Money and Politics Mix, in Malaysia as Elsewhere
International Herald Tribune
March 1, 1994
Philip Bowring    

Hypocrisy, naïveté and grandstanding have been ricocheting between London and Kuala Lumpur, culminating in Friday's announcement by the Malaysian government that it would boycott British goods in retaliation for British media allegations of payoffs involving Malaysian politicians.

At one level, the dispute is extremely petty - of the sort once associated with relations between former colonial powers and smaller African states in the early flush of independence. It follows a similar row between Malaysia and Australia just three months ago after Prime Minister Paul Keating described his Malaysian counterpart, Mahathir bin Mohamad, as "recalcitrant" in his attitude against the Asia-Pacific Economic Cooperation forum.

At another level, however, the dispute with Britain has origins that go back 15 years, to the start of the Carrian saga involving the various misdeeds of a Hong Kong company which subsequently went bust owing a billion dollars, the biggest chunk to a state-controlled Malaysian bank, Bank Bumiputra. Malaysian politicians as well as Hong Kong bankers, lawyers and accountants were beneficiaries of the scam.

The Carrian affair, aspects of which are still before the courts, has brought credit to neither Malaysia nor Britain. Since then a continuing series of episodes has shown the perils of trying to mix business with judicial and foreign affairs.

The latest tiff was sparked by a dispute in Britain over the link between aid financing for Malaysia's Pergau hydroelectric project and Malaysian purchases of British arms worth some $1.5 billion. In Britain, outrage is expressed that an aid deal be linked to an arms sale. In Malaysia there is little such alarm, even among the opposition; the main issue is whether Pergau was a good project.

"Aid" may be a curious word for Britain to apply to Malaysia, which owns a car manufacturer when Britain does not. The very fact that Britain should offer and Malaysia accept "aid" should suggest something different from, say, British donation of vaccine to Rwanda.

Equally curious is the apparent assumption by British media and parliamentarians that "aid" is not and never should be connected to commercial advantage. In a truly moral world, that would be right, but few would accuse the Murdoch or British tabloid press of being driven by moral imperatives. The fact is that aid has always been used by most donors for political and commercial as well as purely humanitarian purposes.

What has stung Mr. Mahathir into retaliation is not the debate over Pergau but the suggestion that politicians, and indeed the ruling party, have been in receipt of large donations from British contractors - and not just in relation to Pergau. This followed recent allegations in the Australian media that Canberra's secret intelligence service has been bribing Malaysian polticians.

Mr. Mahathir, seldom averse to a fight, seems to have decided that attack is the best defense. British media have been accused of patronizing and colonialist attitudes, while British firms anxious to do business in Malaysia have been forced to their knees in praise of all things Malaysian.

How well all this plays at home for Mr. Mahathir has yet to be determined - but it is likely to bring further British media attention to British-Malaysian issues.

The reality behind all this is that money plays an important role in Malaysian politics, as it does elsewhere. Political connections are often involved in government contract awards and the benefits of privatizations. Malaysians might prefer that things were otherwise, but it is a reality that is unlikely to be seriously challenged while the country prospers.

Mr. Mahathir himself has been among those who decry publicly the spread of "money politics." Stopping it is another matter, given Malaysia's combination of fast economic growth and a need to develop the Malay majority as a capital-owning class.

The British government has fallen over itself in an effort to be accommodating. In the early 1980s, Mr. Mahathir launched a "Buy British Last" campaign ostensibly in protest at British increases in foreign student fees. To help get back into Malaysian favor, the British Foreign Office was instrumental in a series of (largely successful) efforts in Hong Kong to cover up the involvement of some Malaysian politicians in the Carrian affair, to the point of suppressing important evidence - the victim's own letters - relating to the murder of a Bank Bumiputra auditor sent from Kuala Lumpur to investigate the goings-on in Hong Kong.

The British press, so quick to throw allegations against Malaysians, easily allowed itself to be gagged in failing to investigate the Carrian cover-ups. So although Britain may now cry "unfair," and its media claims may appear, in Malaysia as elsewhere, to have a ring of truth, the British cannot claim any moral high ground.

Meanwhile, the long and costly courtship of the Malaysians by Margaret Thatcher and the Foreign Office has flopped. Although Mr. Mahathir says that his quarrel is with the media and not the government, official relations are halfway back to where they were a decade ago.

So the episode is damaging to Britain. Whether Kuala Lumpur's actions do Malaysia any good is questionable. Its neighbors, Indonesia, Thailand and Singapore, are averse to high-profile rows with friendly countries. They said as much at the time of the spat with Mr. Keating. Some Indonesian ministers openly refer to Mr. Mahathir's behavior as that of a "mini-Sukarno."

A conciliatory British government is unlikely to get tough suddenly, and few in Malaysia seem to want escalation of the affair. But there are loose cannons on both sides.

Copyright © 2006 The International Herald Tribune