KUALA LUMPUR – Bersih 2.0 has called for a new law to usher reform in the appointment process of chairmen and directors of government-linked investment companies (GLICs), government-linked companies (GLCs) and all commercially related statutory bodies.
The election watchdog’s steering committee, in a statement following the launch of its report Reforming the Appointment Process of Directors in GLICs, GLCs and Commercially Related Statutory Bodies today, said there should be a GLC Act to clearly define such companies and regulate the appointment process of the chairmen/presidents and directors, to ensure compliance with the principles of transparency, accountability and meritocracy.
“The parliamentary select committees (PSCs) should be given power to scrutinise the appointment process as a check-and-balance mechanism.
“Such reform is much needed, as the power is currently highly concentrated in the hands of the executive, especially the prime minister.
“It was abused during Barisan Nasional and Pakatan Harapan’s rule for political patronage and control of resources, at the expense of merit, competency and professionalism.”
It said the unchecked abuse of such powers became more evident under the Perikatan Nasional government, with positions in GLICs, GLCs and commercially related statutory bodies allegedly used to entice elected representatives to switch parties and support the administration.
Institute for Democracy and Economic Affairs CEO Tricia Yeoh suggested that PSCs vet these appointments to ensure they are qualifications-based, and not made for personal or political gain.
“Although a case can be made that the executive appoints his trusted persons to have oversight, especially in state-owned enterprises (SOEs) carrying out important public policy objectives, the appointment of politicians to these SOEs should be avoided to minimise conflict of interest.”
Main problems identified
The Bersih report, authored by Ahmad Fikri Fisal and commissioned by the polls watchdog, identifies several key problems with regard to the issue:
- The expansion of the payroll vote when an elected representative is appointed director of a GLIC, GLC or statutory body that is within the legislature’s supervision. This only serves to strengthen the executive’s control over the legislature, hampering the latter’s function in preserving the integrity of the separate branches of power, and in holding the executive accountable.
- GLICs’ incorporation statutes and parliamentary laws governing GLCs do not spell out stringent requirements for persons to be appointed as directors, and there is no legal or institutional instrument to ensure the appointments made by the minister have the appropriate qualifications.
- There are no guidelines for the appointment of directors at the statutory (GLIC) level. The Green Book on Enhancing Board Effectiveness applies only to major GLCs. Guidelines by regulatory agencies, such as Securities Commission Malaysia and Bursa Malaysia Bhd, are applicable only to some public-listed GLCs. And, there are no identified guidelines related to state-level GLCs’ appointment process. This lack of a clear framework makes regulating appointments and instituting reforms difficult.
- The executive, especially the prime minister, has complete authority over the appointment of directors. Even the appointment of directors in non-GLIC statutory bodies, such as Felda, Mara and Petronas, is dominated by the executive.
- The convoluted GLC ownership structure and official definition of GLCs cover only commercial ones and those owned by GLICs. They exclude companies owned by other statutory bodies, like Petronas, Felda and Mara. Also excluded are government-owned companies that are not commercially oriented.
Reforms sought
As such, Bersih is calling for the reforms listed below:
- Prohibit the appointment of elected representatives to these organisations through a new GLC Act, or by amending existing, relevant laws such as the Companies Act.
- Empower PSCs to scrutinise and approve director nominees of GLICs, GLCs and commercially related statutory bodies under the respective ministries. This system can be emulated by state governments for such companies at the state level.
- A clear definition of GLCs and GLICs applicable at both the state and federal levels should be laid out in the abovesaid GLC Act or an existing law like the Companies Act. This will form the basis to institutionalise reforms relating to the process and requirements of GLC director appointments.
- Enhanced disclosure and transparency is mandatory through periodic reports on listed or unlisted GLICs and GLCs that should include important information such as director remuneration and background, and tender bids. A specific body such as the Putrajaya Committee on GLC High Performance should take on this task. – The Vibes, May 25, 2021
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