Towards A Competitive Malaysia #61

Chapter 9: Institutions Matter (Cont’d)

Judicial System

The decline in foreign investments in Malaysia is in part attributable to the fact that investors lack confidence in the integrity of the judicial system. Investors feel they would not have a fair shake especially when the other party to their dispute is someone well connected politically.

Since the government is a major player in the marketplace through its myriad GLCs, there is a high probability that in any commercial dispute, the government or its proxy would be the adversary in litigation. The lack of confidence by foreign investors directly impacts Malaysia’s economic performance, and the government ignores this at its peril.

Malaysia inherited its judicial system from the British. For some time following independence, Malaysians could still appeal to London’s Privy Council, but nationalistic pride soon put an end to that. The immediate practical impact was minimal as judges then had impeccable integrity and scholarship. They were also highly respected. The nation’s first “native” Chief Justice, Tun Suffian Hashim set demanding standards. His successors for the most part fell far short.

In normal times such a gradual deterioration would hardly be noticed, or could be self-correcting. In the 1980s however, Malaysia faced a constitutional crisis over Prime Minister Mahathir’s attempt to clip the powers of the sultans. What should have been a mature political debate, with the judicial system acting as the arbiter between what was essentially a power struggle between the crown (the sultans) and the executive branch, quickly degenerated into an ugly public broil. The justices themselves were entangled in the dispute. The already weakened judiciary could not hold up to the stress.

The upshot of that and other crises (specifically the deregistration of UMNO) was that a few senior judges, including the chief justice, were fired. That in turn precipitated uproar. Judges, unlike ordinary mortals, apparently are immune from such a human fate. An eminent body of chief justices from fellow Commonwealth countries was empanelled to review this sordid affair and, much to the surprise of everyone (especially the fired judges), found for the executive.

A reflection of the caliber of the fired chief justice (Salleh Abbas) was his post-bench career. He tried politics and was soundly trounced by a woman lawyer decades his junior in age and experience. The humiliation did not end there; it was also her first try at elective office! The judge is now a junior functionary with the opposition Islamic Party PAS. When that party won the oil-rich state of Trengganu in the 1999 elections, it sued the federal government over the suspension of payments of oil revenues. That former chief justice was a mere ceremonial appendage to the party’s legal team that lost.

That embarrassing episode should have been the impetus for Prime Minister Mahathir to be more careful in selecting senior judges. On the contrary, the reverse happened. Mahathir, chastened by this bitter experience (and a man who does not think highly of lawyers, a trait common among physicians), decided to nominate only judges who were sympathetic to his views. That is nothing radical; I would not expect President Bush to nominate a flaming liberal to the Federal Bench. Mahathir’s error was not that he picked judges who shared his political views (that was his prerogative), rather that he chose mediocre ones. Perhaps he reasoned that an incompetent but pliant judge was better to a competent but independent one. Thus the rot in the judiciary accelerated.

Surveys confirmed this decline.17 Locals do not need such an affirmation. An encounter with the system will confirm it. Savvy local lawyers are known to shop around for sympathetic judges, and brazenly brag about it. While there are no blatant exchanges of cash, as seen in some neighboring countries, such shopping around nonetheless erodes the integrity of the system.

There is not much deliberation in the selection of senior judges. The Prime Minister does not seek the views of practicing lawyers, fellow judges, or legal scholars. Judges are almost exclusively drawn from within the civil service, rising up through the ranks as magistrates, public prosecutors or some administrative positions. Few have significant private sector experience. They are essentially civil servants in experience and mentality. They follow orders only too well, unable to think independently, the very opposite qualities needed to be a good judge. In reviewing the backgrounds of senior judges, this is what strikes me—their narrow and shallow experience.

Their work reflects this. These judges complain that their judgments are not cited enough. That is like asking why someone does not quote your articles. If you have something sensible or important to say and have said it well, your peers will quote you. Their judgments do not have precedential value because they are poorly written, lack solid legal reasoning, and worse, delivered late, very late. Judges’ working conditions and pay are such that the talented would not be attracted. For a successful lawyer, it would be quite a financial sacrifice to be “elevated” to the bench.

Visit a Malaysian court. There are no court recorders; judges have to scribble furiously to record everything. They do not have time to assess the demeanor and credibility of witnesses. As trials in Malaysia are not by jury, these judges are missing an important element in judging. Judges, including senior appellate ones, do not have legal clerks to help them with their research and writing. The courts are also way behind in ICT applications.

All these problems are obvious, yet there is minimal attempt at rectifying them. The government has yet to acknowledge the importance of a fair, functioning and efficient judicial system in a modern economy. Malaysia needs to improve both the system and personnel. There are a few judges who on their own initiative have modernized their courts by putting their judgments and schedules on the Web and otherwise make their work transparent. They are the exceptions.

There are minimal steps that can be taken, like providing court recorders, legal clerks, and computers. Legal clerks are usually recent law graduates who help judges research and write judgments. The pay scale of judges would have to be substantially upgraded to attract experienced lawyers. Senior judges should be earning as much as cabinet ministers, and the chief justice on par with the prime minister. Judges should be selected from the widest possible pool, not just from the ranks of the civil service.

Never underestimate the importance of personnel. When Mahathir appointed Dzainuddin Abdullah to replace the crisis-prone Eusoff Chin as Chief Justice, the sense of relief was palpable. Even junior judges picked the cue immediately; they suddenly had the courage to be more assertive in rendering their judgments. The October 2005 successful appeal by former Deputy Prime Minister Anwar Ibrahim over his sodomy conviction was to many an affirmation of this greater judicial independence. The task of rejuvenating Malaysia’s justice system however is still very much work in progress.

Next: Financial Intermediaries