Glitter and fake glory in the GLC protection racket

 

Government-linked companies (GLCs) are often in the news linked to frauds and various malfeasances, which can run up to billions. To be fair, they’re just keeping up with the Malaysia Boleh model – if it ain’t in the hundreds of millions, don’t bother getting out of bed for it.

Hanky-panky happens in our private sector, too, but on a smaller scale. Private sector money comes from shareholders who know, or should know, what are the risks they take when investing.

But then there’s the public sector, where anything goes and the amounts involved are staggering and mind-boggling.

The rakyat are inured to such scandals, partly because they have been around for a long time, and the numbers are so huge they become meaningless, and they’re happening when it’s getting tougher for people to just put food on the table.

Most importantly, the rakyat have been conditioned – brainwashed if you’re being unkind – into believing these scandalous projects are all being done on their behalf.

They’re more than grateful for a couple of hundred ringgit come election time, and willing to forgive and forget.

In Malaysia, there is a strong GLC presence in most business sectors, except those dealing with non-halal businesses. Banking, telecommunications, infrastructure, plantations, energy, automotive – the government is literally competing against the private sector in so many business areas.

GLCs started out as part of the government’s affirmative action programmes – the Malay Agenda in the peninsula, and the Natives’ Agenda in East Malaysia (though often it’s the Malay Agenda there too).

Some of these GLCs are well run, though with the overhang of the government control and agenda, you can never definitively say they achieved it fair and square. That judgment shall remain, until and unless the GLCs slip the shackle of government ownership and control.

While there are some good ones, GLCs are more known for their failures, which often meant billions poured into bailouts or lost through corruption, not to mention the taxes forgone had they been profitable.

The GLCs have become a convenient cash machine for some. There’s intense horse-trading among political warlords on who’ll be the chairman of how many GLCs in return for what favour, and you’d later hear of such GLCs losing millions, or even billions, because of this.

Even if the GLCs are run ethically, they suffer from having to select their top talents from a very shallow pool – Bumiputeras in the private sector, an already small number, and those in the good books of said warlords, which limits things even more.

And if it’s not a Bumiputera, it’s occasionally OK to bring a foreigner in, but it must never be a non-Bumiputera Malaysian! Go figure that one out.

I know of a GLC chief executive officer who was considered for a job which required working with foreign partners in a joint venture. His boss told him: “The foreigners love to drink, karaoke and play golf – since you already drink and karaoke, go learn how to play golf and the job is yours.”

I’m more familiar with an exhaustive and professional recruitment process to appoint people into big jobs. I don’t remember ever asking whether they play golf or karaoke or drink.

Once, years ago, I came across the CV of an ex-GLC guy, who must’ve fallen on hard times and applied for a job in my lowly listed multinational company. He detailed every single golf course he ever played on all continents. That list ran to about seven pages.

Needless to say, he didn’t get called for an interview: it didn’t help that I didn’t play golf, and neither did my CEO.

I’ve also had a short stint serving in a GLC. Fuelled by the “GLC transformation” excitement of the day, I decided to join one after over 22 years with multinationals. I took a big pay cut as GLCs then didn’t pay very well, and I turned down their German-made limousine and company driver as I never cared for such things.

I lasted mere months and then had my ass handed to me on a platter. I won’t go into the gory details of my firing, but at least that itch I had about “national service” was scratched, and the itch never returned.

The person who fired me was later fired himself and ended up in court facing a slew of charges. But nothing has been heard of it since then. Maybe he managed to compound all those charges?

If I was into schadenfreude, I’d have celebrated this big time. But I’ve moved on, and his fate didn’t move my needle the slightest.

I once recruited an investment banker who took an even bigger pay cut to scratch his own itch, and he said his biggest lesson was that, in a GLC, anybody can become a CEO. Where he came from, the talent pool was literally the entire world, and competition was fierce.

My own lesson? In a highly political environment such as a GLC, any act is always interpreted as a political act. Scratch your nose or fart too loudly, and somebody will surmise you’re trying to topple the CEO.

GLCs are now known for things like the biggest and most obscene corporate losses, as well as, funnily enough, the highest and most obscene pay for their top people. They constantly need to be bailed out, a case of privatising profits and nationalising losses.

They’re deemed too big and too important to fail. Some are kept alive because the well of the rakyat’s money, the money that belongs to everybody yet to nobody, appears bottomless, and there are many snouts in the trough that need to be fed.

Instead of the GLCs springboarding Bumiputeras to compete head-on with other people, it has become a crutch for many, who are now even more afraid of free and open competition.

We’ve created a new set of rich elites, while the kampung poor they are supposed to help have become even poorer.

GLCs force non-Bumiputera businesses to become tougher to survive against such unfair odds, not dependent on the rakyat’s money for bailouts, though one particular category, the Government-Crony Companies, or GCCs (you heard it here first) are not averse to occasionally drinking at the rakyat’s well either.

The GLCs also crowd out the true Bumiputeras who want to make it on a level playing field and not through handouts and bailouts.

Is it any surprise that we haven’t managed to create a class of true Bumiputera entrepreneurs after 52 years of affirmative action?

A recent piece of wisdom by a local politician applies here: that Malay society is feudal and cries out to be protected. That applies not only to the poor Malay folks in the kampungs, but also to the rich Malay elites in the cities, whether KL, London or New York. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.