Transparency International Malaysia (TI-M) expresses deep concern over the serious governance failures exposed in the Auditor-General’s Report 2/2025, tabled in Parliament today. The report uncovers substantial irregularities across multiple public institutions, revealing systemic weaknesses in financial management, procurement oversight, and accountability. TI-M stresses that these are not isolated incidents, but symptoms of deeper institutional failures that must be urgently addressed to restore public trust and integrity in governance.
Key Findings from Auditor-General’s Report 2/2025
The report highlights troubling audit findings involving five audit scopes across seven ministries, with total programme and project values reaching RM48.87 billion. Notable examples include:
- FELCRA Berhad (2022–2024): Procurement governance failures involving oil palm plantation leases valued at RM241.76 million.
- Universiti Kebangsaan Malaysia (UKM): Serious procurement irregularities involving RM58.45 million across three tenders awarded to companies not recommended by technical or financial evaluation committees.
- Malaysian Army Defence Contracts (2020–2023): Poor contract management, with RM162.75 million in uncollected penalties for late delivery of GEMPITA vehicles and RM1.42 million in penalties that were never imposed. Additionally, RM107.54 million in maintenance contracts were fragmented to bypass procurement controls.
The report also flagged persistent weaknesses in the management of public subsidy programmes and irregularities in the new “Pre-Qualification” procurement process introduced by the Ministry of Finance, further demonstrating a lack of internal controls, compliance, and ethical governance.
Structural Failures Require Institutional Reform
TI-M warns that the patterns highlighted in the Auditor-General’s report are emblematic of systemic governance failures. Outdated procedures, weak financial oversight, and a culture of impunity have allowed such practices to continue year after year, despite repeated audit warnings.
“Where is the accountability for all these lapses? The government must take a firm stance and hold leadership accountable for discrepancies involving public funds,” said Raymon Ram, President of Transparency International Malaysia. “These recurring findings highlight institutional weaknesses that demand more than administrative corrections—they require structural reform.”
Wastage through mismanagement and corruption directly deprives the rakyat of essential services and economic opportunity. The persistence of such failings erodes confidence in public institutions and signals a breakdown in accountability at multiple levels of government.
Acknowledging Recent Reforms—but Calling for More
TI-M acknowledges the government's steps to improve audit follow-up mechanisms. The 2024 amendments to the Audit Act 1957, especially the introduction of Section 9A, have empowered the Auditor General to track the implementation of audit recommendations through the Auditor-General’s Dashboard, enhancing institutional transparency.
The expanded audit scope now includes government-linked companies and any entity receiving public guarantees, enabling a “Follow the Public Money” approach. Additionally, audits conducted between 2024 and June 2025 have helped recover RM157.73 million through back payments and penalties—proof that enforcement matters.
However, laws and dashboards alone are insufficient. TI-M stresses that transparency must be matched with enforcement, and that every agency implicated must be held accountable without delay.
TI-M’s Four Urgent Recommendations
In response to the Auditor-General’s Report 2/2025, TI-M calls for the following immediate actions:
- Swift enforcement by MACC, PDRM, and AGC: All cases involving procurement fraud, abuse of power, or negligence must be referred for investigation or prosecution. Inaction sends the wrong signal to both the public and potential wrongdoers.
- Public disclosure of remedial actions within 30 days: Each implicated ministry, department, or agency must publish clear corrective measures—including recovery of funds, disciplinary steps, and procedural reforms—to restore public confidence and show institutional responsibility.
- Mandatory implementation of Independent Expert Monitors in all Integrity Pacts in high-risk procurements: These agreements, monitored by independent third-party observers, provide a credible safeguard against collusion and corruption in major contracts. Integrity Pacts must be institutionalised—not just via circulars, but through formal mechanisms with real-time monitoring. In line with the MADANI principles, the public sector must collaborate with civil society and professionals from the private sector to improve efficiency and reduce the cost of public procurement, using the Rakyat’s money.
- Tabling of a comprehensive Public Procurement Act: Malaysia urgently needs a unified, legally enforceable procurement framework that goes beyond existing Treasury circulars. The Act must include transparency standards, independent oversight, legal sanctions for non-compliance, whistleblower protections, and clear procurement dispute mechanisms. Simply consolidating current guidelines is inadequate; we need a law with teeth.
Restoring Public Trust
Above all, TI-M underscores that restoring public trust in Malaysia’s institutions must be the overarching objective. Every ringgit lost to corruption or mismanagement represents stolen opportunity and weakened national credibility.
TI-M commends the Auditor General and her team for their continued professionalism and commitment to transparency. However, the responsibility to act now lies with the executive, enforcement bodies, and political leadership.
“The Auditor-General’s Report must not be an annual ritual of regret,” added Raymon Ram. “It must serve as a catalyst for reform—one that rebuilds institutional integrity, ensures justice for wrongdoing, and protects the interests of the rakyat.”
Transparency International Malaysia stands ready to support reforms that uphold the principles of transparency, accountability, and good governance. We urge all institutions to treat the findings of LKAN 2/2025 as a clear warning—and an opportunity to change course.
Issued by
Raymon Ram,
President,
Transparency International Malaysia.
