by Ganesh Sahathevan
Malaysia ‘s Prime Minister Anwar Ibrahim is appealing to
the country’s highest court, the Federal
Court, to declare that he has immunity
from civil claims “ to
ensure that high public office is protected from litigation that may be
strategically timed, politically motivated, or institutionally disruptive.”
An application to the subordinate High Court, for leave to
refer his legal questions on immunity to the Federal Court has been rejected
with the judge declaring “court
rulings on constitutional supremacy demands that all persons, including public
office holders, are equally subject to the rule of law.” Among the questions Anwar wants the Federal
Court to answer is “whether a civil suit would
impair the effective discharge of his executive functions and undermine the
constitutional separation of powers”, or in plain language his duty
to advice his sovereign, the King who is a constitutional monarch. It should be noted that the King himself does
not enjoy sovereign immunity, that being removed
in 1993 by then prime minister Mahathir Mohamad. The absurdity of a servant
enjoying immunity which the master does not have has not escaped local lawyers
,who have not been shy in making their
views public.
While the matter meanders its way through the courts and the
political maelstrom , for Anwar seeks immunity from a
civil claim brought by a former aide who is accusing him of sexual assault,
there are very serious commercial implications which concern some of Malaysia
‘s largest government owned companies for Anwar is also the Minister For
Finance, and has effective control over all those companies (and a few more)
via a government owned entity , Minister Of Finance Inc (MOF Inc), of which he and
another minister are the only shareholders and directors. While the Minister For Finance and Prime
Minister are two separate offices under the monarch, the
political reality in Malaysia is such that the two offices are likely in the
future, as they have since 1998, be considered as one. As a result if the prime minister is found by the Federal
Court to have immunity from civil claims that immunity is likely to extend to
the minister for finance and quite likely anyone deemed to hold “high
public office” as Anwar contends.
MOF Inc may be said to be a creature of Malaysia’s affirmative action policies which are designed to ensure that ethnic Malay Muslims retain some control over the country’s assets. Companies under its control include Petronas , which is Malaysia’s largest company, and arguably the Malaysian Government’s primary source of income. Importantly Malaysia’s Petroleum Development Act 1974 (PDA) provides that Petronas “shall be subject to the control and direc
tion of the Prime Minister who may from time to time issue such direction as he may deem fit.”
In fact, the PDA vests in the Prime Minister complete
control over the upstream and downstream sectors of Malaysia’s oil and gas
sector, and the recent dispute between Petronas and the Sarawak state
owned and Petroleum Sarawak Bhd (Petros) over control of gas located in
Sarawak provided Malaysians and
others a graphic illustration of the prime minister’s powers in such matters
when Sarawak
Chief Minister Abang Johari Openg was embarrassed having to declare publicly in
late May that the conflict remained
unresolved at that point because Anwar had other matters to tend to. That the conflict left Shell
PLC , the primary operator of Sarawak’s
gas fields , bewildered to the point that it had to take both Petros and
Petronas to court in order to obtain orders permitting it to withhold
payments to both parties while they resolved their dispute did not seem
sufficient reason for Anwar to divert
his attention. Under current laws Shell could have possibly joined MOF Inc
as a party , seeking orders that a
decision of the dispute be made, on the
basis that it was in effective control of Petronas, and given that the Prime
Minister has absolute control over the oil and gas industry. If the Federal Court grants Anwar immunity that avenue would be shut.
That the person who is , in lay terms, Petronas personified
is immune from civil claims is not an element of risk that oil and gas majors heavily
invested in Malaysia have ever had to contemplate but that may no longer be the case. Relations between foreign oil majors like Shell and
Exxon Ltd , and Petronas and the Malaysian government seem at least cordial but
that has not always been the case. In 1976 for example Exxon
and United States Government had to work
in tandem with local operatives like Exxon’s lawyer the late Alex Lee to
manage tense negotiations with then Prime Minister Hussein Onn, and his
Minister For Finance Tengku Razaleigh over Exxon’s oil and gas interests in
Malaysia. Razaeigh was also in charge of Petronas which had just been
incorporated in 1974, and was regarded by Exxon, Lee and the US Government as
the more difficult of the two. If Hussein had immunity from any civil claims
Exxon and the US Government may have had to decide against further involvement
in Malaysia on the basis of unacceptable and insurmountable political and legal risks.
MOF Inc is also the majority shareholder in Khazanah
Nasional Berhad, which is the majority and controlling shareholder in many of
the larger companies listed on BursaMalaysia, including national electricity
company Tenaga
Nasional Bhd, and the national telecommunications provider, Telekom Malaysia
Bhd.
Additionally it is a minority shareholder in Permodalan
Nasional Bhd (PNB), whose core assets
include Malaysia’s largest bank, Maybank Bhd. It is the country’s largest fund manager and its portfolio includes many listed ,public
and private assets. That the prime
minister and finance minister has very significant influence over its
operations is a given, and hence the heightened legal risk in Malaysia’s capital markets that can arise
if the Federal Court determines that the
prime minister , who is also the finance minister, has immunity from civil
claims are likely to be felt beyond
Petronas and the oil and gas industry.
END
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