Visiting the headquarters of Majlis Amanah Rakyat (Mara), the country’s largest statutory body, in the heart of Kuala Lumpur helps explain why the much-ballyhooed institutional reforms promoted by the Pakatan Harapan (PH) government have to remain a key performance indicator (KPI) for the coalition.
Bangunan Mara, as the headquarters is formally called, is a wide complex housing, among others, a 23-storey tower comprising various departments that ensure Mara’s 22,000 staff make good the statutory body’s goal since its inception in 1966: to help the Bumiputera community, which make up some 68% of the country’s demography, gain economic parity. Malays make up the majority of Bumiputera.
Today, Mara is involved in a wide array of businesses ranging from education, property and hospitality to fund management and retail. It also has properties and investments in countries such as Australia.
The companies that Mara uses to achieve its mission include commercial companies Mara Inc Sdn Bhd, Mara Corp Sdn Bhd, Pelaburan Mara Bhd, and education centres Universiti Teknologi Mara and Maktab Rendah Sains Mara.
In Budget 2019, the government allocated RM3.75 bil to the statutory body. Managing such a mammoth organisation and funds, however, requires tight oversight. Despite focusing on education and entrepreneurship, Mara has evolved into a complex institution with a vast web of companies and institutions under its purview (see chart on page 9). Naturally, such a set-up has led Mara to be infamous for political patronage and scandals.
But seeking to steer the entity back to its original purpose is new Mara chairman Dr Hasnita Hashim, who took over the reins in October last year. “We want to do the right thing,” she tells FocusM. “Mara is not bad in terms of its policies and procedures. These are sound but the problem is when the organisation becomes too widespread. There are so many subsidiaries, sections, centres and so on that Mara is like an octopus with 280 tentacles. So how do you actually control it? The internal controls must be there. You need to have the right framework and a strategy at the top which can cascade to the bottom.”
Her other plans include setting up new committees to ensure proper oversight of money flows in and out of the organisation, pushing for a more independent council, and ensuring that Mara is utilised as a vehicle to provide underserved Bumiputera upward social mobility. (See Q&A on page 10.)
A huge responsibility
The learning curve has been “steep,” says Hasnita. She is among the crop of well-credentialed men and women appointed by Prime Minister Tun Dr Mahathir Mohamad’s PH government to oversee and reform various state-owned entities.
In Mara, the highest decision-making body is the council or majlis comprising 11 people. Eight, including the chairman, serve as an independent members while the remaining three are representatives from the Finance Ministry and Rural & Development Ministry as well as a civil servant who serves as director-general. The independent members play the role similar to that of the board of a company and these seven corporates serve as an extension of Hasnita’s role as chairman.
“It’s a huge responsibility and we want to help make a change for the better,” she says. The last three-and-a-half months have certainly been gruelling, she adds, as “we’ve all been working extremely hard”. Support from all the council members has been unwavering as well, she notes. “Because, before we can transform something, you have to first understand what it is that you are trying to transform and what the organisation is all about. It is a complex set-up that we’ve had to spend a lot of time on.”
On paper, Hasnita’s appointment marks a radical shift from the leadership norms set by the country’s former ruling coalition Barisan Nasional (BN). She is the first non-politician and the first woman to head Mara. She also has an academic pedigree with a PhD in nuclear physics from Oxford and a sterling career spanning two decades in financial management.
At one time, Hasnita was CEO of Guidance Investments Sdn Bhd, the investment arm of Guidance Financial Group, which had assets under management of US$1 bil (RM4.09 bil). She is currently the chair of Maybank Asset Management Group Bhd (Maybank AM) and a board member of Malayan Banking Bhd, the country’s largest banking group.
“We are all quite strong-minded people. We are not rubber-stampers,” assures Hasnita on the independence of her team. “On a personal basis, and I think I can speak on behalf of all the independent council members, we are very independent in terms of our thinking and where we want to go. Certainly, this independence is within the framework of the Mara mandate but we are independent and we want to do the right thing.”
Hasnita hopes to inject some “corporate culture” into the statutory body, “which I think is healthy,” she says. “So the government has done the right thing in terms of bringing professionals into government-linked companies (GLCs) and statutory bodies, among others. But there is still some work to be done in terms of refining the laws, the regulations and the Act to give us the freedom to act independently within the polices the government has come up with.”
Some political observers remain sceptical. “On one hand it’s good because the corporates have no political affiliations. This is something we’ve been calling for where people appointed to the board should not in any way be linked to politicians,” Prof Dr Edmund Terence Gomez, a political economy specialist from Universiti Malaya, tells FocusM.
“Having said that, one must understand the nature of Mara. It is a statutory body which was created primarily to help uplift the plight of poor Bumiputera and it has since grown to become extremely diversified.” The question is, according to Gomez, when these professionals were appointed, “do they have the know-how to deal with a statutory body involved in such diverse activities? Because at the end of the day this is a statutory body, it’s not a business.”
The key Acts governing Mara are the Majlis Amanah Rakyat Act 1966, the Law of Malaysia Act 240 (2006) and the Statutory Body Act 1980. One clear difference on how Mara operates as a statutory body as compared to a private limited or listed company, due to these laws, is with regards to financial reporting where it submits its financial statement to the Auditor-General to be audited within six months at the end of the financial year.
The problem with such a framework became obvious when another statutory body, pilgrims’ fund Lembaga Tabung Haji was allegedly found to have been engaged in financial statement fraud and political financing. “Why PH stated in its manifesto that politicians should not be directors of GLCs is because it is firstly a source of patronage and secondly, a source of financing for politicians at the branch and divisional levels,” says Gomez. “So in the old days, you’d give them appointments as directors and those directors would be privy to money and much of this money, from what we understood, will go back to be used to finance political activities.”
Gomez thought that when PH formed the government, the Mahathir administration would have first revisited Mara, reviewed its structure and looked at it “in terms of what they want do with Mara. Should they even break up Mara in its separate divisions so that they can be properly managed, such as one division on education, another on business? That will make it more manageable,” he says.
“Therein lies my problem with PH,” says Gomez. “They should have relooked at these GLCs and statutory bodies and other institutions, especially those under Mara. It has got a huge number of GLCs under it and they should have reviewed these structures and done a proper assessment on how they are being run and then bring about the managerial changes.”
Checks and balances
According to Hasnita, one of the “first things” she did was to set up different committees for each of the council members to lead. Some of these committees are education, audit, entrepreneurial and investments. There are two new additional committees, risk and nomination, that have been set up under her watch.
“We didn’t have the risk committee, which to me is one of the key committees and key areas we need to look at. For example, what is your risk appetite and framework? The other one is the nomination committee that ensures we pick the right candidates to be on the boards and senior management.”
The council has been working hard, she notes. “Normally if this were a board, you met once a month. But some of them are here on a weekly basis, some of them are here on a daily basis. So I’m been grateful that the team has been so helpful in terms of doing the due diligence and coming up with plans and strategies.” Hasnita expects the gruelling pace to continue in the coming months.
Another exercise the council members have undertaken is to review the Mara Act to propose “refinements” to it so that there is more wiggle room for the independent council members. “We are definitely studying the Mara Act. While the Act is sound in terms of its vision and objective, there can be certain refinements in terms of execution and implementation,” says Hasnita.
A political animal
While these might put certain checks and balances in the system, it has to be remembered that Mara is very much a “political enterprise”, observes Prof Dr James Chin, director of the Asia Institute, University of Tasmania. How political and influential such an institution like Mara is can be seen in the way the Mahathir administration streamlined control of certain government agencies after the May 9 general election.
Economic Affairs Minister Datuk Seri Azmin Ali announced that Mara will be under the purview of his ministry. “Mara will be under the Ministry of Economic Affairs and there will not be any further questions that Mara will be broken down or mixed into several ministries,” Azmin told reporters at parliament lobby on Aug 15, 2018.
But the shift has not transpired and Mara remains under the purview of Rural Development Minister Datuk Seri Rina Harun who also caused a public outcry recently when she appointed three men from her Parti Pribumi Bersatu (Bersatu) to head entities under her ministry, two of which are under Mara’s purview.
The two Mara-related appointments are Bersatu supreme council members Sukiman Sarmani and Akhramsyah Muammar Ubaidah Sanusi who have been appointed to chair Universiti Teknikal Mara and Mara Corporation Sdn Bhd, respectively. Rina’s defence was that these appointees were experienced and they have been greenlighted by Mahathir.
PH is having problems with Mara, says Chin. “They cannot really reform Mara because it is seen as one of the institutional pillars of ‘special rights’ hence it’s very political,” he adds.
Mara’s financial losses are well known, notes Chin, but “if you reform Mara, Umno-PAS will say you are taking away Malay rights.” According to him, the best approach is not to make sweeping changes, but “reform small parts” of the institution first by hiving off loss-making enterprises and subsidiaries irrelevant to some of Mara’s affirmative action programmes.
But because the system has not had a “proper revamp”, Hasnita and her team would have a Herculean task in turning around Mara, argues Gomez. “When you have politicians appointed by ministers sitting as board of directors of these companies, I’d argue that it can be quite difficult for these independent directors to act because they are answerable to the same minister,” he says. “If they are answerable to the minister then the minister can remove them as directors. This would make it really difficult for these independent directors to do their work.”
The problem becomes manifold for these independent directors, adds Gomez, “where the ministry is directing them in terms of what to do but there are also politicians sitting on these GLCs and watching what these independent directors are doing and probably insisting that certain things go the way of these politicians.”
Mara is a quasi-government body responsible to a minister, says Tan Sri Mohd Sheriff Mohd Kassim, a founding member of civil society group G25. “Although the board of directors are political appointees, they are ultimately answerable to taxpayers as Mara gets financial grants annually from the federal government.” His proposal is that when parliament forms its select committees (PSCs), “one of the committees should be assigned to oversee Mara.” This would allow the PSC to call the chairman of the board and the CEO to answer questions from the committee members, Sheriff opines. “This will make Mara transparent and accountable to the public.”
Also, Sheriff moots that while the power to appoint the Mara directors lies with the minister, the nominees should be evaluated at the board level to determine if they are “fit and proper” people. These criteria are derived from the GLC Transformation Programme, says Sheriff.
“Although Mara itself is not a GLC as it is not a company incorporated under the Companies Act and instead is a statutory body established under its own act of parliament, the need for transparency and accountability is still there. Parliament should not allow statutory bodies to hide themselves under ministerial powers. They should be made accountable to the relevant select parliamentary committee. That should include Mara,” he says.
Gomez, too, is calling for all appointments of directors on GLCs and state-owned enterprises to be made privy to parliamentary oversight, but Chin dismisses the idea. “It really does not matter as the oversight will always have to compete with political considerations,” he says and instead prefers to frame such reform discussions within the overarching theme of the country’s affirmative action policies, in particular the New Economic Policy (NEP).
“The question is whether the NEP will be reformed for the betterment of the whole country? Once you’ve answered this big question, then you can deal with Mara,” he says.
In the meantime, Hasnita is confident that she and her team will do good on the mandate to bring Mara back to its original mission of providing assistance to disenfranchised Bumiputera. “What Malaysians can take comfort in is that the people chosen, at least for Mara, want to do the right thing. There is absolutely no conflict of interest or self-interest here,” she stresses in a sobering tone.
“We have a lot of work to do in terms of how we are going to achieve these goals. It’s all very nice to say that this is what we want to do. But the question remains, how are we going to do this? I just hope that we can be effective to effect these changes.” FocusM