Silence of the Tax Authorities (LHDN) In High-Profile Corruption Cases

  

Silence of the Tax Authorities (LHDN) In High-Profile Corruption Cases

M. Bakri Musa

October 11, 2026

(Excerpt from my ongoing series, Qur’an, Hadith, and Hikayat: Exercises In Critical Thinking, which will resume next week.)

The utter silence of Lembaga Hasil Dalam Negeri (LHDN)—the federal agency charged with safeguarding public revenues—amid the parade of high-profile corruption cases shuffling through our courts is both perplexing and damning. Are those civil servants in LHDN, like their counterparts across the civil service, merely waiting for orders?

         That, unfortunately, remains the default and laidback tradition of the Malaysian civil service, epitomized by the passive sign-off historically affixed to official correspondences: “Kami yang menurut perintah” (We who follow orders!).

         That tagline, unchanged until 2018, faithfully reflects the subservient mindset of Malaysian civil servants right to the very top—along with its destructive consequences. Consider the November 2019 court testimony of former Chief Secretary Ali Hamsa during the 1MDB trial:

“…[M]odifications [on the 1MDB report] were done to protect the image of the country, government, and prime minister from being compromised by political opposition.”

          Notice the slippery, passive phrasing: “Modifications were done!” It echoes the infamous Watergate hearings of the Nixon era, where bureaucrats deftly declared, “Mistakes were made.” Left conveniently unsaid was who made the mistakes—and who ordered the modifications.

          Nor are the highly-touted “executives” in our glut of government-linked corporations (GLCs) any better, as evidenced by the recurring scandals in Tabung Haji and elsewhere. In his 2019 testimony, former 1MDB CEO Arul Kanda admitted he failed to initiate any internal investigation despite reading the June 2016 US Department of Justice civil forfeiture complaint naming “Malaysian Official No. 1.”

          By contrast, consider the United States. President Barack Obama played golf with Najib Razak in Hawaii over Christmas 2014—a rare honor accorded to a foreign leader. Yet that photo-op did not deter Obama’s Attorney General, Loretta Lynch, from vigorously doing her job. Back home in Putrajaya, Najib promptly forced the early retirement of (read: fired) Attorney-General Gani Patail just as he was drafting charges to arrest the Prime Minister. Gani quietly slunk away, observing the “Kami menurut perintah” mantra all too faithfully.

         To its credit, LHDN eventually pursued bankruptcy proceedings against Najib, his wife, and his children. Yet I wonder why the tax authority has not seized Najib’s palatial residence—the very estate where he hopes to serve out his comfortable house arrest. Being far from intellectual, Najib lacked the foresight to hide his assets inside sophisticated trusts or offshore structures; after all, he possesses merely a general degree from a provincial British university. Why then the hesitation by LHDN?

The Illusions of Anwar’s Anti-Corruption Crusade

The Anwar Administration relentlessly brags about its crackdown on corruption. Yet measured by actual convictions, the results remain dismal. High acquittal rates point directly to amateurish investigations and incompetent prosecutions. Local talent in our enforcement agencies has proven severely outmatched.

           It is time to engage seasoned foreign professionals—not from the bureaucratic labyrinths of Egypt or India, but battle-tested investigators from the FBI and Scotland Yard. Short of that, the government should hire top-tier private-sector litigators on an ad hoc basis and establish specialized anti-corruption courts dedicated solely to mega-fraud cases.

          Our statutory framework also requires radical modernization:

• Global Tax Enforcement: As the Panama and Pandora Papers revealed, wealthy Malaysians routinely stash assets overseas beyond LHDN’s reach, including individuals currently sitting in Anwar’s cabinet. Malaysia must emulate the U.S. model: mandate annual declarations of all foreign and domestic financial assets (reporting minimum and maximum yearly values) and tax worldwide income.
• Mandatory Financial Disclosures: Require the top 100 public officials—including royalty, ministers, and their spouses—to file comprehensive annual public financial disclosures modeled after the U.S. Office of Government Ethics (OGE Form 278e). Excepting Donald Trump, these filings are concise, accessible online, and take up mere megabytes of data.
• Enforceable Whistleblower Protections: The Whistleblower Protection Act 2010 exists in name only. Its first—and unsuccessful—prosecution took over a decade to materialize. A law without enforcement is a useless law.

          Ultimately, Malaysia’s official "war on corruption" remains a farce: high on grandiloquent rhetoric, low on tangible results. Prime Minister Anwar compromised his moral standing from day one by appointing a Deputy Prime Minister burdened by dozens of corruption charges. While Ahmad Zahid Hamidi subsequently received a discharge not amounting to an acquittal (DNAA), we can only hope the Malaysian Bar’s legal challenge overturns that questionable outcome.

          "Innocent until proven guilty" is the standard for criminal conviction in a court of law. For appointment to high public office, the standard must be vastly higher: absolute integrity, free from even the faintest whiff of impropriety. Had Anwar held his administration to that standard from the outset, he would not be saddled with his compromised deputy today—and Malaysia would be infinitely better served.

Excerpt from my Qur’an, Hadith, and Hikayat:  Exercises In Critical Thinking will resume next week.