Business Corruption

According to several sources, such as the US Department of State 2011, there is a lack of transparency in public procurement in Malaysia, and competitive bidding in the procurement process is widely disregarded. The US Department of State 2011 also reports that the formal Malaysian procurement policy is discriminatory, as it explicitly seeks to encourage greater participation of bumiputera (ethnic Malays) in the economy.

According to Bertelsmann Foundation 2010, political connections continue to be the main criteria to be granted huge infrastructure projects and state contracts. All small-scale government contracts are only open to Bumiputera companies. Intense lobbying and closed-door negotiations between companies and government officials for public projects are known to take place. According to a June 2011 news article by Malaysian Mirror, the Malaysian government continue to award lucrative contracts to companies without calling for tenders, including the awarding of the Mass Rapid Transit (MRT) to Gamuda-MNC as the ‘project delivery partner’ the MYR 682 million worth contract of Matrade International Convention Centre to Naza TTDI, and both the proposed Kuala Lumpur International Financial District (KLIFD) and the Sungai Besi Airport redevelopment project to 1Malaysia Development Bhd.

According to Transparency International Malaysia's Transparency Perception Survey 2007, a majority of corporate respondents perceived that there is no transparency or openness in the government procurement system. Similarly, according to the US Department of State 2011, the tendering process in Malaysia is still obscure and non-transparent and concerns about irregularities have been voiced by US companies.

See more information on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Political Corruption

In December 2009 and February 2010, the Malaysian rights group Suaram filed two complaints to French prosecutors in relation to possible corruption and kickbacks of EUR 114 million being paid by a French shipbuilder, DCNS to a Malaysian company, Perimekar, in order to obtain a USD 1.2 billion submarine contract. According to a 2010 news article by The Straits Time, the owner of Perimekar is closely related to the Prime Minister, Najib Razak.

According to a 2011 news article by The Canadian Press, in March 2011, Transparency International urged the Malaysian government to investigate cases of alleged corruption and abuse of power committed by Abdul Taib Mahmud, a state leader on Borneo Island. Taib was accused of awarding lucrative contracts, timber concessions and land deals to companies owned by his family and associates.

Another graft scandal in relation to winning a contract was when a former Malaysian employee of Alcatel, a French telecommunications corporation, was accused of having paid a bribe to employees from state-owned Telekom in 2006, in exchange for confidential information that helped Alcatel win a contract worth approximately USD 106 million from Telekom. The former employee will face up to 20 years in prison and a fine if convicted, and the trial is scheduled to begin in October 2011, according to a July 2011 news article by Forbes.

See more information on public procurement under 'Public Anti-Corruption Initiatives' in the Initiatives section.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 4.1 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give the favouritism of government officials towards well-connected companies and individuals when deciding upon policies and contracts a score of 3.7 on a 7-point scale (1 being 'always show favouritism' and 7 'never show favouritism').

Transparency International Malaysia: Transparency Perception Survey 2007:
- 71% of corporate respondents perceive that there is no transparency or openness in the government procurement system.

- 54% of the general public perceives that there is no transparency or openness in the government procurement system.