MANILA, Philippines — Malaysian House Speaker Johari Abdul has choice words on managing sovereign wealth funds: having good intentions alone is not enough to prevent scandals like the billion-dollar 1MDB case that rocked his country.
"The idea is noble, but you must have the right people running the noble things," Johari said in a press briefing in Manila on Tuesday, January 28.
The Malaysian Speaker was in the Philippines for a three-day official visit from January 27 to 29, part of his tour of ASEAN countries where he personally extended invitations to attend the 46th ASEAN Inter-Parliamentary Assembly (AIPA) in Malaysia this September.
Prior to the press conference, Johari met with Senate President Juan Miguel "Chiz" Escudero and House Speaker Martin Romualdez.
Using an analogy about appointing the right people with the right tasks, Johari explained: "Your car is meant to be run by petrol, put petroleum. If the car is meant to run on diesel, put diesel in and it will work. So this is a mismatch sometimes."
Johari drew his insights from Malaysia's experience with 1MDB (1Malaysia Development Berhad), where billions of dollars were misappropriated from what was meant to be a state investment vehicle for development.
"Investment is one thing, but supervision is another thing," Johari said.
The Malaysian leader said that beyond setting up investment funds, strict oversight is crucial. "Parliament is very important. Members of parliament are given and entrusted by the people," he said.
Johari was particularly critical of legislators who failed to exercise proper oversight. "MPs have their own role and they have their responsibility and contribute to the people," he said.
"They should be responsible too for not asking the right questions," the Malaysian House Speaker added.
His warning comes three months after Malaysia's jailed former Prime Minister Najib Razak issued a rare public apology for the mishandling of the 1MDB scandal. Najib, who is serving a six-year prison term, maintained his innocence despite authorities saying he received more than $1 billion traceable to 1MDB.
The 1MDB scandal led to investigations across multiple countries over the alleged misappropriation of over $4.5 billion by high-level officials. Malaysia's top court in 2022 upheld a guilty verdict against Najib for corruption and money laundering for illegally receiving about $10 million from former 1MDB unit src International.
The Malaysian speaker's comments carry weight in the Philippines, where the Maharlika Investment Corporation – which has been hounded by delays and tall expectations from the public – just announced its first investment this week after more than a year since the investment fund was signed into law.
On Monday, January 27, Maharlika Investment Corporation (MIC) Chief Rafael Consing Jr. announced the fund's first investment in the National Grid Corporation of the Philippines. The state-owned investment firm's capital comes from Landbank (P50 billion) and the Development Bank of the Philippines (P25 billion), a funding structure that has drawn concern from the International Monetary Fund.
These latest developments come nearly a year after Consing vowed the fund would not follow the path of Malaysia's 1MDB. In a March 2024 interview with Nikkei Asia, Consing promised stricter safeguards against corruption.
Consing told Nikkei Asia that the MIC would follow the ASEAN Corporate Governance Scorecard and establish six committees for oversight – going beyond the legal requirement of just two committees for audit and risk management.
To prevent mismanagement of funds, Consing said MIC outsourced its cash management to the Bureau of the Treasury. "So our cash is therefore not with us," he explained. "We draw on it as and when we would make the investment."