The British like to celebrate the strength of their institutions. Not just the Parliament they have exported around the world or their cherished legal system, but their revered companies like Lloyds Insurance and the 300-year-old Barclays Bank.
But in recent weeks there hasn’t been much to celebrate.
The latest financial scandal emanating from the UK involves Barclays, which was found to have manipulated inter-bank lending rates to boost its profits at the expense of hard-working UK families.
Barclays Bank agreed to pay fines totalling £290 million (RM1.43 billion) to UK and US regulators to settle the case, but those fines are just the start of the matter, not the conclusion.
The scandal has now cost Barclays Group CEO Bob Diamond his job and now there is a second round of allegations involving even more British banks. Barclays and UK banks RBS, Lloyds and HSBC are also accused of mis-selling financial products to medium size companies. In the words of the British Chamber of Commerce, many businesses now look at the banks with “disbelief and horror.”
After reckless banking practices triggered the 2008 financial crisis that resulted in huge bailouts for banks in the US and UK, many people had hoped the global banking sector would put its house in order.
This latest crisis exposes that as baseless wishful thinking.
And it also reminds us that no country is immune from financial impropriety, including the British, who are usually so fond of lecturing other nations about how they should and shouldn’t do business.
Right now the British are concentrating on their latest mess but if they looked at Malaysia they would see just how much work is being done here to ensure our financial sector doesn’t make the same mistakes as them. Our banking sector is regulated by BNM under the globally-praised leadership of Governor Tan Sri Dr Zeti Akhtar Aziz.
She is tasked not just with controlling the banking sector but liberalising it during 2012 so that it can grow without opening the door to reckless or unethical practices. It’s a tough balancing act but there is no doubt she is the right person to be steering our banking sector through this new landscape.
Malaysia under the leadership of Datuk Seri Najib Razak has been doing all the right things to guarantee transparency in Government and the corporate sector.
The Government now asks private and government-linked companies to sign an Integrity Pledge or even a contractually-binding Integrity Pact to ensure ethical standards. As the co-founder of Transparency International Michael J Hershman recently wrote on the Huffington Post website: “Unlike empty pledges used in some other countries, Malaysia Integrity Pledge has real implications for both the country and company alike.
“In return for cooperating with an outside team that may include officials from Transparency International, the Auditor General’s office, the Finance Ministry, or other stakeholders to verify their progress, companies receive a competitive advantage, such as being shortlisted during competitive bidding processes.”
Recently The Choice reported on the Prime Minister’s brother Datuk Seri Nazir Razak, who has successfully grown CIMB from a RM12 billion company to almost RM300 billion in just 8 years. He spoke of the need to “strengthen market forces in general and that is about rolling back government in business, both in terms of bureaucracies but also in terms of its direct involvement.”
In other words, the benefits of the advances being made from both the Political Transformation Programme and the Economic Transformation Programme.
He was also brutally honest about the need to keep up the fight against corruption. The MACC was once plagued by long delays that meant many cases fizzled out before they were heard. Now the Government has ensured all cases must be resolved within 12 months.
The old adage “justice delayed is justice denied” has no place in the war on corruption.
The Government has also introduced an electronic data-based for government procurement processes that allows transparency in an area where once deals could be done in secret.
And the Malaysian Anti-Corruption Academy is also addressing the business culture of this nation that in the past made corruption seem almost acceptable. How do you change the mindset of the business leaders of tomorrow? Go to schools and talk to them about corruption today.
The message we should take from Britain’s latest scandal is that no country can remain immune from the damage done by those who flout ethical standards in the name of greed.
Maintaining business ethics and stamping out corruption is a process not an event. And it is one Malaysia is meeting head on.