This country is placed in Band D

Malaysia’s GI ranking in Band D places it in the high risk category for corruption in the defence and security sector.  Personnel is the highest scoring, lowest risk area in Band C. The highest risk area assessed, with the lowest score is Operations in Band E.

The Malaysian Government completed a government review of the GI 2015 research, which shows a willingness to open dialogue with an international NGO on defence corruption issues.

With formal regulations governing the actions of military personnel and independent investigative organizations like the Malaysian Anti-Corruption Commission (MACC), Malaysia is in a good place to build its anti-corruption framework. But significant vulnerabilities to corruption persist as a result of a weak legislative scrutiny, opaque budgets, weak whistleblower protections, and insufficient anti-corruption training. We suggest the following recommendations:

Strengthen Legislative Scrutiny

The legislature plays a very limited role in scrutinising defence policy or spending. Despite calls from the opposition coalition Pakatan Rakyat (PR), and in particular, the Democratic Action Party (DAP), for a limited or bi-partisan defence committee to be established. As a result, the legislature is given no detailed information on the defence budget, including secret items, beyond the aggregated sums for operating and development expenditure leading to lack of scrutiny regarding defence spending and procurement decisions.

We recommend that the government establish a parliamentary committee tasked specifically with oversight of all aspects of the defence and security sector. This committee should have the power to access to a fully detailed defence budget and internal audit reports; be able to call expert witnesses and scrutinise defence agencies and institutions; meet regularly and publish reports on its activity.

Enhance Budget Transparency

A budget is submitted to Parliament; however, it is lacks sufficient detail regarding specific expenditures.  Furthermore, parliament has only a limited amount of days to approve the budget as a whole, which precludes effective scrutiny.

We recommend that the government publish an annual defence budget that includes detailed information on expenditure across functions including research and design, training, salaries, acquisitions, disposal of assets, maintenance and personnel expenditures and appropriately lengthens the time that budget items can be discussed by the Parliament.

Enhance Anti-Corruption Measures across Operations

According to interviewees who served in the Malaysian military, no comprehensive anti-corruption training – aside from ad-hoc integrity talks is provided. An Integrity Plan Manual exists, but it is insufficient preparation for commanders on deployment and there is evidence that corruption is a high risk issue for the Eastern Sabah Security Command (ESSC).

We recommend Malaysia adopts an operational doctrine which specifically recognises corruption risks as a strategic operational issue; provides comprehensive and systematic training and guidance for commanders and personnel on corruption risks faced in operations, including in contracting, and deploy trained professionals capable of monitoring corruption in the field who regularly report while on mission, with these reports made available to the public, at least in summary form.

Leadership 30
01.
score
0

Is there formal provision for effective and independent legislative scrutiny of defence policy?

Researcher4180: There exists no formal legislative scrutiny with regard to defence policy. Malaysia’s defence policy was released with the publication of the National Defence Policy (NDP) in 2010 and has lacked any significant revisions since.

Whilst there is evidence of the government being informed by the debate among academics and media leading up to the publishing of the NDP, as detailed in the above articles, it was not scrutinised by the legislature, represented by Parliament, before or after being published. This has led to calls since for the involvement of legislative representatives in the formulation of defence policy, as demonstrated by MP Liew Chin Tong's comments in the above news article.

Defence has been seen as a secondary partner to foreign policy (which is under the power of the executive), in part due to a lack of major external defence issues in the past, preventing formal provisions for scrutiny at a legislative level.

This lack of oversight is also seen at budgetary level. Parliament has to approve the budget, including the defence budget, which would suggest a degree of control over defence policy. However, the budget is neither detailed nor extensive, instead it is highly aggregated which limits any debate.

Response to Government Reviewer: The Defence Ministry's consultations with governmental security agencies and National Security Council could not be verified; the National Security Council website does not have information concerning their role in the NDP, and the Defence Ministry does not appear to have released information concerning the process. Furthermore, the National Security Council falls under the control of the executive cabinet or the Prime Minister's office. This means that even if security agencies or the National Security Council were involved, there is still no formal provision for legislative scrutiny, as parliament still has no formal rights over defence policy. Score maintained.

COMMENTS -+

Mohamad Faisol Keling et. al., &quoute;The Malaysian Government's Efforts in Managing Military and Defence Development&quoute; International Journal of Business and Social Science Vol. 2 No. 12 (2011), accessed 10th July, 2014 http://ijbssnet.com/journals/Vol._2_No._12;_July_2011/20.pdf

Majlis Keselamatan Negara &quoute;Majlis Keselamatan Negara&quoute; https://www.mkn.gov.my/site/index , Accessed 5th September 2015

Balakrishnan, K., &quoute;Defence Industrialisation in Malaysia&quoute; Security Challenges Vol. 4 No. 4 (2008), accessed 10th July 2014 http://www.securitychallenges.org.au/ArticlePages/vol4no4Balakrishnan.html
Kementerian Pertahanan Malaysia &quoute;Dasar Pertahanan negara&quoute; Http://www.mod.gov.my/en/publication/category/82-national-defence-policy-open.html (2010), accessed 5th September 2015

Kementerian Pertahanan Malaysia &quoute;Malaysia's National Defence Policy&quoute; (2010) http://www.mod.gov.my/phocadownload/DASAR-PERTAHANAN/ndp.pdf, accessed 5th September 2015

Free Malaysia Today &quoute;We're ill-prepared for new military threats&quoute; (2014) http://www.freemalaysiatoday.com/category/nation/2014/11/20/were-ill-prepared-for-new-military-threats/ , accessed 5th September 2015

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Tan, J., Keong, S., & Wah, L., &quoute;MH370, stop thinking about shopping: Tell us what’s the problems first!&quoute; Democratic Action Party, June 18, 2014, accessed 15th July 2014 http://dapmalaysia.org/en/statements/2014/06/18/18750/

Tong, L., &quoute;Make fuller use of our MP's Expertise and Talents&quoute; September 9th 2011,
accessed 15th July 2014 http://liewchintong.com/2011/09/make-fuller-use-of-our-mps-expertise-skills-and-talents/

Kamal, S., &quoute;DAP wants Parliamentary Panel to Oversee Defence Buys&quoute; The Malaysian Insider (6th December 2011) Accessed 1st July 2014 Themalaysianinsider.com/Malaysia/article/dap/wants-parliamentary-panel-to-oversee-defence-buys

Chin, J., &quoute;The Role of Defence Budgeting and Parliament&quoute; (2007) Accessed 1st July 2014 http://ipf-ssg-sea.net/expert_ws_phuket/DefenceBudgetingMalaysia_Jitkai_Chin.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: Malaysia's Defence Policy was published in 2010. There is no strong evidence that it was scrutinised in parliament or even discussed in parliament prior to the policy being released, or even when it was released. The latest National Defence Policy can be obtained from Ministry of Defence website - http://www.mod.gov.my/en/publication/category/82-national-defence-policy-open.html but it is in Bahasa Malaysia language only. There is no formal oversight committee in parliament overlooking defence, and the only power the parliament has over defence is the approval of its Annual Budget which is highly aggregated and approved along with the rest of the federal budget, rather than being approved on its own.

The formulation of the National Defence Policy (NDP) started in March 1984 and was scrutinised thoroughly over the years. The NDP was debated and carefully crafted by groups of expert people in the field of defence and security, until its official inception in 2010.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The National Defence Policy is formulated by the Defence Ministry in consultation with various governmental security agencies. It was then tabled before the National Security Council for approval and adoption. The National Defence Policy upholds Malaysian foreign policy and stands guided within the parameters of foreign policy.

Suggested score: 3

Government Reviewer-+

02.
score
1

Does the country have an identifiable and effective parliamentary defence and security committee (or similar such organisation) to exercise oversight?

Researcher4180: There is no parliamentary defence committee despite calls from the opposition coalition Pakatan Rakyat (PR), and in particular, the Democratic Action Party (DAP), for a limited or bi-partisan committee to be established, as demonstrated in above cited statements. There was a plan under the Prime Minister's Government Transformation Plan (GTP) to establish a Parliament Select Committee on Defence, but this has not occured despite these calls from the opposition, with no sign of any progression. The airline disasters (MH370 and MH17) have put further pressure on such calls, given the accusation that the airline crashes are being used to expand defence procurement with no oversight. There has not been strong debate on the subject beyond the media and no resolution met. The lack of a committee specifically for oversight of defence was confirmed by the civil society actor interviewed.

There is limited evidence of only ad hoc briefings of MPs, including backbenchers and the opposition, but this is not consistent, and when MPs have raised questions in parliament in lieu of a committee, they are not consistently or sufficiently answered. There has been the suggestion that parliament does not have the necessary expertise, with inadequate staff and a poorly resourced Parliament Resource Centre, meaning any oversight would have only limited efficiency.

The Public Accounts Committee (PAC) has summoned defence officials for clarifications based on the Auditor General's report, but this focused on impropriety on spending identified by the Auditor General rather than acting as a consistent and efficient oversight committee. Indeed, the chairman of the PAC has argued that when summoning had occurred, information was often not disclosed on grounds that it was sensitive and secret, restricting oversight.

Response to the Governmental Reviewer: While the Cabinet may have the ability to review defence policy matters, this is part of the executive rather than parliament and as such, it is not a parliamentary defence and security committee in effect.

Response to TI Chapter Reviewer: No publicly available evidence of consistent briefings could be found. With regard to the PAC's role in defence oversight mechanisms, it is agreed that there is evidence of the PAC having limited oversight through the occasional summoning of defence officials for clarifications on issues found in the Auditor General's report. Therefore, there is a committee which has some rights of scrutiny of defence but in a very narrow role. There is no evidence that PAC has an identifiable or effective oversight mechanism beyond this limited form.

Score raised from 0 to 1.

COMMENTS -+

Tan, J., Keong, S., & Wah, L., &quoute;MH370, stop thinking about shopping: Tell us what’s the problems first!&quoute; Democratic Action Party, accessed 15th July 2014 http://dapmalaysia.org/en/statements/2014/06/18/18750/

The Star &quoute;Nur Jazlan: Armed Forces Purchases Must Undergo Audit&quoute; (2015) http://thestar.com.my/news/nation/2015/03/13/PAC-says-armed-forces-procurement-must-undergo-audit/ accessed 5th September 2015

Tong, L., &quoute;Make fuller use of our MP's Expertise and Talents&quoute; accessed 15th july 2014 http://liewchintong.com/2011/09/make-fuller-use-of-our-mps-expertise-skills-and-talents/

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Interview with Civil Society Actor, 18 July 2014

Mohamad, N. J, &quoute;Malaysia's Defence Policy and Defence Budgeting http://ipf-ssg-sea.net/4th_WS/Nur-Jazlan.pdf , accessed 5th September 2015

Chan, M., &quoute;MinDef Meets PAC about Wisma Perwira&quoute; (2015) Free Malaysia Today http://www.freemalaysiatoday.com/category/nation/2015/05/28/mindef-meets-pac-about-wisma-perwira/ accessed 5th September 2015

Wee, T. P. K., &quoute;The Defence Minister's contempt for Parliamentary oversight over Malaysia's defence expenditure proves the complete lack of interest in transparency and accountability&quoute; (2011) DAP http://dapmalaysia.org/english/2011/dec11/bul/bul4792.htm Accessed 5th September 2015

Kamal, S. M. &quoute;DAP wants parliamentary Panel to Oversee Defence Busy&quoute; The Malaysian Insider (2011) http://www.themalaysianinsider.com/mobile/malaysia/article/dap-wants-parliamentary-panel-to-oversee-defence-buys accessed 5th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There is no identifiable Parliamentary defence and security committee. Opposition MPs are requesting for one to be set up (http://ipf-ssg-sea.net/expert_ws_phuket/NSP_Malaysia_Jitkai_Chin.pdf).
There is no parliamentary committee, commission or working group tasked with oversight of defence and the role of the parliament in regard to defence oversight is limited to the approval of the annual budget. The PAC reviews general purchasing figrues of defence and is involved in the budget proposal process although it does not have access to a detailed budget. The PAC chair wrote an article on the oversight of defence (http://ipf-ssg-sea.net/4th_WS/Nur-Jazlan.pdf).

The Ministry of Defence has conducted briefings for MPs, including opposition MPs. A briefing to opposition MPs was conducted in January 2012 which included information on defence procurement issues at the time.



Suggested score: 1

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Cabinet of Ministers is the highest authority that scrutinises the defence policy. Nevertheless, if the need arises a parliamentary organization - the Public Accounts Committee, with members from both the ruling party and the opposition, may convene to discuss certain policy matters that may need further clarification from the Ministry. The Defence Ministry's Secretary General may be summoned before the Committee.

Suggested score: 3

Government Reviewer-+

03.
score
2

Is the country's national defence policy debated and publicly available?

Researcher4180: The National Defence Policy (NDP) is publicly available, in both Malay and English, but there is the possibility that these are abridged versions. It is named the ‘Open Defence Policy’ in the Malay language version (Dasar Pertahanan Negara -Terbuka) and it is a generally vague policy. The academic interviewed mentioned that some expected elements were missing in the policy, but stated there is still academic debate concerning policy, though he/she was unsure of whether this has any policy impact.

The lack of significant revision since its inception in 2010 demonstrates the lack of consistent government engagement in any debate, as well as the lack of formal debate occurring. There have been some cases of responses to the opposition's questions over defence, but this is outside of parliament. As demonstrated in a statement by an MP, formal debate is not in place, and parliament has no involvement in or impact on the formulation of policy.

Talks are invitation only and MPs who have been lobbied to ask questions in parliament find their questions are often unanswered or evaded with the invocation of ‘national security’. See for example MP Tong's attempts to create a debate within parliament, which has not yet resulted in anything tangible, and limited responses by the Defence Minister to written requests for information by an MP cited above. The lack of evidence suggests that the Ministry engages only with parliament on this limited basis, and doesn't engage in the wider debate in the media, or among academics and the wider public.

For the most part, informal deliberations concerning the NDP are generally ad hoc and restricted to academia and, to a lesser degree, the media and civil society. This lack of debate could be due to the fact that the public generally seem to have little interest in engaging in any debate themselves rather than government not encouraging it. There are discussion portals, such as the Malaysia Defence website, and the media publish debates when they emerge. There has been some evidence of regional debates involving Malaysia in which civil society played a role, as demonstrated by the Association of Southeast Asian Nations (ASEAN) Defence Establishment and Civil Society Organisations conference in 2009, but this is limited to non-traditional security issues and the impact this has on defence policy is unclear as there have been no revisions to the NDP since 2010. Laws against the spreading of false news on social media, which are vague and open to abuse, could limit the potential for public debate to emerge if the level of public interest was to change.

Response to Government Reviewer: No evidence could be found that policy is formally openly debated either by the PAC or by parliament. Evidence to the contrary, as demonstrated in the Free Malaysia Today article, instead suggests that MPs are calling for the MoD to involve MPs in the the formulation of a new defence policy, as this is currently lacking.

Response to Peer Reviewer 2: Agreement with comments concerning the ASEAN Defence Establishment and CSOs. With regard to social media, the article cited seems to suggest that blocking facebook would be 'impossible' and regulation has been enacted in cases of insulting those in power and inciting racial issues. Whilst this mechanism would clearly be open to abuse, no evidence of censorship regarding social media and defence issues to this date could be found. However, the ability to limit the debate is clearly there, as demonstrated in the ability to arrest based on 'spreading false news', and this has been addressed in the main comments above.

COMMENTS -+

Online interview with Academic, 10 July 2014

Ministry of Defence, &quoute;National Defence Policy (English)&quoute; Accessed 9th July 2014 http://modv2.mod.gov.my/images/ndp.pdf

Ministry of Defence, &quoute;National Defence Policy (Malay)&quoute; Accessed 9th July 2014 http://www.mod.gov.my/en/about-us/policies/national-defence-policy.html

Abas, M., &quoute;The National Defence Policy&quoute; Malaysia Defence, Accessed 9th July 2014 http://www.malaysiandefence.com/?p=1279

Free Malaysia Today &quoute;We're ill-prepared for new military threats&quoute; (2014) http://www.freemalaysiatoday.com/category/nation/2014/11/20/were-ill-prepared-for-new-military-threats/ , accessed 5th September 2015

The Malaysian Insider &quoute;Don’t spread false news on 1MDB probe, Putrajaya warns&quoute; (2015) http://www.themalaysianinsider.com/malaysia/article/no-false-news-social-media-parodies-on-1mdb-probe-putrajaya-warns Accessed 5th September 2015

Meikeng, Y., &quoute; Hisham: No countries deemed a threat to national security&quoute; The Star (2015) http://www.thestar.com.my/News/Nation/2015/05/27/Hisham-Treat-National-Security/ Accessed 5th September 2015

Parliament &quoute;Penyata Rasmi Parlimen Dewan Rakyat&quoute; (8th March 2011) Accessed 12th July 2014 www.parlimen.gov.my/files/hindex/pdf/dr-08032011.pdf

Parliament &quoute;Penyata Rasmi Parlimen Dewan Rakyat&quoute; (21st March 2011) Accessed 12th July 2014
http://www.parlimen.gov.my/files/hindex/pdf/DR-21032011.pdfWee, T., &quoute;Dato' Seri Zahid Hamidi displays the worst traits of a minister who is arrogant, ignorant and shockingly forgetful&quoute; (January 2nd 2012) Accessed 12th July 2014 http://dapmalaysia.org/english/2012/jan12/bul/bul4825.htm

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: Malaysia's Defence Policy was published in 2010. There is no strong evidence that it was scrutinised in parliament or even discussed in parliament prior to the policy being released, or even when it was released. The latest National Defence Policy can be obtained from Ministry of Defence website - http://www.mod.gov.my/en/publication/category/82-national-defence-policy-open.html but it is in Bahasa Malaysia language only. There is no formal oversight committee in parliament overlooking defence.
The formulation of the National Defence Policy (NDP) started since March 1984 and was scrutinised thoroughly over the years. The NDP was debated and carefully crafted by groups of expert people in the field of defence and security, until its official inception in 2010.


Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Civil society is involved in the debate on Malaysian defence but it is often in government-led &quoute;arenas&quoute; (see this ASEAN conference on defence establishments and civil society from 2009, http://www.adpc.net/cso/more.asp).

Public debate on social media about all issues - particularly sensitive ones - also faces intense government security and regulation. Please see this article on the current government's proposal to block Facebook, Mong Palatin, 'Malaysia Threatens to Block Facebook', The Diplomat, 14 August 2014, http://thediplomat.com/2014/08/malaysia-threatens-to-block-facebook/

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The open version of the National Defence Policy is publicly available. The policy is debated publicly during parliament sessions and also by the Public Accounts Committee.

Though the policy is deemed esteemed, the Defence Ministry has started the revision process.

Suggested score: 3

Government Reviewer-+

04.
score
2

Do defence and security institutions have a policy, or evidence, of openness towards civil society organisations (CSOs) when dealing with issues of corruption? If no, is there precedent for CSO involvement in general government anti-corruption initiatives?

Researcher4180: There is little evidence of openness towards CSOs by defence and security institutions, as is demonstrated by the difficulties TI-Malaysia has had in gaining access (see TI Malaysia Reviewer comments below) and the experiences of the interviewee who was involved in a number of high profile anti-corruption CSOs. However, the Ministry of Defence has shown willingness to respond to this assessment index, despite being unwilling to do so in 2013, demonstrating a growing engagement.

Generally, outside of defence and security, civil society organisation (CSO) involvement is growing in general anti-corruption initiatives. With the growing strength of opposition in the 2013 general election, there has been a degree of growth in commitment by the government to engage in the area of corruption, as is demonstrated by meetings between the Malaysian Anti-Corruption Commision (MACC) and CSOs such as C4 and TI Malaysia, as well as workshops held with multi-stakeholders from the government and various CSOs. This, however, has been limited within the defence and security sector, where the interviewee argued that national security is used as a justifcation to maintain distance from CSO involvement.

NGOs and CSOs have only limited rights in Malaysia, restricted by laws that restrict freedom of expression and assembly (specifically the Peaceful Assembly Act 2012, the Sedition Act 1948 and the Printing Presses and Publications Act 1984), that limit their engagement. There are many conditions on activities and reporting, and NGOs can be de-registered if found to violate them. The Sedition Act also causes restrictions and had resulted in harassment and travel bans, as demonstrated in above citations. SUARAM, who reported on corruption in the Scorpene submarine case, for example, stated they were subject to a year of continued harassment and were almost de-registered.

Response to TI Chapter Reviewer and Peer Reviewer 2: The score has been amended in light of new engagement. Score raised from 1 to 2.

Response to Government Reviewer: It would seem that engagement with TI-M has recently emerged following former difficulties. Despite this, the case is quite limited and other CSOs have expressed difficulties in engagement. It is agreed whistleblower protection legislation is in place; however this topic is focused on in Question 36. The aforementioned issues prevent movement to score 4.

COMMENTS -+

Interview with Civil Society Actor, 18 July 2014

UNODC &quoute;Bringing governments and civil society together to better fight corruption in Asia&quoute; 24 - 27 February 2014, accessed 15th July 2014 https://www.unodc.org/unodc/en/ngos/CN13-Bringing-governments-and-civil-society-together-to-better-fight-corruption-in-Asia.html

Centre to combat corruption and cronyism (C4) &quoute;Top Legal Minds Meet MACC&quoute;, 4 September 2014, http://c4center.org/top-legal-minds-meet-macc

ICNL &quoute;NGO Law monitor: Malaysia&quoute; Accessed 5th September 2015 http://www.icnl.org/research/monitor/malaysia.html

Whistleblower Protection Act 2010 (Act 711)

Gabriel, C., &quoute;A New Paradigm Shift Needed To Protect Whistleblowers In The Fight Against Corruption | C4 Center&quoute; (C4) (2015) http://www.c4center.org/new-paradigm-shift-needed-protect-whistleblowers-fight-against-corruption Accessed 5tth September 2015

SUARAM &quoute;SUARAM Sedition Memo&quoute; http://suaram.net/suaram%20A19%20sedition%20memo.pdf Accessed 5th September 2015

Bernama &quoute;MinDef Has Become More Transparent says TI-M&quoute; (2015) http://www.bernama.com/bernama/v8/ge/newsgeneral.php?id=1167876 Accessed 5th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: Transparency International Malaysia (TI-M) has approached the Ministry of Defence for engagement, taking the initiative to write to the Minister and communicate with his Senior Private Secretary. While the Undersecretary for Policy had intiially offered to meet and discuss the Government Defence Anti-Corruption Index (GI) assessment of Malaysia, this did not result in a meeting finally. This demonstrates a lack of openness towards CSOs.

Discussion and debates on defence related issues has been through official forums and conferences such as the PUTRAJAYA Forum and MiDAS Talks. Furthermore, the Ministry has active involvement in discussions with the public through other public conferences, workshops and seminars conducted by NGOs and think-tank institutes such as MIMA and ISIS as well as universities.

Suggested score: 2

TI Reviewer-+

Opinion: Disagree

Comment: Yes, but the evidence used in the analysis means that it could be score 2 instead. Civil society is becoming increasingly involved in the debate on corruption in defence. One might expects the anti-corruption movement Bersih movement to debate the issue more vigorously in the months ahead although there is limited evidence to suggest that is happening right now.

Suggested score: 2

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Ministry of Defence investigates all reports. The ministry's engagement with Transparency International Malaysia is one of the parameters to ensure all anti-corruption measures in the ministry take place systematically.

Legal protection is provided for via Witness Protection Act 2009 (Act 696) and Whistleblower Protection Act 2010 (Act 711).

The Malaysian Bar supports this in its portal entitled &quoute;'Informants have nothing to fear&quoute;. Accessed 10 November 2014 http://www.malaysianbar.org.my/legal/general_news/informants_have_nothing_to_fear.html

Suggested score: 4

Government Reviewer-+

05.
score
3

Has the country signed up to international anti-corruption instruments such as, but not exclusively or necessarily, UNCAC and the OECD Convention? (In your answer, please specify which.)

Researcher4180: Malaysia is a signatory to or member of a number of relevant institutions and treaties. Malaysia signed UNCAC on the 9th December 2003 and went on to ratify the treaty on the 24th September 2008. Whilst not counting amongst the members or key partners of OECD, Malaysia is a member of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific. Furthermore Malaysia is part of the South East Asia Parties Against Corruption (SEA-PAC) mechanism, the Asia Pacific Economic Cooperation (APEC) Anti-Corruption and Transparency Working Group/Experts Task Force, the Asia Pacific Group (APG) on Money Laundering, and the International Association of Anti-Corruption Authorities (IAACA).

In regards to compliance the most recent Implementation Review Group Compliance Review of UNCAC in Malaysia, published May 31st 2013, looked at the implementation of Chapters 3 and 4 (Criminalization and law enforcement, and international co-operation), and highlighted both successful practices and recommendations for improvement. There were many positive elements of the review. MACC, furthermore, has established a UNCAC compliance task force in order to ensure consistent compliance, and has been extremely proactive in IAACA.

Despite these successes, concerns exist that compliance is particularly difficult in the defence sector and that any commitment to these treaties is superficial when it comes to 'grand corruption'. Critics have pointed towards the ‘Scorpene’ case and the Ministry of Defence’s refusal to co-operate with the French court by sending a representative, as a demonstration of failing to meet obligation that falls under the UNCAC treaty. Indeed, the recent case of the 2.6 billion ringgit donation to Najib has led the chairman of UNCAC to declare that interference in the investigation goes against UNCAC, demonstrating further problems of compliance. UNCAC has also requested Malaysia clarify some of its anti-corruption legislation and grant greater autonomy to MACC.

COMMENTS -+

UNCAC Implementation Review Group, &quoute;Executive Summary: Malaysia&quoute; (2013) , https://www.unodc.org/documents/treaties/UNCAC/WorkingGroups/ImplementationReviewGroup/27-31May2013/V1383790e.pdf

OECD &quoute;Members and Partners&quoute;, http://www.oecd.org/about/membersandpartners/

OECD &quoute;Member Economies and Countries&quoute; http://www.oecd.org/site/adboecdanti-corruptioninitiative/theinitiativesmembercountriesandeconomies.htm

UNODC &quoute;UNCAC Signatories&quoute; https://www.unodc.org/unodc/en/treaties/CAC/signatories.html

MACC &quoute;The Fight Against Corruption&quoute; http://www.sprm.gov.my/files/eNewsletter_SPRM-The_Fight_Againts_Corruption.pdf

MACC &quoute;IAACA Conference 2012&quoute; (2012) http://www.sprm.gov.my/files/IAACA_Conference_2012.pdf

Lim, I., &quoute;Zahid Hamidi snubs Scorpene probe inquiry in Paris&quoute; (21st April 2012) themalaysianinsider.com/Malaysia/article/zahid-hamidi-snubs-scorpene-probe-enquiry-in-Paris

Malaysiakini &quoute;Step down, UNCAC Chief Tells Najib&quoute;, 4 Sep 2015, http://www.malaysiakini.com/news/311102

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The next UNCAC Review of Chapter II and V will be carried out in 2015/2016.
It is worth mentioning that the International Association of Anti-Corruption Authorities (IAACA) brings together anti-corruption agencies in the Asian region to share information and experiences and promote cooperation among anti-corruption agencies. Our anti-corruption agency is also provides support to middle East countries And while Malaysia's Anti Money Laundering law was enacted in 2001 and came into effect in 2002, no individual charged with corruption has been successfully prosecuted under the AML rule.
Malaysia is seen to be active in anti-corruption measures, especially in recent years, however, enforcement of it is questionable when it comes to grand corruption.
Malaysia is also a member of the Asia- Pacific Economic Cooperation Anti-Corruption and Transparency Experts Task Force.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

06.
score
1

Is there evidence of regular, active public debate on issues of defence? If yes, does the government participate in this debate?

Researcher4180: There is little public debate concerning issues of defence. Debate that occurs is limited to academia or interested parties involved in the commercial defence sector. When debate occurs there is no evidence of wider governmental engagement; there is minor response, but no public consultation. The debate surrounding the Defence Services Asia (DSA) exhibition, for example, was particularly limited to commercial actors, academics and other interested parties.

There are elements of debate very occasionally in the mainstream media, usually in the wake of a tragedy or scandal. There are discussion portals, such as the Malaysia Defence website, and the media publish debates when they emerge, as demonstrated by the comments from MP Tong. The Ministry of Defence website has issued only five press releases in 2015, however.

The freedom of the press is problematic; Freedom House has stated that officials are concerned about releasing information due to the Security Offenses (Special Measures) Act (SOSMA), the Official Secrets Act (OSA) and the Sedition Act. The Printing Presses and Publications Act means permits can be abolished or suspended, which means news portals (both print and online) face considerable penalties. These two elements may contribute to stifling debate.

There is a growing trend of wider debate on social media platforms, but this still hasn’t reached significant levels in terms of defence. This lack of debate could be due to the fact that the public generally seem to have little interest in engaging in any debate themselves rather than government not encouraging it. Again, the aforementioned legislation (OSA, Sedition Act etc.) are vague and open to abuse, which could limit the potential for public debate to emerge if public interest was to increase. These laws have not yet been used in the context of defence as yet, but there is the risk that they could be.

The academic interviewed stated that despite their research output being focused on Malaysian defence and security, they had little opportunity to engage with the government, for example.

There is no publicly available evidence of NGO or CSO formal participation or consultation. The CSO actor confirmed in the interview that they were unaware of any events concerning defence and there appears to be no public evidence to contradict this.

Response to Peer Reviewer 2: As mentioned previously, the article provided appears to suggest that blocking facebook would be 'impossible' and regulation has been enacted in cases of insulting those in power and inciting racial issues. Whilst this mechanism would clearly be open to abuse, no evidence of censorship regarding social media and defence issues to this date could be found. However, the ability to limit the debate is clearly there, as demonstrated in the ability to arrest based on 'spreading false news', and has now been addressed in the main comments.

Response to TI Chapter Reviewer and Government Reviewer: Very limited statements have seemed to answer questions made publicly in the DSA exhibition and other seminars which does not demonstrate consistent commitment to dialogue. Information seems particularly one-way, questions often go unanswered and no other evidence to indicate engagement could be found. Score maintained.

Response to Governmental Reviewer: Government security agencies' involvement wouldn't necessarily add to the public element of debate. Information seems particularly one way, questions often go unanswered and I can find no evidence of engagement. Score maintained.

COMMENTS -+

Defence Services Asia &quoute;2014 Factsheet&quoute; Accessed 12th July 2014 Http://www.dsaexhibition.com/index.php/dsa-2014-factsheet

Ministry of Defence &quoute;Press Releases&quoute; (2015) http://www.mod.gov.my/media-en/press-release.html accessed 6th September 2015

Interview with Civil Society Actor, 18 July 2014

Online interview with Academic, 10 July 2014

Parliament &quoute;Penyata Rasmi Parlimen Dewan Rakyat&quoute; (8th March 2011) Accessed 12th July 2014 www.parlimen.gov.my/files/hindex/pdf/dr-08032011.pdf

Parliament &quoute;Penyata Rasmi Parlimen Dewan Rakyat&quoute; (21st March 2011) Accessed 12th July 2014 http://www.parlimen.gov.my/files/hindex/pdf/DR-21032011.pdf

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Wee, T., &quoute;Dato' Seri Zahid Hamidi displays the worst traits of a minister who is arrogant, ignorant and shockingly forgetful&quoute; (January 2nd 2012) Accessed 12th July 2014 http://dapmalaysia.org/english/2012/jan12/bul/bul4825.htm

Free Malaysia Today &quoute;We're ill-prepared for new military threats&quoute; (2014) http://www.freemalaysiatoday.com/category/nation/2014/11/20/were-ill-prepared-for-new-military-threats/ , accessed 5th September 2015

The Malaysian Insider &quoute;Don’t spread false news on 1MDB probe, Putrajaya warns&quoute; (2015) http://www.themalaysianinsider.com/malaysia/article/no-false-news-social-media-parodies-on-1mdb-probe-putrajaya-warns Accessed 5th September 2015

Meikeng, Y., &quoute; Hisham: No countries deemed a threat to national security&quoute; The Star (2015) http://www.thestar.com.my/News/Nation/2015/05/27/Hisham-Treat-National-Security/ Accessed 5th September 2015

Freedom House &quoute;Freedom of the Press 2014&quoute; https://freedomhouse.org/report/freedom-press/2014/malaysia#.VexIIxFVhHw Accessed 6th September 2015

DSA &quoute;DSA Programme of Events&quoute; (2015) http://www.dsaexhibition.com/dsa2016/official-programme-events.php Accessed 6th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There is rare open public consultation on defence and security issues. Decisions are made by the MINDEF and the army without public input. There is also limited debate in Parliament. The Annual Defence Services Asia Exhibition and Conferences attracted a different ‘public debate and discussion’. H ttp://www.dsaexhibition.com/index.php/dsa-2014-factsheet and http://www.malaysiandefence.com/?p=4365

At times, seminars were organised where academia, certain industries and governmental security agencies participated but not many NGOs/CSOs participated.

Suggested score: 2

TI Reviewer-+

Opinion: Agree with Comments

Comment: Please see my previous reference on the government's heavy regulation of the internet and considerations to ban Facebook which has stifled public debate on sensitive security and defence issues. Mong Palatin, 'Malaysia Threatens to Block Facebook', The Diplomat, 14 August 2014, http://thediplomat.com/2014/08/malaysia-threatens-to-block-facebook/

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: It is common practice for government institutions to organise seminars and discourses pertaining to strategic interests where academia, industries and various government security agencies would participate. At times seminars' proceedings and resolutions are referred to though not necessarily, in the process of drafting policies.

Suggested score: 3

Government Reviewer-+

07.
score
1

Does the country have an openly stated and actively implemented anti-corruption policy for the defence sector?

Researcher4180: There is no openly stated anti-corruption policy specific to the defence sector. Defence institutions fall under the wider anti-corruption legal framework of the Malaysian Anti-Corruption Commission Act enforced by the Malaysian Anti-Corruption Commision (MACC) and anti-corruption policy in general is enshrined as one of Malaysia’s National Key Results Areas (NKRA). Under the NKRA, as part of the Government Transformation Programme (GTP), there is a new establishment of Governance and Integrity Committees in all Ministries as of July 2014 aimed at countering corruption, but these will be headed by the ministers themselves. Despite a strong general framework, implementation within the sector suggests that it is not particularly active. While the Ministry has co-operated with the MACC with regard to providing documentation for past investigations, there has been little publicised outcome to any investigations, grand corruption remains an issue, and the MACC's potential deployment to Eastern Sabah Security Command (ESSCOM) in the wake of claims that corruption is exacerbating the security situation, indicates that it is more targeted at receiving public complaints rather than having any substantial investigative powers.

Response to Government Reviewer: A higher score requires specific, rather than general, plans for implementation and as mentioned above, there appears to be limited evidence of active implementation. Score maintained.

COMMENTS -+

The Edge Malaysia, &quoute;Senior journalist pan Putrajaya’s new integrity committees&quoute; (22nd July 2014) Accessed 22nd July 2014 http://www.pemandu.gov.my/gtp/Media_Coverage-@-Senior_journalist_pan_Putrajaya%E2%80%99s_new_integrity_committees.aspx

Su-Lyn, B., &quoute;Putrajaya sets up Ministerial Unites in Graft Fight&quoute; (22nd July 2014) The Malay Mail Online Accessed 22nd July 2014 http://www.themalaymailonline.com/malaysia/article/putrajaya-sets-up-ministerial-units-in-graft-fight

Laws of Malaysia &quoute;Malaysian Anti-Corruption Commission Act &quoute; (8th January 2009) Accessed 12th July 2014 http://www.sprm.gov.my/images/webuser/files/static_content/act/SPRM_act_BI.pdf

The Malay Mail Online &quoute;Graft Busters to set up Stall in ESSCOM After Minister's Claim&quoute; (June 6th 2014) Accessed 5th July 2014 themalaymailonline.com/Malaysia/article/graft-busters-to-set-up-stall-in-esscom-after-ministers-claim

The Malaysian Insider &quoute;Defence Ministry Hands Over Documents on RIV Purchases for Investigation&quoute; (1st November 2012) Accessed 5th July 2014 http://www.themalaysianinsider.com/malaysia/article/defence-ministry-hands-over-documents-on-riv-purchase-for-investigation

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: Fighting corruption is one of the National Key Results Areas (NKRAs) under the Government Transformation Programme (GTP) for Malaysia since its first announced in 2010. However, there is currently no specific anti-corruption policy for the defence and security sector. There is hardly any effort to openly and actively implement anti-corruption in the defence sector.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is a strong anti-corruption policy and legal framework that, though not explicit to the defence sector, would effectively cover it; implementation plans exist not only within the defence sector but for the entire government machinery. For instance, the Malaysian Government General Orders.

Suggested score: 3

Government Reviewer-+

08.
score
2

Are there independent, well-resourced, and effective institutions within defence and security tasked with building integrity and countering corruption?

Researcher4180: The Ministry of Defence has an Internal Audit and Investigation Unit (BADSA), which to a degree is aimed at building integrity and countering corruption; however, it is not independent as it comes under the Secretary General of the Ministry of Defence. It has a primarily financial focus, and it only investigates complaints rather than being a pro-active institution aimed at countering corruption.

There is the new Integrity Unit (JITU) aimed at increasing integrity and reducing corruption within each ministry, including the defence ministry, headed by Certified Integrity Officers (CeIOs). It is too nascent to measure its effectiveness despite it representing signs of growing commitment. There has been no review process on effectiveness or activities of the JITU's in general, despite media calls for one. However, MACC chief Tan Sri Abu Kassim Mohamed, head of the organisation training the CeIO's stated that they required more manpower to be effective.

Many of the integrity building institutions are either external to the defence sector or have a wider mandate. There is an Enforcement Agency Integrity Commission (EAIC) aimed at the building of integrity, though its involvement in the defence and security sector is limited due to its restrictive jurisdiction. The EAIC also suffers from a lack of effectiveness as highlighted by the slow replacement of its head as well as complaints about the lack of disciplinary and prosecution powers, and allegations of there being a shortage of competent personnel. With regard to building integrity there also exists the Institute of Integrity Malaysia (IIM). However, the mandate of the IIM is extremely broad with its programmes covering the public and private sector, making it difficult to measure its impact on public defence and security institutions specifically.

MACC is the organisation that is best placed to counter corruption, but again it is not specific to defence and even though it is increasingly well resourced and has a strong legal mandate. Its independence and effectiveness is a source of debate; it has a lack of powers of prosecution, and is administered by the Prime Minister's Department rather than parliament. This has led to concerns, when senior personnel within MACC were reportedly transferred during an investigation of 1MDB (1 Malaysia Development Berhad), due to interference from the Prime Minister's Department. Officials and investigators were also reportedly arrested. Despite this, the commission is monitored by five independent panels. It has also been involved in recent investigations into military personnel, such as the reported arrests of six personnel in the Royal Malaysian Navy for suspect procurement practices. The Malaysia Defence Industry Council [MDIC], tasked with development of Malaysia's defence industry, does not fall under MACC or BADSA.

There is no public information concerning coordination among these agencies, apart from JITU heads requiring MACC training.

Response to Government Reviewer: The Integrity Unit here would be considered a &quoute;compliance or ethics departments that span all government institutions&quoute; rather than an institution within the MoD. Whilst these institutions are generally identifiable, without reviews and public evidence, it is unclear whether they are effective in their work. Due to the lack of public information and reviews, evidence of effectiveness is limited. Score maintained.

COMMENTS -+

Enforcement Agency Integrity Commission Website - http://www.eaic.gov.my/

Institute of Integrity Malaysia &quoute;Objektif&quoute; Accessed 10th July 2014 http://www.iim.org.my/en/web/guest/info_objektif

Mok, O &quoute;Paul Low: EAIC Chief Transfer Not my Idea&quoute; The Malay Mail Online (June 29th 2013) Accessed 5th July 2014 www.themalaymailonline.com/Malaysia/article/paul-low-eaic-transfer-not-my-call

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

The Edge Malaysia, &quoute;Senior journalist pan Putrajaya’s new integrity committees&quoute; (22nd July 2014) Accessed 22nd July 2014 http://www.pemandu.gov.my/gtp/Media_Coverage-@-Senior_journalist_pan_Putrajaya%E2%80%99s_new_integrity_committees.aspx

NKRA Newsletter &quoute;Enculturing Integrity&quoute; ( 2014) http://newsdata2.bernama.com/newsletter/nkra/monitor22014/monitor22014.pdf accessed 6th September 2015

The Malaysia Insider &quoute;Low Announces Formation of Integrity Unites in All Public Agencies (2013) http://www.themalaysianinsider.com/malaysia/article/low-announces-formation-of-integrity-units-in-all-public-agencies-bernama accessed 5th September 2015

The Star &quoute;Time to Check Integrity Unit Activities&quoute; (2015) http://www.thestar.com.my/Opinion/Columnists/The-Star-Says/Profile/Articles/2015/07/05/Time-to-check-integrity-units-activities/ Accessed 6th September 2015

The Malaysian Insider &quoute;MACC Says FAces No Interference in RM2.6 Billion Probe&quoute; 2015 http://www.themalaysianinsider.com/malaysia/article/macc-says-faces-no-interference-in-rm2.6-billion-probe accessed 6th September 2015

MIDES &quoute;Organisation&quoute; http://mides.mod.gov.my/index.php/info/carta-organisasi Accessed 6th September 2015

The Malaysian Insider &quoute;Activists Fear for Country's Future After Transfer of MACC DIrectors&quoute; (2015) http://www.themalaysianinsider.com/malaysia/article/activists-fear-for-countrys-future-after-transfer-of-macc-directors accessed 6th September 2015

Malaysia Chronicle &quoute;Corruption in the Navy: Shady Splurge of RM26 Million Detected (2015) http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#axzz3jpFwAnD Accessed 6th September 2015

SOURCES -+

Opinion: Agree with Comments

Comment: The Malaysia Defence Industry Council [MDIC], formed in 1999, which is currently chaired by the Minister of Defence and has 56 members from both the government and private sectors, and mandated to coordinate the orderly development of Malaysia's defence industry sector (including making it more competitive),could do with representation from external auditing agencies such as the MACC or internal ones such as BADSA, but interestingly, still does not.

MIDES website and organisational/membership structure - http://mides.mod.gov.my/index.php/info/carta-organisasi
“Malaysia Defence Industry”, GlobalSecurity.Org, http://www.globalsecurity.org/military/world/malaysia/industry.ht

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The Enforcement Agency Integrity Commission (EAIC http://www.eaic.gov.my/index.php/extensions/s5-flex-menu) and the Institute of Integrity Malaysia (IIM) span across all agencies and are not defence specific. The IIM has many outreach programmes and has developed its very own Malaysia’s Corruption Perception index. Recently, an Integrity Unit was established in the Ministry (see - http://www.themalaysianinsider.com/malaysia/article/low-announces-formation-of-integrity-units-in-all-public-agencies-bernama)

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There are identifiable institutions within the defence and security that are independent, suitably staffed and funded; evidently effective in their work. These are the Internal Audit & General Investigation Divisions of the Ministry, the Inspectorate General of the Armed Forces and the newly formed Integrity Unit.

Suggested score: 4

Government Reviewer-+

09.
score
2

Does the public trust the institutions of defence and security to tackle the issue of bribery and corruption in their establishments?

Researcher4180: Public trust appears to be mixed with regard to the different institutions of security and defence. The Global Corruption Barometer (2013) demonstrates only 10 per cent of respondents viewed the military as corrupt, whilst 46 per cent viewed public officials more generally as corrupt. Only 14 per cent saw corruption as decreasing. It is important to note that figures related to the government and public officials are not specific to defence institutions, but the Ministry of Defence would fall within the government, making it one potential indicator in the absence of specific data. A follow up Malaysia Corruption Barometer demonstrated that public perceptions on the government’s effectiveness to fight corruption have declined, and incidences of bribery in public services have worsened. According to the Corporate Perception Indicator 2014 'corruption' is the first word to come to peoples' minds when thinking about the government. This is further reinforced by the PEW report on top country problems, with 63 per cent of Malaysians responding that corruption is a 'very big problem' the country faces, with a 35 per cent increase (from 28 to 63 per cent) seeing corrupt leaders as being a problem.

This is reinforced with more qualitative data; there is strong rhetoric from the Ministry of Defence in tackling corruption, but the trust deficit in the ministry has grown following the lack of willpower and resolution in the Scorpene submarine corruption case, as well as the lack of meaningful prosecutions in general. The lack of transparency concerning the MH370 airline tragedy, as well as the increased spending following the tragedy, is widely linked on social media to corrupt practices, which demonstrated this perception and appears to have deepened public mistrust. The interviewee stated that trust of the Ministry of Defence was low.

Despite this, however, the public have positive perceptions of the military in particular, as mentioned above, with only 10 per cent seeing them as corrupt. The generally positive view of the military policing the border in response to widespread corruption among law enforcement officers would seem to reinforce the view that the military is seen as having more integrity.

Response to Government Reviewer and TI Chapter Reviewer: The perception of government institutions, which would include the Ministry of Defence, is quite mixed, as indicated above, which along with recent news, needs to be taken into consideration here. The score has been raised from 0 to 2.

COMMENTS -+

Interview with Civil Society Actor, 18 July 2014

The Star &quoute;Zahid: No need to probe Perimekar&quoute; (July 2, 2010) Accessed 2nd July 2014 http://thestar.com.my/news/story.asp?file=/2010/7/2/nation/6594283&sec=nation

Dato' Mohd.Ariff Sabri bin Hj. Abdul Aziz &quoute;Making Sense of Our Defence Spending&quoute; (April 2nd 2014) Accessed 3rd July 2014 Sakmongkol.blogspot.com/2014/04/making-sense-of-our-defence-spending.html

Transparency International &quoute;Global Corruption Barometer 2013 - Malaysia&quoute; (2013) http://www.transparency.org/gcb2013/country?country=malaysia accessed 6th September 2015

Transparency International &quoute;Malaysia Corruption Barometer Results&quoute; (2014) http://transparency.org.my/what-we-do/indexes/global-corruption-barometer/ti-m-2014-malaysia-corruption-barometer-mcb-results/ Accessed 6th September 2015

Malay Mail Online &quoute;Corruption is First Word on Malaysian's Mind When Thinking of Government&quoute; (2014) http://www.themalaymailonline.com/malaysia/article/corruption-is-first-word-on-malaysians-minds-when-thinking-of-government-su Accessed 6th September 2015

PEW &quoute;Counry Problems and Institutions&quoute; (2014) http://www.pewglobal.org/files/2014/11/Pew-Research-Center-Country-Problems-and-Institutions-Report-FINAL-November-6-2014.pdf Accessed 6th September 2015

Chi, M. &quoute;Defence Ministry Gives Green Light to Army Patrols at Malaysia-Thai Border (2015) http://www.themalaymailonline.com/malaysia/article/defence-ministry-gives-green-light-to-army-patrols-at-malaysia-thai-border accessed 6th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: The defence minister has made statements on his stand on corruption. However, there have been no investigations into grand corruption cases within the defence sector. For example, there is currently a court proceeding in France over corruption allegations in regard to submarines acquired by the MINDEF in the 'Scorpene deal'. The public perception and trust in defence institutions on tackling corruption is going down the drain.

Suggested score: 1

TI Reviewer-+

Opinion: Agree with Comments

Comment: &quoute;As I am not currently based in Malaysia, it is difficult to make a precise judgement - but based upon research and contacts in the country, the criteria score appears to be correct&quoute;.

Source: Interview with civil society activist, 18 August 2014

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The public view is that there is a clear commitment that bribery and corruption are not acceptable and must be prosecuted, and that there is little or no prevalence of corruption in defence, or significantly decreasing prevalence.

The acquisition and subsequently operation of strategic assets have been continuously debated in parliament.

The government attempts to be as transparent as it could possible be within the ambit of law, in case of the missing flight as well as the one crashed. The cost of deploying advanced equipment for a prolonged search period is undoubtedly expensive. The Malaysian Government welcomes and appreciates the mutual assistance offered by friendly nations.

Suggested score: 4

Government Reviewer-+

10.
score
1

Are there regular assessments by the defence ministry or another government agency of the areas of greatest corruption risk for ministry and armed forces personnel, and do they put in place measures for mitigating such risks?

Researcher4180: No public information is released concerning regular assessments of defence-specific corruption risks, or any measures outside of the regular anti-corruption framework. However, an integrity section on the Ministry of Defence website suggests they are aware of different areas of risk, and the Auditor-General's reports highlights and prioritises different issues as well within the Defence Ministry (see, for example, the above 2014 series 1 report). Despite this, there is no specific mention of corruption in the Auditor-General's report, and measures in place to mitigate further issues are not apparent.

A new Integrity Unit (JITU) aimed at increasing integrity and reducing corruption within each ministry, including the defence ministry, is in place which suggests awareness of risk. It is too nascent to measure its effectiveness despite it representing signs of growing commitment. There has been no review process on effectiveness or activities of the JITU's in general, despite media calls for one. The interviewees were unaware of any regular assessments or specific measures in place.

Response to Government Reviewer: JITU demonstrates awareness of risk and represents a measure put in place to mitigate this. However, there are no publicly released reviews of their activities, so it is unclear whether the implementation is effective and how regular such assessments take place if at all. The Auditor General reports suggest regularity but are focused on identifying areas most vulnerable to corruption risk. Neither measures are defence specific either. Score maintained

COMMENTS -+

Ministry of Defence &quoute;My Integriti&quoute; Accessed 10th July 2014 http://www.mod.gov.my/ms/component/content/article/171-lain-lain/598-myintegriti.html

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

National Audit Department Malaysia &quoute;Synopsis: Auditor General Report for Year 2013 Series 2&quoute; (2013) Accessed 5th July 2014 https://www.audit.gov.my/images/pdf/LKAN2013/Persekutuan/Siri2/master%20synopsis%20lkan2013%20series%202_opt.pdf

The Star &quoute;Time to Check Integrity Unit Activities&quoute; (2015) http://www.thestar.com.my/Opinion/Columnists/The-Star-Says/Profile/Articles/2015/07/05/Time-to-check-integrity-units-activities/ Accessed 6th September 2015

Jabatan Audit Negara &quoute;Laporan Ketua Audit Negara: Siri 1&quoute; (2014) https://www.audit.gov.my/images/pdf/LKAN2014/Siri1/Persekutuan/LKAN2014%20Siri%201%20-%20Kerajaan%20Persekutuan.pdf accessed 6th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: In addition, please see this article on offset policy in the Malaysian government. It explains how risk has been integrated into Malaysian defence acquisition and policy in general, and supports the analysis that decision-making in this area is opaque. Ron Matthews & Tracy Yip, &quoute;The Push and Pull of Offset in the Development of Malaysia's Defence and Security Technology Park,&quoute; Asia Defence Review, 28 Jan 2013, http://www.defencereviewasia.com/articles/203/The-Push-and-Pull-of-Offset-in-the-Development-of-Malaysia-s-Defence-and-Security-Technology-Park

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Risks have been identified, and appropriate measures have been put in place in many cases. There may be minor concerns over the regularity of assessments or the degree to which the measures sufficiently address the risks identified. The Integrity Unit is newly formed but the Auditor General has been in placed since 1957 along with its Act.

All risks and reports, not limited to Auditor General's Report, pertaining to any/possible corruption matters nationwide are tackled by the Malaysian Anti Corruption Commission.

Suggested score: 3

Government Reviewer-+

11.
score
2

Does the country have a process for acquisition planning that involves clear oversight, and is it publicly available?

Researcher4180: Acquisition planning has a clear internal process, initially based upon five year plans that focus on acquisition requirements and subsequent spending in the following five year period, as mentioned by public sources cited above and confirmed by interviewees. Both the Ministry of Defence and the Treasury are involved, as are the cabinet, following on from acquisition requests from the military. There is evidence that the treasury undertakes its own evaluation, which suggests a degree of oversight of planning, but technical information is provided by Ministry of Defence personnel which is a shortcoming in terms of quality. This process is audited, but only after the fact, not during the planning stage. Due to its internal nature and a notable lack of transparency, the process is neither publicly available nor scrutinised, making an evaluation of effectiveness difficult.

With regard to wider oversight, parliament has little involvement in the planning process, and attempts at scrutiny appear to lead to evasion of questions. An MP has recently called for more involvement of Parliament in the planning of defence. However, there is the suggestion that if this were to take place, the lack of expertise from MPs in this field, due to a lack of focus or involvement in defence, a lack of specialist staff, and a poorly equipped Parliamentary Resource Centre, would lead to a continued dependence on defence institutions to plan and dictate acquisition needs. The Parliamentary Accounts Committee (PAC), which only has oversight after the fact, not during planning, also demonstrates problems whereby secrecy and national security are reportedly used to evade questioning, showing the limits that Parliament and the PAC have in oversight of planning.

Response to Government Reviewer: The information provided regarding the internal process of acquisition planning have been incorporated above. The limitations in oversight by parliament and the audit process have been mentioned above as well, which justify maintaining score 2.

COMMENTS -+

Parliament &quoute;Penyata Rasmi Parlimen Dewan Rakyat&quoute; (8th March 2011) Accessed 12th July 2014 www.parlimen.gov.my/files/hindex/pdf/dr-08032011.pdf

Parliament &quoute;Penyata Rasmi Parlimen Dewan Rakyat&quoute; (21st March 2011) Accessed 12th July 2014 http://www.parlimen.gov.my/files/hindex/pdf/DR-21032011.pdf

Free Malaysia Today &quoute;We're ill-prepared for new military threats&quoute; (2014) http://www.freemalaysiatoday.com/category/nation/2014/11/20/were-ill-prepared-for-new-military-threats/ , accessed 5th September 2015

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Wee, T., &quoute;Dato' Seri Zahid Hamidi displays the worst traits of a minister who is arrogant, ignorant and shockingly forgetful&quoute; (January 2nd 2012) Accessed 12th July 2014 http://dapmalaysia.org/english/2012/jan12/bul/bul4825.htm

Mohamad, N., &quoute;Malaysia’s Defence Policy and the Defence Budgeting&quoute; Accessed 14th July 2014 http://ipf-ssg-sea.net/4th_WS/Nur-Jazlan.pdf

Hellmann-Rajanayagam, D., &quoute;Malaysia&quoute; in Singh, R. P., Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan (2000) PP. 67-105 Accessed 10th July 2014 http://books.sipri.org/files/books/SIPRI00Singh/SIPRI00Singh04.pdf

Mak, J. N., ‘Security perceptions, transparency and confidence-building: an analysis of the
Malaysian arms acquisition process’, SIPRI Arms Procurement Decision Making Project, Working
Paper no. 82 (1997)

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

The Malay Mail Online &quoute;After Navy Graft Arrests, PAC demands Full Audit of Military Accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 6th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There is a defined process for acquisition planning. However, the decision-making in this regard is rarely public or open to scrutiny on grounds of national security.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: For an analysis on how offset policy has been institutionalised by the Malaysian government. Ron Matthews & Tracy Yip, &quoute;The Push and Pull of Offset in the Development of Malaysia's Defence and Security Technology Park,&quoute; Asia Defence Review, 28 Jan 2013, http://www.defencereviewasia.com/articles/203/The-Push-and-Pull-of-Offset-in-the-Development-of-Malaysia-s-Defence-and-Security-Technology-Park

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Acquisition planning has a clear internal process based on the Treasury's circulars and instructions, initially based upon a 5-year plan that focuses on acquisition requirements and subsequent spending in the following 5-year period. The audited process is made publicly available via Parliamentary sessions.

Suggested score: 4

Government Reviewer-+

12.
score
2

Is the defence budget transparent, showing key items of expenditure? This would include comprehensive information on military R&D, training, construction, personnel expenditures, acquisitions, disposal of assets, and maintenance.

Researcher4180: The formulation of the defence budget is not a transparent process, but takes place internally within the
MoD Finance Division, and is then submitted to the Budget Division of the Treasury. The defence budget estimate is released publicly, but lacks transparency, displaying developmental and operating expenditure, with the only further elaboration showing these and logistics costs for each institutional sub-unit. The defence budget is then published, as are all other ministries' budgets, covering 16 pages of aggregated information. However, there is some break down into different programmes, sub-divided into training, logistics, activities and operation. The opaque nature of the budget is explained by ‘national security’, which is often covered by the OSA.

Response to Government Reviewer: Score maintained given the level of detail in the budget (as indicated above) does not justify a higher score.

COMMENTS -+

Chi, M., &quoute;Malaysia moderate to low in defence budget transparency,&quoute; The Malaysian Insider (November 19, 2011) Accessed 1st July 2014 http://www.themalaysianinsider.com/malaysia/article/malaysia-moderate-to-low-in-defence-budget-transparencysays-anti-graft-body

Ministry of Finance &quoute;Budget Estimate 2015: Defence Ministry&quoute; Accessed 1st September 2015 http://www.treasury.gov.my/pdf/bajet/maklumat_bajet_kerajaan/2015/b60.pdf

Ministry of Finance &quoute;Proses Penyediaan Belanjawan&quoute; (2015) http://www.treasury.gov.my/index.php?option=com_content&view=article&id=272&Itemid=2475&lang=ms accessed 8th September 2015

Ministry of Finance &quoute;Bajet 2015&quoute; http://www.treasury.gov.my/pdf/bajet/ucapan/ub15.pdf (2015) accessed 8th September 2015

Laws of Malaysia &quoute;Official Secrets Act&quoute; (1972) Accessed 1st July 2014 www.agc.gov.my/Akta/Vol.%202/Act%2088.pd

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The defence budget is presented in a very highly aggregated way to the public. It is generally tabled at Annual Budget in the Parliament but details are not transparent. Details of the defence budget are available and can be viewed in the National Budget prepared by Ministry of Finance.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The defence budget which includes comprehensive information on research and development, training, construction, personnel expenditure, acquisitions, maintenance and disposal of assets, is available on a &quoute;need to know basis&quoute;.

Suggested score: 3

Government Reviewer-+

12A.
score
1

Is there a legislative committee (or other appropriate body) responsible for defence budget scrutiny and analysis in an effective way, and is this body provided with detailed, extensive, and timely information on the defence budget?

Researcher4180: There is no legislative body responsible for defence budget scrutiny. However, the budget, in its opaque form, is submitted to parliament for approval along with the annual budget estimate. This is not effective as the budget is neither detailed nor extensive, which results in the budget essentially being rubber-stamped. The parliament has only a limited amount of days to approve the budget as a whole, which allows little time for scrutiny, and a majority is required for approval, which undermines opposition due to the majority consistently being held by the Barisan Nasional party (BN). Again, the effectiveness of any scrutiny that occurs ad hoc in parliament is undermined by a lack of expertise or information due to the lack of specialist staff, focus, limited information in the budget, and resources at the Parliamentary Resource Centre. At times where opposition has requested clarification on budget increases, only limited debate has occurred.

The opposition has been quite strong in calling for a bi-partisan Defence Accounts Committee to oversee the defence budget, suggesting that up to RM3.5 billion could be saved through this. Calls increased especially in the wake of suggested increased procurement following tragedies such as the MH370 airline disaster, but this has not resulted in an increase in scrutiny, and there has been no movement towards a formal legislative committee.

The parliamentary Public Accounts Committee, has extremely minor influence following budget acceptance which does not constitute budget scrutiny. It is after the fact, and responds to problematic elements of procurement highlighted by the auditors. However, its role is curtailed by the fact that significant information is not divulged due to national security.

Response to Government Reviewer: The Cabinet of Ministers is an executive body which the scope of the question does not allow for. Score maintained.

COMMENTS -+

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Selangor Kini &quoute;Pakatan Budget: Establish Parliamentary Oversight Committee to Review Defence Expenditure&quoute; (2013) http://en.selangorku.com/9231/pakatan-budget-establish-parliamentary-oversight-committee-to-review-defence-expenditure/ accessed 8th September 2015

Tan, J., Keong, S., & Wah, L., &quoute;MH370, stop thinking about shopping: Tell us what’s the problems first!&quoute; Democratic Action Party, June 18, 2014, accessed 15th July 2014 http://dapmalaysia.org/en/statements/2014/06/18/18750/

Tong, L., &quoute;Make fuller use of our MP's Expertise and Talents&quoute; September 9th 2011,
accessed 15th July 2014 http://liewchintong.com/2011/09/make-fuller-use-of-our-mps-expertise-skills-and-talents/

Kamal, S., &quoute;DAP wants Parliamentary Panel to Oversee Defence Buys&quoute; The Malaysian Insider (6th December 2011) Accessed 1st July 2014 Themalaysianinsider.com/Malaysia/article/dap/wants-parliamentary-panel-to-oversee-defence-buys

Chin, J., &quoute;The Role of Defence Budgeting and Parliament&quoute; (2007) Accessed 1st July 2014 http://ipf-ssg-sea.net/expert_ws_phuket/DefenceBudgetingMalaysia_Jitkai_Chin.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The budget is approved as a whole with the defence budget included in the annual national budget. There is no parliamentary committee responsible for defence budget scrutiny or analysis although opposition MPs have requested one to be set up, according to http://en.selangorku.com/9231/pakatan-budget-establish-parliamentary-oversight-committee-to-review-defence-expenditure/:
&quoute;The Opposition Party, Pakatan Rakyat (PR) has proposed the establishment of a bipartisan Defence Accounts Committee to look into defence expenditure because of the huge budget allocation for defence and security worth RM23 billion under the 10th Malaysia Plan. With the establishment of the committee, PR estimates a total savings of nearly RM3.5 billion in defence procurement. The budget presented also showed that there is no oversight over defence purchases and procurement. The Public Accounts Committee only oversees all other types of government spending not classified as official secrets&quoute;.
The MINDEF puts up its budget proposal and Ministry of Finance gives the final approval on the defence budget. The budget is then tabled and debated in parliament and subsequently submitted for approval.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Malaysia is a country that rose through insurgencies during her early independence. Paramount emphasis is placed to secure continual peace and independence. Hence the detailed information for defence scrutiny and analysis is reserved for the Cabinet of Ministers.

Suggested score: 4

Government Reviewer-+

12B.
score
1

Is the approved defence budget made publicly available? In practice, can citizens, civil society, and the media obtain detailed information on the defence budget?

Researcher4180: The approved budget, in its opaque and limited form, is publicly available on the Treasury website. This is highly aggregated, but includes details on different programmes, with logistics, operations, activities and training being provided as sub-headings. Formal Freedom of Information requests can not be made, and comments by Minister Low suggests that there will be no such mechanism forthcoming, either. This means there is no formal mechanism for citizens to obtain detailed information, and this would be further problematic in defence as it falls under the scope of national security and, therefore, the OSA.

There is a small degree of elaboration within the Ministry of Defence Annual Report, but this is released the following year, and does not provide significant details.

Response to Government Reviewer: Score 1 is maintained given that the approved budget is available in limited form due to national security concerns (as confirmed by you) and given there are no mechanisms to request further information.

COMMENTS -+

Chin, J., &quoute;The Role of Defence Budgeting and Parliament&quoute; (2007) Accessed 1st July 2014 http://ipf-ssg-sea.net/expert_ws_phuket/DefenceBudgetingMalaysia_Jitkai_Chin.pdf

Ministry of Finance &quoute;Budget Estimate 2014: Defence Ministry&quoute; Accessed 1st July 2014 www.treasury.gov.my/pdf/bajet/maklukamt_bajet_kerajaan/2014/b60.pdf

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

Ng, E., &quoute;Not Feasible to have a freedom of Information law for now&quoute; The Malaysian Insider (2015) http://www.themalaysianinsider.com/malaysia/article/not-feasible-to-have-freedom-of-information-law-for-now-says-paul-low accessed 8th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The approved defence budget is available online along with the rest of the national budget presented in the Parliament. The detailed approved budget is not publicly available. Requests for additional information on detailed expenses have always been denied on grounds of national security.

The budget allocation is available on the Ministry’s annual report and the public are welcome to give their comments and input through the Ministry’s official social media channel and the Ministry’s website.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The defence budget is publicly available. Nonetheless, some of the details of the approved budget are not publicly available in the interest of national security.

Suggested score: 2

Government Reviewer-+

13.
score
1

Are sources of defence income other than from central government allocation (from equipment sales or property disposal, for example) published and scrutinised?

Researcher4180: The government in its response to the previous Government Defence Anti-Corruption Index (GI 2013) assessment claimed that there is no other source of defence income, and that defence spending all comes from the centrally allocated defence budget. However, they have not addressed the previous assessment’s point concerning the initial creation of special purpose vehicles (SPVs) using the LTAT (the Armed Forces Fund Board), which is a body separate from the Ministry of Defence (though closely linked due to its board of directors being chief of staff, Min Def secretary general etc.), which would suggest this as an ad hoc alternative source of income.

Income and expenditure from LTAT is not audited. The use of the LTAT fund was publicised by the Minister of Defence in a speech, and while it was not scrutinised, the use of the fund seems to be limited. There is also income derived from equipment sales, as publicised on the e-tender website and confirmed by interviewees, but these seem limited to vehicles and scrap metal.

Response to Government Reviewer: For a higher score, the concerns of utilising LTAT funds for initial procurement would need be addressed and this information published. Score maintained.

COMMENTS -+

Government Defence Anti-Corruption Index 2013, Malaysia Assessment, http://government.defenceindex.org/sites/default/files/documents/GI-assessment-Malaysia.pdf

Government Defence Anti-Corruption Index 2013, Government's Response to Malaysia Assessment, http://government.defenceindex.org/sites/default/files/documents/Malaysia-government-response.pdf

Abas, M., Armed Forces Pension Fund to Fund Armed Forces Procurement (June 26th 2009) Accessed 5th July 2014 http://www.malaysiandefence.com/?p=650

Ministry of Defence &quoute;E-Tender&quoute; Accessed 5th July 2014 http://etender.mod.gov.my/tdr_detail_pero.php?bah=wang&status=sst&b=7&j=kk&t=2014

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: All defence procurement comes from the defence budget and not through other sources as claimed by MINDEF. However, the Lembaga Tabung Angkatan Tentera (LTAT), an Army Cooperative &quoute;has recorded its highest ever income since its establishment, posting a whopping RM907.4mil of unaudited total income for the financial year ending Dec 31, 2012 (FY12) on the back of the strong performances of the Boustead Group's diversified businesses. On the back of this sterling performance, the Armed Forces Superannuation Fund has declared a huge dividend payout of 16 per cent which was announced by Minister of Defence&quoute;.(http://www.thestar.com.my/business/business-news/2013/03/13/ltat-breaks-income-record-members-get-16-dividend/?style=biz)

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is no other source of defence income, and defence spending all comes from the centrally allocated defence budget. All proceeds from any disposal goes back to the Treasury.

Suggested score: 3

Government Reviewer-+

14.
score
2

Is there an effective internal audit process for defence ministry expenditure (that is, for example, transparent, conducted by appropriately skilled individuals, and subject to parliamentary oversight)?

Researcher4180: There is an internal audit process within the Ministry of Defence for expenditure led by BADSA (the Internal Audit and General Investigation Unit), which is monitored by the Treasury. With regard to expenditure, BADSA conducts Financial Management Audits in all of its Responsibility Centres. BADSA then release reports, though these are not publicly available. Within the Ministry there is also an Accountability Index Monitoring System (AIMS) which has been implemented so that the Responsibility Centre, Cost Centre and Defence Attache Office can evaulate their performances and implement self-auditing. There is only a small degree of transparency limited to an overall insight of BADSA’s activities and abilities annually, with little detail available. Limited MinDef information concerning BADSA suggest that BADSA and AIMS, recieving 4 and 5 stars at the Commonwealth Association for Public Administration and Management event, is recognised internationally as being effective. However, recent news reports concerning corruption demonstrate BADSA was ineffective when procurement officers utilised an old procurement system, enabling corrupt practices which were not audited.There is also little evidence on the extent to which BADSA is scrutinised by parliament, as parliament, represented by PAC, has had issues scrutinising external auditing due to national security, which implies this may also occur with regard to internal auditing under BADSA.

Response to TI Chapter Reviewer: Agreed that there is a degree of scrutiny. However, the PAC is ineffective at addressing external audits within defence, and there is no evidence to the contrary that this differs internally.

COMMENTS -+

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

Krishnan, S., &quoute;AG Cannot do Internal Audit Functions&quoute; (February 20th 2014) Accessed 5th July 2014 http://www.freemalaysiatoday.com/category/opinion/2014/02/20/ag-cannot-do-internal-audit-functions/

Ministery of Defence &quoute;MinDef : BADSA Menjuarai Pertandingan CAPAM Dalam Kategori Innovations In Public Service Management&quoute; (2012) http://www.mod.gov.my/ms/component/content/article/257-arkib-berita/934-mindef-badsa-menjuarai-pertandingan-capam-dalam-kategori-innovations-in-public-service-management.html accessed 5th October 2015

AIMS &quoute;AIMS&quoute; http://aimsweb.mod.gov.my/en/introduction-of-aims/background.html accessed 5th October 2015

The Malaysia Chronicle &quoute;CORRUPTION IN THE NAVY: ‘Shady splurge' of RM26 mil detected&quoute; (2015) http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#ixzz3jpGIEecc accessed 5th October 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: BADSA conducts routine auditing and is comprised of skilled and trained officers in the field of accounting and auditing. At the parliamentary level, the Ministry is also subjected to the scrutiny of the Public Accounts Committee (PAC).

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

15.
score
2

Is there effective and transparent external auditing of military defence expenditure?

Researcher4180: With regard to audits of expenditure conducted externally from the Ministry of Defence, these fall under the Auditor General’s (AG's) office and the Ministry of Finance, with potential follow ups from the Parliamentary Public Accounts Committee (PAC) and the MACC. The scope of the audits and other oversight are all limited, however, for reasons of national security, as some elements may fall under the Official Secrets Act. As mentioned in Questions 22 and 62, audits of asset disposal and tender board decisions do not appear to take place consistently either.

The Auditor General is an independent body that prepares reports after auditing financial statements and six specifically chosen projects, taken as a sample. These reports are released three times a year to enable a quicker response, but the publication may occasionally be delayed (in July 2014 only two 2013 reports were available). The Auditor General’s auditing is transparent and released online; the Auditor General's dashboard, provides updates on progress on the areas audited - currently all recommendations relating to the Ministry of Defence are marked as complete. Despite this, due to only auditing financial statements and six projects, it means some expenditure is not audited, and this has raised concerns as demonstrated in TI-Malaysia's 2013 report concerning problems of auditing procurement in particular. The PAC, too, has called for the Auditor General to more widely audit the full accounts of the military, due to the discovery of corruption within the navy concerning procurement. However, it is unclear whether such demands resulted in any further auditing, making effectiveness problematic to ascertain.

The PAC can audit after the fact, if there are any areas of concern. However, it is reported that whilst the PAC called for details on the purchase of Eurocopters, little could be revealed as the issue involved national security, demonstrating that the PAC is not particularly effective. Further to this, it has, as noted, called for audits into the military, but this has had no follow-up from the Auditor General.

The MACC has announced it is investigating elements of the Auditor General reports if corruption is suspected, but some results are not publicised (see, for example the 2010 report) and the MACC arrests of naval personnel in 2015 following an investigation demonstrated the issue whereby procurement was not audited, leading to corrupt practices. The MACC is not an auditor, but instead investigates corruption and leads some investigations based on the AG's reports.

Response to Peer Reviewer 2: Agreed. Score lowered from 3 to 2.

Response to Government Reviewer: Accept comments regarding about the Auditor General Dashboard. However, audits still appear to be limited to specific programmes which impacts effectiveness. Score maintained at 2.

COMMENTS -+

Auditor General &quoute;Dashboard: Search 'Pertahanan'&quoute; (2015) https://agdashboard.audit.gov.my/#/LKAN?lkanType=1&lkanYear=&lkanSeries=&actionStatus=&keyword=&auditiName=pertahanan&cawangan=&maxPerPage=5&order=1 accessed 10th September 2015

Transparency International Malaysia &quoute;Auditor General report 2013 shows more serious failure in the system due to non-compliance and poor attitude&quoute; (2013) http://transparency.org.my/media-and-publications/auditor-general-report-2013-shows-more-serious-failure-in-the-systems-due-to-non-compliance-and-poor-attitude/ accessed 10th September 2015

The Malay Mail Online &quoute;After navy graft arrests, PAC demands full audit of military accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 10th September 2015

The Star &quoute;Nur Jazlan: Armed Forces purchases must undergo audit&quoute; (2015) http://www.thestar.com.my/News/Nation/2015/03/13/PAC-says-armed-forces-procurement-must-undergo-audit/ accessed 10th September 2015

Krishnan, S., &quoute;AG Cannot do Internal Audit Functions&quoute; (February 20th 2014) Accessed 5th July 2014 http://www.freemalaysiatoday.com/category/opinion/2014/02/20/ag-cannot-do-internal-audit-functions/

National Audit Department Malaysia &quoute;Synopsis: Auditor General Report for Year 2013 Series 2&quoute; (2013) Accessed 5th July 2014 https://www.audit.gov.my/images/pdf/LKAN2013/Persekutuan/Siri2/master%20synopsis%20lkan2013%20series%202_opt.pdf

Auditor General &quoute;Auditor general's reports (federal)&quoute; (2015) https://www.audit.gov.my/index.php?option=com_content&view=article&id=534:auditor-generals-report-federal-2&catid=89&Itemid=300&lang=en accessed 10th September 2015

Malaysia Chronicle &quoute;CORRUPTION IN THE NAVY: ‘Shady splurge' of RM26 mil detected&quoute; (2015) http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#axzz3jpFwAnDF Accessed 10th September 2015

Anis, M &quoute;MACC Also Looking into Defence Ministry's Luxury Purchases&quoute; (November 12th, 2010) Accessed 5th July 2014 http://www.thestar.com.my/story.aspx/?file=%2F2010%2F11%2F12%2Fnation%2F7393978&sec=nation

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The Auditor General only audits financial statements and revealed that the Defence Ministry had only spent 28.1 per cent of the total contact value for the supply of dry ration to the Royal Malaysian Navy which was not made public. On the other hand, for example, in the area of procurement of military equipment and aircraft, the Royal Malaysia Police Air Wing Unit had purchased the Beechcraft King Air 350 in 2005, which was done through direct negotiation with Hawker Pacific Airservices Ltd (HPA) through its local agent, EZ Aviation Sdn. Bhd. (EZA). The price for the purchase of five units of the plane was USD58.25 million, but the AG had found that the procurement of the planes did not follow the terms of the contract and the planes were delivered not according to schedule, and the training provided to the pilots and aircraft engineers did not meet the original objectives. Failure of the senior military staff in supervising the procurement of the aircraft is serious as it affects the effectiveness of our military defence. This is why TI-Malaysia in the past has on numerous occasions highlighted that the procurement of defence equipment which runs into the billions must always be done with greater transparency
(http://transparency.org.my/media-and-publications/auditor-general-report-2013-shows-more-serious-failure-in-the-systems-due-to-non-compliance-and-poor-attitude/)

Suggested score:

TI Reviewer-+

Opinion: Disagree

Comment: The analysis does not match the score given - based upon the comments (which I would agree with), I would give suggest awarding score 2.

Suggested score: 2

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Military defence expenditure falls within the audit scope of the Auditor-General, whose report is tabled in every Parliament session (three times a year). The Auditor-General may raise issues on military defence expenditure in the report. Should any issue arise in the report, information on whether such issue is resolved or any action taken in response is available to the public through the Auditor General Dashboard.

Suggested score: 4

Government Reviewer-+

16.
score
3

Is there evidence that the country's defence institutions have controlling or financial interests in businesses associated with the country's natural resource exploitation and, if so, are these interests publicly stated and subject to scrutiny?

Researcher4180: The Ministry of Defence controlled LTAT (the Armed Forces Fund Board), is the only business with evidence of being involved in natural resource exploitation - specifically palm oil plantations. However, this is one of many sectors of investment that the LTAT are involved in, and whilst finances and income are not externally audited, its investments are publicly stated in statements and subjected to scrutiny by stakeholders. There is no evidence of individual involvement of armed forces' personnel in natural resource exploitation.

COMMENTS -+

Ai, L., &quoute;LTAT Targets RM1Billion Profit for 2013&quoute; (13th March 2013) The Edge Malaysia, Accessed 6th July 2014 http://www.theedgemalaysia.com/business-news/232875-highlight-ltat-targets-rm1b-profit-for-2013.html

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: LTAT &quoute;has recorded its highest ever income since its establishment, posting a whopping RM907.4mil of unaudited total income for the financial year ending Dec 31, 2012 (FY12) on the back of the strong performances of the Boustead Group's diversified businesses. On the back of this sterling performance, the Armed Forces Superannuation Fund has declared a huge dividend payout of 16 per cent which was announced by Minister of Defence&quoute;.(http://www.thestar.com.my/business/business-news/2013/03/13/ltat-breaks-income-record-members-get-16-dividend/?style=biz)

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: A difficult assessment as extensive investigation (beyond the scope of my current knowledge and this review) would be required to ascertain beneficial ownership, shareholders etc. of natural resource companies.

However, limited evidence has been provided here to support the proposal that financial interests are &quoute;publicly stated and subject to scrutiny that explicitly analyses the potential for impropriety.&quoute;

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

17.
score
4

Is there evidence, for example through media investigations or prosecution reports, of a penetration of organised crime into the defence and security sector? If no, is there evidence that the government is alert and prepared for this risk?

Researcher4180: There is no evidence of organized crime in the defence and security sector. In the past, there has been a focus on organised crime as a potential security issue, as demonstrated by different forums and conferences, which would suggest that the government is alert and prepared for the risk of it occurring within the sector as well as more broadly. The existence of the Crime Prevention Board, while not directly focused on the defence sector, would demonstrate that there is an element of preparedness against the risk as it is aimed at reducing organised crime in the country.

In 2015, it was reported by the Special Branch that upto 80 per cent of border officials, from the Immigration Department, Malaysian Maritime Enforcement Agency (MMEA), the Anti-Smuggling Unit (UPP) and the police’s General Operations Force were corrupt or involved in smuggling syndicates. However, none of these fall under the Defence Ministry, instead being part of the Home Ministry or reporting directly to the Prime Minister's Office. Indeed, the Home Minister Ahmad Zahid Hamidi has since stated he wants to replace the enforcement agencies guarding the borders with the military, which suggests that organised crime in the military is not an issue.

COMMENTS -+

Bernama &quoute;Crime Prevention Board Studying 51 Cases of Organised Crime&quoute; (14th April 2014) Astro Wani, Accessed 6th July 2014 http://english.astroawani.com/malaysia-news/crime-prevention-board-studying-51-organised-crime-cases-33879

Malasyai Kini &quoute;80pct of border officers are corrupt, says SB&quoute; (2015) http://www.malaysiakini.com/news/300537 Accessed 10th September 2015

Malay Mail Online &quoute;Home Minister Wants Army to Police Corrupt Malaysian Borders&quoute; http://www.themalaymailonline.com/malaysia/article/home-minister-wants-army-to-police-corrupt-malaysian-borders accessed 10th September 2015

Malay Mail Online &quoute;Ahmad Zahid: Crime Prevention Board Screening Organised Crime Cases &quoute; (2015) http://www.themalaymailonline.com/malaysia/article/ahmad-zahid-crime-prevention-board-screening-organised-crime-cases accessed 10th September 2015

Defence Services Asia &quoute;Conference&quoute; Accessed 5th July 2014 http://www.dsaexhibition.com/index.php/visitors-information/conference

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

18.
score
3

Is there policing to investigate corruption and organised crime within the defence services and is there evidence of the effectiveness of this policing?

Researcher4180: The military has a military police force, though it is uncertain on to what extent they focus on corruption and organized crime, and interviewees stated that in their experience this force instead focuses on the maintenance of discipline. Under the National Key Results Areas (NKRA), as part of the Government Transformation Programme (GTP), there is a new establishment of Governance and Integrity Units in all Ministries as of July 2014 aimed at countering corruption; a lack of review process makes it difficult to ascertain whether these are effective or not. Therefore, there seems to be a lack of effective preventative measures in place internally.

Externally, the MACC, the Special Branch, the Royal Malaysian Police force and the Crime Prevention Board all have jurisdiction in combating corruption and organised crime, including within the military. These are all independent bodies, with independent policing functions.

The MACC is the organisation tasked with policing corruption, and has demonstrated a degree of enforcement effectiveness; for example, it has arrested naval officers among others for corruption following independent investigation.

There has been no public evidence of enforcement from the other branches with regard to the defence sector and organised crime. The aforementioned involvement of organised crime among border personnel demonstrated a wider problem whereby the Special Branch stated that its intelligence was not followed upon by relevant agencies, suggesting the possibility this could occur within the defence sector, but there are no known cases of this. Effectiveness of the the Royal Malaysian Police and the Crime Prevention Board cannot be ascertained, as either there are no reported cases of organised crime within the military. However, as mentioned in the previous question, the Crime Prevention Board does appear to be making proactive efforts to study cases of organised crime to take the best possible action to counter it in the country.

Response to Government Reviewer: I agree that MACC has had some evidence of effectiveness, but this is not particularly widespread and is limited to corruption, not organised crime. Score 3 fits best, given the varying mandates and levels of independence and evidence of effectiveness of the institutions discussed above.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Bernama &quoute;Crime Prevention Board Studying 51 Cases of Organised Crime&quoute; (14th April 2014) Astro Wani, Accessed 6th July 2014 http://english.astroawani.com/malaysia-news/crime-prevention-board-studying-51-organised-crime-cases-33879

Su-Lyn, B., &quoute;Putrajaya sets up Ministerial Unites in Graft Fight&quoute; (22nd July 2014) The Malay Mail Online Accessed 22nd July 2014 http://www.themalaymailonline.com/malaysia/article/putrajaya-sets-up-ministerial-units-in-graft-fight

The STar &quoute;Time to Check Integrity Units Activities&quoute; (2015) http://www.thestar.com.my/Opinion/Columnists/The-Star-Says/Profile/
Articles/2015/07/05/Time-to-check-integrity-units-activities/ accessed 10th September 2015

Malaysia Kini &quoute;80pct of border officers are corrupt, says SB&quoute; (2015) http://www.malaysiakini.com/news/300537 accessed 10th September 2015

The Malay Mail Online &quoute;After navy graft arrests, PAC demands full audit of military accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 10th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Malaysian Anti-Corruption Commission (MACC) is responsible to investigate and prosecute all corruption matters in Malaysia. Organised crime is tackled by the Royal Malaysian Police force nationwide. Additionally, the Auditor-General publishes reports on the performance of all government institutions which includes the irregularities of conduct. Internally, the Ministry has recently set up a governance and integrity unit that oversees the conduct of military personnel.

Suggested score: 4

Government Reviewer-+

19.
score
1

Are the policies, administration, and budgets of the intelligence services subject to effective, properly resourced, and independent oversight?

Researcher4180: There are two military intelligence units, the Defence Staff Intelligence Division and the Kor Risik diRaja (Royal Intelligence Corps). Additionally, there is the Special Branch which is part of the Police, and the Prime Minister’s research division which is the main foreign intelligence agency.

No separate budget can be found for any of them, which leads to the assumption their budgets are part of their respective Ministries.

There is no evidence of external oversight of the budget, policy and administration of the agencies and very little information is released regarding their operations. They report to either their respective Chief of Staff, their respective Ministry heads, or the Prime Minister, which suggests a degree of internal control. However, there have been accusations from a retired General that the Defence Intelligence Staff Division (BSPP) failed to detect militant movements because they were wrongly focused on internal political operations, as demonstrated in the cited news articles (Chooi 2013; Zakaria 2013).

There is no evidence that the Public Accounts Committee is empowered for the oversight of intelligence, and failed attempts by the PAC to question other defence institutions, have been rejected on the basis of national security. This suggests the limitations likely to be faced by the PAC if it were mandated with oversight of intelligence agencies and was to attempt scrutiny.

Response to Government Reviewer: No evidence that PAC is empowered for such oversight could be found. Indeed, PAC has had issues overseeing less secretive organisations, such as the military, which would suggest oversight of intelligence agencies would be more challenging. Score maintained.

COMMENTS -+

Chooi, C., &quoute;Ex-general blames military intel failure for prolonged Sulu crisis&quoute; The Malaysian Insider (2013) http://www.themalaysianinsider.com/malaysia/article/ex-general-blames-military-intel-failure-for-prolonged-sulu-crisis/#sthash.grxay9Zq.dpuf accessed 10th September 2015

Zakaria, H., &quoute;'Complete intelligence failure in Lahad Datu'&quoute; Malaysia Kini (2013) http://www.malaysiakini.com/news/223718 accessed 10th september 2015

US Embassy Kuala Lumpur &quoute;Malaysia's National Security Council Described By New NSC Secretary&quoute; (26th July 2007) Wikileaks Accessed 14th July 2014 https://cablegatesearch.wikileaks.org/cable.php?id=07KUALALUMPUR1205

Beeson, M &quoute;Securing Southeast Asia&quoute; (2012)

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There are no provisions for the scrutiny of intelligence services nor any evidence of internal controls. They are overseen by the Prime Minister.


Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Agreed. The main issue with Malaysian intelligence authorities is the a lack of clarity about the role, authority and budget of the intelligence services - consequently, oversight is incredibly difficult to manage.



Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Public Account Committee is a parliamentary body made up of both the ruling and opposition, is empowered for such oversight.

Suggested score: 3

Government Reviewer-+

20.
score
1

Are senior positions within the intelligence services filled on the basis of objective selection criteria, and are appointees subject to investigation of their suitability and prior conduct?

Researcher4180: Due to the lack of transparency concerning the intelligence services, the criteria for selection is unclear. Theoretically, there should be criteria as laid out by the Armed Forces Council, for military intelligence, and to a more limited degree in this sector, the Public Services Department. Senior appointments are tabled before the Armed Forces Council. Information on various current and former and current senior staff also suggests a strong military or international relations background. In practice, however, the level of control by the Prime Minister's Office and the lack of transparency in relation to intelligence agencies suggests the risk of selection based on loyalty also exists.

With regard to intelligence agencies operating outside of the military and defence sector, the selection criteria of senior officials is unclear, due to the level of secrecy and given they fall under the remit of the Prime Minister's Office.

Response to TI Chapter Reviewer and Government Reviewer: While it appears that Armed Forces Council scrutinises appointments of intelligence agencies within defence, there is still no selection criteria published at the link provided. Additionally, as mentioned above, the appointment criteria and processes of senior officials of intelligence agencies external to defence is still unclear. Score maintained.

COMMENTS -+

ABN News &quoute;Military Intelligence failed to detect movement of Sulu sultan's royal army (13th March 2013) ABN news, Accessed 14th July 2014 http://news.abnxcess.com/2013/03/military-intelligence-failed-to-detect-movements-of-sulu-sultans-royal-army/

US Embassy Kuala Lumpur &quoute;Malaysia's National Security Council Described By New Nsc Secretary&quoute; (26th July 2007) Wikileaks Accessed 14th July 2014 https://cablegatesearch.wikileaks.org/cable.php?id=07KUALALUMPUR1205

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: According to an ex-intelligence official, while there is objective criteria for the selection of senior intelligence personnel, he/she has witnessed them being circumvented.

Source: Interview with ex-intelligence official, 19 March 2012

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Any senior position within the Malaysian Armed Forces is filled on the basis of objective selection criteria, and candidates are subjected to investigations of their suitability and prior conduct and tabled before the Malaysian Armed Forces Council for further scrutiny prior to appointment. (http://www.mod.gov.my/en/about-us/organisation/management-team/malaysian-armed-forces-council-group.html)

Suggested score: 4

Government Reviewer-+

21.
score
1

Does the government have a well-scrutinised process for arms export decisions that aligns with international protocols, particularly the Arms Trade Treaty (ATT)?

Researcher4180: Malaysia is a signatory to the Arms Trade Treaty, though it has not yet ratified it. There is a degree of activity concerning the Arms Trade Treaty which would suggest commitment, such as conferences organised alongside the United Nations Regional Centre for Peace and Disarmament in Asia and the Pacific (UNRCPD). However, Malaysia's Permanent Representative to the United Nations stated that the criteria for application of the treaty would need further deliberation to ensure objectivity and clarity. As it has not yet been ratified, there is no evidence of compliance or non-compliance, as no reviews have taken place.

Malaysia has signed major conventions such as the Biological Weapons Convention, the Chemical Weapons Convention and the Treaty on the Non-Proliferation of Nuclear Weapons.

There is also an internal arms export control law, the Strategic Trade Act (STA), which was established in 2010 and came into force in 2011. It covers all strategic items, including, but not restricted to, arms. Whilst initially seen as being quite a passive law, the introduction of the death penalty as a punishment has suggested to analysts that arms export is seen as increasingly important. The STA requires all companies exporting goods that fall under its remit to apply for a permit, and demonstrate they have a Internal Compliance Program in place, made up of a number of elements such as a clear export control policy and relevant documentation.

There is no scrutiny from parliament concerning export decisions, and there is no transparent process for them. Export contracts are signed by companies and the respective ministries grant permits for them, under the Strategic Trade Act. Parliament is unable to discuss arms exports decisions due to the Official Secrets Act.

Response to Government Reviewer: The level of evidence available for this question does not justify an increase to score 4. Score 1 maintained.

COMMENTS -+

UNODA &quoute;UNRCPD and Government of Malaysia organise Asia Regional Meeting to Facilitate Dialogue on the Arms Trade Treaty&quoute; (27th February 2013) Accssed 9th July 2014 http://www.un.org/disarmament/update/20130226a/

UNRCPD &quoute;Asia-Pacific Signatory States&quoute; Accessed 9th July 2014 http://unrcpd.org/asia-pacific-signatory-states/

Ministry of International Trade and Industry &quoute;Strategic Trade Act&quoute; (2010) Accessed 9th July 2014 http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.article.Article_a84fac8e-c0a81573-f5a0f5a0-57df60c6

KLN &quoute;Malaysia Highlights Views On Arms Trade Treaty&quoute; https://www.kln.gov.my/archive/content.php?t=4&articleId=2196941 (2013) accessed 10th September 2015
Tan, G &quoute;Export Controls in the ASEAN Region&quoute; (Accessed 9th July 2014) http://cits.uga.edu/uploads/compass/compass2-05-tan.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The government publishes arms control decisions made after procurement contracts are given. The decision making process itself is not transparent at all - not even to members of parliament strictly due to security reasons. There is little/no discussion of this in parliament in the run up to publication.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: All corruption matters are tackled by the MACC. It is independent, active and adequately empowered by Acts.

Suggested score: 3

Government Reviewer-+

Risk management 60
22.
score
2

How effective are controls over the disposal of assets, and is information on these disposals, and the proceeds of their sale, transparent?

Researcher4180: The transparency surrounding the disposal of assets is inconsistent; as cited only some disposals are published online, and there is no further mechanism for transparency concerning this and or evidence to indicate whether publicised controls are effectively followed. Interviewees have confirmed this inconsistency based on their prior experience.

There are internal controls and operating procedures, partly demonstrated by the MS ISO 9001 2001 certification which includes Management of Asset Disposal, and income derived from the disposal of assets is reported to the Finance Ministry. Asset disposal procedures are also subjected to strict guidelines as provided for by the Ministry of Finance circulars and directives. Some income derived from equipment sales are also publicised on the e-tender website, but these seem limited to vehicles and scrap metal.

Beyond that there is no public or parliamentary involvement. This limited information and lack of oversight of asset disposals (further discussed in Question 23) has led to scandals, such as one from 2011 in which jet engines, originally thought to be stolen, had ended up in Uruguay. Furthermore, proceeds of the disposals are usually not made public.

Response to Peer Reviewer 1: Relevant information has been incorporated in the main comments and sources above.

Response to Government Reviewer: Accept that procedures and controls are made public (this has been added to comments above). Score changed from 1 to 2 in line with the evidence above.

COMMENTS -+

Ministry of Defence &quoute;E-Tender&quoute; Accessed 5th July 2014 http://etender.mod.gov.my/tdr_detail_pero.php?bah=wang&status=sst&b=7&j=kk&t=2014

Ministry of Defence &quoute;Ministry of Defence Malaysia MS ISO 9001: 2008 Certification&quoute;
http://www.mod.gov.my/maklumat/program-kualiti/persijilan-msiso-90002001.html?lang=m accessed 10th September 2015

MercoPress &quoute;Wikileaks reveals Malaysian air force over up of F-5 jet engines which turned up in Uruguay&quoute; (2011) http://en.mercopress.com/2011/04/19/wikileaks-reveals-malaysian-air-force-over-up-of-f-5-jet-engines-which-turned-up-in-uruguay accessed 10th September 2015

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The MINDEF has obtained ISO 9001:2008 certification which includes Management of Asset Disposal under the Finance Division. This indicates that there are controls in place.

Asset disposals are made through a tendering process which is published in the local daily newspapers and through the Ministry’s website. Asset disposal procedures are also subjected to the strict guidelines as provided for by the Ministry of Finance. However, details of procedures are not available to the public.

The quality of the controls over asset disposals are also questionable. There was speculation that some assets were sold to a private enterprise in the US without the MINDEF's knowledge. There was also a scandal reported in 2011 about jet engines that been sold to Uruguay. (http://en.mercopress.com/2011/04/19/wikileaks-reveals-malaysian-air-force-over-up-of-f-5-jet-engines-which-turned-up-in-uruguay)
Overall, there is limited information on the disposal of assets.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: It might be useful to add extra context on money laundering regulations here: Malaysia has enacted good laws with respect to money laundering, but limited oversight and banking secrecy laws make implementation quite hard. The contemporary focus on anti-terrorism means there has been less attention paid to asset disposal vis-a-vis defence equipment.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The procedures and controls over asset disposals are outlined through the Ministry of Finance's circular and directives and these are publicly available. However, there is limited information on the proceeds of the disposals and these are usually not made public.

Suggested score: 3

Government Reviewer-+

23.
score
1

Is independent and transparent scrutiny of asset disposals conducted by defence establishments, and are the reports of such scrutiny publicly available?

Researcher4180: There is little evidence of independent and transparent scrutiny of asset disposals, and no public reports beyond that of the limited asset disposal reports on the e-tender website. One interviewee (a retired major) claimed asset disposals are discussed in parliament in some cases, but another (a civil society actor) disputed this assertion . Parliamentary oversight is often problematic due to the Official Secrets Act, which prevents assets relating to national security from being discussed.

It is expected that audits take place, under the remit of BADSA internally and the Auditor-General externally, both of whom are responsible for auditing the accounts. The presence of controls and procedures from the Ministry of Finance would further suggest some degree of limited oversight. However, as mentioned there is little transparency from BADSA, and the Auditor General audits only accounts and 6 projects (as a sample). So far, the Auditor-General’s office has not brought up asset disposals in its reports in the past, nor has BADSA in the annual Ministry of Defence report, meaning the effectiveness of such audits cannot be ascertained.

Response to Government Reviewer: Audit reports do not mention asset disposals. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

Auditor General &quoute;Auditor-General's report&quoute; (2015) https://www.audit.gov.my/index.php?option=com_content&view=article&id=534:auditor-generals-report-federal-2&catid=89&Itemid=300&lang=e accessed 10th September 2015

Ministry of Defence &quoute;Laporan Tahunan&quoute; http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html accessed 10th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There may be no public knowledge of whether there is any scrutiny of asset disposal and whether it functions well. But there are strict Standard Operating Procedures (SOPs) for asset disposals as scrutinised by internal and external auditors (both appointed by the State.)

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Asset disposals are scrutinised by both internal and external audit. The external audit reports directly to the Auditor General. The latter is appointed by the Supreme Ruler of Malaysia and answers solely to the Parliament. Audit reports are available to the public within a reasonable time frame.

Suggested score: 4

Government Reviewer-+

24.
score
0

What percentage of defence and security expenditure in the budget year is dedicated to spending on secret items relating to national security and the intelligence services?

Researcher4180: Malaysia has consistently scored a ‘d’ ranking in the Open Budget Survey, with regard to secret items spending; the relevance of which has been disputed in the previous GI assessment (2013) because it cites a document demonstrating security expenditure as a whole, not just ‘secret’ items. Given there is no detailed public information on the budget as a whole, it is impossible to verify the percentage of expenditure on secret items from the defence budget. The budget is released and approved by parliament in its opaque form; there is no released break down of the budget, and no detail beyond the knowledge that there is a developmental and operating expenditure. This makes the government's claims, in response to the last GI assessment (in 2013), that none of the budget is dedicated to spending on secret items, as all has to be approved by the Ministry of Finance, impossible to verify. This is especially problematic considering, for example, expenditure associated with intelligence agencies, which constitutes secret spending.

Response to Government Reviewer: The question considers secret' expenditure to be expenditure on items relating to national security and the intelligence services. If Malaysia has intelligence services (which it does), there is spending on intelligence which needs to be considered for this question. This is not disclosed. Score maintained.

COMMENTS -+

Ministry of Finance &quoute;Budget Estimate 2014: Defence Ministry&quoute; Accessed 1st July 2014 www.treasury.gov.my/pdf/bajet/maklukamt_bajet_kerajaan/2014/b60.pdf

Thilaga &quoute;Open Budget Questionnaire Malaysia&quoute; (June 2011) International Budget Partnership, Accessed 8th July 2014, http://internationalbudget.org/wp-content/uploads/Malaysia_Questionnaire_OBS2012.pdf Q: 79

Government Defence Anti-Corruption Index, Malaysia Assessment 2013, government.defenceindex.org/sites/default/files/documents/GI-assessment-Malaysia.pdf

Government Defence Anti-Corruption Index, Malaysian Government Response to 2013 Assessment of Malaysia, government.defenceindex.org/sites/default/files/documents/GI-assessment-Malaysia.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: MINDEF claims that there is no percentage in the budget for the purpose of so-called secret items. Any request defence acquisition must be approved by the Ministry of Finance.

However, the interviewees believed there is some percentage of defence and security expenditure in the budget year is dedicated to spending on secret items relating to national security and the intelligence services, which is not available to the public. The budget is provided in a very highly aggregated manner and information cannot be disclosed.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is no acquisition of secret items. Acquistions of even nationally strategic defence assets are debated publicly in parliament; for example, the fighter jets and submarines.

Suggested score: N/A

Government Reviewer-+

25.
score
0

Is the legislature (or the appropriate legislative committee or members of the legislature) given full information for the budget year on the spending of all secret items relating to national security and military intelligence?

Researcher4180: The legislature is given no detailed information on the defence budget beyond the overall operating and development expenditure, meaning the legislature is also given no information concerning the spending of any of the budget on secret items. For example, the way the budget is presented means the legislature would have no indication of proportion of the budget is intended for intelligence service expenditure, as it would not be included in the aggregated budget as a separate section. It is noteworthy to mention here that there is no parliamentary legislative committee mandated with defence and security oversight specifically despite calls from the opposition. Much of this is kept secret officially through the Official Secrets Act. This has had implications on investigations following procurement purchases as well as the lead up to them; when PAC tried to obtain details of Eurocopter purchases they have been told that little can be revealed due to it being related to national security.

Response to Government Reviewer: Again, the intelligence agency budget is not disclosed publicly, and there is no evidence the legislative has access to this as well, judging by the opaqueness of the reports suggesting there is secret spending. Due to the way the budget is released, it is impossible to ascertain what is secret spending and what is not. Score maintained.

COMMENTS -+

Laws of Malaysia &quoute;Official Secrets Act&quoute; (1972) Accessed 1st July 2014 www.agc.gov.my/Akta/Vol.%202/Act%2088.pdf

Kamal, S., &quoute;DAP wants Parliamentary Panel to Oversee Defence Buys&quoute; The Malaysian Insider (6th December 2011) Accessed 1st July 2014 Themalaysianinsider.com/Malaysia/article/dap/wants-parliamentary-panel-to-oversee-defence-buys

Malay Mail Online &quoute;After navy graft arrests, PAC demands full audit of military accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts#sthash.f45OJY7E.dpuf accessed 10th September 2015

Ministry of Finance &quoute;Budget Estimate 2014: Defence Ministry&quoute; Accessed 1st July 2014 www.treasury.gov.my/pdf/bajet/maklukamt_bajet_kerajaan/2014/b60.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There is no legislative committee to scrutinise spending on secret items. The defence budget is presented in a highly aggregated manner, without specific details.

Information related to spending on secret items spending is kept secret under the Official Secrets Act. However, MINDEF claims that the details of procurement are available in the annual budget and presented in the parliament.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is no acquisition of secret items. Acquistions of even nationally strategic defence assets are debated publicly in parliament; for example, the fighter jets and submarines.

Suggested score: N/A

Government Reviewer-+

26.
score
0

Are audit reports of the annual accounts of the security sector (the military, police, and intelligence services) and other secret programs provided to the legislature (or relevant committee) and are they subsequently subject to parliamentary debate?

Researcher4180: BADSA is the internal auditing organisation, with the Auditor-General being mandated with external audit of defence expenditure. However, there is no evidence of audit reports relating specifically to overall annual accounts being released to the legislature, and the PAC has called for these accounts to be audited following accusations of corruption, suggesting they do not have access to these audits, or that audits have not occurred previously. The PAC, a legislative committee, holds the function of following up on any issues raised in the Auditor General's report, but they can only act on the limited information received - as demonstrated by statements made by the PAC, chief often information is withheld due to the OSA and national security (see the above article relating to Eurocopters). Furthermore, evidence suggests the Auditor-General is generally focused on non-secret programs such as bases, rations and equipment. Much of the spending due to the nature of defence and national security is exempt from audit on the basis of the Official Secrets Act.

Payment performance reports are released online, as is the Ministry of Defence’s annual report, but these are limited with regard to detailed information.

Response to Government Reviewer: No evidence was found that indicated the Auditor General audits secret items. Score maintained.

Response to TI Chapter Reviewer: As noted, secret programs are not audited. The annual reports do not cover these, but instead provide only limited information. Score maintained.

COMMENTS -+

Ministry of Defence &quoute;Payment Performance Reports&quoute; Accessed 15th July 2014 http://www.mod.gov.my/en/component/phocadownload/category/123-payment-performance-report-for-year-2014.html

Laws of Malaysia &quoute;Official Secrets Act&quoute; (1972) Accessed 1st July 2014 www.agc.gov.my/Akta/Vol.%202/Act%2088.pd

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

The Star &quoute;PAC Says Armed Forces Procurement Must Undergo Audit&quoute; (2015) http://www.thestar.com.my/News/Nation/2015/03/13/PAC-says-armed-forces-procurement-must-undergo-audit/ accessed 11th september 2015

The malay mail online &quoute;After navy graft arrests, PAC demands full audit of military accounts &quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 11th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: Annual accounts of the security sector (the military, police, and intelligence services) and other secret programs are not audited. Secret items spending are kept secret under the Official Secrets Act. However the MINDEF Annual Report are available online - http://www.mod.gov.my/en/publication/category/81-annual-reports.html

Suggested score: 1

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Military defence expenditure falls within the audit scope of the Auditor-General, whose report is tabled in every Parliament session (three times a year). The Auditor-General may raise issues on military defence expenditure in the Report. Should any issue arise in the Report, information on whether such issues are resolved or any action taken in response is available to the public through the Auditor General Dashboard.

Suggested score: 4

Government Reviewer-+

27.
score
1

Off-budget military expenditures are those that are not formally authorised within a country's official defence budget, often considered to operate through the 'back-door'. In law, are off-budget military expenditures permitted, and if so, are they exceptional occurrences that are well-controlled?

Researcher4180: Off-budget military expenditure is allowed, and some of it is generally tightly controlled, but reporting is inconsistent depending on the source of expenditure. It appears to have increased significantly, with reports suggesting that it has gone up by 86.8 per cent since 2009 (please not this is not defence-specific, but in relation of off-budget expenditure more broadly). There are a number of options for off-budget requests: emergency expenditure (a vote of credit); the Contingencies Fund under the Ministry of Finance in cases of emergency or unexpected needs; and Federal Government Loans, secured by the Ministry of Finance from internal and external sources; and Letters of Guarantees.

The Contingencies Fund is most strongly controlled. The Ministry of Finance has a division in charge of off-budget requests, and more commonly when they are not considered an emergency or for a major project with extremely high costs, a request for further expenditure will be tabled in parliament along with requests for a supplementary budget, meaning there is an element of reporting.

Whilst the contingent liabilities are reported, MPs have argued that other forms of off-budget expenditure are more difficult to track, such as Letters of Guarantees, which suggests they are not clearly stated or recorded in the respective budget. Therefore, it would seem there is inconsistent reporting of off-budget expenditure, based on the method by which it occurs.

Response to Government Reviewer: MPs have suggested that not all expenditures are tabled, as they have complained that some methods are hard to track. Score maintained.

COMMENTS -+

Abas, M., &quoute;2012 Supplementary Budget: Anything for Defence, MMEA and PDRM? Updated&quoute; Malaysian Defence (June 14th 2012) Accessed 13th July 2014 http://www.malaysiandefence.com/?p=2557

Francis, L., &quoute;Malaysia aims to upgrade air force with new fighters, AEW aircraft&quoute; (13th April 2010) Flight Global Accessed 13th July 2014 http://www.flightglobal.com/news/articles/malaysia-aims-to-upgrade-air-force-with-new-fighters-aew-340425/

Asian Organisation of Supreme Auditing Institutions &quoute;Financial Accountability&quoute; Ch. 8, accessed 13th July 2014, http://www.asosai.org/R_P_financial_accountability/chapter_8_malaysia.htm

Ministry of Finance &quoute;Function&quoute; Accessed 13th July 2014, www.treasury.gov.my/index.php?option=com_content&view=article&catid=120%3Aprofil-perbendaharaan&id=319%3Afungsi&Itemid=160&lang=en

Mahavera, S., &quoute;Government off-budget spending risky, going up, says lawmaker&quoute; The Malaysian Insider (2015) http://www.themalaysianinsider.com/malaysia/article/government-off-budget-spending-risky-going-up-says-lawmaker (accessed 11th September 2015)

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: By law, off-budget expenses are allowed but usually tabled in the Parliament as a supplementary budget. The Ministry of Finance has a division in charge of off-budget expenditures. However, no official information is available related to off-budget defence spending. Any additional military expenditure must get approval from the parliament. Off-budget can be linked to the supplementary budget which is always tabled in Parliament.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: I agree with the assessment, and please note an earlier comment about offsets. This stated that the Malaysian government has looked to institutionalise its offset policy within defence procurement which will has the potential to obfuscate independent/external/public evaluation of defence spending in the future (particularly when anything determined as secret or sensitive is prevented from being discussed as per the Malaysian Official Secrets Act).

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Off-budget military expenditures are permitted for unforeseen events with the condition that procedures under emergency expenditures are followed. Expenditures which are not budgeted are tabled in parliament for approval.

Suggested score: 4

Government Reviewer-+

28.
score
2

In practice, are there any off-budget military expenditures? If so, does evidence suggest this involves illicit economic activity?

Researcher4180: There have been examples of off-budget purchases in the past, such as the examples in the cited news report, but these are not common and do not suggest any illicit economic activity, instead being a response to a reduction in defence budgeting. Both interviewees noted they were not aware of illicit economic activity funding any expenditure. Recent news reports suggest that generally off-budget spending by Putrajaya has gone up by 86.8 per cent since 2009, meaning there is potential it occurs in practice within the defence industry. Furthermore, Malaysia is the recipient of military aid (though this is limited to 3-5 million dollars per year), which does not appear to be recorded in the budget.

Due to the lack of transparency concerning the budget itself, there is no official information concerning additional off-budget expenditure, but it is suggested by interviewees that with defence planning taking place in advance, there should be little need for extensive off-budget expenditure.

Response to Government Reviewer: As mentioned, MPs have reportedly complained that it is difficult to track all off-budget expenditure. Score maintained.

COMMENTS -+

Francis, L., &quoute;Malaysia aims to upgrade air force with new fighters, AEW aircraft&quoute; (13th April 2010) Flight Global Accessed 13th July 2014 http://www.flightglobal.com/news/articles/malaysia-aims-to-upgrade-air-force-with-new-fighters-aew-340425/

Mahavera, S., &quoute;Government off-budget spending risky, going up, says lawmaker&quoute; The Malaysian Insider (2015) http://www.themalaysianinsider.com/malaysia/article/government-off-budget-spending-risky-going-up-says-lawmaker (accessed 11th September 2015)

Security Assistance Monitor &quoute;Military and Police aid by year&quoute; (2015) http://www.securityassistance.org/data Accessed 11th September 2015

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There is no official information available in relation to off-budget defence spending. While there is no speculation about illicit motives in relation to such spending, it has been claimed by an interviewee that the Scorpene case was one that involved off-budget spending. However, most off-budget or emergency expenditures are eventually sent to Parliament for approval.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: All defence-related expenditures are recorded in the official defence budget. The only off-budget expenditures are those related to unforeseen events. These expenditures are known as ‘emergency expenditures’ and are tabled in Parliament for approval.

Suggested score: 3

Government Reviewer-+

29.
score
2

In law, are there provisions regulating mechanisms for classifying information on the grounds of protecting national security, and, if so, are they subject to effective scrutiny?

Researcher4180: The Official Secrets Act 1972 (Act 88), also known as the OSA, is a statute in Malaysia prohibiting the dissemination of information classified as an official secret. Despite a mechanism for classifying information, whereby a Minister can appoint any public officers this right, there is little evidence of scrutiny. A Minister, the Menteri Besar or Chief Minister of a State or such public officer can classify information. The civil society actor interviewed stated that the lack of scrutiny allows for individuals or the leading party to classify information at their discretion, especially with regard to information concerning defence and international relations. This has led to much documentation being covered under the Official Secrets Act. The 2015 Free Malaysia news article cited in the sources section demonstrates the OSA is open to abuse as it was unclear why leaked documents have been classified in the 1MDB case (2015).

Response to Government Reviewer: Evidence indicates abuse of the OSA which is reflective of limited or ineffective scrutiny. Score maintained.

COMMENTS -+

Laws of Malaysia &quoute;Official Secrets Act&quoute; (1972) Accessed 1st July 2014 www.agc.gov.my/Akta/Vol.%202/Act%2088.pdf

Interview with Civil Society Actor, 18 July 2014

The Malay Mail Online &quoute;Leak in 1MDB-Tabung Haji deal shows OSA abuse, Transparency Malaysia says&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/leak-in-1mdb-tabung-haji-deal-shows-osa-abuse-transparency-malaysia-says accessed 11th September 2015

Gaun Eng, L., &quoute;Is Official Secrets Act (OSA) meant to protect national and public interests or the private interests of one private company to prevent people from knowing whether they should be increasing water tariffs to earn huge profits?&quoute; (2007) http://dapmalaysia.org/english/2007/jan07/lge/lge543.htm Accessed 11th September 2015

Ng, S., &quoute;Our government has too many secrets&quoute; Free Malaysia Today (2015) http://www.freemalaysiatoday.com/category/opinion/2015/03/18/our-government-has-too-many-secrets/ accessed 11th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The Official Secrets Act (1972 The Official Secrets Act 1972 (Act 88), also known as the OSA, is a statute in Malaysia prohibiting the dissemination of information classified as an official secret. The act defines an &quoute;official secret&quoute; as, “...any document specified in the Schedule and any information and material relating thereto and includes any other official document, information and material as may be classified as 'Top Secret', 'Secret', 'Confidential' or 'Restricted', as the case may be, by a Minister, the Menteri Besar or Chief Minister of a State or such public officer”. The Schedule to the Act covers &quoute;Cabinet documents, records of decisions and deliberations including those of Cabinet committees&quoute;, as well as similar documents for state executive councils. It also includes &quoute;documents concerning national security, defence and international relations&quoute;. See http://www.agc.gov.my/Akta/Vol.%202/Act%2088.pdf

However, the Freedom of Information Act is available in the states of Penang and Selangor although it is not fully implemented.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Classified information is subjected to OSA (Official Secret Acts) and it is also subject to Parliament scrutiny.

Suggested score: 4

Government Reviewer-+

30.
score
2

Do national defence and security institutions have beneficial ownership of commercial businesses? If so, how transparent are details of the operations and finances of such businesses?

Researcher4180: The only evidence of institution-owned commercial business is the Armed Forces Fund Board (LTAT). The LTAT is a government statutory body established through an Act of Parliament, Act 101 (1973) to provide retirement benefits, a savings scheme to officers of the Armed Forces Malaysia and members of voluntary deployment fleet as well as other benefits to members of other ranks.The chairman is the Secretary General of the Ministry of Defence while the board is made up of the Chiefs of the Armed Forces. Te Minister of Defence appoints the CEO of the LTAT. Significantly, LTAT has majority ownership in Boustead holdings, which is involved in many sectors and has over 133 subsidiaries; and Affin Holdings, a significant financial provider. Due to LTAT being a fund for armed forces personnel and its holdings being publicly traded businesses, there is a strong degree of transparency with regard to its finance and operations. There are, however, allegations of mismanagement, with accusations that LTAT money is used to purchase business or land at inflated prices as a form of bribery. The LTAT has also been used for limited procurement, as indicated by statements made in 2009 by the then Defence Minister.

Beyond LTAT, it is unknown whether or not the MOD owns other commercial businesses. This could be due to there being no other commercial businesses, or it could be due to an associated ack of disclosure.There is a company called the National Aerospace and Defence Industries (NADI) which was set up in 1983 to consolidate some of the aerospace and defence activities set up by the Government of Malaysia, which is now a private limited company with 14 subsidiaries. However, it is unclear as to whether the Ministry of Defence has any ownership in this, as it is not disclosed. The board is made up of a number of retired senior army personnel, but there are no serving personnel from the Ministry or armed forces present.

The score has been selected given the risk that there may be businesses such as NADI which are not public and transparent.

COMMENTS -+

Boustead Holdings &quoute;Boustead Today&quoute; Accessed 13th July 2014 http://www.boustead.com.my/v2/boustead_today.html

AFFIN &quoute;Affin&quoute; Accessed 13th July 2014 http://www.affin.com.my/

Ar, Z., &quoute;LTAT land Deal will hamstring Mindef projects says Rafizi&quoute; The Malaysian Insider (31st December 2012) Accessed 13th July 2014 http://www.themalaysianinsider.com/malaysia/article/ltat-land-deal-will-hamstring-mindef-projects-says-rafizi

Bloomberg Business &quoute;Company Overview of National Aerospace & Defence Industries Sdn.Bhd&quoute; (2015) http://www.bloomberg.com/research/stocks/private/people.asp?privcapId=23542007 accessed 12th September 2015

Malaysian Defence &quoute;Armed Forces Pension Fund to Fund Armed Forces Procurement&quoute; (2009) http://www.malaysiandefence.com/armed-forces-pension-fund-to-fund-armed-forces-procurement/ accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: LTAT, which is the pension fund for the army, also controlled by MINDEF. Armed Forces Fund Board is a government statutory body established through an Act of Parliament, Act 101, 1973 to provide retirement benefits and other benefits to members of other ranks and a savings scheme to officers Armed Forces Malaysia and Members of voluntary deployment Fleet. LTAT is managed by boards of directors whose members are the highest ranked officers of the Malaysian Armed Forces and it is the highest army funded instrument of our government. LTAT has vastly invested and owns some of the major local corporations, such as Affin Investment Bank Berhad and Boustead Holdings Berhad.
However, this is limited compared to the larger companies producing palm oil and they are audited annually with reports being made available publicly (http://www.xtend.net.my/?page_id=115)
Apart from the LTAT, it is unknown as to whether or not the MINDEF owns other commercial businesses, such as NADI which are not disclosed and are not subject to scrutiny.
NADI (National Aerospace & Defence Industries) is now a private limited company with 14 subsidiaries involved in Aerospace & Defence industries, located in Subang, Malaysia. Companies under the NADI Group are Airod, Airod Techno Power (ATP), Airod Aerospace Technology Sdn Bhd (AAe ), Aerospace Technology Systems Corp (ATSC), SME Aerospace (SMEA) & SME Ordnance Sdn Bhd (SMEO) that primarily serves Maintenance, Repair & Overhaul, engines modifications and upgrades, aerospace parts manufacturing and avionics whilst SME Ordnance (SMEO) is the only licensed manufacturer of Ammunition in Malaysia and has been identified by the Government as the agency responsible for the development of defence products in the country.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Searches through RAM Credit Holdings can help to determine actual and beneficial ownership for publicly owned companies.

http://www.ram.com.my/

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

31.
score
2

Are military-owned businesses subject to transparent independent scrutiny at a recognised international standard?

Researcher4180: The LTAT, as the only known military-owned business, is by law required to be audited by the Auditor General or someone else permitted by the Minister of Finance. There is evidence that audits have taken place (see the relevant report in the sources section) and these are released to the public. This is then tabled in Parliament.

The LTAT also provides a public yearly report. However, due to a lack on transparency, it is unclear whether such scrutiny is at a recognised international standard. Furthermore, it is unclear whether there are other military-owned businesses (such as NADI, as mentioned in the previous question) and whether they are subject to scrutiny.

Response to Peer Reviewer 2: The AG is an independent body (as indicated in Question 15) and while there are issues with the scope of its oversight in defence, audits of the LTAT income does appear to be undertaken. The score has been selected given this, and keeping in mind that there may be other businesses which are not disclosed.

COMMENTS -+

Laws of Malaysia &quoute;TABUNG ANGKATAN TENTERA ACT&quoute; (1973) Accessed 13th July 2014 http://www.agc.gov.my/Akta/Vol.%203/Act%20101.pdf

Ali, S. M., &quoute;LTAT breaks income record, members get 16% dividend&quoute; The Star (2013) http://www.thestar.com.my/business/business-news/2013/03/13/ltat-breaks-income-record-members-get-16-dividend/?style=biz accessed 12th September 2015

LTAT &quoute;Annual Report 2014&quoute; (2014) http://www.ltat.org.my/webltat/borg/LTATAnnualReport2014.pdf accessed 12th September 2015

Auditor general &quoute;AUDITOR GENERAL’S REPORT: FEDERAL STATUTORY BODIES FOR THE YEAR 2006&quoute; Https://www.audit.gov.my/docs/BI/4Auditor%20General's%20Report/3Federal%20Statutory%20Bodies/2006/bbp2006englishX.pdf (2006) accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The LTAT is legally required to be audited by the Auditor General only. The audited accounts have to be submitted to the Minister of Finance and tabled at Parliament as well. However, it is unknown whether there are other military-owned businesses such as NADI which are not disclosed and are not subject to scrutiny.

Suggested score:

TI Reviewer-+

Opinion: Disagree

Comment: Audting processes clearly do not follow adequate due diligence.

I would be more inclined to suggest score 1 as the details are not known to the public (beyond, perhaps basic credit checks through RAM Credit Holdings), ad hoc parliamentary reports and so forth.

Suggested score: 1

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

32.
score
4

Is there evidence of unauthorised private enterprise by military or other defence ministry employees? If so, what is the government's reaction to such enterprise?

Researcher4180: Private enterprise is not outlawed in the Armed Forces Act, and there is no clear policy aimed towards conflict of interest. However, public officials may not participate in commercial activities without the approval of their heads of department (as stated in Regulation 5 of the Public Officers (Conduct and Discipline) Regulation 1993). Regulation 4(2) further prohibits public officials from subordinating public duty to private interest, and government Service Circular No. 3/2002 makes it mandatory for all officials to declare assets every six years.

While the LTAT and its subsidiaries involve serving and retired officers, this appears to be a result of the LTAT being an institutionally-owned fund. It is common for retired military officials to join the boards of defence industries in order to lobby for those defence companies, but there is no evidence of this occurring when military officials are serving.

Response to Government Reviewer: Comments accepted and score raised from 1 to 4 accordingly.

Response to TI Chapter Reviewer: The scope of the question deals with private entrepreneurial activities by serving military personnel only and the score has been revised to reflect this.

COMMENTS -+

Asia Sentinel &quoute;Graft in Malaysia’s defence Ministry&quoute; (24th September 2007) Asia Sentinel Accessed 13th July 2014 http://www.asiasentinel.com/politics/graft-in-malaysias-defence-ministry/

Laws of Malaysia &quoute;Armed Forces Act&quoute; (1972) Accessed 13th July 2014 http://www.agc.gov.my/Akta/Vol.%202/Act%2077.pdf

Public Officers (Conduct and Discipline) Regulations, 1993 (Regulation 5).

Yew N. S., Foong, J. T. H., &quoute;Malaysia&quoute; in Moyer Jr, H. E., &quoute;Anti-Corruption Regulation&quoute; (2015) (Law Business Research: Lancaster)

Warta Kerajaan &quoute;Peraturan Peraturan pegawai awam&quoute; (1993) http://docs.jpa.gov.my/docs/pu/pua395.pdf accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: The Armed Forces Act does not disallow private enterprises. It is common for retired military men join the board of directors of defence companies which deal with them. On many occasions, the Minister of Defence has spoken on behalf of LTAT and NADI. There is no evidence that serving personnel or officials personally owning any businesses.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is no evidence of serving military personnel or defence officials owning any defence-related businesses. The Malaysian Government General Orders specifically prohibit government officials from engaging in businesses for personal gain.

Suggested score: 4

Government Reviewer-+

Policies & codes 90
34.
score
3

Do the Defence Ministry, Defence Minister, Chiefs of Defence, and Single Service Chiefs publicly commit - through, for example, speeches, media interviews, or political mandates - to anti-corruption and integrity measures?

Researcher4180: There is mixed evidence of public commitment to anti-corruption and integrity measures. The Ministry of Defence has a ‘My integrity’ section on its website, and the presence of an internal integrity unit suggests integrity measures are being taken more seriously. Previous Ministers of Defence have made statements against corruption. Interviewees agreed that commitment appears to be growing, but the civil society actor argued this was largely rhetoric and still quite sparse. The current Minister has made statements concerning corruption highlighting it is a problem that needs to be solved due to problems in ESSCOM, but this has not been followed with further public expression of commitment against corruption in the defence industry. The same has occurred in response to the special branch report which argues upto 80 per cent of border officials are corrupt; the Defence Minister expressed his willingness to combat the issues of corruption through utilizing the military at the border.

There is a further concern that these statements are mostly rhetoric with little commitment intended, due to the nature of responses to parliamentary questions and the outright refusal to assist the French court in the probe relating to the Scorpene corruption case.

(Please note: the score has been selected on the basis of evidence of public commitment to anti-corruption and integrity only, not whether this has resulted in actual action)

Response to Government Reviewer: Whilst it seems that this is increasing, it still has limitations as indicated in the comments above. Score maintained.

COMMENTS -+

Lingan, L., &quoute;Hisham Blames Graft, Info Leaks&quoute; New Straits Times (6th June 2014) Accessed 14th July 2014 http://www2.nst.com.my/nation/general/hisham-blames-graft-info-leaks-1.612318

The Malaysian Insider &quoute;'Corruption is like cancer', Zahid Hamidi tells Ambiga'&quoute; The Malaysian Insider, (January 15, 2012) Accessed 14th July 2014 http://www.themalaysianinsider.com/malaysia/article/corruption-is-like-cancer-zahid-hamidi-tells-ambiga/

Free Malaysia Today &quoute;IGP and Army chief to discuss border security&quoute; (2015) http://www.freemalaysiatoday.com/category/nation/2015/06/04/igp-and-army-chief-to-discuss-border-security/ accessed 12th September 2015

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The defence minister has made statements in regard to on his stand on corruption. However, there have been no investigations into grand corruption cases within the defence sector although there have been public discussions around the Scorpene case and other scandals, including those which have been reported by the Auditor-General for years now.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is a clear and cohesive commitment to anti-corruption and integrity measures by the Defence Ministry, as declared by the Defence Minister, the Chief of Defence, and  Service Chiefs. This commitment is publicly and strongly stated and is reflected throughout the Defence Ministry and Armed Forces by similar commitments from senior ministry staff and senior armed forces officers.

Suggested score: 4

Government Reviewer-+

35.
score
3

Are there effective measures in place for personnel found to have taken part in forms of bribery and corruption, and is there public evidence that these measures are being carried out?

Researcher4180: All public servants and military personnel can be prosecuted under the Malaysian Anti-Corruption Commission Act (MACCA) and the Penal Code. There is increasing evidence that personnel are being charged for bribery and corruption. in 2014, a major was charged for an offence (relating to bribery) occurring eight years ago. Furthermore, in 2015, two Royal Malaysian Navy officers were charged under Section 165 of the Penal Code, as they allegedly received numerous valuables from the owner of a company supplying goods. A further four were probed in the same case, which is ongoing. The court decision will be reached on 8th of October. Defence personnel that are charged are published on the MACC's 'Criminal Register and Name-and-Shame' list.

Whilst measures seem to be increasingly imposed, there are two causes for concern. There is little public evidence that prosecutions are occurring at higher levels; in regard to the Scorpene case, those implicated in bribery were never prosecuted, and it is uncertain as to whether an effective investigation took place. One interviewee noted that there is a bottle-neck at the Attorney General level, as the only body that is able to pursue prosecutions. A lack of political will within this institution has reportedly led to calls for the MACC to be given powers of prosecution. Lacking these, MACC, with regard to reported corruption in the Eastern Sabah Security Command (ESSCOM), has requested the mlitary dismiss or remove anyone from the area engaged in corrupt practices.

Evidence indicates that investigations and punishment are still occasionally undertaken internally, (through court martials) with forced or optional early retirement, even though external investigations are increasing. These tend to be associated with no public explanation or clarification in relation to action taken and no evidence of whether the measures were effective. This has led to condemnation recently, as evidence of neighbouring countries convicting or punishing senior officials has emerged.

Response to TI Chapter Reviewer: Relevant information has been incorporated in the main comments and sources.

Response to Government Reviewer: In light of recent news of MACC's investigation of the Royal Malaysian Navy (RMN), there is increasing consistency with regard to external investigations and appropriate sanctions being imposed on defence personnel. However, there is still some cause for concern as indicated in the comments above, prevents the top score being awarded here. Score changed from 2 to 3.

COMMENTS -+

Malaysian Anti-Corruption Commission Act, 2009

Malaysia: Penal Code, Act No. 574 of 1997, 7 August 1997, available at: http://www.refworld.org/docid/3ae6b5cf0.html

MACC &quoute;Statistik Tangkapan Tahunan&quoute; Accessed 13th July 2014 http://www.sprm.gov.my/statistik-tangkapan-tahunan-2013.html

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Siang, L., &quoute;No way Malaysia can catapult to “top 10 or 12” of Transparency International CPI without catching any “big fishes” like what is happening in France, Indonesia, Philippines and China&quoute; (2nd July 2014) Accessed 14th July 2014, http://blog.limkitsiang.com/2014/07/02/no-way-malaysia-can-catapult-to-top-10-or-12-of-transparency-international-cpi-without-catching-any-big-fishes-like-what-is-happening-in-france-indonesia-philippi/

Interview with Civil Society Actor, 18 July 2014

The Malay Mail Online &quoute;Graft Busters to set up Stall in ESSCOM After Minister's Claim&quoute; (June 6th 2014) Accessed 5th July 2014 themalaymailonline.com/Malaysia/article/graft-busters-to-set-up-stall-in-esscom-after-ministers-claim

MACC &quoute;Two RMN Officers Charged with RM2.5 Millions Corruption&quoute; (2015) http://www.sprm.gov.my/2-tldm-didakwa.html accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There have not been many successful prosecutions of defence personnel under the Malaysian Anti-Corruption Act. However, on April 2014, an Air Force Major was being court martialed for blowing the whistle on indelible ink used during the general election in 2013. Internal investigations are not disclosed to the public. However, usually, once civilians are involved, the case goes to civil court. The Criminal Register and Name-and-Shame section under MACC publishes offenders.
There is a complaint system online for the MOD. However, details on the procedures and the outcomes of the actual use of the system are not publicly disclosed www.mod.gov.my/faq.html#

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There are effective disciplinary or punitive measures in place for personnel found to have taken part in forms of bribery and corruption. The rules and regulations such as the Peraturan kelakuan dan tatatertib 1993.

There is publicly available evidence that measures have been, or are being, carried out effectively and consistently. These reports can be found in MACC portal, newspapers and Malaysia’s and Singapore’s Criminal Registrar.

Suggested score: 4

Government Reviewer-+

36.
score
1

Is whistleblowing encouraged by the government, and are whistle-blowers in military and defence ministries afforded adequate protection from reprisal for reporting evidence of corruption, in both law and practice?

Researcher4180: There is a Whistleblower Protection Act which came into force in 2010 and was seen as a positive beginning. There was a forum &quoute;Whistleblowing - Your Right, Our Commitment&quoute; which explored ways to strengthen the act, however, as it is limited in nature and vague with regard to overlap with other laws, it is seen as inadequate for protecting whistle-blowers. This is particularly problematic for military personnel who are subject to separate legislation, as is demonstrated in the below case.

In a known case where a major lodged a report with the police concerning disappointments with the indelible ink used for voting in the general elections in 2013, he was subsequently arrested and charged. While protection should have been afforded to him under the Whistleblower Protection Act, he was found to have breached the Army Act and was found guilty of making a statement to the media without authorisation from top leadership. The interviewee noted that this has not been encouraging for other potential whistle-blowers within the defence sector.

Response to Government Reviewer: The above case would highlights that whistleblowing is not encouraged by the government and that there is likely to be limited trust amongst officials that they would be provided adequate protection. Score maintained.

COMMENTS -+

Majlis Peguam Bar Council Malaysia &quoute;Forum on Whistleblowing—Your Right, Our Commitment&quoute; (24th July 2014) Accessed 25th July 2014 http://www.malaysianbar.org.my/index.php?option=com_docman&task=doc_view&gid=4660

Interview with Civil Society Actor, 18 July 2014

The Malaysian Insider &quoute;RMAF officer charged for defying orders over indelible ink issue in GE13&quoute; (7th February 2014) Accessed 15th July 2014 http://www.themalaysianinsider.com/malaysia/article/rmaf-officer-charged-for-defying-orders-over-indelible-ink-issue-in-ge13-be

C4 &quoute;A New Paradigm Shift Needed To Protect Whistleblowers In The Fight Against Corruption&quoute; (2015) http://www.c4center.org/new-paradigm-shift-needed-protect-whistleblowers-fight-against-corruption accessed 12th September 2015

Laws of Malaysia &quoute;Whistleblower Protection Act&quoute; (2010) Accessed 17th July 2014 http://www.nkracorruption.gov.my/index.php/en/21-internal/35-whistleblower-protection-act-2010-act-711#

M Mustafa, &quoute;Found guilty, indelible ink whistleblower says ‘see you in Allah’s court&quoute; The Malaysian Insider, 12 January 2015, http://www.themalaysianinsider.com/malaysia/article/found-guilty-indelible-ink-whistleblower-says-see-you-in-allahs-court

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Whistleblowing is encouraged by the government. Whistleblowers are protected by a specific Act.

Suggested score: 4

Government Reviewer-+

37.
score
2

Is special attention paid to the selection, time in post, and oversight of personnel in sensitive positions, including officials and personnel in defence procurement, contracting, financial management, and commercial management?

Researcher4180: There is no public announcement or information concerning the selection of personnel in sensitive positions. From interviews, it is understood the process is extremely selective, and all officers have to be vetted regardless of sensitivity. It is the role of the Chief Government Security Office (CGSO) which falls under the Prime Minister's Office jurisdiction, to vet all appointments, along with the Armed Forces Council, which suggests a degree of oversight. There is a rotation of positions every three years, unless special circumstances exist, and there is evidence that some posts are seen as being sensitive, but this is quite limited (to ESSCOM, as discussed below), and it is unclear the degree to which positions in defence procurement, contracting, financial management, and commercial management are seen as sensitive.

One sensitive post currently, not directly addressed by the question, is the ESSCOM command due to its reported vulnerability to corruption, and this is being rotated between the police and Ministry of Defence every 18 months. Beyond this, there is no public information concerning selection of sensitive positions. In particular, it cannot be ascertained whether special attention is paid to the selection, time in post, and oversight of personnel consistently. It should be noted that the board of National Aerospace and Defence Industries (NADI), now a private limited company consists of retired military officials. There does not appear to be any restriction on post-separation activities of personnel (as mentioned in the comments for Question 47) more broadly and there was no evidence to indicate that this may be different when it comes to personnel in positions seen as sensitive.

Response to Government Reviewer: Information related to the CGSO has been incorporated in the main comments and sources. However, all positions deemed to be sensitive are not made public, and while there is some evidence of special oversight of some positions, it cannot be verified whether this takes place for all sensitive positions. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

CGSO &quoute;CGSO Website&quoute; http://www.cgso.gov.my/portal/ accessed 12th September 2015

The Borneo Post &quoute;Ministry to rotate ESSCom command between police and army, says Ahmad Zahid&quoute; (April 20th 2014) Accessed 10th July 2014 http://www.theborneopost.com/2014/04/20/ministry-to-rotate-esscom-command-between-police-and-army-says-ahmad-zahid/

Bloomberg Business &quoute;NADI Board&quoute; (2015) http://www.bloomberg.com/research/stocks/private/board.asp?privcapId=23542007

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: While some sensitive positions require a minimum criteria for selection, this is not always followed. Selection of sensitive positions are not made public.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Discussion of official appointments should always include the caveat that the Federal Constitution had conferred special rights to native Malays and bumiputeras in all areas of government and business. In this respect, all government positions will always receive &quoute;special attention&quoute;.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Personnel in sensitive positions are vetted both internally and externally. The Malaysian Government Head of Security Office is responsible for the external scrutiny. Job rotation for sensitive positions is given high priority.

Suggested score: 4

Government Reviewer-+

38.
score
2

Is the number of civilian and military personnel accurately known and publicly available?

Researcher4180: Civilian personnel figures are disclosed through the annual report released by the Ministry of Defence. In terms of figures of military personnel, this information is not available on any official websites. There are various estimates published online on non-governmental websites, and all seem to be roughly in the same area, but cannot be verified as they are not released or confirmed by the government.

Response to Government Reviewer: As mentioned, the military personnel numbers are undisclosed, which prevents a higher score been awarded. Score maintained.

COMMENTS -+

Ham, M., &quoute; Jumlah Anggota Tentera Malaysia&quoute; Servanthood (August 19th 2008) Accessed 21st July 2014

Global Firepower, &quoute;Malaysia Military Strength&quoute; Global Firepower (27th March 2014) Accessed 5th August 2014 http://www.globalfirepower.com/country-military-strength-detail.asp?country_id=malaysia

Global Security, &quoute; Malaysian Armed Forces&quoute; Global Security Accessed 5th August 2014 http://www.globalsecurity.org/military/world/malaysia/maf.htm

Minister of Defence &quoute;Laporan Tahunan&quoute; http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The number of civilian and military personnel in the Ministry of Defence is accurate and correct. While the number of civilian personnel is disclosed to the public through the Ministry's Annual Report, the number of military personnel is be kept secret from the public and can only be disclosed to a particular department for welfare and improvements in terms of salaries and allowances.

Suggested score: 4

Government Reviewer-+

39.
score
4

Are pay rates and allowances for civilian and military personnel openly published?

Researcher4180: All civil servants, including defence and military personnel, receive pay rates based on an internally published grade scale from the remuneration division of the public service department, which is in line with position or rank and is reviewed annually. This publication includes allowances for personnel.

COMMENTS -+

Public Services Department &quoute;Renumeration Divison&quoute; Accessed 1st July 2014 http://www.jpa.gov.my/index.php?option=com_content&view=article&id=255&Itemid=55&lang=en

Malaysian Armed Forces &quoute;Public Services Department&quoute; Accessed 1st July 2014 http://www.mafhq.mil.my/index.php/ms/mengenai-kami/markas-atm/public-service-department

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

40.
score
3

Do personnel receive the correct pay on time, and is the system of payment well-established, routine, and published?

Researcher4180: There have been no issues noted with pay delays; the system is perceived to be punctual and efficient. Interviewees noted that they received accurate pay on time.There is a published and routine process, enacted by a centralised Administration team responsible for the management of salaries and allowances. This, however, lacks detailed information concerning procedures. Civilian personnel can further access their payslips and check pay-dates through the e-Penyata Gaji.

Response to Government Reviewer: I've added the e-penyata gaji section. However, this is limited to civilians. There are also elements of the process which are not publicly disclosed and lacks transparency. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Accountant General &quoute;E-penyata gaji&quoute; http://www.anm.gov.my/&quoute; accessed 12th September 2015

Ministry of Defence &quoute;Maklumat&quoute; http://www.mod.gov.my/ms/maklumat/program-kualiti-dan-inovasi/persijilan-ms-iso-9001-2008.html accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: All personnel receive the correct pay on time directly credited to their bank accounts. There is a centralised online salary payment system called e-Penyata Gaji, managed by the Accountant General’s Department of Malaysia (JANM) for civilians to access and check payslips. The pay day is published yearly and is publicly available.

Suggested score: 4

Government Reviewer-+

41.
score
2

Is there an established, independent, transparent, and objective appointment system for the selection of military personnel at middle and top management level?

Researcher4180: There is an appointment system in place internally, and interviewees suggest that each position has selective criteria. With regard to mid-level positions, a Service Corp Officer Promotion Board (SCOPB) within the Human resource department utilizes a program referred to as the 'Merit System' to facilitate promotions between the ranks of Lieutenant and Lieutenant Colonel. This incorporates work performance, career course results, examinations, disciplinary background, among various other criteria. The criteria for higher promotions lacks transparency and is not published, with no job descriptions and assessments made public. There are no independent personnel or committees that oversee appointments within the military, beyond the Armed Forces Council which approves top level appointments.

It has been suggested by interviewees that these processes do not prevent selection based on loyalty rather than merit.

There also appears to be a particularly strong racial dimension when it comes to appointments; with ethnicity relatively divided, there is evidence that the Bumiputera, or ethnic Malays, are favoured when it comes to senior appointments. Utusan, owned by the ruling party, argued there is no discrimination by demonstrating the percentage of ethnically Chinese and Indian officers is higher than the percentage of lower ranking Chinese and Indian service personnel. Senior personnel (ethnically Chinese) have also disputed this. However, interviewees and other reports suggest non-Malays still have problems in this sector, and that 96 per cent of officers are Bumiputera.

Response to Government Reviewer: While there appears to be a published process for mid-level promotions, top level promotions lack transparency. Additionally, there are indications of issues related to the enforcement of established processes. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

Iqbal, M., &quoute;Tiada Diskiriminasi dalam ATM&quoute; Utusan (2nd December 2010) Accessed 13th July 2014 http://www.utusan.com.my/utusan/info.asp?y=2010&dt=1202&pub=Utusan_Malaysia&sec=Rencana&pg=re_05.htm

Malaysia Today &quoute;Ahmad Zahid Hamidi Should Reisn For Questioning the Loyalty and Patriotism of Non-Malays&quoute; Accessed 13th July 2014 www.malaysia-today.net/mtcolumns/letterssurat/35922-ahmad-zahid-hamidi-should-resign-for-questioning-the-loyalty-and-patriotism-of-non-malays

Sulaiman, A., &quoute;Patriotism in Perspective&quoute; (29th November 2010) Accessed 13th July 2014 http://blog.limkitsiang.com/2010/11/29/patriotism-in-perspective/

Hishamudin, A. R. &quoute;Development of decision support systems prototype for promotion in Service Corp Malaysian Army Human Resources Management using simulation model&quoute; (2006) (Degree thesis, Universiti Teknologi MARA)

The Malaysian Insider &quoute;Lack of promotion as reason for non-Malays not joining army a myth, says veteran – Bernama &quoute; (2015) http://www.themalaysianinsider.com/malaysia/article/lack-of-promotion-as-reason-for-non-malays-not-joining-army-a-myth-says-vet accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There is evidence of non-merit based appointment. Race is an issue in terms of appointment and selection. There is no transparency in selection and appointment before they are announced by the Minister. It is common to hear of established procedures being bypassed.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is an established system for the appointment of military personnel, which requires the use of objective job descriptions and assessment processes for appointments. Oversight of this process is provided for by the Malaysian Armed Forces Council and is adhered to in practice.

Suggested score: 4

Government Reviewer-+

42.
score
2

Are personnel promoted through an objective, meritocratic process? Such a process would include promotion boards outside of the command chain, strong formal appraisal processes, and independent oversight.

Researcher4180: There are suggestions promotions occur based on factors other than objective merit-based processes. While there is a selective criteria-based process without external oversight, this can be overlooked. With regard to mid-level promotions, a Service Corp Officer Promotion Board (SCOPB) within the Human Resource Department utilizes a program referred to as the 'Merit System' to facilitate promotions between Lieutenant and Lieutenant Colonel. This incorporates work performance, career course results, examinations, disciplinary background, among various other criteria.

The preference of the Minister or the ranking officer is often demonstrated to be an important element when it comes to initial selection. Interviewees have noted that those that should have been promoted if meritocracy was the main policy were not although this was difficult to verify publicly. However, as promotions have to be approved by the Armed Forces Council, there appears to be least some objective appraisal process in place. The Armed Forces Council is constituted, however, by military personnel.

Again, issues in appointment are also suggested to translate into issues in the promotion process, with the suggestion of a racial dimension which favours the promotion of native Malay personnel to maintain a strong presence. Utusan, owned by the ruling party, argued there is no discrimination by demonstrating the percentage of ethnically Chinese and Indian officers is higher than the percentage of lower ranking Chinese and Indian service personnel. Senior personnel (ethnically Chinese) have also disputed this. However, interviewees and other reports suggest non-Malays still have problems in this sector, and that 96 per cent of officers are Bumiputera.

Response to Government Reviewer: Some of the points are accepted and amendments have been made above, in particular in relation to the discussion regarding the racial dimension of promotions. Score changed from 1 to 2. A higher score could not be awarded given the evidence above regarding corruption risk in the process.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

Hishamudin, A. R. &quoute;Development of decision support systems prototype for promotion in Service Corp Malaysian Army Human Resources Management using simulation model&quoute; (2006) (Degree thesis, Universiti Teknologi MARA)

The Malaysian Insider &quoute;Armed forces open to all races, says general&quoute; (2011) http://www.themalaysianinsider.com/malaysia/article/armed-forces-open-to-all-races-says-general accessed 16th September 2015

The Malaysia Insider &quoute;Lack of promotion as reason for non-Malays not joining army a myth, says veteran – Bernama&quoute;, March 15, 2015, http://www.themalaysianinsider.com/malaysia/article/lack-of-promotion-as-reason-for-non-malays-not-joining-army-a-myth-says-vet

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: As noted with earlier questions, there is limited media or academic evidence in English about military appointment. Interviews are the best source here and the comments offered follow similar stories to those (i.e. favouritism in favour of Malays, family ties and so forth) known to the peer reviewer.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Personnel are promoted through an objective, meritocratic process. There is a formal committee board chaired by the top management. Promotion is strictly based on performance, time served and board approval. Annual appraisals are also taken as performance indicators.

On the other hand, a servicemen is eligible for promotion only if he has fulfilled all the conditions specified and if there are vacancies for promotion. The criteria to promote a servicemen is in accordance with the Perintah Majlis Angkatan Tentera (Armed Forces Council Instructions). Some of the criteria stipulated in the Armed Forces Council Instructions include a good track record (based on the performance appraisal form), knowledge, skills and experience as well as the number of specified career courses that the serviceman has attended. Personal attributes such as his suitability for the promotional post, integrity, potential and leadership are some of the additional factors that are also considered.

Recommendations for promotions will be made by the relevant authority and will be tabled in the designated promotions boards before the final approval from the Armed Forces Council. Although the Minister acts as Chairman of the Armed Forces Council, the decision to promote a servicemen is not the prerogative of the Minister or any high-ranked officer. The decisions made by the Armed Forces Council is by way of majority or by way of consensus among its members.

Race is not a factor in promoting well-deserved and eligible servicemen. Throughout the history of the Malaysian Armed Forces, there have been several non-Malay officers who have risen through the ranks in the Armed Forces’ top organisation. However, the number of non-Malays holding high-ranked positions is undeniably small due to the fact that the number of non-Malays personnel joining the Armed Forces is still relatively small. Therefore, the author's comments are believed to be based on the personal, individual perceptions of the interviewees and do not reflect the whole of the Armed Forces.

Suggested score: 4

Government Reviewer-+

43.
score
N/A

Where compulsory conscription occurs, is there a policy of not accepting bribes for avoiding conscription? Are there appropriate procedures in place to deal with such bribery, and are they applied?

Researcher4180: There is no compulsory conscription barring that of a National Service for high school leavers, whereby a number of people are randomly chosen from the pool of all 18 year olds with an IC. It is semi-military in nature. There are no public proven cases whereby bribes have been accepted for evasion, only anecdotal musings. As it is only three months in length, it seems unlikely that bribery would be a key issue, though procedures are in place to prevent it through a thorough postponement or exemption process.

COMMENTS -+

Laws of Malaysia &quoute;National Service Training Act&quoute; (2003) Accessed 19th July 2014 http://www.khidmatnegara.gov.my/content/files/Akta/National-Service-Training-Act.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Not Qualified

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

44.
score
N/A

With regard to compulsory or voluntary conscription, is there a policy of refusing bribes to gain preferred postings in the recruitment process? Are there appropriate procedures in place to deal with such bribery, and are they applied?

Researcher4180: The national service (PLKN) has been suspended for one year, and, when resumed, will undergo a transformation whereby it will be completely voluntary. The PLKN is focused on integrating youths, but has distinct military type training within the physical module, including hand-to-hand combat and weapon usage. Within this, where currently a number of people are randomly chosen from the pool of all 18 year olds with an Identity Card, there is no distinct bribery policy. This is despite different ranks existing based on performance in early stages. It should be noted that bribery in general is illegal under section 21 of the MACC Act (MACCA), as PLKN is constituted by officers of a public body, and that there is no evidence of bribery taking place with regard to rank. The interviewee claimed not to be aware of any cases of this, and there are no reported cases in the media.

Response to TI Chapter Reviewer: N/A has been selected here given the national service has been suspended for a year.

COMMENTS -+

Interview with retired Major, 20 July 2014

Asia One &quoute;Malaysia's National Service to be fully voluntary by 2019&quoute; (2015) http://news.asiaone.com/news/malaysia/malaysias-national-service-be-fully-voluntary-2019 accessed 12th September 2015

Shukry A., &quoute;Why cancel National Service if it’s so important, ask parents&quoute; The Malaysian Insider (2015) fhttp://www.themalaysianinsider.com/malaysia/article/why-cancel-national-service-if-its-so-important-ask-parents accessed 12th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There is a National Service scheme for high school leavers in Malaysia where students are chosen at random to attend three months of semi-military training, which is as close to conscription as we get to in Malaysia. While there have been no official cases of bribery, there have been cases where students who are called to attend this have had their parents bribe officials out of this. It should be strongly acknowledged, however, that this is based on hearsay and no investigation has ever been conducted on the matter, either by the press or by the police. However, ROTU is common among universities graduates and young men want to study in Military Colleges too.

Suggested score: 1

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

45.
score
4

Is there evidence of 'ghost soldiers', or non-existent soldiers on the payroll?

Researcher4180: Internal accounting is accurate and effective and there is a lack of evidence that suggests non-existent or ghost soldiers exist on the military payroll. A separation between chains of command and payment, and the presence of a financial department responsible for payroll, further suggests that ghost soldiers are an unlikely phenomenon. Two interviewees noted that they had not heard of ghost soldiers either.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

46.
score
4

Are chains of command separate from chains of payment?

Researcher4180: There is a separation of chain of commands and chain of payment, which ensures money allocated reaches its destination. As previously mentioned, there have been no issues experienced by interviewees, and there is a financial department within the ministry which is responsible for personnel emolument and that is regarded as being efficient and clearly separated from chain of command. Civilians can check e-Penyata Gaji for their payslips, a centralised online payment system.

COMMENTS -+

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

Accountant General &quoute;e-Penyata Gaji&quoute; http://www.anm.gov.my/ accessed 14th September 2015

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

47.
score
2

Is there a Code of Conduct for all military and civilian personnel that includes, but is not limited to, guidance with respect to bribery, gifts and hospitality, conflicts of interest, and post-separation activities?

Researcher4180: All military and civilian personnel also have to follow the Public Officers Regulations (Conduct and Discipline), as well as any addition General Orders or Circulars, with a signed letter affirming commitment. Civil law is applicable in regards to bribery and hospitality, which also contributes to conduct regulations. The MACCA, for example, prohibits officers of public bodies from using their position for gratification, and prohibits bribery (see section 21). Hospitality, in the form of gifts, travel and entertainment are restricted. Gifts are prohibited (in the above Public Officers Regulation) and entertainment expenses can be given as long as they do not influence execution of the official's duty.

There appears to be no restriction on post-separation activities, as demonstrated by retired army staff joining the boards of defence companies (see, for example, the constitution of NADI's board, made up of retired military personnel).

Interviewees from within the military have stressed there is a code of conduct that covers conduct with respect to bribery, gifts and hospitality, conflicts of interest etc. However, this could not be verified through public sources and it is unclear how this may differ (or add to) the Regulations and legislation mentioend above. The code is understood by interviewees to not be particularly effective with little monitoring.

Response to Government Reviewer and TI Chapter Reviewer: The information related to the MACCA and the Peraturan-Peraturan Pegawai Awam has been added above. However, there is still no public information related to the code of conduct for military personnel cited above, there appear to be no regulations related to post-retirement actvities, nor is there information relating to an oversight mechanism. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Laws of Malaysia &quoute;PEKELILING PERKHIDMATAN BILANGAN 17 TAHUN 2001&quoute; (2001) Accessed 19th July 2014 http://www.eghrmis.gov.my/wp_content2/pekeliling/PP01/PP01Bil17/pp0117.pdf

Bloomberg Business &quoute;NADI Board&quoute; (2015) http://www.bloomberg.com/research/stocks/private/board.asp?privcapId=23542007 accessed 14th September 2015

Yew, N. S., Foong, J. T. H., &quoute;Malaysia&quoute; in Moyer jr, H. E., &quoute;Anti-Corruption Regulation 2015&quoute; (2015) (Law Business Research: Lancaster)

Warta Kerajaan &quoute;Peraturan-Peraturan Pegawai Awam (kelakuan dan tatatertib)&quoute; 1993 http://docs.jpa.gov.my/docs/pu/pua395.pdf accessed 14th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: The Code of Conduct is understood to cover these items, however monitoring relies on whistleblowing by colleagues rather than on active monitoring. There is no publicly available information to provide further detail on the matter. Members of the public service including military personnel are bound to the General Orders and Circular issued by the Public Service Department. Any civilian and military personnel found to breach the code of conduct as stipulated in the circular, will be subjected to severe punishment. The existing civil law is also applicable - the MACC Act 2009 and Peraturan Tataterbit dan Kelakuan 1993 (Discipline).

Suggested score: 3

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is a Code of Conduct for all military and civilian personnel, which comprehensively covers conduct with respect to bribery, gifts and hospitality, conflicts of interest, and post-separation activities. This is available publicly. There is likely to be a robust oversight mechanism, too, though it may be confidential.

- MACC Act 2009;
- Peraturan Tatatertib dan Kelakuan 1993;

Suggested score: 4

Government Reviewer-+

48.
score
2

Is there evidence that breaches of the Code of Conduct are effectively addressed ,and are the results of prosecutions made publicly available?

Researcher4180: Beyond limited cases of corruption, such as the retired major who was found to have accepted bribes in the past and the RMN officers currently undergoing being charged for receiving gifts, there is little evidence of codes of conduct or conduct standards being consistently enforced publicly. Instead, these breaches have been in response to legislative regulations and enforced externally (through the MACC), rather than on the basis of internal breaches of conduct. This is problematic, as in the military, interviewees note, most breaches are dealth with internally with no public attendance of court martials and a lack of transcripts. Furthermore, the above two cases have not yet had results announced publicly (the charges concerning the RMN officers the case will be decided on October 8, 2015).

Response to Government Reviewer: There is indication that the MACC has enforced breaches in the legislation, but no evidence of action taken for breaches of the Public Officers Regulation or the internal code of conduct could be found. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

MACC &quoute;Two RMN Officers Charged with RM2.5 Millions Corruption&quoute; (2015) http://www.sprm.gov.my/2-tldm-didakwa.html accessed 14th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Some cases may also fall under the Official Secrets Act, hence they are not publicly known.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There are strong indications that breaches of the Code of Conduct are effectively addressed and that the results of prosecutions are made publicly available via, for examples, the Malaysian Anti-Corruption Commission (MACC) portal, newspapers, Malaysia’s and Singapore’s Criminal Registrar.

Suggested score: 4

Government Reviewer-+

49.
score
2

Does regular anti-corruption training take place for military and civilian personnel?

Researcher4180: Interviewees note that anti-corruption training is not widespread. While the Ministry of Defence has an integrity plan manual, which is not published, it is understood to outline a commitment to promote anti-corruption initiatives (derived from comments from staff), seminars and lectures for military personnel. These are not publicly discussed, which suggests they are either being undertaken internally or not at all. The latter seems more likely, as any anti-corruption training would be positively received.

Selected civilian personnel recieve religious influenced-training through Pengukuhan Integriti Perkhidmatan Awam (PIPA), which covers integrity, though it is unclear how personnel are selected to undergo this training.

Response to TI Chapter Reviewer: Agreed, though the consistency of such training is extremely questionable in light of lack of limited information released.

Response to Government Reviewer: Information regarding PIPA is accepted and has been incorporated in the main comments. However, the training cannot be considered as there are remain questions regarding effectiveness and consistency of trainings as well as in relation to the selection of personnel undergoing training. With regard to Integrity Units, there is no public information relating to any associated training.

Score raised from 1 to 2 accordingly.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

The Star &quoute;Time to check integrity units' activities&quoute; (2015) http://www.thestar.com.my/Opinion/Columnists/The-Star-Says/Profile/Articles/2015/07/05/Time-to-check-integrity-units-activities/ accessed 5th October 2015

Pipa &quoute;Our Services&quoute; http://pipa.jakim.tripod.com/id2.html Accessed 5th October 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: Anti-corruption training comes in form of seminars and lectures related to public service integrity as well as religious classes that prohibit any form of corruption. The Ministry of Defence has published an Integrity Plan manual which covers : i) Strengthening Good Governance, ii) Enhancing Public Delivery System, iii) To conduct activities to promote anti-corruption, mismanagement and power abuse, iv) To provide witness protection, v) To strengthen human resource management.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Annually, a certain number of civilian personnel are selected to attend training courses related to integrity. For example, the Pengukuhan Integriti Perkhidmatan Awam (PIPA) (Civil Service Integrity Reinforcement Programme) had 10 courses in 2014 targeting 5,000 personnel all over Malaysia.

Suggested score: 4

Government Reviewer-+

50.
score
2

Is there a policy to make public outcomes of the prosecution of defence services personnel for corrupt activities, and is there evidence of effective prosecutions in recent years?

Researcher4180: There is no public policy in place to publicise outcomes of prosecutions. As public prosecution is currently limited, it is difficult to detect any consistency. The MACC does publicise all arrests and prosecutions that involve corruption activities through the publication of a 'Criminal Register and Name-and-Shame' list, but public disclosure of cases involving defence personnel are limited as they are only compiled from civilian courts. The MACC has publicised limited cases when military officers have been involved in corruption, but some outcomes are still not public. Note that the relating to the cited case of naval officers accepting gifts will be decided on the 8th of October 2015.

The government's response to the 2013 GI stated that media and public attention would surround public cases but they did not address outcomes of internal cases. This is problematic as there is no legislation in place to distinguish between internal and external investigations; instead only the outcomes of MACC investigations are revealed. One interviewee noted that it seems unlikely that internal cases would be made public to protect the image of the institution.

In terms of whether prosecutions have been inappropriately suppressed, as mentioned in the comments for Question 35, there are two issues to note: there is little public evidence that prosecutions are occurring at higher levels; in regard to the Scorpene case, those implicated in bribery were never prosecuted, and it is uncertain as to whether an effective investigation took place. One interviewee also noted that there is a bottle-neck at the Attorney General level, as the only body that is able to pursue prosecutions. A lack of political will within this institution has reportedly led to calls for the MACC to be given powers of prosecution.

Response to Government Reviewer: While it is agreed that the MACC reports on the outcomes of prosecutions, these do not extend to cases dealt with internally. Score has been raised from 0 to 2, in line with existing concerns regarding the effectiveness and independence on prosecutions and given there is no policy to make the outcomes of prosecutions public.

Response to TI Chapter Reviewer: Agreed. Score changed from 0 to 2.

COMMENTS -+

MACC &quoute;Name and Shame&quoute; Accessed 11th July 2014 http://www.sprm.gov.my/name-and-shame.html

Government Defence Anti-Corruption Index, Malaysia Assessment 2013, government.defenceindex.org/sites/default/files/documents/GI-assessment-Malaysia.pdf

Government Defence Anti-Corruption Index, Malaysian Government Response to 2013 Assessment of Malaysia, government.defenceindex.org/sites/default/files/documents/GI-assessment-Malaysia.pdf

Interview with Civil Society Actor, 18 July 2014

MACC &quoute;Two RMN Officers Charged with RM2.5 Millions Corruption&quoute; (2015) http://www.sprm.gov.my/2-tldm-didakwa.html accessed 12th September 2015

The Ant Daily, &quoute;Growing calls for MACC to be given powers to prosecute&quoute;, 12 August 2014, http://www.theantdaily.com/Main/Growing-calls-for-MACC-to-be-given-powers-to-prosecute

Siang, L., &quoute;No way Malaysia can catapult to “top 10 or 12” of Transparency International CPI without catching any “big fishes” like what is happening in France, Indonesia, Philippines and China&quoute; (2nd July 2014) Accessed 14th July 2014, http://blog.limkitsiang.com/2014/07/02/no-way-malaysia-can-catapult-to-top-10-or-12-of-transparency-international-cpi-without-catching-any-big-fishes-like-what-is-happening-in-france-indonesia-philippi/

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There is no policy to make public outcomes of the prosecution of defence services personnel for corrupt activities. These are only made public if the case involves civilians and is charged in civil court.

There is no other such information available publicly. No such policy exists, however, corruption cases appear which before the court are subject to media and public attention.

The MACC has investigated and prosecuted alleged corrupted practices in military and defence.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: All alleged corrupt practices are investigated and prosecuted by the MACC. This includes, but is not limited, to any breach of conduct by the military or any uniformed personnel.

Suggested score: 4

Government Reviewer-+

51.
score
2

Are there effective measures in place to discourage facilitation payments (which are illegal in almost all countries)?

Researcher4180: Facilitation payments are prohibited under Regulation 8 of the Public Officers (Conduct and Discipline) regulation 1993. This includes both gifts and monetary payments. MACCA, section 21, also covers bribery. Internally, interviewees from within the military note that the code of conduct and the Integrity Manual Plan also reinforce this, but these generally appear to be more vague than legislation. The MACC has charged military officials for receiving gifts and bribes, suggesting measures are enforced when investigated externally. The civil society interviewee specific that some institutions such as the police are making an effort to put in effective measures internally, but this has not migrated to the military. The accusations of bribery occurring at ESSCOM would also suggest that no effective measures currently exist internally.

Response to Government Reviewer: Agree with comments that facilitation payments are illegal and there are measures to reduce their occurrence. However, there are issues with effectiveness. Current reports on the naval personnel arrested for corruption suggests that they were not using acquisition systems, and this enabled them to gain facilitation payments. Additionally, the lack of public evidence of prosecutions undertaken internally also suggests a wider problem.

Response to TI Chapter Reviewer: Score raised from 1 to 2 on the basis of available evidence.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

The Malay Mail Online &quoute;Graft Busters to set up Stall in ESSCOM After Minister's Claim&quoute; (June 6th 2014) Accessed 5th July 2014 themalaymailonline.com/Malaysia/article/graft-busters-to-set-up-stall-in-esscom-after-ministers-claim

Kumaran, L., &quoute;Navy staff suspected of corruption wielded influence, sources say &quoute; The Malay Mail Online (2015) http://www.themalaymailonline.com/malaysia/article/navy-staff-suspected-of-corruption-wielded-influence-sources-say accessed 14th September 2015

Yew, N. S., Foong, J. T. H., &quoute;Malaysia&quoute; in Moyer jr, H. E., &quoute;Anti-Corruption Regulation 2015&quoute; (2015) (Law Business Research: Lancaster)

Warta Kerajaan &quoute;Peraturan-Peraturan Pegawai Awam (kelakuan dan tatatertib)&quoute; 1993 http://docs.jpa.gov.my/docs/pu/pua395.pdf accessed 14th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There are no measures in place to discourage facilitation payments. Recently, the MINDEF has published a manual on integrity which is being used to instill awareness on forms of corrupt practices. Facilitation payments are strictly prohibited.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Facilitation payments are strictly illegal and mechanisms to punish offenders are in place and are effectively applied. Amongst the mechanisms are the MACC Act 2009, the Malaysian Government General Orders and Treasury's specific programmes such as e-SPKB, e-bidding, e-pero and SPLN. These online acquisition and payment systems eliminate abuses.

Suggested score: 4

Government Reviewer-+

Training 60
52.
score
1

Do the armed forces have military doctrine addressing corruption as a strategic issue on operations?

Researcher4180: There appears to be no military doctrine for the armed forces which addresses corruption in any way in relation to operations.

With corruption being increasingly and publicly identified as an issue in the Eastern Sabah Security Command (ESSCOM) operation, however, it is likely that there is greater awareness of corruption as an issue in operations. Measures are being enacted externally by the MACC as military officials come under MACCA and the Public Officers Regulation 1993.

Response to Peer Reviewer 1: There is some awareness of corruption as a problem in operations as is seen by the measures taken in the ESSCOM operations case. Score maintained.

Response to TI Chapter Reviewer: There has been no significant results in the form of a tangible military doctrine in response to ESSCOM corruption reports and changes only indicate an agreement to rotation of command between the military and police. Score maintained.

Response to Government Reviewer: The legislation mentioned does not reflect on corruption as a strategic issue on operations. Score maintained.

COMMENTS -+

The Malay Mail Online &quoute;Graft Busters to set up Stall in ESSCOM After Minister's Claim&quoute; (June 6th 2014) Accessed 5th July 2014 themalaymailonline.com/Malaysia/article/graft-busters-to-set-up-stall-in-esscom-after-ministers-claim

The Borneo Post &quoute;Ministry to Rotate ESSCOM Command Between Police and Army&quoute; (20th April 2014) Accessed 13th July 2014 http://www.theborneopost.com/2014/04/20/ministry-to-rotate-esscom-command-between-police-and-army-says-ahmad-zahid/

SOURCES -+

Opinion: Disagree

Comment: Based on the comments, one ought to go further to score this as '0', in my opinion.

Suggested score: 0

Peer Reviewer-+

Opinion: Disagree

Comment: The military doctrine does not address corruption as an issue in operations not does it recognise it as a strategic issue. The Armed Forces are governed by the Public Service Department and therefore the General Circular issued by them are also applicable to military personnel. It is also being addressed in the military services procedure.

Suggested score: 2

TI Reviewer-+

Opinion: Agree with Comments

Comment: I agree that the government emphasis on &quoute;human factors&quoute; rather than addressing institutional problems, as highlighted in the source, suggests that there is no military doctrine in addressing this issue but we cannot be sure and further evidence is required. Follow-up interviews may help corroborate this issue.

It would be worth pursuing to see whether the Malaysian Anti-Corruption Act 2009, to which military and civilian personnel are responsible, has had any impact in re-shaping military internal code of conduct or doctrine with regards to corruption.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The military is also bound by the Anti Corruption Act coupled with the Inspectorate General of the Armed Forces.

Suggested score: 4

Government Reviewer-+

53.
score
0

Is there training in corruption issues for commanders at all levels in order to ensure that these commanders are clear on the corruption issues they may face during deployment? If so, is there evidence that they apply this knowledge in the field?

Researcher4180: Interviewees noted that during their time in the military there was no official or consistent training, beyond ad-hoc integrity talks and awareness raising. There is an Integrity Plan Manual, but it is unclear as to the extent to which this prepares commanders for corruption issues faced in deployment. As previously mentioned, corruption has been highlighted as an issue that ESSCOM faces, and the MACC has been seen as being required to prevent it, suggesting commanders are not trained to deal with it themselves.

Response to Government Reviewer: As the integrity unit has yet to start such training and it is unclear whether the training will cover corruption on operations specifically, the score is maintained.

Response to TI Chapter Reviewer: No public evidence of this could be found. Additionally, an awareness-raising talk would not qualify as training. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

The Malay Mail Online &quoute;Graft Busters to set up Stall in ESSCOM After Minister's Claim&quoute; (June 6th 2014) Accessed 5th July 2014 themalaymailonline.com/Malaysia/article/graft-busters-to-set-up-stall-in-esscom-after-ministers-claim

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: A commander is responsible for his battalion and his duties include proper administration and discipline. Under the Government Transformation Programs, integrity talks were part of awareness-raising.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Ministry has recently established a governance and integrity unit that will conduct training on corruption issues. This strengthens the activity of the Inspectorate General of the Armed Forces.

Suggested score: 4

Government Reviewer-+

54.
score
2

Are trained professionals regularly deployed to monitor corruption risk in the field (whether deployed on operations or peacekeeping missions)?

Researcher4180: The year 2014 saw the first anti-corruption professionals being deployed to the field in order to investigate allegations of corruption. In response to the Minister’s claims that corruption was undermining the effectiveness of ESSCOM, MACC announced it's intention for investigators to be based at a field office in the area in order to investigate allegations and facilitate a public complaint process. However, this appears to be irregular as there has been no discussion of sending such officials to other operations. It is unclear, due to a lack of reviews, whether anyone from the integrity unit within the Ministry is also deployed.

Response to Peer Reviewer 1: Given there is some evidence of anti-corruption monitors being sent to the location of operations, the score is maintained.

Response to government reviewer:Public evidence of the deployment of such monitors could not be found. Score maintained.

COMMENTS -+

The Malay Mail Online &quoute;Graft Busters to set up Stall in ESSCOM After Minister's Claim&quoute; (June 6th 2014) Accessed 5th July 2014 themalaymailonline.com/Malaysia/article/graft-busters-to-set-up-stall-in-esscom-after-ministers-claim

MACC &quoute;Isu Rasuah Di Esscom - SPRM Bersedia Menempatkan Pegawai Di Lahad Datu&quoute; MACC (June 6th 2014) Accessed 05th August 2014 http://www.sprm.gov.my/esscom-sprm.html?&lang=bm

SOURCES -+

Opinion: Disagree

Comment: Based on these comments, I would suggest knocking down the score to '1.0'. Yes, the MACC has been empowered to investigate and intervene. Still, the Malaysian military remains relatively impervious to scrutiny even by bodies such as the MACC.

Suggested score: 1

Peer Reviewer-+

Opinion: Agree with Comments

Comment: Trained civilian personnel are attached to a number of peacekeeping missions to take charge of financial matters. The Internal Audit and General Investigation Division has started to conduct regular visits and auditing of peacekeeping operations.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Agreed, but the evidence suggests that the deployment of trained officials &quoute;appears to be irregular&quoute; rather than it is irregular.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Inspectorate General of the Armed Forces is set up, amongst others, to monitor and curb these immoral activities.

Suggested score: 3

Government Reviewer-+

55.
score
1

Are there guidelines, and staff training, on addressing corruption risks in contracting whilst on deployed operations or peacekeeping missions?

Researcher4180: There are vague guidelines as published by the Ministry of Defence Integrity Plan Manual which is confirmed by the interviewees. However, they do not appear to be particularly specific to the area of operations. This document is not published publicly, so it is difficult to verify whether such guidelines exist. There is no review of how they are applied, or how specific they are. As there is a lack of consistent anti-corruption training in general, it can be assumed that this is also not covered in training.

Response to Government Reviewer: No public evidence of this could be found. Score maintained.

Response to TI Chapter Reviewer: No public evidence of how regularly guidelines within the Integrity Plan Manual are applied or how complete they are, could be found. Accordingly, the score is maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There is no official or unofficial information on this. However, it is unlikely that there are training and guidelines as there is no anti-corruption training and guidelines in general for the MINDEF. However, now MINDEF has publish an Integrity Plan Manual to serve as a guideline and used as a training reference manual.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Inspectorate General of the Armed Forces is set up, amongst others, to monitor and curb these immoral activities.

Suggested score: 4

Government Reviewer-+

56.
score
1

Private Military Contractors (PMCs) usually refer to companies that provide operational staff to military environments. They may also be known as security contractors or private security contractors, and refer to themselves as private military corporations, private military firms, private security providers, or military service providers.

Researcher4180: There is no regulation which bans the use of PMCs, or any publicly available regulation concerning monitoring them once in use or scrutiny. There appears to be no oversight of these entities, or information on the same is not publicly released. There is a suggestion, by both interviewees, that they are subject to lesser levels of scrutiny than the armed forces as there is a lack of regulations regarding Private Security Contractors. However, there is little evidence that PMCs are hired on a consistent basis with regard to the military or defence, beyond limited training roles.

Response to Government Reviewer: Evidence suggests that PMC's are used. Without further evidence of regulations or scrutiny, it would be difficult to justify a higher score. Score maintained.

COMMENTS -+

Klausen, L., &quoute;The Consequences of Privatizing Security&quoute; St. Andrews Foreign Affairs Review (11th November 2013) Accessed 25th July 2014 http://foreignaffairsreview.co.uk/2013/11/private-security-companies/

Sea Resources &quoute;Doing Business in Malaysia&quoute; Sea Resources (June 2005) Accessed 25th July 2014 http://www.searesources.biz/Doing-Business-In-Malaysia.pdf

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There are few, if no PMCs hired by the MINDEF for operations. PMCs tend to only be hired for training purposes. However much of outsourced military weaponry and logistics manufacturing contractors (OEM) are from the Armed Forces Fund Board (Lembaga Tabung Angkatan Tentera - LTAT)'s subsidiary such as Boustead Heavy Industries Corporation Berhad.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: &quoute;There is no entity with military responsibility except for the Malaysian Armed Forces. As provided for by Article 41 of the Federal Constitution - the highest law in Malaysia - the Yang di-Pertuan Agong shall be the Supreme Commander of the Armed Forces. Armed Forces is within the Public Services (Article 132 Federal Constitution) and matters, including relating to command, discipline and administration of the Armed Forces is under the responsibility of Armed Forces Council (Article 137 Federal Constitution)&quoute;.

Suggested score: 4

Government Reviewer-+

Personnel 50
57.
score
1

Does the country have legislation covering defence and security procurement and are there any items exempt from these laws?

Researcher4180: There is general legislation that covers all government procurement, which includes the defence ministry and sector; The Financial Procedures Act, the Supply Act, the Government contract Act and treasury instructions and circulars. Procurement generally falls under the Ministry of Finance, and goods and services have to be procured through the centralised e-perolehan system. There is evidence that an application can be made to the ministry for exclusion from using this system and these standards. However, due to a lack of public evidence it is unclear as to what the process for exemption is, and the extent to which exempt procurement is independently scrutinised; there is no public evidence of scrutiny occuring.

This lack of knowledge concerning scrutiny is important, as practices by the Ministry of Defence demonstrate that procurement does take place outside of these rules. For example, anything above 200,000 rm should go through an open tender process, yet there have been cases of direct negotiations which far exceed these limits such as submarines and the Network Centric Operation (NCO) project worth 7 billion rm and 2 billion rm respectively. There is no legislation in place covering these situations, but they are justified through linkages to national security under the OSA, which allows for information not to be made public. There are also cases, as can be seen in the news articles in the sources section, whereby smaller procurement takes place outside of these standards, enabled by the usage of an old system and a lack of internal auditing, which allowed individuals at the Lumut naval base to reportedly misrepresent information to the Ministry. the MACC was the organisation that discovered this, not the Ministry of Defence.

Response to Government Reviewer: Relevant information has been added to the main comments. For a higher score to be awarded, evidence of independent scrutiny of directly negotiated procurement is required. Score maintained.

COMMENTS -+

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Laws of Malaysia &quoute;FINANCIAL PROCEDURE ACT &quoute; (1957) Accessed 20th July 2014 http://www.agc.gov.my/Akta/Vol.%202/Act%2061.pdf

Lee, S., &quoute;Malaysian defence Procurement: A Source of Opaque and Shady Deals&quoute; The Malaysia Chronicle (September 10th 2011) Accessed 20th July 2014 http://dinmerican.wordpress.com/2011/09/10/malaysian-defence-procurement-a-source-of-opaque-and-shady-deals/

Teoh S., &quoute;Watchdog Wants End to Secret Defence Deals&quoute; The Malaysian Insider (9th September 2011) Accessed 20th July 2014 http://www.themalaysianinsider.com/malaysia/article/watchdog-wants-end-to-secret-defence-deals

Mansor, M., &quoute;Public Procurement Innovation in Malaysia: E-Procurement &quoute; Network of Asia-Pacific Schools and Institutes of Public Administration and Governance Accessed 20th July 2014 http://www.napsipag.org/pdf/E-Procurement-Malaysia.pdf

Malaysia Chronicle &quoute;CORRUPTION IN THE NAVY: ‘Shady splurge' of RM26 mil detectedr&quoute; (2015) http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#axzz3cYY87Lqg accessed 15th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There are no specific rules for defence and security procurement and there is evidence that rules and procedures are not followed when it comes to defence procurement. For example, while any procurement above 500,000 rm is to go through open tender, in the case of the infamous Scorpene submarine case, the procurement was undertaken through direct negotiation. The use of ‘middlemen” seems to break loose.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Defence procurement technically falls under the jurisdiction of the Government Procurement Management Division within the Ministry of Finance, but as noted, parliamentary questioning is frequently bypassed on defence issues in the interests of national security.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The country has legislation covering defence and security procurement such as the Financial Procedures Act, the Supply Act, the Government Contract Act and Treasury instructions and circulars in addition to the Anti-Corruption Act. Submarines and NCO programmes procurement are made on direct negotiation due to national security.

Suggested score: 4

Government Reviewer-+

58.
score
1

Is the defence procurement cycle process, from assessment of needs, through contract implementation and sign-off, all the way to asset disposal, disclosed to the public?

Researcher4180: The defence cycle process is not officially disclosed to the public in full, though it has been published in a non-official paper. It should be noted, however, that the paper uses sources from 1979-1998 and the process may have changed since then. The e-tender process is available online, but this is only one element of the whole cycle and, as previously mentioned, it is reportedly often bypassed when it comes to defence.

Response to TI Chapter Reviewer: The paper could be considered out of date. Given there has been no updated information provided by the government, the score is maintained.

Response to Government Reviewer: Again, this confirms that only certain information is disclosed. As of yet there is not enough disclosed to warrant a score for 'some elements' disclosed in detail or even the whole cycle in a summary way. Score maintained.

COMMENTS -+

Ministry of Defence &quoute;Prosedur&quoute; Accessed 20th July 2014 http://etender.mod.gov.my/prosedur.php

Hellmann-Rajanayagam, D., &quoute;Malaysia&quoute; in Singh, R, R[., ed. 'Arms Procurement Decision Making (2000) http://books.sipri.org/files/books/SIPRI00Singh/SIPRI00Singh04.pdf accessed 15th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: A SIPRI paper from 2000 appears to be the only information available on the full procurement cycle procedure in place. The MINDEF procurement website only discloses what bidders/contractors should do, and not the entire tendering and procurement process.

Ravinder Pal Singh, 'Arms Procurement Decision Making (Malaysia)', page 78, May 2000, http://books.sipri.org/files/books/SIPRI00Singh/SIPRI00Singh04.pdf

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Subject to Treasury Instructions only certain information can be disclosed publicly.

Suggested score: 3

Government Reviewer-+

59.
score
2

Are defence procurement oversight mechanisms in place and are these oversight mechanisms active and transparent?

Researcher4180: There is a lack of effective external oversight of defence procurement. As previously mentioned, parliament only has a limited role in scrutinising defence. The Public Accounts Committee has attempted this role, after the fact, but details are withheld on the basis of national security. The only institutions external to defence that provide oversight are the Ministry of Finance and the MACC. The Ministry of Finance is still part of the executive, and its role appears to only be with regard to open tender contracts. If a contract is over the value of 7 million rm, a tender opening board is established comprising personnel from both ministries, which is further divided into two committees that analyse the technical and financial aspects of each tender. These procurements, therefore, have to be approved by the Ministry of Finance. This is still seen as problematic due to the dominance of one party and in the context of reported criticism of nepotism in general within the ruling party and the cabinet. the MACC is also limited, as it does not provide oversight of all procurement, but instead investigates allegations of corruption.

With regard to internal oversight, an internal tender board is established for any contracts under 7 million rm, with similar price and technical committees, under the internal Procurement Division. Direct Purchase boards are also created when procurement comes from this source. BADSA, the internal audits division within the Ministry of Defence, also audits some elements of procurement, but issues of corruption have raised questions concerning efficiency of internal oversight, as demonstrated in the cited 2015 news article on MACC arrests.

Response to Government Reviewer: As mentioned, the PAC is not effective with regard to defence procurement, which has been stated by the institution itself. The Auditor General only audits select programs, and internal audit is not transparent or effective (as indicated by reports). Score maintained.

COMMENTS -+

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Hellmann-Rajanayagam, D., &quoute;Malaysia&quoute; in Singh, R. P., Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan (2000) PP. 67-105 Accessed 10th July 2014 http://books.sipri.org/files/books/SIPRI00Singh/SIPRI00Singh04.pdf

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

Government Defence Anti-Corruption Index 2013, Malaysia Assessment, http://government.defenceindex.org/sites/default/files/documents/GI-assessment-Malaysia.pdf

Mokhtar, M., &quoute;OK Najib, let’s talk about nepotism&quoute; Free malaysia Today (2014) http://www.freemalaysiatoday.com/category/highlight/2014/08/29/ok-najib-lets-talk-about-nepotism/ accessed 15th September 2015

Malaysia Chronicle &quoute;CORRUPTION IN THE NAVY: ‘Shady splurge' of RM26 mil detected&quoute; (2015) http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#axzz3cYY87Lqgin accessed 15th September 2015

Malay Mail Online &quoute;After navy graft arrests, PAC demands full audit of military accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 15th September 2015

Krishnan, S., &quoute;AG Cannot do Internal Audit Functions&quoute; (February 20th 2014) Accessed 5th July 2014 http://www.freemalaysiatoday.com/category/opinion/2014/02/20/ag-cannot-do-internal-audit-functions/

National Audit Department Malaysia &quoute;Synopsis: Auditor General Report for Year 2013 Series 2&quoute; (2013) Accessed 5th July 2014 https://www.audit.gov.my/images/pdf/LKAN2013/Persekutuan/Siri2/master%20synopsis%20lkan2013%20series%202_opt.pdf

Auditor General &quoute;Auditor general's reports (federal)&quoute; (2015) https://www.audit.gov.my/index.php?option=com_content&view=article&id=534:auditor-generals-report-federal-2&catid=89&Itemid=300&lang=en accessed 10th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The defence procurement process is discussed between government agencies, including the military services level (technical), the Ministry of Defence, the Ministry of Finance and the Implementation and Coordination Unit (ICU). The Secretary General of MINDEF as the financial controller oversees the entire process. At times, MINDEF argues that the Ministry of Finance has to approve all the procurement, which is equivalent to oversight. The Minister of Finance and the Minister of Defence are from the same party however and answer to the Prime Minister who has a strong say in their appointment as ministers.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Oversight mechanisms are in place by means of parliamentary Public Account Committee, Auditor General and internal audit and they are active and transparent.

Suggested score: 4

Government Reviewer-+

60.
score
2

Are actual and potential defence purchases made public?

Researcher4180: Some defence purchases are made public, but this is not entirely consistent or detailed. Interviewees were not aware of any policy that they should be, which is further confirmed by a lack of information found in this regard. Quite often, the Ministry will announce its contracts at the two larger defence exhibitions in Malaysia, Defence Services Asia (DSA) and Langkawi International Maritime and Aerospace Exhibition (LIMA), with some details on purchases. They also disclose some purchases in parliament. However, there have also been occasions where transparency is lacking, or announced long after the fact. The rhetoric surrounding the lack of announcements is often national security, and the OSA and national security is utilised to not answer questions asked. However, these questions are usually asked after the fact, and instead focus on details rather than what the purchases actually were, following the announcement of the purchases.

Response to Government Reviewer: No substantial evidence of purchases being made public via Parliament was found. Instead it seems that purchase announcements are ad hoc, and some quite long after the fact. Score maintained.

COMMENTS -+

Chuter, A., &quoute;Flurry of Deals Announced at Defence Services Asia&quoute; defence News (April 16th 2014) Accessed 20th July 2014 http://www.defencenews.com/article/20140416/DEFREG03/304160024/Flurry-Deals-Announced-Defence-Services-Asia

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Lim, I., &quoute;Probe Ministry of Defence’s procurement deals, says Pua&quoute; The Malaysian Insider (2012) http://www.themalaysianinsider.com/malaysia/article/probe-ministry-of-defences-procurement-deals-says-pua accessed 15th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The bulk of defence purchases are disclosed publicly via the Parliament. Some defence purchases are not made public in the interest of national security.

Suggested score: 3

Government Reviewer-+

61.
score
2

What procedures and standards are companies required to have - such as compliance programmes and business conduct programmes - in order to be able to bid for work for the Ministry of Defence or armed forces?

Researcher4180: All companies wanting to supply to the government, including the Ministry of Defence, have to register with the Ministry of Finance. Companies must also sign an integrity pact, which demonstrates they follow the standards set by the Malaysian Anti-Corruption Commission Act (MACCA). The extent to which these are implemented is not clear. The sanctions companies which violate these standards face and they include prevention from further bidding in the future, is not clear.

There is no evidence that companies are required to have a compliance programme in place in order to bid.

COMMENTS -+

Mansor, M., &quoute;Public Procurement Innovation in Malaysia: E-Procurement &quoute; Network of Asia-Pacific Schools and Institutes of Public Administration and Governance Accessed 20th July 2014 http://www.napsipag.org/pdf/E-Procurement-Malaysia.pdf

Ministry of Defence &quoute;Syarat-Syarat Kelayakan Tender&quoute; Accessed 20th July 2014 http://etender.mod.gov.my/syarat.inc.php

Malaysian Anti-Corruption Commission Act (2009), www.sprm.gov.my/images/webuser/files/static.../act/SPRM_act_BI.pdf

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: The MINDEF requires bidders and contractors to sign integrity pacts, however, there is no evidence of compliance programmes being required. There could be requirements for these, but they are not stated on the website.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: There is an indirect relationship between compliance procedures and defence acquisition. Malaysian companies are subject to strict compliance laws and procedures regarding money laundering (and counter terrorist financing), which cover issues within corruption, such as beneficial ownership. Their implementation is patchy or unknown, and their relationship to defence acquisition is unclear (for aforementioned reasons that the defence budget is only made partially available, big projects are protected by secrecy laws and/or are rarely made public).

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

62.
score
2

Are procurement requirements derived from an open, well-audited national defence and security strategy?

Researcher4180: There is no detailed open, or well-audited, national defence and security strategy. Technically, all defence purchases should be derived from the current internal five year plan, but this is difficult to verify without public access and interviewees cannot confirm whether this is the case. The National Defence Policy, as previously mentioned, is particularly vague and, therefore, seemingly insufficient as a basis for defence purchases. However, speeches given, such as the Prime Minister's 2014 Budget speech, demonstrated funding was earmarked in response to strategy requirements, specifically that towards ESSCOM and protecting the waters around Malaysia. Malaysia has not previously faced many external defence issues, and the Armed Forces were initially focused on internal security.

There is the suggestion from the academic interviewee that procurement is not entirely based on defence requirements, and purchases are occasionally political in nature, for example aimed at invigorating the local defence industry. There is no evidence that this process is effectively audited, beyond the internal mechanisms previously found to be ineffective.

Response to Government Reviewer: As mentioned above, the NPD is not sufficiently detailed to be considered a strategy from which defence requirements can be formally derived. The powers of the PAC in terms of oversight is limited; the scope of the Auditor General, given it only audits select programs is again a limitation; and internal audit has been highlighted as ineffective in several cases of procurement. Score maintained.

Peer Reviewer 2: Appropriate comments have been incorporated.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Online interview with Academic, 10 July 2014

Hellmann-Rajanayagam, D., &quoute;Malaysia&quoute; in Singh, R. P., Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan (2000) PP. 67-105 Accessed 10th July 2014 http://books.sipri.org/files/books/SIPRI00Singh/SIPRI00Singh04.pdf

Razak, N. T. H. A., &quoute;2014 Budget Speech&quoute; (2014) http://www.pmo.gov.my/bajet2014/Bajet2014E.pdf accessed 15th September 2015

Malaysia Chronicle &quoute;CORRUPTION IN THE NAVY: ‘Shady splurge' of RM26 mil detected&quoute; (2015) http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#axzz3cYY87Lqgin accessed 15th September 2015

Malay Mail Online &quoute;After navy graft arrests, PAC demands full audit of military accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 15th September 2015

Krishnan, S., &quoute;AG Cannot do Internal Audit Functions&quoute; (February 20th 2014) Accessed 5th July 2014 http://www.freemalaysiatoday.com/category/opinion/2014/02/20/ag-cannot-do-internal-audit-functions/

National Audit Department Malaysia &quoute;Synopsis: Auditor General Report for Year 2013 Series 2&quoute; (2013) Accessed 5th July 2014 https://www.audit.gov.my/images/pdf/LKAN2013/Persekutuan/Siri2/master%20synopsis%20lkan2013%20series%202_opt.pdf

Auditor General &quoute;Auditor general's reports (federal)&quoute; (2015) https://www.audit.gov.my/index.php?option=com_content&view=article&id=534:auditor-generals-report-federal-2&catid=89&Itemid=300&lang=en accessed 10th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Malaysian defence and security policy is neither open nor well-audited. The government is pursuing vigorous efforts to indigenise the defence industry to expand its high-end technical expertise. There are several reasons for this. Firstly, like many regional players, Malaysia is concerned by China's posturing vis-a-vis Japan, Vietnam and Taiwan. Secondly, encouraging home-grown defence expertise will boost economic investment, particularly from abroad (hence the expansion of offsets and counter trade agreements. Malaysia's renewed defence policy is also linked to limited public appetite for defence spending and urgent requirements to balance Malaysia's current account deficit (which has also meant the government has not been able to spend as much on defence acquisition as it would have liked).

The 11th Economic Plan, 2016-2020 will provide a clearer indication of Malaysia's defence policy for the rest of the decade, which has stuttered over the past 12-18 months. The government is under intense public pressure following the shooting down of MH17 and the incursion of Filipino militants into Laha Datu, the latter incident was also highlighted in to 2014 Budget Speech by PM Najib http://www.pmo.gov.my/bajet2014/Bajet2014E.pdf.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Procurement requirements are largely derived from a National Defence Policy (NDP). The Public Account Committee, Auditor General and internal audit ensure the proper acquisition processes are adhered to.

Suggested score: 4

Government Reviewer-+

63.
score
3

Are defence purchases based on clearly identified and quantified requirements?

Researcher4180: For the most part, announced purchases appear to meet general requirements. There is a process in place for the planning of requirements, which are then submitted to headquarters. They are then sent to the Ministry of Defence Development Committee, Following this there are consultations between all the parties, including the Economic Planning Unit (EPU) in the Prime Minister's Office. Interviewees confirmed this is followed a majority of the time.

There is evidence of purchases that may not follow this, however. Aademics (like the one interviewed) and interested parties (see the Malaysian Defence news portal above) suggest some purchases are questionable. For example, The Sultan of Johor criticised the purchase of vehicles for special forces, claiming they were too expensive and not required. There is disagreement on whether Scorpene submarines were required, furthermore, especially due given they cannot extended dive in tropical waters. The opposition, too, has criticised the government for purchases following the MH370 crisis, which they argue are not required. Furthermore, there is evidence of pportunistic purchasing at the lower levels, which is not centrally planned, as demonstrated by the recent case of naval officers being arrested for making unauthorised purchases.

Despite this, analysts such as those on Malaysian Defence seem to agree that most of the purchases meet defence requirements, despite exceptions.

The Ministry of Defence does not always have the final say on purchases, due to the requirement of approval from the Ministry of Finance.

Response to Government Reviewer: Relevant information has been incorporated in the main comments. A top score cannot be awarded given evidence that indicates there have been cases of opportunistic purchases in the recent past. Score maintained.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Online interview with Academic, 10 July 2014

Abas, M. &quoute;Give Priority to National Security&quoute; Malaysian Defence (2015) http://www.malaysiandefence.com/give-priority-to-national-security/ accessed 16th September 2015

Adinia, S., &quoute;KILO and SCORPENE : DIFFERENCE IN SIMILARITIES&quoute; Malaysia Military Power (2013) http://malaysiamilitarypower.blogspot.co.uk/2013/06/kilo-and-scorpene-difference-in.html accessed 16th September 2015

Boileau, C., &quoute;How much for the Scorpenes?&quoute; Free malaysia Today (2012) http://www.freemalaysiatoday.com/category/nation/2012/02/10/how-much-for-the-scorpenes/ accessed 16th September 2015

Abas, M., &quoute;LIMA 2015: Day 2&quoute; Malaysian Defence (2015) http://www.malaysiandefence.com/lima-2015-day-2-fulcrums-for-sukhois/ Accessed 16th September 2015

Abas, M., &quoute;DSA 2012 Special: Only in Malaysia!&quoute; Malaysian Defence (2012) http://www.malaysiandefence.com/dsa-2012-special-only-in-malaysia/ accessed 16th September 2015

Ping, J. T. K., Keong, S. S. C., Wah, L. C., &quoute;MH370, stop thinking about shopping: Tell us what’s the problems first!&quoute; DAP Malaysia (2014) http://dapmalaysia.org/en/statements/2014/06/18/18750/ accessed 16th September 2015

Mahadzir, D., &quoute;Malaysia Struggles to Update Military&quoute; AIN Online (2014) http://www.ainonline.com/aviation-news/defence/2014-02-07/malaysia-struggles-update-military accessed 16th September 2015

Hellmann-Rajanayagam, D., &quoute;Malaysia&quoute; in Singh, R. P. ed., &quoute;Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan&quoute; (2000) http://books.sipri.org/product_info?c_product_id=154 accessed 16th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: As noted in my previous comment, Malaysian defence policy has struggled to update its military in line with its desired policy and will wait until next year before the next economic plan is rolled out to articulate a new policy and/or defence requirements (if does so publicly or not).

Dzirhan Mahadzir, Malaysia Struggles to Update Military, AIN Online, 7 February 2014, http://www.malaysiandefence.com/?cat=8

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: All purchases are made based on the Malaysian Armed Forces' operational requirements as well as the government's financial capability. The MoF approves purchases only if the Ministry of Defence has the budget to fund the projects.

Suggested score: 4

Government Reviewer-+

64.
score
2

Is defence procurement generally conducted as open competition or is there a significant element of single-sourcing (that is, without competition)?

Researcher4180: It is difficult to clearly state whether there is a strong degree of open competition due to the lack of transparency and continued use of unannounced direct negotiations. Single sourcing is legal as outlined in the MoF's Surat Pekeliling Perbendaharaan Bilangan (SPP Bil.) 4/95, despite the Competition Act (2012). News reports suggest that processes in place to allow open competition are subverted, as favourable sourcing occurs at a lower level (as seen in the 2015 naval base case). There are also some aspects of institutionalised favouritism, such as a preference (and quota) for Bumiputera registered companies with regard to some of the tenders and negotiations. This is sourced from documents released by the treasury, cited above, which state that there is Bumiputera Status Certificate (STB) which some tender applications require, and encouraging the participation of Bumiputera entrepreneurs is a part of the procurement policy. All works under RM200,000 will be reserved for Grade G1 Bumiputera.

Institutional favouritism may extend to companies such as Boustead Naval Shipyard, which is owned by LTAT, and others that have experienced Ministry ownership. There is one company licensed to produce ammunition in Malaysia, and therefore it is assumed it is the single source for this specific item, that previously had Ministry involvement, demonstrating this. Despite this, Malaysia has the largest variety of suppliers within the Association of South East Asian Nations (ASEAN). These findings suggest Malaysia probably single sources up to 50 per cent of total procurement, despite the above problems.

Response to Government Reviewer: Bumiputera encouragement is marked as a policy of procurement in the documents provided in the sources section. Regulations also state that all works under a certain amount must be undertaken by companies with a Bumiputera certificate. Score maintained.

COMMENTS -+

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Surat Pekeliling Perbendaharaan Bilangan 4/95

SME Ordnance &quoute;About us&quoute; Accessed 20th July 2014 http://www.smeordnance.com/front.htm

Almeida, R., &quoute;Boustead Holdings Wins $2.8 Billion Littoral Combat Ship Newbuild Order&quoute; G Captain (July 17th 2014) Accessed July 20th 2014 http://gcaptain.com/boustead-holdings-wins-2-8-billion-littoral-combat-ship-newbuild-order/

Ministry of Defence &quoute;Syarat-Syarat Kelayakan Tender&quoute; Accessed 20th July 2014 http://etender.mod.gov.my/syarat.inc.php

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

Malaysia Chronicle &quoute;CORRUPTION IN THE NAVY: ‘Shady splurge' of RM26 mil detected&quoute; (2015)
&quoute;http://www.malaysia-chronicle.com/index.php?option=com_k2&view=item&id=528132:corruption-in-the-navy-%E2%80%98shady-splurge-of-rm26-mil-detected&Itemid=2#axzz3cYY87Lqg accessed 15th September 2015

Treasury &quoute;MALAYSIA’S GOVERNMENT PROCUREMENT REGIME&quoute; http://www.treasury.gov.my/pdf/lain-lain/msia_regime.pdf accessed 15th September 2015

Ministry of Finance &quoute;General&quoute; http://www.treasury.gov.my/index.php?option=com_content&view=article&id=602&lang=en accessed 15th September 2015

Kamarudin R. P., &quoute;WIKILEAKS: MALAYSIAN GOVERNMENT PROCUREMENT IN THE FTA&quoute; Malaysia Today (2011) http://www.malaysia-today.net/wikileaks-malaysian-government-procurement-in-the-fta/ accessed 15th September 2015

SOURCES -+

Opinion: Agree with Comments

Comment: I strongly concur with the point being made about the general preference for Bumiputera registered companies, from my direct professional experience with private-sector and government-sector entities in Malaysia (including those dealing with security).

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: This percentage is not disclosed anywhere. They publish one or two contracts but others are direct negotiations.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Malaysia is one of the largest defence importers in Southeast Asia, has diversified its imports across the U.S., Europe, Russia and South Korea; and within Southeast Asia as a whole it is viewed as a lucrative location for further foreign investment.

McKinsey and Co, Southeast Asia: The next growth opportunity in defence,' February 2014, file:///Users/olihousden/Downloads/SEA%20defence%20Report%202014%20-%20Final.pdf

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Open competition has always been the chosen method for government procurement as outlined by the Ministry of Finance. Single source procurement will only come into the picture as a final course of action. It is perfectly legal as being outlined in MoF's SPP 4/95. There is no such thing as 'institutionalized favoritism' to Bumiputera.

Suggested score: 4

Government Reviewer-+

65.
score
1

Are tender boards subject to regulations and codes of conduct and are their decisions subject to independent audit to ensure due process and fairness?

Researcher4180: If a contract is over the value of 7 million rm, a tender opening board is established comprising personnel from the Ministry of Finance and the Ministry of Defence, which is further divided into two committees that analyse the technical and financial aspects of each tender. Such procurement, therefore, has to be approved by the Ministry of Finance. As previously mentioned, this could be problematic given nepotism is an accusation that many leverage at the government as an issue that Malaysia faces. An internal tender board is established for contracts under 7 million rm, with similar price and technical committees, under the internal Procurement Division. As these tender boards fall under their respective Ministries, they all follow the standard Code of Conduct and General Orders and Circulars from the Public Services Department. There is no evidence of external auditing of either tender board, but the committees are not aware of the names of the companies they are analysing contracts from, which contributes to objectivity in the process.

The recent naval corruption case appears to suggest that boards are not always established, and can be by-passed.

For direct negotiations, which as previously mentioned occurs significantly in defence due to national security reasons, a negotiations committee needs to be set up which has to produce a document listing out the current market prices prior to negotiation as a guideline for the negotiation process.

Response to Government Reviewer: There is no evidence of the auditing of tender boards. The Auditor General appears to audit the outcomes of only six projects and it is unclear whether it does take on audits of tender board decisions where corruption is suspected. Score maintained.

COMMENTS -+

Jeshurun C., Ismail H., &quoute;Role of Parliament in Defence Procurement in Malaysia&quoute; Paper presented at IPF-SSG Regional Parliamentary Workshop,Phnom Penh, Cambodia, 12-13th October 2008, accessed online 15th July 2014 http://ipf-ssg-sea.net/5th_WS/Defence_procurement_malaysia_final.pdf

Mokhtar, M., &quoute;OK Najib, let’s talk about nepotism&quoute; Free Malaysia Today (2014) http://www.freemalaysiatoday.com/category/highlight/2014/08/29/ok-najib-lets-talk-about-nepotism/ accessed 16th September 2015

Hellmann-Rajanayagam, D., &quoute;Malaysia&quoute; in Singh, R. P., Arms Procurement Decision Making Volume II: Chile, Greece, Malaysia, Poland, South Africa and Taiwan (2000) PP. 67-105 Accessed 10th July 2014 http://books.sipri.org/files/books/SIPRI00Singh/SIPRI00Singh04.pdf

The Malay mail Online &quoute;After navy graft arrests, PAC demands full audit of military accounts&quoute; (2015) http://www.themalaymailonline.com/malaysia/article/after-navy-graft-arrests-pac-demands-full-audit-of-military-accounts accessed 16th September 2015

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: All acquisitions and tenders are subject to regulations set out by the Ministry of Finance. There is no evidence of audits of decisions made, though this could happen but is not publicly noted. Before a request for tender is put out, the maximum value for a direct purchases (RM50k), and quotations (RM500k) is put out by the MoF.

For direct negotiations, a negotiations committee needs to be set up which has to produce a document listing out the current market prices prior to negotiation as a guideline for the negotiation process. Again, market pricing is highly subjective. It is worth noting that while the Ministry of Defence is subject to these guidelines, there have been cases where defence procurements above RM 500k did not go through open tender - for example, 2 Scorpene submarines were procured through direct negotiation.
•tScorpene’s bought in 2002 – first submarine delivered in 2009, due to matters arising around the deals
•tSerious delay, couldn’t dive because hadn’t been tested in tropical waters, and had to be sent back – what was required was extra weights in order for them to sink (extra 1.1 million for reconstruction  additional cost incurred due to oversight)
•tFinancial Director stated up to 140 million euros were kept separately for bribes and kickbacks for both officials on Malaysian and French parties  where these separate funds derive from – unclear
•tThe overall 7.3 billion cost tabled in parliament with minimal explanation of the significant budget increase
•tHaving a significant impact in parliament and public – debate surrounding this case – with regard to how the case was drafted in parliament
•t7.3 billion approved by BN, despite opposition
•tAnother 6.6 million separate to the 7.3 billion request, which was asked in the supplementary budget in 2011-12
•tOther supplementary budget for torpedos and other equipment – separate to the 7.3 billion
•tAdditional torpedoes and missiles needed to be ordered separately – of which submarines circling and in use without the necessary equipment for 4 years (huge part of the scandal case) – additional supplementary budget (determine what this sum is  research)

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: Tender board committees are appointed based on clear regulations which are the Treasury Instructions with a certain limit of contract value. For example, Tender Board 'B' Committees are allowed to made decisions on contracts under RM20 milion. The country has an independent auditing function such as Auditor General's Department which will foresee any misconduct of the tender.

Suggested score: 4

Government Reviewer-+

66.
score
2

Does the country have legislation in place to discourage and punish collusion between bidders for defence and security contracts?

Researcher4180: There is a Competition Act which is overseen by the Malaysia Competition Commission (MYCC) to discourage collusion between bidders. This is not specific to defence, but does cover defence as it covers all commercial activity within Malaysia and specifically outlaws ‘acts of bid rigging’.

It is unclear whether cases of collusion do occur in defence procurement and if so, whether they are appropriately dealt with. There is no known case of collusion in defence procurement in the recent past; however, given the limitations in oversight as highlighted in Question 59, there is risk of impropriety. The score has been selected accordingly.

COMMENTS -+

Laws of Malaysia &quoute;Competition Act&quoute; (2010) Accessed 21st July 2014 http://mycc.gov.my/wp-content/uploads/2014/05/CA2010.pdf

Procurement issues at in Inland Revenue Board of Malaysia : a case study on Inland Revenue Board of Malaysia in Cyberjaya / Noor Hisham Kamarodzaman

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There are no defence-specific laws against collusion.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Competition Commission Act 2010 empowers the Malaysia Competition Commission (MyCC) to carry out functions such as implement and enforce the provisions of the Competition Act 2010, issues guidelines in relation to the implementation and enforcement of the competition laws, acts as advocate for competition matters; carries out general studies in relation to issues connected with competition in the Malaysian economy or particular sectors of the Malaysian economy; informs and educates the public regarding the ways in which competition may benefit consumers in, and the economy of, Malaysia.

Suggested score: 4

Government Reviewer-+

67.
score
3

Are procurement staff, in particular project and contract managers, specifically trained and empowered to ensure that defence contractors meet their obligations on reporting and delivery?

Researcher4180: The Ministry of Defence Annual Report discusses training that staff from the Procurement Division have undertaken. Procurement officers are rotated. They are empowered to ensure the meeting of requirements through the ability to levy fines if obligations are not met. There is also an Integrity Plan Manual which is aimed at strengthening human resource management, suggesting that this area has improved recently.

There is no public information, however, concerning the standards of such training or its efficiency. There is the implication that senior staff can wield influence over procurement staff, given the recent case of naval officers 'using their internal influence to fake procurement claims'.

Response to Peer Reviewer 2: Agreed, based on new evidence regarding the naval corruption case (information added above). Score changed from 4 to 3.

COMMENTS -+

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

Kumaran, L., &quoute;Navy staff suspected of corruption wielded influence, sources say&quoute; The Malay Mail Online (2015) http://www.themalaymailonline.com/malaysia/article/navy-staff-suspected-of-corruption-wielded-influence-sources-say accessed 16th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: Both civilian and military staff are briefed and trained but procurement officers are from the Public Services Commission and they rotate around the government departments and agencies. The Auditor-General department oversees and audits procurement.

Suggested score:

TI Reviewer-+

Opinion: Disagree

Comment: I believe there is insufficient evidence provided to make this assertion here: a training manual from the Defence Ministry and the empowerment of staff does not mean training has been implemented or whether the training is of sufficient standard.

I would suggest score 3 here as the efficiency of the training cannot be verified.

Suggested score: 3

Researcher + Peer Reviewer-+

Opinion: Agree with Comments

Comment: All procurement staff, particular project and contract managers are specifically trained and empowered to ensure that defence contractors meet their obligations on reporting and delivery. They must fullfill at least 7 days per annum training pertaining to their subject matter.

Suggested score:

Government Reviewer-+

68.
score
3

Are there mechanisms in place to allow companies to complain about perceived malpractice in procurement, and are companies protected from discrimination when they use these mechanisms?

Researcher4180: There is an online complaints system that companies can utilise for complaints. There is also a Corporate Communications Unit which is in place partially to respond to complaints received from any format, such as emails, faxes, letters and phone calls. The Ministry, however, does not release publicly complaints or resolutions, so it is impossible to ascertain whether companies are protected from discrimination or are satisfied by the process. There is no public evidence, however, to the contrary either.

Response to Government Reviewer: Given information on complaints and resolutions is not disclosed, it is impossible to independently verify the extent to which companies are discriminated against. However, as there seems to be no public evidence to indicate discrimination either, a higher score is justified. Score changed from 2 to 3.

COMMENTS -+

Ministry of Defence &quoute;Ministry of Defence Laporan Tahunan 2012&quoute; Accessed 4th July 2014 http://www.mod.gov.my/component/phocadownload/category/11-laporan-tahunan.html

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There is a complaint system online for the MINDEF. Additionally, Integrity Pacts and Whistleblower Protection Act in place. However, details on the procedures and the outcomes of the actual use of the system are not publicly disclosed.

Suggested score:

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Ministry will investigate all complaints received. The integrated Sistem Pemantauan Aduan Agensi Awam (iSPAA) issues a ticket number for complaint received. All correspondences relating to the investigation will only be copied to the complainant for information and not to public. The Ministry has never discriminated against companies based on their complaints.

Suggested score: 4

Government Reviewer-+

69.
score
2

What sanctions are used to punish the corrupt activities of a supplier?

Researcher4180: If a supplier has engaged in corrupt practices, the Ministry can terminate the contract, and would likely blacklist the company as well. The MoD can also pursue further action by reporting the issue to the MACC. Whether these are pursued or not is questionable as while the Auditor-General’s report has highlighted issues with suppliers in the past, there has been no discernable action taken by the Ministry, including the above potential sanctions. The only evidence of sanctions is from the result of external investigations by MACC, which was responsble for the arrests of naval officers and suppliers following charges of corruption.

Response to Government Reviewer: No evidence of sanctions being consistently imposed was found (see comments above).

COMMENTS -+

National Audit Department Malaysia &quoute;Synopsis: Auditor General Report for Year 2013 Series 2&quoute; (2013) Accessed 5th July 2014 https://www.audit.gov.my/images/pdf/LKAN2013/Persekutuan/Siri2/master%20synopsis%20lkan2013%20series%202_opt.pdf

Minsitry of Defence &quoute;Prosedur&quoute; Accessed 20th July 2014 http://etender.mod.gov.my/prosedur.php

MACC &quoute;Two RMN Officers Charged with RM2.5 Millions Corruption&quoute; (2015) http://www.sprm.gov.my/2-tldm-didakwa.html accessed 16th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: Sanctions include blacklisting and termination of service and contract. However, every year the Auditor-General Report indicated that contractors are supplied sub-standard product and services to MINDEF and yet they receive minimal punishment or none at all.

Suggested score:

TI Reviewer-+

Opinion: Not Qualified

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is an integrity pact stated in all tender documents that must be signed by any contractors involved in tendering governments’ contract.
The termination clause in contract documents also serves a reminder to contractors not to get involved in the corrupt activities and actions that can be taken to their contract.
And should a contractors is found to offer bribery or involves in any wrongdoing regarding the contract, he is liable to certain actions:
- Terminated from the contract;
- Blacklisted from future contract(s);
- Charged in courts;

Suggested score: 4

Government Reviewer-+

70.
score
2

When negotiating offset contracts, does the government specifically address corruption risk by imposing due diligence requirements on contractors? Does the government follow up on offset contract performance and perform audits to check performance and integrity?

Researcher4180: There is little detail available regarding the addressing of corruption risks in offset contracts. There are, however, performance checks as offsets have been seen as a significant area to improve in order to develop Malaysia’s industry. Interviewees are positive about these programmes. Many offset programmes have been perceived as positive, such as the BAE Hawk aircraft and following offset programmes, which has encouraged further exploration. BAE have a code of conduct and offset policy which has helped facilitate this.

There is a strong institutional process which offset policies must follow. MIGHT (Malaysian Industry Government Group for High Technology) and Malaysian Offset Executive Committee (MOEC) manages offset programmes. MIGHT is not independent, falling under the Prime Minister's Office. The MOEC falls under the Ministry of Finance. Offset Committee's are established by the ministry making procurement, and this involved staff from the Ministry of Finance and MIGHT. The committee aims to ensure that all relevant activities in the offset program are monitored and audited by the secretariat on a regular basis. Their is a Offset Management Unit subordinate to this committee which also has the task of managing offsets. Three phases of audits also occur under MIGHT (recipient, surveillance and post-implementation), though there have been no public reviews of any of these audits and the results are not made available

Within Defence specifically programmes are additionally monitored by the Countertrade Committee (CTC) and the Defence Industry Division (DID). The CTC is chaired by the Secretary General of the Ministry of Defence (who also chairs the Offset Committee) and other members including external experts and the Ministry of Finance. The recipients of offsets report to the DID every six months.

Response to Government reviewer: Ensuring integrity is not mentioned in any of this documents or processes, so despite the strong process, a higher score cannot be awarded. Score maintained.

COMMENTS -+

Balakrishnan, K., &quoute;Defence Industrialisation in Malaysia&quoute; Security Challenges Vol. 4 No. 4 (2008), accessed 10th July 2014 http://www.securitychallenges.org.au/ArticlePages/vol4no4Balakrishnan.html

Balakrishnan, K., &quoute;Evaluating the Effectiveness of Offsets as a Mechanism for Promoting Malaysian
Defence Industrial and Technological Development&quoute; (April 2007) Thesis https://dspace.lib.cranfield.ac.uk/bitstream/1826/2504/1/final%20thesis07ver7.pdf&quoute;

BAE Systems &quoute;Offsets&quoute; http://www.baesystems.com/article/BAES_051664;baeSessionId=RpXWbNmN1ln7AGQUXDFu5cB8pjG7QYyaHuMF2tmVwkSGVL9hv_XQ!201291115?_afrLoop=2251883818411000&_afrWindowMode=0&_afrWindowId=null#!%40%40%3F_afrWindowId%3Dnull%26_afrLoop%3D2251883818411000%26_afrWindowMode%3D0%26_adf.ctrl-state%3D1agsuuxgjv_4 accessed 16th September 2015

MIGHT &quoute;National Offset Management Policy&quoute; http://www.might.org.my/maritime/SiteAssets/5.%20Offset%20Programme%20-%20Leveraging%20on%20LCS%20Project.pdf Accessed 16th September 2015

Ministry of Finance &quoute;POLICY AND GUIDELINE ON OFFSET PROGRAMMES
IN GOVERNMENT PROCUREMENT&quoute; (2011) http://mides.mod.gov.my/phocadownloadpap/PDF/pekeliling/offset_guidelines_english.pdf accessed 16th September 2015

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

SOURCES -+

Opinion: Not Qualified

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: The assessment is generally correct: the ad hoc nature of decision-making over defence procurement, aforementioned shifts in defence strategy, and a simultaneous push to diversify imports and indiginize the defence industry through institutionalising offsets, mean that that due diligence in this area will become increasingly complicated.

The explanation should also mention the Malaysian Industry Government Group for High Technology (MIGHT) which manages offset programmes. In particularly, see page 11 and the National Offset Management Policy: the bidding process is subject to three phases of audits (offset recipient, surveillance and post-implementation). It is questionable whether these are implemented fully in more sensitive defence contracts although it is difficult to make definitive assessment. MIGHT is also under the purview of the PM and is therefore not sufficiently independent for such oversight.

http://www.might.org.my/maritime/SiteAssets/5.%20Offset%20Programme%20-%20Leveraging%20on%20LCS%20Project.pdf

Also note BAE's code of conduct and offset policy, which have helped facilitate the public perception that it is a positive programme: http://www. .com/article/BAES_020430/offset?_afrLoop=429030548573000&_afrWindowMode=0&_afrWindowId=1wpwslnkn_78#%40%3F_afrWindowId%3D1wpwslnkn_78%26_afrLoop%3D429030548573000%26_afrWindowMode%3D0%26_adf.ctrl-state%3D1wpwslnkn_142.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: During the negotiation process, all the interested parties, which include the beneficiary, users, government agencies and also independent interested parties namely MiGHT as TDA are invited to the negotiation. The government also imposed clear guidelines and procedures for the offset namely the Offset Policy and Guidelines issued 18 March 2011 which can be freely accessed through http://www.mides.com.my. In addition, all offset projects must be approved by the Offset Committee (OC) whereby the Secretary General of the Ministry of Defence sits as Chairman. The members of the OC consists of representatives from the Ministry of Finance, MiGHT, Undersecretary Procurement the Ministry of Defence, users and any other invited parties when and where required. Furthermore, the Defence Industry Division (DID) as secretariat of Offset Working Committee (OWC) will advise on the proposed offset project and approved/disapproved it. If disapproved the offset provider need to submit a new project to the OWC before submitting it to OC. The government monitor closely the performance of the offset project and auditing of activities of each offset project will be carried out by the government. Prior to that, the report will be submitted by the offset provider and beneficiaries of each offset project.

Suggested score: 4

Government Reviewer-+

71.
score
1

Does the government make public the details of offset programmes, contracts, and performance?

Researcher4180: There is little consistency transparency with regard to details concerning offset performance and contracts. The interviewee notes there is no policy to make these public. Some are published under MIGHT, but these are extremely limited. For example, it states THE TDA team is working closely with the Ministry of Defence (MINDEF) to strategize the Offset Programme in conjuction with the following procurements: 8x8 Armoured Personal Carrier (APC) Acquisition, Littoral Combatant Ship (LCS) Acquisition.

Response to Government Reviewer: The question relates to proactively making this information available. Furthermore, there is no freedom of information (or equivalent) legislation whereby to facilitate the disclosure of such information to the public. As discussed in previous questions, the Official Secrets Act also plays a large role in the non-disclosure of information considered to be relevant to national security and there is a stong likelihood this would be the case in relation to offset contracts as well. Score maintained.

COMMENTS -+

Interview with Civil Society Actor, 18 July 2014

MIGHT &quoute;Publications&quoute; http://www.might.org.my/en/SolutionPages/pubsroom.aspx accessed 16th September 2015

The Star Online, Paul Low: Malaysia not ready for Freedom of Information Act, August 18, 2015, http://www.thestar.com.my/News/Nation/2015/08/18/Paul-Low-Data-Free/

SOURCES -+

Opinion: Not Qualified

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: The Offset Policy and Guideline can be accessed online - www.mides.com.my

Suggested score: 2

TI Reviewer-+

Opinion: Agree with Comments

Comment: The government has made some progress in making details of offset programmes more public, particularly through MIGHT, although these are patchy and limited in what they offer. Activity in the defence industry also appears to have stalled, and will likely increase again later in 2015 and 2016.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is no requirement to make public the details of offset programmes. Certain offset programmes involve commercial confidentiality and national security. However, the public can acquire certain information regarding offset program either contacting directly the Defence Industry Division, the Ministry of Defence or through Biro Pengaduan Awam (Public Complaint Bureau) or through the Parliament.

Suggested score: 3

Government Reviewer-+

72.
score
2

Are offset contracts subject to the same level of competition regulation as the main contract?

Researcher4180: Offsets, whilst separately negotatiated by the DID, still follow similar processes and, therefore, are subject to a similar level of competition (or lack thereof). Many are still negotiated as direct negotiations, rather than open tender, similar to defence procurement in general. If there is open tender, the DID will initially evaluate each supplier’s package before submitting it to the Tender Board alongside a recommendation of the most competitive offer. Offsets must be approved by the Offset Committee, which also manages them, alongside Malaysian Industry-Government Group for High Technology (MIGHT). However, due to a lack of transparency, the level of competition is unclear.

Response to Government Reviewer: As direct negotiation occurs more often, it appears that offset contracts are negotiated less competitively than main contracts. Score maintained.

COMMENTS -+

Balakrishnan, K., &quoute;Evaluating the Effectiveness of Offsets as a Mechanism for Promoting Malaysian Defence Industrial and Technological Development&quoute; ( April 2007) Thesis Accessed 20th July 2014 https://dspace.lib.cranfield.ac.uk/bitstream/1826/2504/1/final%20thesis07ver7.pdf

Ministry of Finance &quoute;POLICY AND GUIDELINE ON OFFSET PROGRAMMES
IN GOVERNMENT PROCUREMENT&quoute; (2011)
http://mides.mod.gov.my/phocadownloadpap/PDF/pekeliling/offset_guidelines_english.pdf accessed 16th September 2015

MIGHT &quoute;Offset Programme&quoute; http://www.might.org.my/maritime/SiteAssets/5.%20Offset%20Programme%20-%20Leveraging%20on%20LCS%20Project.pdf accessed 16th September 2015

SOURCES -+

Opinion: Not Qualified

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: For direct negotiations, the offsets proposal is submitted together with a tender document. For open tenders, the various suppliers’ offsets proposals will be separately evaluated based on projects, value-added activities, spin-offs to the buyer nations and any additional costs incurred due to offsets. The Board will eventually consider the purchase, based on price, technicality and offsets. But there is a ‘loophole’ where it is potential to be abused where some ‘friendly’ contractors have been asked to re-submit tender to meet the earlier lowest quotation received.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Again, it is important to recognise MIGHT in the managing and auditing of offset agreements. That the group is under the purview of the Prime Minister does not guarantee sufficient independence for an ombudsmen. Furthermore, it is also unclear whether the offset auditing process is implemented more or less vigorously than the rest of the contract, but the detail needs to be included here.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There are certain levels of competition in offset contracts which are the same as the main contract. However it is should be noted that the objective of the offset is not to provide services to the government as the main contract. Offset programmes are initiated through the need of the nation either for advanced technologies transfer of know-how, training, etc. Therefore it is required by each offset program be negotiated rather than tendered out. Offset projects are still in general subject to a similar level of competition as the normal procurement process which among others must be approved by the Offset Committee which is to ensure competitiveness and justness.

Suggested score: 3

Government Reviewer-+

73.
score
1

How strongly does the government control the company's use of agents and intermediaries in the procurement cycle?

Researcher4180: There appears to be little control with regard to the use of agents in the procurement cycle; the Scorpene case highlighted the ability for intermediaries to gain substantially in financial terms. There have been further complaints of the High Commission's and agents’ lack of knowledge regarding relevant regulations in place. The lack of transparency of the controls in place, alongside these cases, suggest they either do not exist or are quite loose in nature and are not particularly enforced.

Recent changes to the Malaysian Industrial Council for Defence, Enforcement and Security (MIDES) and the Malaysian Industry-Government Group for High Technology (MIGHT) suggest there may be a greater degree of control over all participants in defence procurement.

Response to Peer Reviewer 1: Agreed, and comments incorporated. Score raised to 1.

Response to Government Reviewer: This information could not be independently verified but it is accepted. The score is raised to 1 in line with the Peer Reviewer's comments. A higher score cannot be justified given the lack of restrictions and controls over the use of agents.

COMMENTS -+

Interview with Civil Society Actor, 18 July 2014

Kabilan, K., &quoute;Pak Lah’s sister-in-law arranged aircraft deal&quoute; Free malaysia today (September 9th 2011) Accessed 15th July 2014 http://www.freemalaysiatoday.com/category/nation/2011/09/09/pak-lahs-sister-in-law-arranged-aircraft-deal/

Minnick, W., &quoute;MAlaysia Takes on Corruption - Still Struggles To Control Offsets&quoute; (October 3rd 2009) Accessed 15th July 2014 http://minnickarticles.blogspot.com/2009/10/malaysia-takes-on-corruption-still.html

Zahiid, S., &quoute;Scorpene deal: Najib Must Come Clean&quoute; (June 2nd 2011) Free Malaysia Today, Accessed 15th July 2014 http://www.freemalaysiatoday.com/category/nation/2011/06/02/scorpene-deal-najib-must-come-clean/

Malaysian Industrial Council for Defence, Enforcement and Security, mides.mod.gov.my/phocadownloadpap/PDF/Terma/terma_rujukan_mides_eng.pdf

Malaysian Industry-Government Group for High Technology, http://www.might.org.my/en/SolutionPages/Default.aspx

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

TI Reviewer-+

Opinion: Disagree

Comment: The evidence provided here is far too old to make this assessment. Changes to MIDES and MIGHT mean there is a framework in place to monitor the activities of all those involved in defence procurement, including agents, although implementation appears to be poor.

Suggested score: 1

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: The Government imposes no restrictions on the use of agents and intermediaries. However all agents or intermediaries must submit documents to prove that they have received Original Equipment Manufacturing (OEM) support.

Suggested score: 3

Government Reviewer-+

74.
score
0

Are the principal aspects of the financing package surrounding major arms deals, (such as payment timelines, interest rates, commercial loans or export credit agreements) made publicly available prior to the signing of contracts?

Researcher4180: Arms deals are only made publicly available, in limited forms and limited cases, after they take place. A civil society actor who was interviewed argued it was difficult to assess purchases given this lack of transparency. However, some, for example, the announcements following the Langkawi International Maritime and Aerospace (LIMA) Exhibition are released generally to the media. Principal aspects of the financing package are not released prior to signing contracts, and detailed aspects are not released publicly following the signing of contracts, either. A retired Lieutenant Colonel stated this was due to national security reasons.

COMMENTS -+

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

Astro &quoute;LIMA 2015: RM9.3 billion worth of contracts inked - Hishammuddin&quoute; http://english.astroawani.com/malaysia-news/lima-2015-rm9-3-billion-worth-contracts-inked-hishammuddin-55972 accessed 16th September 2015

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: There is no policy at the moment to reveal details of the financing package of deasl due to defence technical information confidentiality. No information on financing packages is available on defence purchases.

Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: Selective information about defence deals can be made clear as part of the around defence and foreign policy announcements by the government.

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+

75.
score
0

Does the government formally require that the main contractor ensures subsidiaries and sub-contractors adopt anti-corruption programmes, and is there evidence that this is enforced?

Researcher4180: There is no clear statement regarding anti-corruption requirements for subsidiaries and subcontractors, beyond that of the overarching MACCA law. Interviewees were unsure whether such requirements existed.

Response to TI Chapter Reviewer: As it is not clearly stated, there is no evidence that any such requirements are in place. Score maintained.

Response to Government Reviewer: No contracts are made public, so it is difficult to confirm this without evidence. Score maintained.

COMMENTS -+

Chi, M., &quoute;Malaysia moderate to low in defence budget transparency,&quoute; The Malaysian Insider (November 19, 2011) Accessed 1st July 2014 http://www.themalaysianinsider.com/malaysia/article/malaysia-moderate-to-low-in-defence-budget-transparencysays-anti-graft-body

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

Interview with Civil Society Actor, 18 July 2014

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Disagree

Comment: There may be controls on sub-contractors, however, this is nowhere clearly stated.

Suggested score: 2

TI Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Disagree

Comment: There is a termination clause in the contract documents which requires that the main contractor ensures subsidiaries and sub-contractors adopt anti-corruption programmes.

Suggested score: 3

Government Reviewer-+

76.
score
2

How common is it for defence acquisition decisions to be based on political influence by selling nations?

Researcher4180: There is no evidence of recent cases whereby defence acquisition was based on influence from selling nations, and Malaysia has contracts for arms imports with varying countries which seems to demonstrate this. Traditionally, the UK has been the largest arms supplier to Malaysia, but Malaysia has signed contracts with the US, Russian, South Africa and other countries in recent years as well and appears to be diversifying. This would suggest there is little to no risk of political influence in defence procurement and it preceding military requirements in contract award considerations.

Instead, currently, there is a primarily domestic focus; with the accusation that some acquisitions have been made to ensure the continuing viability of the domestic defence industry, such as the purchase of six ships, for 9 billion rm, from Boustead shipyard.

COMMENTS -+

Balakrishnan, K., &quoute;Defence Industrialisation in Malaysia&quoute; Security Challenges Vol. 4 No. 4 (2008), accessed 10th July 2014 http://www.securitychallenges.org.au/ArticlePages/vol4no4Balakrishnan.html

Interview with retired Lieutenant Colonel, 14 July 2014

Interview with retired Major, 20 July 2014

The Star &quoute;Boustead Naval Shipyard seals RM9b ships deal &quoute; The Star (17th July 2014) Accessed 20th July 2014 http://www.thestar.com.my/Business/Business-News/2014/07/17/Boustead-Naval-Shipyard-seals-RM9b-ships-deal/

Banlaoi, R., &quoute;Globalization’s Impact on Defence Industry in Southeast Asia&quoute; in Till G., Chew E., Ho, J., ed. Globalization’s Impact on Defence Industry in Southeast Asia (2009)(Routledge: USA)

SOURCES -+

Opinion: Agree

Comment:

Suggested score:

Peer Reviewer-+

Opinion: Agree with Comments

Comment: It is very common for defence acquisition decisions to be based on political considerations, taking the Scorpene as one of an example. The decisions for major purchases are indeed impacted by the political influence of supplying nations. The defence acquisition involving multi-million projects, more than not, are concealed from the public on grounds of national security although purchases by any nations are not classified.


Suggested score:

TI Reviewer-+

Opinion: Agree with Comments

Comment: On Malaysia diversifying its defence imports, see again McKinsey and Co, 'Southeast Asia: the next growth opportunity for defence,' February 2014, www.mckinsey.com/~/media/mckinsey/dotcom/client_service/aerospace%20and%20defence/pdfs/sea%20defence%20report%202014%20-%20final.ashx

Suggested score:

Researcher + Peer Reviewer-+

Opinion: Agree

Comment:

Suggested score:

Government Reviewer-+