On 7 April 2016, sixteen months after commencing investigations, the Public Accounts Committee (PAC) published a report on 1Malaysia Development Berhad1 (1MDB).
The report reviewed the management and administration of 1MDB by the Ministry of Finance as well as 1MDB’s Board of Advisors, Board of Directors and management committee.
Public response to the report subsequently focused on persons and partisan politics.2 However, the focus should really be on lessons for improving the governance of state-owned enterprises (commonly referred to as government-linked companies in Malaysia).
The 1MDB saga gives Parliamentarians and regulators key insights for improving policies, structures and systems to bring Malaysia closer to the goal of being a developed nation by 2020. This paper recognises the 1MDB case as one involving a state-owned enterprise (SOE)3 and seeks to draw out lessons about the governance of SOEs.
This paper briefly lists seven key reasons why the PAC investigated 1MDB, notes the Government’s positive response to the 1MDB report and concludes with five recommendations for Parliament and regulatory agencies.
It does not examine the arguments for and against the existence of SOEs.
About the Author
Rama Ramanathan is a mechanical engineering graduate of the University of Edinburgh in Scotland. He worked in manufacturing and quality management in the rubber, consumer products and medical device industries for 33 years. In the second half of his career he worked as the Quality Leader in Asia Pacific for two multi-billion dollar US-based multinationals. Since ‘retirement,’ he focuses on studying and writing about socio-political issues, and occasionally takes on consulting work in ethics, quality and risk management. Rama is also a member of The Society for the Promotion of Human Rights (PROHAM).