Comparative Business Ethics and Corporate Governance

Business Ethics 1
COMPARATIVE BUSINESS ETHICS AND CORPORATE GOVERNANCE
Name
Course Name
Professor
City/State
Date

Business Ethics 2
Introduction
According to an article done by The New York Times on May 17, 2018, the former Malaysia’s
Prime Minister, Najib Razak’s residence is under police raid over investigations going on related
to the mismanagement of public funds. The police carrying out the investigation are said to have
seized more than 340 bags and boxes containing designer handbags, cash, and some jewelry. The
haul that were recovered from a total of his three residences include 284 boxes of fashioned
designer handbags and more than 72 pieces of luggage containing cash. A study done by Overall
(2016) the former Malaysian leader is accused of embezzling the funds at a government
investment fund, 1Malyasia Development Berhad. The authorities in Malaysia argue that Mr.
Razak and his wife Rosmah Mansor were the main suspects in the scandal that robed the country
over $7.5 billion that mysteriously disappeared from the accounts of the government fund. It is
alleged that Rosmah, the wife to the battled former prime minister used to appear in public
functions putting on expensive jewelry and fashioned clothing as well as customized. The United
States Department of Justice made more other allegations that Rosmah’s son, who was the
former prime minister’s step son might have used the money from the crippled government fund
to produce movies such as The Wolf of Wall Street. The America’s legal system is said to be
interested in the case to be able to recover money that might have been laundered through some
financial institutions in America, money said to be in excess of $1.7 billion (Stockall & Dennis
2015, p. 9).
The article states that based on these accusations, the former leader, whose party ruled the
country for more than 61 years, has suffered some setbacks such as the famous recent defeat in

Business Ethics 3
his bid to be re-elected. It is said that the opposition, led by Mahathir Mohamad, used the
accusations laid against Mr. Razak to convince the public to vote the regime out. Another
consequence of the scandal on Razak and the wife is the fact that they have been barred from
leaving the country as this would jeopardize the process of seeking justice.
The accusations on Razak had been a public outcry in Malaysia some many yeas now under the
leaders rule. The former prime minister was accused in 2015 of channeling over RM 2.67 billion
from the government trust fund into his personal account. It is well known that the fund,
1Malysia Development Berhad (1MDB), was established and wholly owned by the government
through the ministry of Finance Incorporated Malaysia (MOFI). This strategic development
company was meant to steer head project that would have long-term benefits to the citizens and
promote direct international investments into the country (Westphal 2016). Some of the areas
target when forming the now defunct development fund include agribusiness, real estates,
energy, and tourism.
1Malysia Development Berhad (1MDB had several achievements such the acquisition and
improvement of three independent power producers. The fund is currently engaged on some
other mega projects like the Tun Razak Exchange and its sister project known as the Bandar
Malaysia.
The government fund however started facing a lot of criticism and scrutiny from the year 2015
when people started suspecting some dubious and fishy transactions within the state owned
strategic company. The situation was made worse when there were evidence of laundering
activities within the company. The United States Department of Justice at one point filed a
lawsuit claiming that more than US$3.5 billion could not be accounted for in the company and

Business Ethics 4
there was possibility of theft. The then opposition leader, Anwar Ibrahim, questioned the
credibility of the company protesting that the documents held by the company commissioners
showed that the company had no business address nor any appointed auditor.
The publicly filed accounts showed that the state controlled firm was struggling in debts of more
than US$11.73 that were mostly accrued the state-guaranteed bond issue done in 2013. All the
above mentioned transactions were done without public approval and were mostly leading the
funds into the accounts of the former prime minister and people who were considered close to
the government.
Good Corporate Governance
The former Prime Minister, Mr. Razak, was entrusted by the public to oversee and control the
state-owned development fund for the benefit of the citizens. Ciulla, Knights, Mabey, and
Tomkins (2018) found out that under the good corporate governance principles, the leader ought
to have upheld the following elements.
1. Rule of Law
The stakeholders should be protected by fair legal framework enforced by impartial
regulatory body which was lacking in the company under Mr. Razak.
2. Transparency
The management need to provide the stakeholders with information regarding policies
and practices of the company, and it should be passed through a freely available and accessible
media. This rule lacked as the transactions were done without informing the citizens who were
the main stakeholders as in the study done by Lopes, Walker, and da Silva, (2016).