Trust and Taxes

 

Of late, there have been a series of exposés in terms of financial scandals in our country plaguing some major government-linked investment corporations (GLICs) and institutions. That impacts trust and ultimately questions whether taxes should be paid. Whenever such scandals come to light, is anyone held responsible and whether there has been a breach of fiduciary duty to the public.

 

Theft of milk powder by poverty-stricken families has resulted in criminal prosecution and jail terms. Yet rarely do we see those accused of greater crimes being put behind bars, except for one ex-PM. We have also seen offences involving money laundering, Ponzi schemes and fraudulent scams being let off with a slap on the wrist through compound payments for settlement with the authorities. And the victims? They are made to bear the consequences in silence with a great injustice done to them. It is no wonder then that the perception given to society is that there is an alleged unequal standing before the enforcement of the law. Those from privileged backgrounds appear to get off scot-free, while those who have lesser means must receive whatever comes their way. Fiduciary duty is not an option.

 

Source: https://en.wikipedia.org

 

GLICs and institutions are in effect acting as custodians of the people’s money, and hence, are bound by the fiduciary duty to act in the best interest of the people. Unfortunately, we have seen a blatant disregard for the interest of the people. While in part it may be due to negligence, on a deeper level, there is a clear breach of fiduciary duties by decision-makers.

 

If remedial measures are not put into place urgently and efforts to recuperate losses are not expedited, the one that foots the bill for the foolishness and transgressions of some would be, once again, the people. As such, who in their right mind would entrust their savings to the very institutions meant to safeguard their deposits? The last thing we want is an erosion of confidence in other better-performing institutions such as the Employees Provident Fund or Permodalan Nasional Bhd (PNB) as collateral damage from all this negative news flow.

 

Contrary to popular belief, there is no lack of good frameworks in place for our institutions. We have an abundance of laws and regulations to ensure compliance by the GLICs and institutions. Processes are often robust, with checks and balances in place. Whenever something blows up, there will be loud calls for reform or the need for stricter laws to plug the gap. The issue, in my humble view, is not the framework or the law. It is, in fact, weak enforcement. When enforcement is weak, the deterrent effect is not up to par. If the consequence of breaching the regulations is light compared with the potential windfall (illicit or not), then the end justifies the means, doesn’t it? Those who are responsible for the dereliction of duties by those appointed to act as custodians for the people should be made examples, if not, the misbehaviour will continue. Sad to say, many instances have shown that the risk-to-reward ratio appears skewed in favour of those who cross the line instead of those who are upright.

 

Those who are tasked with managing taxpayers’ money must be held to the highest standards due to the trust placed in them by the public. Appointments to these key roles must be based on merit and capability rather than political connections or affiliations.

 

Malaysia has an abundance of resources and natural advantages that make our regional peers green with envy. Sadly, the leakages in the system are too rampant. The systemic failures across organisations and institutions are too prevalent to be eradicated overnight. But that does not mean we should not start turning it around. Instead of introducing new taxes and removing subsidies that burden the people to increase government revenue, start plugging leakages at key GLICs and institutions. Once the people see the improvement, they would be more receptive and willing to play their part in contributing taxes to the country, provided they are being put to good use. Trust and taxes go hand in hand.

 

Reference:

Rebuilding institutional confidence, Ng Zhu Hann, The Star, 22 August 2026