PETALING JAYA: A think tank has expressed reservations about Prime Minister Dr Mahathir Mohamad being the chairman of sovereign wealth fund Khazanah Nasional.
Speaking to FMT, Aira Azhari, coordinator of the Democracy and Governance Unit of the Institute for Democracy and Economic Affairs (IDEAS) said the “overwhelming” power of the prime minister might cause other board members to hold back from going against him in crucial decisions.
“There is an inherent power imbalance with the prime minister there. As an alternative, perhaps a civil servant such as a representative from the Prime Minister’s Department can sit on the board.”
Mahathir yesterday defended his appointment as Khazanah chairman, saying it was his duty to put the sovereign wealth fund back on track.
But Aira said parliamentary checks and balances for bodies such as Khazanah would also ensure a high level of transparency and accountability. She gave the example of Norway’s government pension fund, known as the “Oil Fund”, managed by the finance ministry which ultimately answers to the Norwegian Parliament.
“With the Oil Fund, everyone can view and scrutinise every single one of its investments on its website.
“Everything is laid out in the open, true to its mandate of being a fund for the benefit of the Norwegian people. Malaysia should try to emulate this.”
Universiti Malaya academic Edmund Terence Gomez however said by convention, the finance minister and the prime minister are on Khazanah’s board. Gomez, who is an expert on corporate Malaysia and politics, said the inclusion of Economic Affairs Minister Mohamed Azmin Ali as a director was curious but not “completely out of play” given that Khazanah deals with matters related to the economy.
He said it was possible for Khazanah to be transferred out from the Ministry of Finance Inc (MoF Inc) and placed under a different ministry.
“As it stands, Khazanah is still under MoF Inc. If the finance minister is not sitting on the Khazanah board, then in all likelihood he won’t be privy to what the Khazanah board is doing.”
Gomez said he believes however this convention must be reviewed as board members will not dispute the prime minister or ministers at meetings. Gomez had previously opposed politicians leading statutory bodies and government-linked companies (GLCs) unless they did so in a ministerial or government capacity.
The Centre For A Better Tomorrow (Cenbet) said while the new Khazanah board members were “men of calibre”, they shouldn’t comprise politicians or Cabinet members as it would unnecessarily expose them to liabilities best shouldered by corporate leaders.
“Sovereign wealth funds should be run like any other corporation and this means political considerations should be excluded from the boardroom,” Cenbet said in a statement to FMT.
It said if there was a specific political purpose for the fund, it should be made clear as part of its mission statement for its management to know and follow, and be held accountable to the public.
“By having professionals on the board, the government can bring the board to task in the event of mismanagement,” it added.
Cenbet said matured democracies around the world shunned the practice of having politicians manage public-funded investments and that Malaysia must avoid another failure or bail-out caused by political interference.
“This would also be consistent with institutional reforms which the new government advocates.”
On Monday, the Prime Minister’s Department announced the appointment of five board members: Mahathir as chairman and Azmin, former Petronas CEO and president Mohd Hassan Marican, former Bank Negara Malaysia deputy governor Dr Sukhdave Singh and former Securities Commission executive director of market development Goh Ching Yin as directors.
First published in http://www.freemalaysiatoday.com, August 3, 2018.