An interview with DS Anwar Ibrahim is featured in the current issue of CFO Europe.

Anwar Ibrahim
by Janet Kesnar

Throughout much of the 1990s, Anwar Ibrahim was best known among Asia watchers as Malaysia’s heir-apparent to Mahathir Mohamad, the country’s long-standing prime minister who retired in 2003.

Anwar, however, fell from grace in 1998, five years after being appointed deputy prime minister, amid—what many believe—were trumped-up charges of corruption and sodomy. After serving six years in prison, he was freed in 2004. The sodomy charges were dropped, but the corruption charges remain, thereby preventing him from active politics until April 2008. During this period, Anwar, who turns 60 in August, continues to be a formidable presence on his country’s political scene as an adviser to the opposition People’s Justice Party, while dipping into academia and lecturing abroad at Oxford, Johns Hopkins and other universities as a voice of moderate Islam.

He’s also been an active advocate of another issue close to his heart: the global fight against fraud and corruption. It’s within his capacity as honorary president of AccountAbility, a London-based not-for-profit which advocates transparency in business, government and NGOs, that Anwar recently spoke with CFO Europe.

Since your release from prison, you’ve become a vocal critic of the private and public sectors’ inability to fight corruption. And most recently, in a new report from AccountAbility called “Development as Accountability,” you fire a salvo at the corporate sector, along with governments and NGOs, for abusing “their wealth and influence” while failing “repeatedly, visibly and generally without penalty to deliver on their promises of social justice and sustainable livelihoods.” Is the situation as bleak as your essay suggests?

Partly. In this regard, we in Asia and in the rest of the developing world have placed too much hope on the industrialised world. That’s why there is growing disillusionment. But I wouldn’t want to sound too pessimistic because there has been change for the better. In many cases, the private sector has taken it upon itself to promote public awareness on issues such as environmental protection and sustainable growth.

In June’s On the Record, CFO Europe spoke with Joe Kaeser, the CFO of Siemens, which is one of several European companies embroiled in bribery and corruption scandals. What’s your take on these cases?

I’m not particularly surprised. I’ve seen contracts involving large, multinational companies for which finance ministers and policymakers receive kickbacks disguised as legitimate commissions. But a half a billion-ringgit (€1m) commission cannot be legitimate. It shows that fraud and corruption are not purely developing world problems, and that there are always two sides to the story.

What is damaging to my mind is the reluctance of many of us in the developing world to be more forceful with regards to governance and accountability. The impact of corruption on a small country in Africa is potentially far more damaging to its economic development than in, say, the US or the UK, where corruption can be exposed and brought to the courts, but it doesn’t really disrupt the underlying institutions.

Do you expect to see any fallout from the various European cases in Asia?

My concern is that many business people in the developing world will start to say, “Why stop the corruption in Africa when the developed world can’t even stop it?” But the setbacks in Europe should not be used as a pretext for these countries to avoid reform….The issues of governance and accountability must remain a universal commitment regardless of where the corruption takes place. So while developments in Europe are positive in exposing corruption, we should never use such incidents to deflect criticisms of the stench in our own backyards.

So who should ultimately be responsible for driving change—the developed countries or the developing countries?

It has to be both. If we in the developing world are seen to adopt the rules of ethics and governance of the private sector in the developed world, many will react negatively, citing the imposition of western values as an excuse not to move forward. Change must be an indigenous process. While we should be mindful of cultural factors, we cannot use them as a pretext to condone corruption or to legitimise the ill-gotten wealth of authoritarian leaders. These issues resonate in both the West and the East, among Christians and Muslims, Buddhists and Hindus. Promoting this concept is precisely my objective with AccountAbility.

Are you seeing much progress?

Corruption is far more endemic now than in the past. According to Transparency International’s Corruption Perception Index, Malaysia’s rating as a “least corrupt” country has deteriorated over the past year, falling from 39th place to 44th place out of around 160 countries. Of the 25 Asia-Pacific countries in the index, Malaysia ranked tenth. Meanwhile, we’ve been slipping in terms of being an attractive destination for foreign direct investment. According to Unctad, FDI inflows into Malaysia fell to $3.9 billion (€2.9 billion) in 2006 from $4 billion in 2005 and $4.6 billion in 2004.

And now, political leaders [in Malaysia] are using the fact there is cheaper labour in China and India to explain why we are losing our competitiveness. But this is absurdly misleading. The attractiveness of India and China is not purely a result of the availability of low-cost labour. The competencies in their IT sectors are far superior to ours, as are their institutions of higher education and the strength of their R&D sectors. To compete we require market reform, and we need the concomitant institutions in place to provide checks and balances that monitor and combat corruption—such as a free media, which we don’t have, and an independent judiciary, which we don’t have. That’s why this so-called “vibrant Malaysian economy” is no longer sustainable.

But implementing these changes is not easy. It was one of the major issues I raised when I was in government in Malaysia. I realised that many prefer to have a timid anti-corruption agency answerable only to the prime minister, or they support strong legislation with weak enforcement so that the system never really changes. Only with proper legislation combined with full disclosure, sound enforcement and a commitment to supporting civil society institutions and a free media can we have a meaningful “zero tolerance” anti-corruption policy. Otherwise all these rhetorical pronouncements don’t amount to much.