MGG Pillai Commentary View

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Would TNB force Pak Lah to eat crow in 2007 and 2009?

TENAGA NASIONAL BERHAD (TNB) continues to be an example of a privatised utility taken control of by cronies of the Establishment, in this instance, the most powerful 30-year-old in Malaysia who doubles up as the Prime Minister's son-in-law, Mr Khairy Jamaludin. The professional management of TNB is not allowed to run the electricity utility as it is capable of; instead, it is at the mercy of the cronies of this 30-year-old, who line their pockets and destroy what was once Malaysia's best run utility. It was privatised on the flawed principle that the government should not concern itself with making money. But it is here to be robbed and pillaged by its present management because the government did a good job of running it well for all its life.

So, why did the government privatise TNB? The flawed thesis that money-making is best left to private enterprise, first articulated in US business schools, attracted governments all over the world, not that it is but that it provided a new form of corruption. The harsh realities of this theory is now laid bare, not only in Malaysia but wherever privatisation has taken root in the past 25 years.

The governments did not let go when the utilities were transfered to private hands, usually to cronies and friends of the Establishment; it armed itself with laws and regulations that allowed it to interfere at will and took it out of parliamentary review – in Malaysia, on the spurious assumption that off-budget agencies are beyond the questioning of elected representatives; as the construction of the administrative capital, Putrajaya, that the real cost of it is kept hidden – and out of control by financial sleight-of-hand, corporate brigandry, and sunk into debt which could not ever be repaid.

Add to this favoured executives with venal minds, so that policies, procedures, usefulness, relevance, administration are junked for the holy grail of greed. It is a worldwide trend. Once those in government realised how privatisation could be converted into ill-gotten gains, elaborate rules were designed, and changed mid-way, so the public and staff are kept ignorant of this highway robbery in their name.

The BN government and the TNB management ignore public and staff concern as TNB turned into a private piggy bank for the exclusive use of its senior management and their political and crony masters. It should not be forgotten TNB funds were liberally used under a former chairman, now a cabinet minister, to humiliate the former deputy prime minister, Dato' Seri Anwar Ibrahim.

When administration is dictated by the venal needs of who runs it, and past practices sidelined because they interfere with this, and any who can takes advantage, it will redound to create problems for the BN government. Especially now, when the middle class feels the pinch. As the BN government should know – and with a clear fright it got when the middle class rose to protest the sacking, arrest and humiliation of its deputy president in 1998 – it could, and would, have unintended and far-reaching consequences.

The frustrated business men who had followed the rules to negotiate for contracts when the rule was who got in first got it, now find the rules have changed mid-stream, are not about to keep quiet. I know of instances where many got in at the bottom, negotiations begun, and then inexplicably kept hanging whilst other arrangements were made to award the contract to others. Why? Because TNB has a new chief executive officer, who wants to make his own arrangements for lining his pocket. Projects are implemented not for its need or use but for how much money can be diverted into private pockets.

A political secretary in the Ministry of Finance is appointed a director in a TNB subsidiary, which is then given a RM1.2 billion negotiated contract in Prai, which MOF approved as it must. The first finance minister is Pak Lah; the second finance minister is Tan Sri Nor Mohamed Yapcob. The subsidiary, TNEC, now has the inside edge in any outsourced contracts. Other engineering companies and consortiums are furious.

But who do they address their complaints to? To the very people who denied it to them in the first place. This man is a protege of Pak Lah's son-in-law. As is the TNB CEO and others there. None has an interest in TNB beyond how it could line their pockets and given them political influence. It is an open secret that those who challenge these practices, in MOF or TNB, will have a short working life in either. But it Pak Lah who must answer: Why did he allow this in the first place? He did not know? That is no excuse. It is corruption pure and simple.

The Bakun hydroelectric project is a disaster by any standard. The political pride of hosting Southeast Asia's largest civil engineering project and the inevitable corruption outweighed the engineering uncertainties made worse when a crony contractor with no experience whatsover in civil engineering was given the contract. The TNB management, who knew the dangers – indeed, its technical experts warned the board not to be involved – joined the consortium in which it did not have any say. The contractor mishandled it, as he was expected to, and gave up but not before suing me for defamation for RM100 million. But he failed badly, barely after I had replied to his writ. Today, a scaled down Bakun Dam is planned, but all it would is to continue to drain TNB's resources, and make its current promoters, and TNB senior management, much money.

TNB goes after untested technology. When China wants to build the Three Gorges and other dams, it calls for the best technology available. When Malaysia wants to show it stands tall amongst the best in the world, it opts for untested Chinese technology. TNB in particular: the Bakun Dam is but one example; another is for an IPP for which TNB was negotiating with a party that first proposed it a few years ago; it has now decided that untested Chinese technology is better employed than one that has been tested time and time again. The minister in charge believes Chinese technology is best for this. So does TNB. Perhaps it is. But is it good for TNB when the rules are changed midstream without rhyme or reason, and make certain to contractors that they must expect their projects to be thrown overboard whenever a new CEO is appointed?

Whether Malaysia and TNB knows it or not, there is change in the air. The economy is in the doldrums. Contractors and business men are caught with their pants down. But officialdom, in government and privatised industries, believe they cry wolf. They believe if they squeeze hard enough, and warn them of the dangers if they fight back, they could do as they please. But the middle class is on the roll. If Pak Lah does not act to halt them – not by getting the police to crack down, but by example of what he means by stopping corruption – not because the rot in TNB could affect all of Malaysia, but that it is inherent in every government and privatised institution, and the consequences of it is cumulative. It could well cause him grief not now but in the UMNO elections in 2007 and the General Elections in 2009. Is that a risk worth taking?

M.G.G. Pillai
pillai@streamyx.com