The Malaysian government is again embroiled in a corruption scandal, this time with an estimated taxpayer cost of RM4.6 billion (A$1.53 billion). Rather than implementing reforms to improve transparency and accountability, in the usual pattern of Malaysian politics the government continues to shift blame and shuffle paper. This scandal comes amidst promises by Prime Minister Najib to ‘reform’ Malaysia.

The scandal centres on the sale of land from Kuala Dimensi to the government’s Port Klang Authority. The land was sold in 2002 for the creation of the Port Klang Free Zone (PKFZ) at a cost of RM1.8 billion. However, Kuala Dimensi had acquired the same land from a local fishing cooperative in 1999 for RM95 million. The sale prices therefore imply that the land appreciated more than nineteen times in three years. More mysteriously, the Port Klang Authority then awarded Kuala Dimensi sole rights to develop the free trade zone without an open tender. After ‘winning’ the contract, Kuala Dimensi raised funds for the development through bonds backed by letters of support from Malaysia’s Transport Ministry.

The scandal hit the press in mid-2007, at which time the Port Klang Authority commissioned a PricewaterhouseCoopers audit report into the matter. Released in May 2009, the report highlighted the involvement of several politicians and identified some conflict of interest. Preliminary findings in a follow up investigation by the Public Accounts Committee found the project was managed by “a very incompetent group of people”.

Earlier this month, political activist Raja Petra Kamarudin (and editor of the independent news website Malaysia Today) published a leaked Treasury memorandum asking the Cabinet to retrospectively approve an increase in the cost of the PKFZ project from RM10.88 billion to RM4.6 billion. The memorandum was signed by the then Finance Minister Tan Sri Nor Mohamed Yakcop.

Transparency International has highlighted the complex network of Malaysian elites involved in this scandal. For example, Kuala Dimensi’s chairman is the treasurer of Malaysia’s ruling political party, the United Malays National Organisation (UMNO), and the legal firm that drafted the agreement between the Port Klang Authority and Kuala Dimensi is headed by the local UMNO branch vice-chief. Other links involve the local UMNO youth chief (also the deputy CEO of the firm behind the sale and development of the PKFZ), and the local UMNO branch permanent chairman (former chairperson of the fishermen’s cooperative that sold the land to Kuala Dimensi).

Corruption scandals feature regularly in Malaysian politics and Prime Minister Najib has declared “I will reform and I will make changes.” However, rather than living up to his promises, the government continues to deal with corruption by blame shifting and paper shuffling. In response to the PKFZ corruption allegations, the government has made no formal statement nor taken any formal action. Instead individual officials are ‘buck passing’, with almost every party threatening legal action against another party involved in the scandal. In terms of paper shuffling, the government has established three committees and a special task force to “turn around” the matter. Importantly, these actions do not contribute to prosecuting the corrupt officials in a court of law. This is the course of action that the government should be pursuing. Moreover, the government has shown now signs of reforming procurement legislation or government practice.

Malaysians describe themselves as “one screwed up nation” and the cycle of corrupt and crony politics appears to be embedded. Blame shifting and paper shuffling are not synonymous with political reform, and without reform corruption and cronyism will certainly continue. Transparency International-Malaysia has suggested that the PKFZ scandal is “a black mark on the country’s history” but one which delivers Malaysians a “positive challenge to revamp ourselves”. To meet this challenge the Malaysian government must be willing to put away the paper and to put down the pointed finger.

Siaan Ansori is a postgraduate student in the College of Asia and the Pacific at the Australian National University.

Update (1): A diagram of the relationship of those involved in the scandal (read here, here, here and here)