Research: Political patronage in GLCs persists in PH, PAS states

NSTP Team

KUALA LUMPUR: Political patronage at state government-linked companies (GLC) persists in the Pakatan Harapan (PH) and PAS stronghold states, according to a research.

The research titled “Government in Business: Diverse Forms of Intervention” claimed that since 2008, PKR and DAP in Selangor and Penang respectively, for example, had "placed a large number of senior party leaders as board members" in all strategic state GLCs and its subsidiaries.

Reporting on the findings, Malay Mail today said the research also claimed that despite being a common practice, the move was prone to abuse.

The research was produced by a team led by political economics professor Terence Gomez from Universiti Malaya.

“When the government has intervened in the economy through GLCs, its forms of intervention have not always been policy-driven, in the pursuit of its stated economic and social goals.

“A key factor contributing to corrupt practices within GLCs is the appointment of politicians to their boards of directors. The members of these boards are public trustees but do not act as such.

“One consequence of this practice, also a form of political patronage, is that it undermines public ownership of corporate enterprises and contributes to the idea that this form of government intervention is not viable or sustainable," the report read as quoted by the news portal.

Gomez wrote that the “conduct of patronage is extensive”, due to the unbridled power accorded to the chief minister or menteri besar over the states' top investment arm Chief Minister Incorporated (CMI) or Menteri Besar Incorporated (MBI).

In Selangor, the research pointed out that then menteri besar Datuk Seri Mohamed Azmin Ali "wielded virtually monopolistic control over businesses and social enterprises through political directorships at key state GLCs" and indirect state ownership of “holding companies” such as Kumpulan Darul Ehsan Berhad or Kumpulan Peransang Selangor.

The report said the GLCs and its subsidiaries have senior PKR and DAP leaders as board members, including Sivarasa Rasiah, Kamarul Bahrin Abbas, Yeo Bee Yin and Teresa Kok.

“The chief minister’s direct control of these GLCs reflects the importance of these enterprises through the other companies, the chief minister can control the state media agency, education institutions and welfare schemes which may benefit him politically,” the report said.

In Penang, the creation of CMI in 2009 following DAP's landslide victory in the 2008 general election under the leadership of then chief minister Lim Guan Eng, saw "concentration of power" as he was the only politician on the board.

The research said Lim had directorships in several GLCs and five subsidiaries or associate companies - Penang Development Corporation and State Secretary, Penang Incorporated (SSI), which owns Invest-in-Penang, Georgetown World Heritage Inc and public-listed PBA Holdings.

In the news report, the Malay Mail said Gomez claimed: "Penang has a higher number of political directorship in its GLCs compared to Selangor, with notable senior DAP leaders and elected representatives found to be directors of numerous state companies."

“More intriguingly, they even include politicians representing constituencies outside Penang such as Tony Pua (from Selangor) and Anthony Loke (from Seremban),” the research read as quoted.

In PAS-ruled Kelantan, the research claimed that political patronage was more "prevalent", with the menteri besar and the deputy menteri besar function as directors in key state institutions.

Gomez said the deputy menteri besar has directorships in companies owned by Kelantan MBI, Kelantan State Economic Development Corporation (SEDC) and Yayasan Kelantan Darulnaim; and director of GLCs overseeing enterprises including agriculture, tourism and construction - Kumpulan Perladangan Perbadanan Kemajuan Iktisad Negeri Kelantan, MBI Development, Majaari Services and Kias Darulnaim.

He said there is also a "particularly high level of political presence in the boards of directors of GLCs, comprising state assemblymen, MPs, former politicians and local PAS division leaders".

“This suggests extensive patronage at work involving high-ranked politicians and local-level leaders. Besides the politicians, key actors in both MBI and SEDC are the CEOs." © New Straits Times Press (M) Bhd