Wednesday, June 03, 2015

A Plea: Unchain the Auditor-General from the Ministry of Finance

Dato’ Seri Najib Razak must act immediately to salvage and restore the damaged reputation to the Auditor-General’s Department.

Malaysians were perhaps understandably a little stunned, when former Prime Minister Tun Dr Mahathir Mohamad proclaimed that he trusted the Public Accounts Committee (PAC) more than he did the Auditor-General (AG). While he addressed the Foreign Correspondents Club of Malaysia, he said

"I would place my faith in the PAC more than the auditor-general. The auditor-general inspects books. They don’t do forensic auditing, they don’t try to poke and find out where was this money spent, how was this money spent, where did you lose this money."

"They only check on the books so they will not discover much because the people who are keeping the books may be very clever people."

After all, the reputation of the AGs Department has been relatively positive in the light of the many exposes which surfaced in the AG’s Reports. Malaysians could not have found out about the purchase of a set of screwdrivers for RM224, or RM4,000 computer laptops for RM42,000, or RM1,941 binoculars for RM56,350 if not for the fact that these discrepancies were highlighted by the AG.

Hence when the former Prime Minister expressed his lack of confidence in the AG’s office to uncover the chicanery in 1MDB, it has significantly dented the credibility and reputation of the AG’s Department.

Perhaps the lack of confidence arose because the Auditor-General’s Department is not an independent office as it is often perceived to be, but really just a department under the auspices of the Ministry of Finance.

Therefore while the AG has conducted his duties commendably when auditing the various government departments, there is a serious concern over the AG’s independence when auditing 1MDB. This is because the AG has to report to the Minister of Finance, Dato’ Seri Najib Razak, who is also the Prime Minister.

What’s more, it has been established in 1MDB’s case that the Prime Minister himself has provided written approvals for every substantial transaction carried out by 1MDB. This causes a clear conflict of interest for Dato’ Seri Najib Razak whose written approvals are under investigation. On the other hand, the investigation is being carried out by the Auditor-General, who is Minister’s subordinate in the Finance Ministry.

Thus, the only way to redeem the independence, credibility and reputation of the Auditor-General’s office is to unchain the office from the Ministry of Finance. Instead, the AG office should report directly to the Parliament like all other modern and progressive democracies.

In the United Kingdom for example, the National Audit Office (NAO) scrutinises public spending on behalf of Parliament. The Auditor-General himself is an Officer of the House of Commons. Both he and his staff at the NAO are totally independent of government. As clearly emphasized in NAO’s website, “we are not civil servants and do not report to any Minister”.

“We can be effective only if we retain our ability to comment objectively and independently on what government does, and we cannot therefore act as adviser on the specific decisions the government takes,” the website further elaborated.

In the light of the stinging criticism by Tun Dr Mahathir, it is therefore imperative for Dato’ Seri Najib Razak to restore the credibility of the AG office. He can do so by ensuring that that immediate steps are taken to make the Office a completely independent entity which does not report back to, or take instructions from the Finance or Prime Minister. Instead the AG’s Office should act on behalf of the Parliament and this measure will certainly help extinguish the fire fanned by his predecessor.

Tony Pua

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