On May 7, the Malaysian government launched its 2024-2028 National Anti-Corruption Strategy (NACS), a continuation of its 2019 National Anti-Corruption Plan (NACP) that ended in 2023. The new strategy is an omnibus of five primary strategies—Education, Public Accountability, Voice, Enforcement, and Incentives—with 60 sub-strategies aimed at cracking down on corruption across sectors and shoring up public trust in the government. As a novel addition to the strategy, Prime Minister Anwar bin Ibrahim announced that the government would “give money to officers, civil servants or even members of the public who cooperate.” Mr. Anwar hopes that the NACS and whistleblower awards will aid the country in its goal of ranking within the top 25 of Transparency International’s Corruption Perception Index (CPI) by 2034.
A Legacy of Corruption
Days before the launch, Anti-Corruption Commission (MACC) chief commissioner Azam Baki lauded the success of the NACP, which the government says implemented 85 of 111 initiatives. Mr. Azam pointed to the NACP as playing an important role in the country’s ascension in the index from 61st in 2018 to 51st in 2019, its highest rank in two decades. However, this unprecedented win was short-lived, with Malaysia regressing in the subsequent two years, falling to 57th in 2020 and 62nd in 2021. The country enjoyed comparatively marginal improvements, rising to 61st in 2022 and 57 in 2023.
On the 7th, Mr. Azam conveyed the stakes for a renewed strategy against corruption—while also seemingly discounting the success of the NACP—citing the government’s estimation of massive losses totaling around RM277 billion (US$58.4 billion) between 2018 and 2023. This estimate would yield average losses of around US$11.7 billion per year and, using figures from the World Bank, make the average cost of corruption around 3% of annual GDP.
In the NACS document, Prime Minister Anwar states, “[t]he future of this nation rests on us ridding it of corruption.” Like the NACP before it, the new NACS initiative is situated against a scandalous record of corruption in Malaysia. Most notable is the 1Malaysia Development Berhad (1MDB) conspiracy, in which US$4.5 billion were diverted from the 1MDB state fund—intended for promoting new strategies for economic development—to offshore bank accounts and shell companies since the fund’s creation in 2009. In 2015, the Wall Street Journal reported that Malaysian investigators discovered at least US$700 million linked to the 1MDB fund were embezzled by then-Prime Minister Najib Razak (2009-2018). Since then, Malaysian authorities have increased the sum to over US$1 billion.
Described at the time as the largest kleptocracy case the U.S. Department of Justice had investigated, the scandal implicated multiple companies, including Goldman Sachs, which allegedly underwrote bond sales totaling US$6.5 billion for the fund, and high-profile individuals, such as Mr. Najib’s stepson Riza Aziz who allegedly used the fund to supply US$155 million in financing to the film The Wolf of Wall Street. Since the Malaysian High Court upheld convictions of multiple charges, including abuse of power, against Mr. Najib in 2022, the former head of government has been carrying out a 12-year prison sentence.
Increasing Incentives for Anti-Corruption Whistleblowers
Integral to the early exposure of the 1MDB scandal was whistleblower Xavier André Justo. Mr. Justo, an unsuspecting director for the 1MDB shell company PetroSaudi, discovered emails evincing egregious illegal activity shortly after leaving the company. Upon leaking the emails to journalists in 2013, Mr. Justo was arrested in Thailand, which holds close relations with Malaysia, coerced into giving a false confession absolving PetroSaudi, and sentenced to three years of imprisonment.
Given this high-profile case of retaliation and persecution against a whistleblower, Mr. Anwar is advertising increased hospitality for would-be whistleblowers under the new NACS program. Specifically, Sub-strategy 3 of Strategy 5 (‘Incentives’) in the NACS report is to “To offer incentives to whistleblowers who expose any improper misconduct leading to case detection.”
The lead and supporting agencies assigned to oversee the sub-strategy are the government’s Legal Affairs Division and Anti-Corruption Commission, respectively. However, beyond this, and the implementation period is ‘medium,’ the report does not stipulate conditions for whistleblowers’ eligibility for payouts (assuming that ‘incentives’ are financial). It does not offer ballpark figures of how large they would be. It also does not mention any reporting channels for whistleblowers—let alone confidential ones—nor anti-retaliation measures.
With these critical ambiguities and absences, it is not yet apparent from the outline alone that the NACS would yield a sizable uptick in detection from public sector and private sector whistleblowers since even large financial incentives may do little to mollify whistleblower concerns of retaliation. Nonetheless, the effect is still to be determined by how robust the resultant policies will be and how eager the government is to fully enforce them.
The Transnational Reach of U.S. Whistleblower Laws
Amidst uncertainty, whistleblower advocates stress it may be safer for Malaysian whistleblowers to disclose misconduct not to their government but to the United States, which broadly offers uniquely expansive transnational whistleblower protections and incentives.
Whistleblower law expert Stephen M. Kohn of U.S. whistleblower law firm Kohn, Kohn & Colapinto explains that “U.S. whistleblower laws can often apply to corruption cases in Malaysia. For example, in the 1MDB scandal involving Goldman Sachs, Malaysian whistleblowers would have been able to qualify for protections and financial incentives under the FCPA [Foreign Corrupt Practices Act]. The new Anti-Money Laundering Improving Act [effective 2022] also has significant transnational application.”
In the largest money laundering case in history, Kohn represents whistleblower Howard Wilkinson, who exposed Danske Bank for money laundering US$230 billion worth of Russian rubles in Estonia, violating the AML Act. Under the AML Act, the U.S. Department of Justice (DOJ) and Treasury have the jurisdiction to subpoena transnational banks if they hold accounts in the U.S. More broadly, the DOJ and Securities and Exchange Commission (SEC) have jurisdiction over foreign companies if they issue stock for American Depositary Receipts (ADRs). In both cases, U.S. whistleblower protections—including anti-retaliation measures and confidential reporting channels—and financial incentives can extend to foreign nationals, including Malaysians. A list of Malaysian companies that take ADRs can be found here.
However, time will tell if Malaysia’s new NACS fosters “[a]n environment with zero tolerance and no compromise for corruption,” as Prime Minister Anwar hopes. Whistleblower advocates see the program as an admirable step forward. But they argue that until evidence emerges of its success—if it does—Malaysian civil servants and citizens, especially would-be whistleblowers, should remain cautious and seek out all available options in doing their part to tame corruption.
