Cenbet: Learn from 1MDB, don't put politicians on Khazanah's board

The Centre for a Better Tomorrow (Cenbet) has spoken out against the appointment of Prime Minister Dr Mahathir Mohamad and Economic Affairs Minister Azmin Ali to the board of Khazanah Nasional Berhad, saying that political appointments to sovereign wealth funds could lead to poor accountability and unnecessary exposure to liabilities.  

In a statement, the local think tank cited the case of 1MDB, in which it said that “politicians’ interference” in a sovereign wealth fund resulted in a massive scandal, due to the lack of proper checks and balances.

Cenbet said sovereign wealth funds "should be run like any other corporation - with political considerations being excluded from the boardroom".

"In the event that there is a specific political purpose for the fund, it should be made clear as part of its mission statement, for the management to know and follow, and being accountable for the public," it said.

Having professionals on the board will enable the government to bring the board to task, in the event of mismanagement, Cenbet added.

"This is unlike statutory boards, some of which are chaired by ministers, as these agencies are directly answerable to Parliament. Matured democracies around the world shun the practice of having politicians manage public-funded investments. Malaysia must not see another failure or bailout caused by political interference.

"This would also be consistent with institutional reforms which the new government advocates," said Cenbet.

Furthermore, having the prime minister and cabinet minister (photo) on the board of Khazanah Nasional Berhad would unnecessarily expose them to liabilities which are best shouldered by corporate leaders, it said.

Cenbet also acknowledged the contributions of previous Khazanah board members in substantially growing the nation's wealth.

Yesterday, Centre to Combat Corruption and Cronyism (C4) executive director Cynthia Gabriel expressed concern about the naming of Mahathir as the chairperson of Khazanah, and urged the government to do away with appointing individuals to the board "by convention", to prevent corruption and mismanagement.

Mahathir had also yesterday defended his self-appointment to the sovereign wealth fund board, saying he wanted to take charge to put it "in the right direction" and said that he did not "earn RM7 million in pay" from his position there.

Khazanah's board of directors last week offered to resign en masse after Mahathir's criticism that Khazanah had strayed from its original objective. The government accepted the resignations.

Apart from Mahathir, Azmin has also joined the Khazanah board as a director.

Others on the board are Mohd Hassan Marican, who is also a member of the Council of Eminent Persons, Sukhdave Singh and Goh Ching Yin.

Sukhdave was a former deputy governor of Bank Negara, while Goh is a director at Maybank Asset Management Group Berhad and formerly served as the Securities Commission's executive director for market development. Mkini