White Collar Crime in Malaysia: Are we tough enough on Corruption

Introduction

The phrase “white collar crime” was first used by sociologist Edwin Sutherland in a 1939 address to the American Sociological Society as “crimes committed by a person of respectability and high social status in the course of his occupation.” In Malaysia’s legal and political framework, white collar crime, especially corruption has long been a recurring and entrenched problem. White collar crimes are non-violent in contrast to traditional crimes and usually entail financial malfeasance, power abuse, or dishonesty by those in positions of control. Among them, corruption continues to be one of the most urgent issues since it erodes public confidence, skews government, and erodes the rule of law.

A number of high-profile corruption scandals have occurred in Malaysia in recent years, most notably the SRC International and 1Malaysia Development Berhad (1MDB) cases, which stunned the country and attracted attention from around the world. Significant weaknesses in institutional integrity, political accountability, and enforcement were made clear by these instances. The effectiveness of legal frameworks like the Malaysian Anti-Corruption Commission Act 2009 (MACC Act) and specialized organizations like the MACC is still a matter of debate. More significantly, does Malaysia actually intend to address all forms of white collar crime?

Malaysia maintained its ranking of 57th out of 180 nations with a score of 50 out of 100 on Transparency International’s 2024 Corruption Perceptions Index (CPI). This inaction emphasizes the continued difficulties in successfully battling corruption.

This article looks at Malaysia’s current anti-corruption legislation framework, identifies enforcement issues, reviews important case studies, and assesses whether the country is doing enough to reduce white collar crime or if more extensive reforms are still required.

Legal Framework on Corruption in Malaysia

Although “white collar crime” is not specifically defined by Malaysian law, several legislation address the specific offenses that are commonly included under this heading, including money laundering, fraud, corruption, and criminal breach of trust.¹ The Malaysian Anti-Corruption Commission Act 2009 (MACCA) is the main piece of law addressing corruption, which is dedicated to investigate and prevent any form of corruption and abuse of power.² Any public official who requests, accepts, or is offered a bribe in exchange for a favor is one of the many corruption offenses listed in the MACCA. Additionally, it makes it illegal to conceal bribery or its purpose. These rules include transactions in the commercial sector as well as those in the public sector.³

The 2018 MACCA amendment added Section 17A,⁴ which defines corruption as giving, agreeing to give, promising, or offering gratification to obtain or retain business or advantage for a commercial organization.⁵ The Penal Code supplements the MACCA by addressing bribery, embezzlement, and fraud.⁶

Furthermore, it is illegal for any organization or individual to transmit, receive, or manage funds and assets that have been obtained illegally, according to the Anti-Money Laundering and Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA).

The Competition Act, 2010 (Sections 4, 24, 33) is another significant anti-corruption measure.⁷ It forbids the concealment and withholding of information pertaining to bid-rigging, as well as collusion intended to reduce or eliminate competition in public and private sector tenders.⁸

Collectively, these legal instruments form the backbone of Malaysia’s legal response to white collar crime.

The causes behind Malaysia’s ongoing corruption

 Weak Enforcement

Even with Malaysia’s extensive institutional and legislative framework to fight corruption, there are still a number of issues with enforcement. One element that contributes to corruption’s ongoing existence is lax enforcement. Among the drawbacks is that just 28% of those who are arrested are eventually charged with and convicted of corruption, which is a low percentage of convictions relative to arrests.⁹ A second problem is the light penalty for those convicted. The “Light punishment of offenders” portion of the document made reference to this.¹⁰ A third problem is that most arrests and convictions are for minor offenses; very few are for major crimes committed by influential people in the commercial and political arenas. Only 2.4% of public officials arrested between 2016 and 2021 were categorized as “top management,” and only 9% of those convicted in 2021 were categorized as senior or general managers of large corporations, or as senior level personnel in Federal and State departments and statutory authorities.¹¹ This illustrates the impact of money politics, which is covered in more detail below.

Political interference or selective prosecution concerns.

Political meddling in enforcement agencies, especially the Malaysian Anti-Corruption Commission (MACC), is one of the most enduring issues in Malaysia’s anti-corruption initiatives. Despite being a legally independent organization under the MACC Act 2009, the MACC’s operational independence is sometimes questioned, particularly when it comes to cases involving prominent politicians or members of ruling parties.¹²

The term “selective prosecution” describes circumstances in which political opponents seem to be disproportionately targeted by the implementation of anti-corruption laws, while identical or more serious accusations against government allies are either disregarded or not sufficiently pursued. Public’s confidence in the rule of law and the organizations assigned to enforcing it is weakened as a result of the sense of prejudice and impunity this fosters.¹³

The appointment of the MACC chief commissioner by Yang di-Pertuan Agong on the prime minister’s recommendation without parliamentary approval raises concerns as well because it may lead to conflicts of interest. This arrangement, according to critics, gives the executive branch excessive control over the agency’s autonomy.

Additionally, behind-the-scenes influences may cause investigations to be discontinued, postponed, or reclassified, particularly when they concern politically sensitive individuals. These worries are made worse by a lack of responsibility for enforcement delays, a lack of transparency in decision-making, and a lack of judicial monitoring during various stages of the investigation. Structural reforms, such as legislative monitoring of enforcement agencies, merit-based and transparent selections of important personnel, and legal protections against meddling in current investigations, are necessary to rebuild public trust.

Case studies

 (i) 1MDB Scandal

 1MDB, which stands for 1Malaysia Development Berhad (limited), was a Malaysian government fund that was founded in 2009 with the goal of promoting development through partnerships and foreign investment. The prime minister at the time, Najib Razak, served as its chair.

Billions of ringgit were taken from 1MDB rather than being used to benefit the nation. Raised through government-backed bonds, the funds were surreptitiously moved to foreign accounts in the US, Singapore, Switzerland, and other nations. About $731 million (RM2.9 billion), a significant amount, ended up in Najib’s personal bank account. It was purportedly used to finance luxury expenditures, pay politicians, and pay for personal costs, such as his wife Rosmah Mansor’s shopping binges. Many questioned Najib’s allegation that the funds were a contribution from a Saudi prince.

A key player was a businessman named Jho Low, who was close to Najib’s family. He ordered the following uses of stolen funds:

• Purchasing upscale real estate in Beverly Hills and New York
• A aircraft worth $35 million and a yacht worth $260 million
• financing the Hollywood film “The Wolf of Wall Street” via Riza Aziz, Najib’s stepson
• extravagant events with famous people like Jamie Foxx and Britney Spears
• Expensive presents, such as jewels for model Miranda Kerr and a Picasso picture for Leonardo DiCaprio

The Wall Street Journal and journalist Clare Rewcastle-Brown (Sarawak Report) were given access to secret material in 2015. The extent of corruption was made clear by these documents. Najib dismissed important officials, including the attorney general and his deputy prime minister, and prevented additional investigations by the Malaysian Anti-Corruption Commission (MACC) before they could make an arrest.

Najib faces 42 charges, including criminal breach of trust, abuse of power, and money laundering. He was found guilty in a case involving SRC International, a former 1MDB entity, and given a 12-year prison sentence along with an RM210 million fine. His primary 1MDB trial, which concerns the purported $731 million theft, is still pending. Charges of money laundering and corruption are also brought against his attorney Shafee Abdullah and his wife Rosmah Mansor.

(ii) SRC International 

Prior to being completely owned by the Malaysian Ministry of Finance, SRC International Sdn Bhd was a subsidiary of 1MDB. It was established with the intention of assisting Malaysia in the development of sustainable energy projects and investing in energy resources.

SRC International borrowed RM4 billion in 2011 and 2012 from Retirement Fund Inc. (KWAP), a government pension fund designed to assist public employees. But a significant amount of this funding was misappropriated. Through intermediate businesses, over RM42 million was traced straight into Najib Razak’s personal bank accounts rather than being used for energy investments. According to reports, the funds were utilized for shopping and other personal costs including credit card bills.

As SRC International’s Prime Minister, Finance Minister, and adviser emeritus, Najib had considerable influence over the business. According to the prosecution, he misused his authority to authorize government guarantees for the loans and then kept a portion of the money for himself. Najib was convicted of seven crimes in July 2020, including: (a) Breach of criminal trust (CBT), (b) Laundering money, (c) misuse of authority. He was given a 12-year prison term and an RM210 million fine by the court. For the first time, a former prime minister of Malaysia was found guilty of corruption.

The SRC case demonstrated how public funds intended for national development were misappropriated for private benefit and was the first 1MDB-related case to go to trial. In Malaysia’s battle against corruption, it marked a turning point.

Reform and the Way Forward

Increasing the independence of enforcement agencies is one of the most important reforms required to combat white-collar crime in Malaysia. Investigating and prosecuting corruption is a critical function of organizations like the Attorney General’s Chambers (AGC) and the Malaysian Anti-Corruption Commission (MACC). However, accusations of selective prosecution and political meddling have frequently called into question their credibility. These organizations must be free to function without outside interference, particularly from political leaders, in order to regain public trust and preserve the rule of law. This can be accomplished by creating procedures like Parliamentary Select Committees to supervise the selections of important individuals like the Attorney General and the MACC Chief Commissioner, as well as by changing pertinent laws to guarantee institutional autonomy. Regardless of a person’s political position or standing, an independent enforcement system will guarantee that investigations and prosecutions are carried out in a fair and unbiased manner.

The modification of political finance rules to encourage accountability and openness is another significant advancement. Because political donations are not regulated in Malaysia, there are now more chances for corruption, power abuse, and excessive influence over public policy. Cases like 1MDB, where public monies were purportedly misappropriated for political ends, made this problem very clear. Legal frameworks requiring complete disclosure of political donations, including the identity of donors and the amount paid, must be implemented in order to stop such events. Along with establishing an impartial oversight organization to audit and disclose political parties’ financial records, there should be a cap on the overall amount of contributions permitted. In addition to discouraging corruption, transparent political funding guarantees a more equitable and democratic political process.

Conclusion 

In summary, although Malaysia has made great progress in creating institutions, laws, and tactics to fight white-collar crime, especially corruption, these initiatives have frequently been thwarted by a lingering money politics culture and a lack of true political will. Enforcement has been uneven, and high-profile cases have shown significant gaps in accountability and transparency, even in the face of specialized organizations like the MACC and programs like the National Anti-Corruption Plan (NACP). One of the biggest challenges to reform remains the long-standing connection between corporate interests and political elites. Going forward, the political leadership’s dedication to institutional independence, openness, and long-term reform will be crucial to the success of anti-corruption initiatives. There is potential for change in the dynamic political scene, especially with the changing role of the major parties and the increasing voice of civil society. However, it is unclear if this potential will result in significant advancements.