This article first appeared in The Edge Malaysia Weekly on June 26, 2023 - July 2, 2023

DURING a visit to Malaysia this month to advise the Institute for Democracy and Economic Affairs (IDEAS) on the role of public funding in regulating political activity, Associate Professor of Comparative Politics at Nottingham University Fernando Casal Bertoa spoke to Rash Behari Bhattacharjee about the critical need for a law to control how money is used in the political arena. Here are excerpts from the interview:

The Edge: Many people have observed that the political reforms the country needs are going to take years and even decades because we had such a strong major party in power for 60 years. So, that means the institutional setups that have been in place for so long are not going to be easy to change, right?

Casal Bertoa: Yes, that’s true, but already in 2008, you had the 12th general election when the then ruling government lost in several states and then, in the 2018 general election, there was a change of power at the national level. I think the environment is set for reform, including institutional reform. You are trying to improve the political system, right? At the end of the day, you are becoming more democratic now, and are developing a multiparty system. Therefore, I think this is the right moment to make the necessary changes.

Now you have the so-called unity government made up of 15 parties. This is the moment to do things because the mood is quite consensual. Of course, politicians should be in the position to pass the law in parliament, especially for these kinds of legislative reforms that you expect will last for many years to come.

With so many different parties in government — Umno, the People’s Justice Party (PKR), DAP, the regionalist parties of Sarawak and Sabah and so on — this is the moment, isn’t it? Because, if you have another election, the ruling coalition may become completely different — you may have Umno, PAS and others getting together, having different priorities. So, this is the moment to get a really strong consensus for reform.

The task that you have set yourself as adviser to the IDEAS project on political financing is to look at the proposed Act, is that right?

The task I have set myself is basically to look at ways to improve the way political finance is regulated in the country. I wouldn’t even say to improve, I would say to regulate because here, it is almost non-regulated.

Basically, on the regulation of electoral spending, it’s very narrowly covered in the Election Offences Act. Then, also you have the Societies Act, which requires some form of annual reporting by political parties.

So there are loopholes …?

There are no loopholes ... there is a huge big hole because there is almost no regulation. Malaysia may be one of the least regulated countries in the world in terms of political finance.

It’s the truth. One of my proposals, in order to solve the problems that you have, is to introduce public funding of political parties.

What basic ingredients would you want to see in this law?

First of all, I think it is very important that there is public funding for political parties. There should be a certain percentage of the budget that is dedicated to fund political parties, because political parties are voluntary private associations, but they have a very important public function. Therefore, it is important that they are financed by the state, especially because public finance has been seen to be beneficial for the institutionalisation of the party system, for the survival of new and old political parties and for combating corruption. As you can imagine, if public money is given to political parties, it is easier to make them accountable and be more transparent.

It’s easier to control and more transparent than when you have private resources: to decrease polarisation; make parties more responsive; help the promotion and participation of women and youth in politics — so, public finance has a lot of positive effects.

If you compare its situation with other countries in the region, Malaysia may not be that bad, but in terms of corruption, it is 61st in the Transparency International index. So it’s not performing so well and it has gone down in the ranking ... What do I have to tell you about the corruption scandals of politicians?

In parliament, you have less than 14% women representatives. This is, for the times that we are living, pretty low. Public finance can help to increase the number of women in parliament.

Now that you are really trying to become a full-fledged democracy, it’s something that you have to face. So, I think probably public finance is very, very, very important. It’s one of the legs of the political finance table.

There’s a saying: If you’re holding the aces, you won’t call for a change of cards. So what is encouraging the current unity government to change the rules now when it has the upper hand?

First of all, I have heard of the current prime minister’s anti-corruption agenda and institutional reforms. For example, the ratio of party finance to public finance is very important because public finance helps you to reduce corruption … in terms of institutional reforms, one of the less disputed legs of the table of political finance is oversight. It is very important that political parties are controlled by an independent, well-resourced authority. This oversight authority also needs to be reformed. If you put this oversight function in the Electoral Commission, it won’t be effective. The current Electoral Commission doesn’t have the capacity or the independence to undertake this responsibility.

So, institutional reform and electoral reform go hand in hand. This fits the agenda of the government. At least, it’s in line with the message coming from the prime minister: anti-corruption, institutional reform, democratisation, liberalisation.

What are the incentives? Well, I think that political parties will be happy to have public finance; where they will not be happy is to be controlled. But this is like the carrot and stick. It’s like your horse and carriage; one cannot come without the other. So, the important thing is that we now have a different context.

In the old times, you had Umno as a dominant party, right? In fact, most probably Umno’s dominant position was not broken earlier because the country didn’t have proper regulation of political finance. They could take advantage of this low level of regulation to do whatever they wished. Public finance helps to create a level playing field.

You didn’t have public political financing, so Umno had a competitive advantage. So, the current government, though it has come to power under their unfair system, the situation is very unstable. You have had, what, four governments in the last four years? Therefore, we have to prepare the ground for making the political system more stable.

So, now it’s an opportunity. If not, this may continue to be a mess for some time. There is this incentive to prepare the country for the future, in a situation where, as it should be, things are uncertain. This is the beauty of elections, isn’t it? You don’t know who’s going to win.

Could you summarise the five most important things we need to do to regulate political financing?

First of all, it will be easier to control the sources of income of political parties. This is important because public finances are transparent — it is money that comes from the budget and is controlled.

Secondly, it’s not all about public finance; it is also important to limit donations. So, the special influence of big companies and big donors may be limited. Since I have been here, I have been hearing about this news — if you have RM5 million or whatever the amount, you can get elected to parliament.

This is something [that is] wrong. You should be elected because of your ideas, because of what you represent, not because of how much money you have.

So, by controlling the source of finance, you are able to also reduce corruption.

Moreover, regulation also covers financing in terms of expenditure. Everything has to be covered under a holistic approach; it is not only about controlling coalitions, it’s about controlling expenditure as well.

We know about vote buying, right? And we know about patronage — how politicians managed to form the government in many cases by offering influential positions.

This new regulation will help to reduce this kind of unethical, immoral and illegal actions, and set the stage for properly regulated practices.

So, I think it is very important. It has a lot of positive effects.

The question is that, of course, there will be a backlash and [more] importantly, resistance from political parties, because old habits die hard.

There is a danger, which is that you give more to political parties, but political parties still continue with the old practices, and then this will be even worse.

That is why it is important that there is proper oversight and an authority that looks into this. Some politicians are talking about the Electoral Commission. In the draft that IDEAS proposed, it was a special finance committee. I think that the anti-corruption agency (Malaysian Anti-Corruption Commission) would be best placed to look into this, as long as it is properly reformed in the sense that it becomes independent and is adequately resourced.

So, how many legs are there to the political finance table?

There are basically four legs, which is public finance, private finance, limitation of donations and a ban on certain funding sources.

For example, you were talking about corruption; foreign donations are a source of corruption. So, if you ban them, then you avoid this type of corruption. Also, no anonymous donations. Sometimes, you have one family donating through relatives. But you can avoid these family interests as well because you are limiting the possibility that they can have an influence on the political system and the results of the election.

This requires oversight, control, transparency and effective sanctions. You need clear, effective, proportional, dissuasive sanctions — including a sanction authority framework that really works. If you have a lot of corrupt activities, but nobody goes to jail, you need to implement this kind of legislative reforms. You need what I call the brain, heart, that is, political will and muscles, that is, an authority that is really able to implement the rules.

Can you share some examples of countries that had a serious corruption problem and that successfully reformed their political culture?

Of course. I would say the most clear example is Latvia. Before 2000, Latvia was basically dominated by three oligarchs and there were high levels of corruption and illegal funding.

In the early 2000s , with a lot of pressure from civil society, they decided that this was unbearable, that this would not continue, and they changed.

They changed their governance by introducing very tough anti-corruption measures. Of course, at the very beginning, it was simple, but it improved with time.

We need to improve step by step. They created an anti-corruption bureau that was dedicated to this issue. They introduced public finance in politics in 2008.

Latvia is now one of the least corrupt countries in the world. We are talking about a new democracy that had been a communist country.

Now, they have one of the best oversight authorities in the world, including a system of whistleblowing. 

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.