Monday, 2 March 2020

Has Corruption Become Institutionalised?


Corruption raises cost of doing business. On average, bribes equal 10.9% of value of a transaction and 34.5% of profits (OECD, 2014). It creates uncertainty. An upward spiral of competing bribes. Discourages foreign investment, raises prices and lowers product quality.

In April 2019, the Penang Road Transport Department (RTD) was crippled following the arrest of 46 of its enforcement officers for alleged corruption. However, the endemic corruption in the local logistics industry had not been deterred.

According to the report published by MalaysiaKini (13 Feb), companies that flout the law, including by overloading lorries, are told to make monthly payments as ‘protection’ from the enforcers, apart from other ad-hoc payments during roadblocks. The news report claimed that many RTD officers nationwide are still soliciting bribes from logistics companies despite the mass arrest in 2019. In fact, they even demanded for double payment in July 2019 as reimbursement for the previous two months (May and June 2019) when the bribes stopped flowing.

One of the firms in September alone made 18 payments totalling RM21,300, which were paid to district RTD officers in Selangor, Negeri Sembilan, Malacca and Johor. The payments ranged between RM300 and RM6,000 each.

Another informant claimed that even if his lorries follow the maximum weight of 51 tonnes, he can’t escape harassment without paying a ‘monthly fee’. The RTD officers will still accuse them and insisted on weighing his lorries. And on one occasion, caused his company to miss the delivery deadline, monetary loss and damage of goodwill with his consignees.

The officers are squeezing every opportunity to take more bribes. Some companies even lose up to 30% of their monthly revenues. This has essentially increased the cost of doing business. According to the informant, the ‘monthly fee’ is only for highways. For federal routes, they need to pay extra. Bribe twice for one journey. The officers may demand more during the festive period and also when their superiors are around them. “They are well organised. The bribes are not for one person but shared with an entire group”.

Fatal road accidents are one of the leading causes of mortality in Malaysia. Corruption may have a huge impact on the number of accidents on the road. Unroadworthy vehicles and “illegal” drivers are the cause. It is unlikely for policymakers to investigate the extent the officers are responsible for road accidents both directly and indirectly due to their involvement in corruption.

A study by George Serafeim (2013), a professor from Harvard Business School, showed that the biggest problem with corporate corruption is not a negative impact on the firm’s reputation, but its effect on employee morale. When employees know that they are working for an organization where the management not only tolerates but practices bribery, they are less likely to put their best into their work. In RTD, those who were charged in court would normally be transferred to a desk job. This could have a negative effect as they could sabotage the system while remaining in the department.

So what could be done?

An anti-corruption agenda has to set-out the following key steps:

     (i)         create special courts for corruption cases, to expedite the process;
   (ii)         provide “amnesty” for corrupt officials and introduce a re-education programme;
  (iii)         move from permanent to contract based appointments;
  (iv)         increase transparency and accountability with artificial intelligence and technology;
   (v)         move from a stick to a carrot – provide examples of positive action and leadership. That boosts values and culture;
  (vi)         active participation of citizens is fundamental to prevent corruption and promote transparency; and
 (vii)         support whistle blowers and act on information provided

So will all that remove corruption? No, unless a nation has the fear of the Almighty, those steps could be in vain!


1. Institutionalised corruption in RTD grips logistics industry, turns clean firms dirty, 13 Feb 2020, MalaysiaKini
2. Has corruption among RTD personnel led to traffic deaths? 30 April 2019, MalaysiaKini
3. George Serafeim (2013), Firm Competitiveness and Detection of Bribery
4. How could we end corruption? Inter-American Development Bank
5. Isabel Cane, Is this the way to finally bear corruption? 29 Aug 2018, World Economic Forum
6. OECD (2016), Putting An End to Corruption

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