Say No To Hudud

Monday, January 17, 2011

Will the silence on the PwC fraud allegations affect ongoing FTA negotiations for Malaysia?

Malaysia is now a part of the negotiations for the Trans-Pacific Partnership (TPP), involving eight other countries. Australia, Brunei, Chile, New Zealand, Peru, Singapore, the United States and Vietnam are the other parties in the negotiations. Malaysia is also negotiating with the EU on an Malaysia-EU FTA, as well as working on the stalled FTA talks with the United States.

When Peru was negotiating an FTA with the United States, one of the areas where there was a call for improvement was in Corporate Governance.

"One of the issues being discussed with great care and hard on companies in recent months is related to the “corporate governance”, a tool that not only should be on the business agenda, but also in public administration." - Urge to Develop Good Corporate Governance Practices

It has to be remembered that any FTA with the United States has to be approved by the United States Congress. The Malaysian Parliament itself has no role in the approval of an FTA.

In the Thailand- New Zealand Free Trade Agreement, the Preamble to the FTA carried this point:

Recognising the significance of good corporate governance and the need for a predictable, transparent and consistent business environment to enable businesses to conduct transactions freely, and use resources efficiently and take investment and planning decisions with certainty; 

It has been shown that both PricewaterhouseCoopers in Malaysia as well as the Audit Oversight Board under the Securities Commission will have some very serious questions to answer if the PCAOB of the United States ever decides to do an inspection of PricewaterhouseCoopers in Malaysia.

Can Malaysia be in the best position possible at the various negotiations if on top of the existing issues that are being hammered out, the country is also questioned on its standard of Corporate Governance?

How much damage must Chin Kwai Fatt and Johan Raslan cause before they are asked to break their silence?
PricewaterhouseCoopers in Malaysia is the auditor for more than a hundred Public Listed companies. Now, while they are allowed to remain silent by the regulators so far, we have to ask if the same privilege can be given them when our economy becomes more globalised in nature, which will be the case when we sign more and more FTA's.

Fraud allegations of this nature must be answered. Action must be taken regardless of whether we are planning on signing FTA's with countries that have better standards of Corporate Governance than us or not. We must recognise the fact that we cannot hope to be a real player in the global field, if we continue to believe that the world at large will be as accepting of lax standards as we are.

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