | :03:28. | |
importantly, he and his ministers have stressed there is no proof of | :03:29. | :03:32. | |
his involvement. The Prime Minister has made it clear from the beginning | :03:33. | :03:35. | |
that we welcomed the investigation by the Department of Justice and if | :03:36. | :03:42. | |
there are any crimes committed, those people will be dealt with | :03:43. | :03:46. | |
according to the law, but as it is right now there is no indication, or | :03:47. | :03:51. | |
there is no judgment at all, whether in Malaysia or the International | :03:52. | :03:55. | |
Court, that says these issues have criminal elements to them. Yes, we | :03:56. | :04:02. | |
have some issues with the proper governance of 1MDB. That is why two | :04:03. | :04:06. | |
years ago the Prime Minister decided to have a new CEO of 1MDB and revamp | :04:07. | :04:18. | |
and have a proper strategised policy to revitalise 1MDB. So you accept | :04:19. | :04:23. | |
there were some issues of corporate governance at 1MDB? Even if the | :04:24. | :04:31. | |
Prime Minister wasn't directly involved, he has been named, but as | :04:32. | :04:37. | |
the leader of a country, this mass corruption taking place under his | :04:38. | :04:40. | |
watch, shouldn't he stepped up and resign? I didn't think so. As it is | :04:41. | :04:46. | |
right now, we know that 1MDB operates on its own. The Prime | :04:47. | :04:53. | |
Minister is the head of the advisory council, but 1MDB has its own | :04:54. | :04:59. | |
corporate structure. Decisions are made at the bottom level and then | :05:00. | :05:04. | |
brought to the Prime Minister. What is important is that the Prime | :05:05. | :05:10. | |
Minister has a plan to rationalise 1MDB. Remember this, we are talking | :05:11. | :05:15. | |
about a few billion, but if 1MDB is allowed some space, some latitude, | :05:16. | :05:27. | |
the land they are going to develop will generate approximately 172 | :05:28. | :05:37. | |
billion worth of great value. Give them time and at a business level it | :05:38. | :05:42. | |
will be resolved. But none of that really explains what the sovereign | :05:43. | :05:45. | |
fund is being investigated by at least half a dozen countries, | :05:46. | :05:49. | |
including the United States, Switzerland and Singapore. And how | :05:50. | :05:55. | |
this was all allowed to go on for so long, grow so big and climbs so high | :05:56. | :05:58. | |
in the power chain in the first place. This is where the Ministry of | :05:59. | :06:07. | |
Finance, the Palace of Justice and the Prime Minister's office sits. | :06:08. | :06:10. | |
It's the heart of government in Malaysia were all the big decisions | :06:11. | :06:13. | |
are made, but the political landscape is shifting and the | :06:14. | :06:18. | |
opposition is gathering pace. The former Prime Minister has set up a | :06:19. | :06:22. | |
new political party to challenge the current administration, but critics | :06:23. | :06:26. | |
said he would Malaysia for more than 20 years with an iron fist from the | :06:27. | :06:30. | |
late 1980s and much of what he is trying to challenge today flourished | :06:31. | :06:34. | |
under his watch. As far as corruption is concerned, do I have | :06:35. | :06:41. | |
cases like 1MDB where people accuse me of stealing money? Until now, | :06:42. | :06:48. | |
after I resigned, when the people who took over against me, they | :06:49. | :06:56. | |
couldn't find anything against me. If they could, by now I will be in | :06:57. | :07:01. | |
jail. With all due respect, sir, you are saying to me, show me the proof | :07:02. | :07:05. | |
I have done something wrong, then I can talk about it. But isn't that | :07:06. | :07:10. | |
what the Prime Minister is saying? He's saying I haven't done anything | :07:11. | :07:13. | |
wrong, so show me the proof then I will respond it. The proof can only | :07:14. | :07:19. | |
be found outside the country. All these charges made by outside the | :07:20. | :07:23. | |
country, all the reports about him, this was possible because within the | :07:24. | :07:29. | |
country, no one is allowed to speak on this issue. His own party was | :07:30. | :07:34. | |
instructed not to talk about 1MDB, or the 2.6 billion in his account. | :07:35. | :07:41. | |
So in the country, you can't do a thing. If it is open, if the rule of | :07:42. | :07:46. | |
law is sustained, we can report about this. We have enough evidence | :07:47. | :07:51. | |
to go to the courts, but you can't go to the courts. The moment you | :07:52. | :07:57. | |
reports, he goes to the Attorney General and the Attorney General was | :07:58. | :08:03. | |
recently appointed by him, he will always say, I've found nothing wrong | :08:04. | :08:08. | |
with what Mr Najib has done. Would you accept that there was corruption | :08:09. | :08:13. | |
and an abuse of power during the time you were in office? Yes. | :08:14. | :08:19. | |
Corruption is found everywhere, even in Britain, even in the US. Found | :08:20. | :08:25. | |
everywhere. But during my time, we didn't have corruption on this | :08:26. | :08:28. | |
scale. It's described by the US as the biggest fraud and | :08:29. | :08:42. | |
money-laundering that they have had. There has been corruption in my | :08:43. | :08:46. | |
staff. Not me. They have not proved that I've been corrupt. What damaged | :08:47. | :08:55. | |
you think this scandal from 1MDB has had on Malaysia internationally? | :08:56. | :09:01. | |
Today, people laugh at Malaysia and say, what has happened to your | :09:02. | :09:06. | |
country? Everywhere we go people make nasty comments about Malaysian. | :09:07. | :09:12. | |
The reputation is really very bad. Only in Malaysia we have people who | :09:13. | :09:16. | |
say there is nothing wrong. That is because Mr Najib controls the press. | :09:17. | :09:22. | |
They cannot say anything. If you say something, you might be hauled up by | :09:23. | :09:26. | |
the police, questioned and may be beaten. But that happened while you | :09:27. | :09:31. | |
were in power, sir. Yes because there were reasons for it. I didn't | :09:32. | :09:39. | |
catch people for no reason. They were opposed against me. Two of my | :09:40. | :09:45. | |
closest leaders, senior leaders, contested against me. They lost | :09:46. | :09:54. | |
during a proper election. Mr Najib doesn't allow anyone to contest | :09:55. | :10:02. | |
against him. He has his deputy because -- he had his deputy sacked | :10:03. | :10:07. | |
because he deputy did not agree with the management of 1MDB. During my | :10:08. | :10:10. | |
time I had five or six ministers who went against me, I retain them as my | :10:11. | :10:16. | |
ministers after they have doubled that. Malaysia isn't the only | :10:17. | :10:19. | |
country in the region to see corruption on such a large scale. | :10:20. | :10:25. | |
I've come to Jakarta, the capital of Indonesia, south-east Asia largest | :10:26. | :10:30. | |
economy which has been ranked as one of the most corrupt countries in the | :10:31. | :10:35. | |
world, but in recent years, global trackers of corruption have shown a | :10:36. | :10:39. | |
slight improvement here. In a moment I will be speaking to a panel of | :10:40. | :10:42. | |
experts who will tell me what has worked here and some of the | :10:43. | :10:46. | |
solutions they see in battling corruption. But first, an | :10:47. | :10:52. | |
alternative look at the situation from our comedy consultant. | :10:53. | :10:57. | |
That's more like it. I've always wanted to be a Private investigator, | :10:58. | :11:07. | |
like the ones in the movies, down at heel gumshoe, fighting powers around | :11:08. | :11:13. | |
world. But in reality, a big issue is being investigated. This week I | :11:14. | :11:18. | |
am in search of answers about corruption and businesses. Keep it | :11:19. | :11:22. | |
to yourself. For businesses around the world corruption is a real | :11:23. | :11:26. | |
issue. There's even an index of countries which tells you which of | :11:27. | :11:31. | |
the most and least corrupt. The corruption perception index looks at | :11:32. | :11:36. | |
public sector corruption in about 180 odd countries and generally the | :11:37. | :11:41. | |
ones that do better of the Scandinavian countries, Singapore, | :11:42. | :11:44. | |
New Zealand, and generally the ones that do worse are fragile and | :11:45. | :11:49. | |
conflict or post-conflict states like North Korea, Afghanistan, | :11:50. | :11:54. | |
Myanmar. Any country is susceptible to corruption and it's a mistake to | :11:55. | :11:59. | |
think that others are and some aren't. It's about the robustness of | :12:00. | :12:03. | |
your systems and when it takes root it is hard to eradicate. And it's | :12:04. | :12:09. | |
not a victimless crime. There was a direct cost to business from | :12:10. | :12:14. | |
corruption. It increases the cost of doing business by 10%. That is paid | :12:15. | :12:18. | |
by the customer or eats into profits. One thing I would like to | :12:19. | :12:24. | |
know more about is how does it work, this bribery and corruption | :12:25. | :12:27. | |
business. Not that I'm going to be doing anything of it, of course. | :12:28. | :12:36. | |
million if you're engaged or committing to pay a bribe, you | :12:37. | :12:42. | |
create the finances for that from the business model, internally from | :12:43. | :12:46. | |
the business? Often what we see is the use of third parties, in many | :12:47. | :12:51. | |
cases, international bribery. That could be an agent working in a | :12:52. | :12:54. | |
foreign jurisdiction on your behalf who would pay a bribe. You have to | :12:55. | :13:03. | |
try and deflect -- deflect the finances, the funds on your behalf, | :13:04. | :13:06. | |
whether in cash or not. In those cases, we see the use of corporate | :13:07. | :13:09. | |
vehicles, or offshore financial centres, to try and conceal the | :13:10. | :13:18. | |
movement of finances. I have got to go, I am about to crack this case | :13:19. | :13:20. | |
wide open. How did you stop people who practice | :13:21. | :13:21. | |
corruption from enjoying It is how we reshape cultures | :13:22. | :13:24. | |
within business to ensure that the dominant narrative | :13:25. | :13:31. | |
is one about ethical, socially responsible behaviour, | :13:32. | :13:32. | |
and not about ensuring their objectives are met | :13:33. | :13:36. | |
through bribery and corruption or The London Anticorruption Summit | :13:37. | :13:38. | |
was interesting because many international treaties | :13:39. | :13:42. | |
and conventions have failed They have gone to the lowest | :13:43. | :13:43. | |
common denominator route. That has meant they are not | :13:44. | :13:52. | |
as strong as they should be. The London Summit tried to bring | :13:53. | :13:55. | |
together governments that really were serious about | :13:56. | :13:58. | |
tackling corruption, It looks like investigators, | :13:59. | :13:59. | |
proper ones, not me, are part of a global momentum | :14:00. | :14:06. | |
to take down the bad guys. If you will excuse me, | :14:07. | :14:09. | |
a new case has just come in. If you like that, you can catch | :14:10. | :14:16. | |
more of his material at our website, | :14:17. | :14:18. | |
bbc.com/talkingbusiness. For more on this issue, | :14:19. | :14:22. | |
I am joined by a panel of experts. We have the co-founder | :14:23. | :14:26. | |
of a law firm. The international board member | :14:27. | :14:33. | |
for Transparency International. And the managing director | :14:34. | :14:39. | |
of the American Chamber We have been talking about how | :14:40. | :14:41. | |
corruption throughout south-east Asia has become | :14:42. | :14:45. | |
an increasingly pervasive problem. Perhaps you can jump | :14:46. | :14:49. | |
in right off the bat. In the last year, we have seen | :14:50. | :14:57. | |
a massive corruption A lot of the reason for why | :14:58. | :15:00. | |
that was able to get to the scale it did was money flowed within borders | :15:01. | :15:05. | |
and outside of borders quite easily. How do you prevent something | :15:06. | :15:08. | |
like that happening? Grand corruption cases like this, | :15:09. | :15:11. | |
we see happening all We cannot get to the people | :15:12. | :15:13. | |
because illicit money is being flowed through such | :15:14. | :15:23. | |
complicated structures, hence we are calling for greater | :15:24. | :15:26. | |
transparency of corporate This is part of the G20 | :15:27. | :15:28. | |
conversation also. The G20 anticorruption working group | :15:29. | :15:38. | |
is really pushing for this. Disclosure of information, | :15:39. | :15:47. | |
that is something we have to demand. What happened eventually | :15:48. | :15:51. | |
in Malaysia, the other thing is the system | :15:52. | :16:00. | |
in Malaysia is not open. It is a controlled democracy, | :16:01. | :16:03. | |
semi-authoritarian. Now in the region, | :16:04. | :16:10. | |
we have seen a retreat We thought Malaysia would become | :16:11. | :16:12. | |
more open, it did not. Thailand is under a military | :16:13. | :16:17. | |
government for the Myanmar, better, things are moving | :16:18. | :16:19. | |
ahead, but it remains to be seen Is the region going to go the way | :16:20. | :16:24. | |
of Malaysia and Thailand, That openness, I think, | :16:25. | :16:39. | |
in a more open system, I do not believe 1MDB | :16:40. | :16:43. | |
could have happened. The political fallout in this | :16:44. | :16:46. | |
country, in Indonesia, against a scandal of that | :16:47. | :16:50. | |
magnitude would be so great It is not just a matter of having | :16:51. | :16:53. | |
to deal with international financial systems, we have | :16:54. | :16:57. | |
to work with the lawyers, the gatekeepers, the financial | :16:58. | :16:59. | |
analysts, the lawyers, there are so many ways | :17:00. | :17:04. | |
that the illicit gains We need to work together, | :17:05. | :17:07. | |
international cooperation What are the sorts of changes that | :17:08. | :17:16. | |
can be made in terms of regulations to make them more stringent | :17:17. | :17:24. | |
about catching these things we have discussed, but they do not | :17:25. | :17:30. | |
seem to be working. Malaysia has an anticorruption | :17:31. | :17:40. | |
commission as well. I think we have all the regulation | :17:41. | :17:42. | |
that we need, at least to get us What is still challenging | :17:43. | :17:45. | |
is the implementation. The difference between Indonesia, | :17:46. | :17:51. | |
the anti-corruption commission, and Malaysia, Vietnam, | :17:52. | :17:57. | |
other countries, this was a truly Not answering to the president | :17:58. | :17:59. | |
or the Parliament. Also, they have significant | :18:00. | :18:09. | |
support from the media, which is free, and from the civil | :18:10. | :18:12. | |
society organisation, which also pretty much | :18:13. | :18:16. | |
have their own freedom. This combination, I think, | :18:17. | :18:21. | |
is very critical, but I do not Then the government | :18:22. | :18:28. | |
is expected to do more. I think they have done, | :18:29. | :18:31. | |
quite a few, I will Setting up companies in Indonesia, | :18:32. | :18:34. | |
a limited liability company, in the past, let's say 15 years | :18:35. | :18:42. | |
ago, it takes months. Right now, pretty much | :18:43. | :18:44. | |
all the processes online. You can set it up in, | :18:45. | :18:53. | |
the actual setup process is, the notary will click, | :18:54. | :18:55. | |
and you will get approval One other significant | :18:56. | :18:58. | |
progress, the Supreme Court. In the past, it was very difficult | :18:59. | :19:09. | |
for us to get the court judgements. If you were party to a dispute, | :19:10. | :19:14. | |
once it is decided you If you're a lawyer, you want to be | :19:15. | :19:17. | |
able to access the past decisions, There was no access | :19:18. | :19:22. | |
to the court decision. The Supreme Court has | :19:23. | :19:30. | |
published more than 1 million It is accessible to everyone. Having | :19:31. | :19:51. | |
said that, the whole process is not just about the government making | :19:52. | :19:57. | |
changes. The private sector also has a responsibility. They also have a | :19:58. | :20:02. | |
role to play. We have to ensure that companies live up to the ideals of | :20:03. | :20:09. | |
transparency. They, too, report their anti-corruption mechanisms, | :20:10. | :20:15. | |
they report their financial Holdings, beneficial ownership. They | :20:16. | :20:23. | |
report the payments they make, facilitation payments. There are | :20:24. | :20:26. | |
lots of things that the private sector also needs to do in order to | :20:27. | :20:32. | |
clean up. Corruption takes two to tango. It is a two-way dance. Is the | :20:33. | :20:38. | |
private sector clean-up in Southeast Asia? You know who the good | :20:39. | :20:41. | |
companies are in any country. There are some great companies in the | :20:42. | :20:48. | |
Philippines that are pretty clean. There are some great companies here | :20:49. | :20:51. | |
that are pretty clean. When you want to do business here is a foreign | :20:52. | :20:53. | |
company, you need Indonesian partners. There are no shortage of | :20:54. | :21:00. | |
partners. You can do good business with them. There is lots of clean-up | :21:01. | :21:07. | |
going on, and it is improving. But it is a lifelong struggle. One last | :21:08. | :21:09. | |
thing I would mention that I am struck by, the popularity of the | :21:10. | :21:20. | |
Governor of Jakarta, and the rise of certain other district head around | :21:21. | :21:25. | |
the country, we are also seeing in Indonesia, something quite | :21:26. | :21:31. | |
remarkable in this reform period. Political power is deriving from | :21:32. | :21:37. | |
actually providing services to your constituents. You cannot provide | :21:38. | :21:41. | |
services to your constituents and be stealing the money. It does not | :21:42. | :21:45. | |
work. You either provide services or steal the money. I have visited | :21:46. | :21:55. | |
districts around Java where you can visibly see that this ambitious | :21:56. | :21:59. | |
politician has figured out, I can rise higher by delivering services. | :22:00. | :22:05. | |
Look what he did. That kind of thing, that is rewarded at the | :22:06. | :22:09. | |
ballot box, and has a public dimension to it, I think that sort | :22:10. | :22:15. | |
of thing will have a real impact on corruption as well. Finally, I want | :22:16. | :22:19. | |
to ask you, if Indonesia, the largest economy in Southeast Asia, | :22:20. | :22:24. | |
appears to be getting it right, or better, is there hope for the other | :22:25. | :22:29. | |
economies in the region? Of course. If we can do it, anyone else can. | :22:30. | :22:36. | |
Indonesia is so big. We are such a complex country, so diverse. If we | :22:37. | :22:40. | |
can get our act in order, I do not think the other countries will have | :22:41. | :22:45. | |
any problems. They can learn from us what to do and what not to do. Yes, | :22:46. | :22:51. | |
I am optimistic we can get there together. Thank you so much for | :22:52. | :22:56. | |
joining us for this edition of Talking Business. That is it for the | :22:57. | :23:00. | |
show. Next week, Tanya Beckett will be in Brussels where she will be | :23:01. | :23:05. | |
looking at the future of the European Union. Do join us then. | :23:06. | :23:24. | |
Variety is the spice of life and we have had plenty of that this | :23:25. | :23:29. | |
weekend. Some have had sunshine others have had wet weather. This | :23:30. | :23:32. | |
was | :23:33. | :23:33. |