KUALA LUMPUR, Jan 8: The Center to Combat Corruption and Cronyism (C4 Center) says it is deeply alarmed by the revelations from the Malaysian Anti-Corruption Commission (MACC) that investigations have been opened into alleged procurement misconduct by Royal Malaysian Armed Forces.
It issued the following statement on Thursday, Jan 8, 2025, published here in its entirety:
The MACC has published several public statements stating that it had opened investigations under Section 17(a) of the MACC Act 2009, and in the course of their investigations have, to date:
- Extended investigations to the Ministry of Defence, focusing on projects implemented through open tender and procurements under the Army Responsibility Centre;
- Conducted a search of an army senior officer’s official residence, resulting in the seizure of several high-value luxury items;
- Conducted searches at several companies believed to be involved for relevant documents and evidence;
- Seized 6 bank accounts owned by an army senior officer and members of his family;
- Remanded 17 company directors suspected of being involved in a cartel network, allegedly paying bribes to senior officers of the army in return for procurement contracts;
- Foiled an attempt to move RM2.4 million in cash that belonged to one of the suspects between two residences;
- Remanded former Chief of Army General Hafizuddeain Jantan and his two wives – he was previously placed on leave in order to facilitate investigations.
Defence procurement has long been the subject of controversy in Malaysia, with many high-value procurement scandals being defence-related, such as the procurement of the Scorpene submarines and the littoral combat ships (LCS) that resulted in the loss or wastage of billions in ringgit. This is due to the unique position of defence procurement being a highly specific area, with a relatively limited number of industry stakeholders, and that requires specialised knowledge for industry participation. The small size of the industry, relative to its contract values and revenue, also creates additional opportunities for the formation of crony networks and cartels.
Furthermore, the use of catch-all “national security” exemptions allow for the non-disclosure of defence procurement-related information by government bodies, and to resist any attempts at reform that would make the defence procurement process more transparent. These factors make public and general oversight into defence procurement more difficult, seeing as access to data is near impossible and requires pre-existing specialised knowledge to interpret. This clearly demonstrates that defence procurement is especially vulnerable to corruption.
The Malaysian government tabled the Government Procurement Act (GPA) in August 2025 and was subsequently passed in both houses of Parliament hastily, and is currently awaiting gazettement by the Minister of Finance. While it was ostensibly enacted in order to address and remedy the long-running weaknesses of Malaysia’s procurement system, the Act was heavily criticised by C4 Center and other civil society organisations when it was first tabled. This was due to its numerous provisions that allow for the exercise of wide discretionary and unreviewable powers to the Minister of Finance, and that crucially lack sections that lay out basic principles such as types of procurements undertaken and standards of information disclosure by procuring entities.
Relevant here is that the GPA also lacks provisions that regulate defence procurement. The questions emerge as to how defence procurement will be regulated – the GPA in its current form would have been largely ineffective in preventing the scandal at hand and would likely not prevent similar instances from taking place in the future. While it may be argued that the decisive action being taken by the MACC currently should not be dismissed – empowered by the provisions under the MACC Act – it needs to be stressed that legal provisions that criminalise corrupt acts are not sufficient as preventative measures and are not a substitute to good governance in defence procurement. Transparency, good governance, and regulation were supposedly the ambit of the GPA – it has unfortunately fallen short of that expectation.
C4 Center has long advocated for the enactment of minimum transparency and accountability standards over defence procurement specifically. It must be stressed that this is not an impossible task as many jurisdictions globally have supplementary measures to ensure that defence spending by governments is not completely opaque, while still taking into account the sensitive nature of national security. Possible measures include the introduction of a Parliamentary Special Select Committee on Defence Procurement that would be empowered to oversee and vote on defence expenditure, or a specialised Defence Procurement Tribunal that is empowered to assess the validity of contracts, ensuring that procurement procedures were adhered to.
The current scandal unfolding before Malaysians is more proof that defence procurement and the procurement system at large is systemically flawed and sorely in need of greater reform – it cannot be boiled down simply to just the acts of a few criminal individuals or treated as isolated cases. Hence, C4 Center strongly urges:
- The MACC to continue conducting its investigations transparently and impartially, with the results of findings made widely available through published reports and statements to the media;
- The Madani government to take seriously the numerous criticisms of the GPA that have been offered by civil society organisations, and work towards amending or supplementing the GPA with strong procurement regulations;
- The Madani government to introduce further institutional reforms such as the Political Funding Act, reform of the MACC especially with regards to the appointment of the Chief Commissioner, and the separation of the offices of the Attorney-General and Public Prosecutor.