CHARITY and POLITICS: A Potent Cocktail

Josie M. Fernandez

The integrity and accountability of charities and foundations linked to politicians has
always been a concern everywhere.

The Sun’s headline story on April 25 2008 –RM 10 million Gone in three days-
underscores a key concern of the nexus between politically linked charity and
government decisions i.e. abuse of power. Transparency International defines
corruption as abuse of power.

On March 11 , three days after the 12 General Election, Balkis, the Association of
Wives of State Assemblymen and Members of Parliament held an EGM and dissolved
the association. The next day it closed its accounts and transferred the RM 9.9
million to an account under Bakti , the Association of Wives of Federal Ministers. All
this was done with the advice of a sitting judge.

The dissolution of an organization is a serious matter and there are several procedures
under the Societies Act 1966 before the assets of an association could change hands.
The roles of the association’s auditors and the banks’ involved , in what the Bar
Council has described as a case of Criminal Breach of Trust ,require a probe.

Another politician linked foundation was in the news too recently raising questions of
ethics and integrity in relation to its accounts. The Women’s Sports and Fitness
Foundation Malaysia had spent RM 2.1 million for meals,RM 242 million for
volunteers allowances and RM 858 million for travel and transportation according to
its annual report. Its patron is Dato Seri Azalina Othman Said , former Minister of
Sports and current Minister of Tourism. The ACA has cleared her of any wrongdoing.

The chief of a bank, a legislator and a deputy governor have been detained by the
Corruption Eradication Commission in a high profile case recently in Indonesia
according to report on April 18 2008 in the Jakarta Post. Burhanuddin Abdullah, the
outgoing chief of the central bank (Bank Indonesia), Hamka Yamda , legislator and
Anthony Zeidra Abidin ,deputy governor of Jambi are suspects in a case on misuse of
funds in a foundation linked to the bank.They are suspected of using foundation funds
to make illegal payments to parliamentrians.
The Supersemar Foundation , set up by Soeharto, the late former president of
Indonesia , was on 28 March 2008 found guilty of misusing funds meant for
scholarships and to foster children all over Indonesia. Supersemar had given the funds
from the foundation to companies managed by Soeharto and his cronies.

A 1976 Indonesian government regulation stipulated state owned banks had to

contribute 5 percent of their profits to foundations and charities.
Development funds in the Philippines according to corruption watch groups have
Often been diverted for corrupt purposes. Many foundations were established by
wives of politicians in the Philippines for political purposes, particularly after the fall
of Marcos when donor money poured into the country.

Corruption happens as we have seen around Asean and elsewhere when funds are
broken apart and transferred into private possession. The funds for Balkis came too
from the state government’s development funds .

An Indonesian journalist had coined the term kleptocracy to describe this form of
abuse of power. Kleptocracy is made up of a power network of “thieves” that are
protective and supportive of each other. Corruption watchdogs in Australia point out
that often civil servants suppress , cover up and lie about misuse of public funds to
protect their political masters..

Sometimes politicians see themselves as some sort of Robin Hood dipping into the
public till for the welfare of children and their constituents. With the establishment of
numerous foundations by politicians and their wives ,we have in Malaysia a form of
state based philanthropy.
This situation raises questions on financial transparency and accountability which are
vital for the sustainability of organizations.

Accountability is an acknowledgement of the organization ‘s responsibility to

taxpayers, donors , the public and recipients of philanthropic aid. There are various
critical elements of accountability which must be highlighted in annual reports such as
identifying the donors including sate agencies, quantum and purpose of the donation
and how the money has been spent.

Compliance with the rules of accountability are a matter of public concern particularly
when state funds have been diverted to organizations managed by wives of politicians
or where politicians are patrons and advisers.
Charitable institutions linked to politicians can lift a politician’s image and help win
votes. Such institutions create opportunities for abuse of power.

Prime Minister Dato Seri Abdullah Ahmad Badwi announced several significant
reforms to combat corruption in Malaysia at the recently held Asean Integrity
Dialogues 2008 in Kuala Lumpur. But these reforms are not enough to address all the
many dimensions of corruption.

One dimension of abuse of power is the management of politically-linked

philanthropic organizations. Reforms are urgently needed to demand greater
accountability and transparency from entities that have been established by
politicians, their wives and cronies for whatever purposes.

Legislation may be required to prohibit state Chief Ministers and ministers from
channeling development funds to charities and foundations linked to them.

Charity and politics make a potent cocktail for abuse of power.

This article was published in TheSun in May, 2008