Financial improprieties: A case for Sosma?

Since the swearing-in of the new Cabinet, Malaysians have been receiving shocks at an alarming frequency regarding financial improprieties at various ministries or departments.

The human resources minister exposed alleged improprieties at the Human Resource Development Fund, the transport minister informed us of the AES scam and the youth and sports minister exposed how contracts were handed out, just to name a few.

The proverbial straw that broke the camel’s back was the revelation by the finance minister of unrefunded sums of RM19.25 billion from our GST collection and RM16.046 billion from our income tax and real property gains tax (RPGT). Not only were the sums not refunded, they were not even placed or secured in the tax refund trust fund (TRTF).

The Customs director-general publicly stated that requests for GST refunds were not properly acted upon by the Treasury. The Inland Revenue Board (LHDN) announced that the sum of RM16.046 billion was not available in the TRTF. Further, these sums have been reportedly recognised as government revenue.

As Lim Guan Eng rightly pointed out, such acts amount to falsification of accounts and misappropriation of money belonging to the tax-paying public. This is much more than mere criminal breach of trust; it is an assault on the integrity of our whole financial system.

Several questions arise as to where the responsibility for such transgressions lies.

While the police investigate the past and present members and senior management of LHDN, the Malaysian public is running out of patience. To compound matters, the likely transgressors continue to thumb their noses at the government and the authorities by issuing contradictory public statements.

It is necessary to send a strong signal to all concerned that the new Malaysian government and the re-energised people of this country are not prepared to allow this state of affairs to continue.

What they have done or allegedly done has far-reaching consequences to stability and security and is prejudicial to the public order of our country.

I would argue that that the alleged acts of the decision-makers at the finance ministry and the LHDN could well fall within the purview of Sosma 2012.

While at first blush it may seem a stretch to see Sosma as including such acts, a strict literal construction of Sosma would clarify such doubts.

One of the overriding objectives behind the promulgation of Sosma was to prevent acts that are prejudicial to public order.

Public order, or as the French call it, “order publique”, has very wide connotations. It goes beyond the ordinary maintenance of law and order.

Common law jurisprudence describes it as “acts that lead to disturbance of the current life of the community”. It is also judicially defined as the “potentiality of an act to disturb the even tempo of the life of the community which makes it prejudicial to public order”.

One should not even try to argue that the phrase “prejudicial to public order” would only be relevant where there is actual public disorder. The various common law jurisdictions have interpreted the phrase to mean anything which has the “potential to disrupt public order”.

The non-refund of more than RM35 billion to taxpayers has caused and threatens to cause great economic hardship to Malaysians in general. It has hindered our economic development, affected our country’s economic efficiencies and diverted the allocation of our resources from areas where such resources are badly needed like healthcare and education.

It has been reported that the refunds are due to more than 1.65 million legal and natural persons. A reasonable extrapolation of the 1.65 million persons could well lead to a figure of more than 7–8 million people actually affected including dependants of natural persons, employees of legal persons and owners of business enterprises.

It therefore stands to reason that the wrongdoers in this case have threatened our security and public order. The fact that Malaysians have not taken to violent street protests as in other countries is not relevant consideration for non-reliance on Sosma.

The conventional perspective of Sosma is that it should apply inter alia to terrorists or organised crime. The way Sosma has been drafted with broad brush strokes, however, may well bring the alleged wrongdoers within the ambit of Sosma.

Organised crime is defined in the Penal Code as where two or more persons commit any serious offence in order to obtain any material benefit or power or influence, whether directly or indirectly. For Sosma to kick in, the offence has to be prejudicial to public order.

Therefore, so long as it can be shown that the suspected wrongdoers acted in concert to obtain material benefit for themselves or power to remain in office or influence over co-leaders or ordinary Malaysians, they may be guilty of organised crime as defined by our laws.

Taking a further step, one would recall that Nazri Aziz in support of Sosma stated in Parliament that in addition to the maintaining the security of our country, it was to ensure the peace, harmony and prosperity of our country and its people.

It is against this backdrop that this opinion is extended, not as a legal discourse but as a political one.

This contrarian perspective would lead to many arguments against such use of Sosma. However, it must be remembered that it does not lie in the mouths of the previous government or its cohorts to argue against the ambit and application of Sosma.
It was they who enacted Sosma on such broad terms and it was they who relied on Sosma to charge a number of Malaysians including Khairuddin Abu Hassan and Matthias Chang – “what is sauce for the goose must be sauce for the gander”.

That said, the use of Sosma is not suggested here as a retributive move but as matter of good governance. The alleged threat to security and public order by the 400 or so persons who have been detained without trial under Sosma for about two years now pales in comparison to that caused by the perpetrators of this grand larceny.

It is hoped that the Pakatan Harapan government, which has been sending mixed signals about the abolition, continuance or review of Sosma, the police and the attorney-general would, despite their personal views on Sosma, use the act which, until repealed, is still good law against the relevant decision-makers and their enablers for this great fraud perpetrated against the Malaysian people and to prevent any actual disturbances on our streets.

Watson Peters has been a practising lawyer for more than 30 years.

The views expressed are those of the author and do not necessarily reflect those of FMT.