We have followed news on many infamous Malaysian politically-exposed persons who faced corruption trials in Kuala Lumpur, contrived to portray their acceptance of monies from businessmen to Arab royalties as donations in support of the philanthropic purposes of building mosques & financing single mothers, benevolence or election campaigning activities. Sometimes, their political aides handled the exchanges, seemingly to create an imaginary firewall between the direct bribery actors. In assuming such occupational hazard in their office, aides too corruptly sought introduction fees. Monies had transferred across personal bank accounts, by hand in envelopes/ duffel bags/ car trunks or through representative legal firms. If such transactions were truly donations, there had been no formalised documentation indicative of approval processes, tax exemption, receipts in acknowledgment, proper accounting records by donors, etc. There was no free lunch, for those donors had secured government project awards or other unfair advantages and managed to lobby for policies in their favour.
During elections, political parties resort to buying votes with cash. Additionally, these parties have always asserted that there is no wrong in giving out cash/ rice/ daily essentials, providing refreshments while campaigning and chartering buses to transport voters on polling days. Having been conditioned for decades with archaic, legacy practices of handouts not just during campaigning, voters of this circumstance are generally socially vulnerable (single parents, the aged, the incapacitated, etc.) and tend to reject anyone’s worldview of bribery.
Vis-a-vis counteracting patronage, influence-peddling, abuse of power, fund misappropriation and a widespread culture in bribery, an All-Party Parliamentary Group Malaysia (APPGM) for Political Financing is formed to advise on a Members Bill to regulate political funding. Political Financing loosely refers to “the activity of sourcing funds for political party activities and to sustain party machinery that encompasses, inter alia, fundraising, maintaining permanent offices, policy expertise, conducting polls, public education, media coverage for policy initiatives, and mobilising voters”. The quintessence of the Bill points to a triptych of governance, transparency and accountability. Introduced to reduce reliance on private funding, including to impede an incumbent government from misusing state resources, is a system that equitably distributes public funds from the national budget.
The Bill lays out the distribution criteria:
Establishment of independent oversight of the implementation & enforcement of stipulated regulations via (i) a Parliamentary Committee on Political Financing; (ii) a Political Financing Commission; and (iii) a Political Party Fund.
Only eligible political parties (in proportion to electoral votes, having the number of female elected representatives) can receive an allocation.
The Commission reports to the Committee on the Fund allocation & spends, keeps books & records, and ensures that Annual Financial Statements be audited by the Auditor General.
Recognising that other sources of contributions and donations to political parties or candidates are imminent, this area especially must be regulated:
The Commission is empowered to obtain information and reports from political parties and candidates on other funding sources accepted & utilised, and to investigate irregularities.
Election candidates are restricted to accepting donations by permissible donors up to ceiling RM1,000 into designated accounts and during an election period only.
Defining permissible donors and maximum thresholds for the financial year- restricted to Malaysian nationals and corporations; (i) RM50,000 by an individual, (ii) RM100,000 by a company and (iii) RM500,000 by a group of companies.
Government-linked companies, companies with government contracts, religious/ charitable foundations, political party affiliates, organised crime/ terrorist groups and foreign entities/ nationals are banned from contributing.
This looks to be the foundation of Malaysia’s Political Financing Act, alluding to building provisions that define and regulate among them, anonymous donations & disclosures (in excess of RM1,000 limit), in-kind donations & disclosures (loans, gifts, sponsorships, provision of services), limiting the recipients to parties, candidates (& appointed campaigning agents if applicable to Malaysian electoral system), reporting & transparency measures and sanctions.
Curbing undue influence and corruption
Further measures that merit consideration into the Act include how much can be spent on campaigning. In the US, soft money from deep-pocketed donors is the favoured source of contribution for supporting not a candidate, but party-building activities with the objective to “increase vote”, since its Federal Election Campaign Act 1974 restricts the number of hard money donations. Although not strictly regulated, soft money cannot be used to support federal candidate campaigns, it can be distributed through national party committees -a rather thin line that sees no pronounced distinction to its utilisation. Some Australian jurisdictions (federal, state/ territory levels) proposed ceiling limits on electoral expenditures in proportion to public funding and donations received. The electoral expenditures in reference to media and conducting polls sponsored by private corporations/ individuals, risk running into biasness towards the agendas setforth by sponsors’ coupling with the sponsored candidate/ party if not restricted.
Level-Playing Field
Requiring identification of all donations prevents powerful individuals or corporations from exerting disproportionate influence through undisclosed contributions. While absolute amount matters, the principle of transparency applies equally to all donations.
Donations are often accompanied by self-interests. The individual donor who donates RM10 can demand equitable access to affordable healthcare, quality education, job opportunities or infrastructural betterment in their constituency. Meanwhile the RM50,000 donor may want more policies to resolve climate crises, oppose gentrification of an older neighbourhood or stop deforestation. The RM50,000 donation might be perceived as more influential for its larger amount and could raise questions about the donor’s expectations or potential favours in return. However, a RM10 donation matters just as much. Cumulatively, small donations from many individuals can significantly impact a campaign or party.
Avoiding Loopholes
Not ascertaining donors, especially for large amounts and of those prohibited, can create loopholes. Anonymous donations can be used to circumvent regulations or hide potential conflicts of interest. The APPGMPF proposes to limit an anonymous donation to RM1,000. Anyone that wants to donate more must forgo the privilege of anonymity. Singapore’s Political Donations Act caps the total amount of anonymous donations that can be received by a candidate or a party during the election year to $5,000. Any superfluous anonymous donations must be returned or surrendered to the Registrar of Political Donations.
Policy or Mandate
Should political candidates be mandated to declare their financial information annually or during election period? As law makers who will pass the Bill, these Members of Parliament are cognisant of grey areas within the future Act from the get-go. For example, donations into designated accounts will be reported as required - any financial transactions to the candidates or parties outside of the election period may not hold up as donation in court. While anonymous RM1,000 donation is a cap, a single donor with bad faith could split their donation of RM50,000 or more among fifty or so individuals, and potentially more through these fifty individuals’ affiliates to avoid detection or enforcement of the law, at all times the candidate is tipped off on the incoming transactions from the principal donor. The difference lies in those who exploit mandate loopholes to reclaim access to money-politics and those who stand sentinel of the law.
A much needed reform
Should the Bill be enacted before the next General Election, the general public as participating donors under the Act will witness new electoral processes being enforced and be subject to compliance themselves. Business communities should mend their policy on political donations and liberate themselves with this other anti-corruption law by their side to fend off predatory PEPs. Ignorance of the law is no excuse.
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