Zahid Hamidi’s court case a breakthrough for uncovering misuse of charitable foundations – C4 Center

Center to Combat Corruption and Cronyism (C4 Center) says the recent High Court decision ordering former Deputy Prime Minister Ahmad Zahid Hamidi to enter his defence on 47 corruption charges as key to uncovering the abuse of charitable foundations by politically-linked individuals. Photo of Kuala Lumpur Courts Complex courtesy of CEphoto, Uwe Aranas/Wikimedia Commons

KUALA LUMPUR, Jan 27 – The Center to Combat Corruption and Cronyism (C4 Center) has described the High Court’s decision on Monday, ordering former Deputy Prime Minister and current UMNO President, Ahmad Zahid Hamidi, to enter his defence on 47 counts of criminal breach of trust, bribery, and money laundering involving Yayasan Akalbudi’s funds as a breakthrough.

In a statement issued Tuesday, C4 Center said it viewed the decision as a major development in uncovering the abuse of charitable foundations by politically-linked individuals.

Over the past few years, several foundations have been at the centre of major corruption scandals involving high-ranking political figures including a former Prime Minister, a former Chief Minister of Sabah, and a former Minister of the Federal Territories, it said, adding that foundations were particularly vulnerable to abuse by politicians.

Firstly, foundations can be used to covertly raise funds during the election campaign and non-campaign periods as they are far from the view of the electorate and oversight institutions such as the Electoral Commission.

There are also no laws to ensure donations to politically-linked foundations are publicly disclosed while foundations are also not legally obliged to publicly declare their donations to political parties or politicians.

C4 Center also hoped that in the course of Zahid Hamidi’s case, answers will be found for several lingering questions surrounding Yayasan Akalbudi such as:

1. How did Yayasan Akalbudi, a private company registered under the Companies Commission of Malaysia (CCM), face no consequences for failing to file an AGM report or audit with CCM since its establishment?

2. How were Yayasan Akalbudi’s funds able to be channelled for Zahid Hamidi’s personal use, despite it being a foundation set up to receive and administer funds for the eradication of poverty?

3. What was the purpose of the RM9.3 million transfer from Yayasan Akalbudi to Yayasan Al-Falah (which is helmed by Zahid’s brother) three weeks after the UMNO-led Barisan Nasional lost power in the 2018 general election?

C4 Center said its report, “Foundations and Donations: Political Financing, Corruption, and the Pursuit of Power” published last year highlighted the severe vulnerabilities of charitable foundations to abuse by politicians.

Reiterating its call for a reform in political financing in Malaysia, it said the reform will be all the more urgent with the possibility of a general election soon where large flows of funds are expected to drive campaigns. 

It said the Parliament must immediately table a political funding law before GE15, adding that a draft of this law has existed since the Pakatan Harapan administration but has not been made public.

Asset declaration laws must also be drafted as soon as possible to prevent the flow of secret and illicit wealth, especially within charitable foundations.

Among others, C4 Center also called for the introduction of proper regulations on political donations, including a list of permissible and non-permissible donors, disclosure by parties and election candidates on the identities of donors who donate above a minimum amount.

Furthermore, donations made to political parties must go directly into the party’s account while maximum donation limits must be introduced while a registry of charitable foundations must be published online and made available to be scrutinised by the public.

It also underlined that politicians must declare their connections to charitable foundations, both in their personal capacity and through family members.