Regulatory Capture and the sin of Corruption.

I am surprised when people cannot believe what is happening to Tabung Haji. God fearing people don’t do this they insist.  By ‘this’, they mean suspicious transactions between TH and the deservedly much maligned 1MDB.

Let’s face it. 1MDB is a bloody crook. Pious and god fearing people don’t do business with a crook.  The general feeling is, it’s unconscionable for TH to touch 1MDB.

You can come up with the gobbledygook jargon such as that given by TH’s deputy CEO about the investments made by TH being in line with the appetite of TH haji’s willingness to take on risks; TH can say all that and can even show that the transaction fulfilled all the shariah compliance criteria and done with all the legal propriety- but still you can’t get rid of the unconscionability part of the whole transaction. You just don’t touch something that can classified as unclean. Not by Tabung Haji anyway.

The world is full of saints and sinners. Robbery and rape all have been done by invoking god’s name and done in God’s name. Bribery and embezzlement are mere sins. The money, if it can talk, will say it doesn’t know it’s in the hands of the saint or sinner.

The horny ustazs too. The pecker or the todger as it’s called in the UK, doesn’t know to whose body it’s attached to- again on a saint or sinner. When it sees the target its gets aroused.

So religiosity is an overrated virtue. Saint and sinner are two sides of the same coin. Visible piousness does not guarantee the hands are kept away from the till.

Can we find one general theory as to why people in businesses owned, controlled and supported by politics and politicians embezzle money? It has also spread to the private sector. Those in executive positions, when doing business transactions, will write in rules and regulations, so that their interests are protected.

Let us take one thing as a given. Men and women in position if confronted and presented with an opportunity to make money, to earn commission, baksheesh will use their positions to exploit the opportunity to make money. Money and women attract the pious and the unvirtuous.

The money is given at the completion of the transaction. It can be immediately given or assured sometime in the future.

Once accepted as given, I can be spared from delving into the psychological constitution of the perpetrators. There are others qualified to do that.  Plus, because I am too lazy to read the literature.Not sure I can understand too.

Example: those who drafted the so called JV agreement between not so clever 1MDB led at that time by one shahrol helmi with Petro Saudi Limited got placements to work with PSI later. They got a lot of money too. 

Patrick Mahoney got USD85 million and percentage of management fee or something. Tarek Obaid got paid USD85 million in commission. Many others got paid by the philanthropist Jho Low- philanthropy is cool bradah man.

We must investigate whether Shahrol Helmi received any kickbacks or not for recklessly agreeing to transfer USD700 million into an account belonging to Jho Low- the chinaman who is a close buddy to the first couple of Malaysia.

In simpler words, thieves look out for their interests and the interests of fellow thieves.

Economists, especially those specialising in public choice theory, have a special name for this conduct. It’s called regulatory capture. The businesses carrying out these acts are called regulatory agencies. They act as agent which procures the interests of the thieves.

Because of regulatory capture, seemingly men and women with good intentions steal money when presented with opportunities to do so and whey they have position.

So, there is no mystery behind all those sordid stories. Real god fearing people ought not to despair when they realised all those men with good intentions managing Tabung Haji can and actually take money because of regulatory capture. 

By way of imputing regulations and setting the rules of the game, they contrived the means to gain benefits immediately or which are promised later.

It’s not enough to put men and women of good character in positions of power where they can and will do regulatory capture. Honesty and integrity must be institutionalised.

If I have my way, I will do the reverse of OSA. I will put in place a law that says that if anyone knows of some misconduct and dishonesty in some business transaction they must come forward and tell the authorities. Otherwise if discovered later that they knew but kept quiet, it is a strong assumption they are complicit in the wrongdoing. If found guilty, they get sent to jail.

Get ready to hear of horror stories from Tabung Haji. Since its Tabung Haji, the citadel of the pious and the god fearing persons, I would like to leave with reminders from the Holy Quran:

Quran 2:42- and cover not truth with falsehood nor conceal the Truth when ye know (what it is).

And at the end of Quran 5:2- help ye one another in righteousness and piety, but help ye not one another in sin and malice…..