Why public officials buying assets at below market price from people doing business with their government is a big deal
Why is it an offence for a public official to buy a property at a discount or below market value from a person who is doing business with the govt considered a corruption offence?
Because a property is an asset and has a defined and assessable market value.
It is no different from assets such as shares in either public or private companies or gold or cars.
For example, if you buy a property valued at RM6.5 million at a discounted price of RM2.8 million, you can immediately sell it at RM6 million (sell RM500k below market value for quicker sale) and make RM3.2 million.
This is a benefit and it is almost as good as giving you RM3.2 million cash.
Likewise, if someone doing business with your govt offers to sell you gold worth RM10 million at just RM5 million because he respects you, would mean he is giving you RM5million benefits to you.
Or perhaps sell you a car worth RM500k for only RM10k.
According to a lawyer quoted by Malaysiakini today, the objective of Section 165 is to punish public officers who receives ‘gifts’ and the gift or gratification must emanate from someone who has some sort of dealing with the public officer.
In fact, whether the giver ultimately receives any benefit or anything in return is not even an element of the offence.
This is because it is assumed that you have gained a BENEFIT BECAUSE of your POSITION – and this means corruption.
This law is not unique to Malaysia and similar laws exist in corruption laws in every other country.
And this has nothing to do with how big the house is or how expensive it is compared to Lim Guan Eng’s house.
Therefore, comparing Guan Eng’s house with other politician’s houses is not helpful.
It is the very act of buying an asset at substantially below market value from a party doing business with his government that got him charged for corruption – the very same charge and case that landed ex-Selangor MB Khir Toyo in jail.
It is highly unlikely that the seller would have sold RM3.7 million below market value to Guan Eng if he were not in the position he was in.
If you don’t believe me, how many Penang properties have you or your friends been offered to buy at 60% below market price?
If Lim Guan Eng was not charged, then all the cabinet ministers, chief ministers, MBs, KSU, EXCO members etc start doing hundreds of such “willing buyer, willing seller” share transactions or asset purchases with the various tycoons and owners of companies – whether listed or not – and the MACC and income tax cannot do anything about this since it is “legal”.
Paying for corruption using below market price or deeply discounted asset sales will essentially have legalized bribe payments and money laundering for all public officials.
To give the Singapore-admirers an example, when Lee Kuan Yew retired as the Prime Minister in the early 1990s, he was given a 7% discount when he purchased a new condominium in a soft-launch for a project called “Nassim Jade” from a listed company that his brother was a board member.
In Singapore and much like Malaysia, it is legal for such discounts to be given in a soft launch to family members as long as it is properly disclosed.
When news of this broke, Lee Kuan Yew who was still an MP requested to address parliament and explained that this was legal, the condo company was not doing business with the govt, he was already retired as PM and had no more influence and that the price per square foot (PSF) he purchased at is higher than surrounding properties.
However, he announced that in the interest of transparency, to avoid further suspicions and to prove his innocence, he would donate the value of the discount to charity.
In the case of Lim Guan Eng, the price per square foot he paid is 50% to 60% below market value of surrounding properties and that the seller had multiple direct business relations with the state govt – including areas where he had great influence over.
Unlike Lee Kuan Yew, Lim Guan Eng had never expressed regret and never offered to donate the difference to charity in the interest of transparency.
In fact, after he was charged he accuses the govt of framing him, refuses to step down, he claims he has done nothing wrong and says this is a conspiracy.