THE OPENING CEREMONY OF THE CONFERENCE ON COMMERCIAL CRIME KUALA LUMPUR HILTON 25TH MAY 1992
Dr Nawawi Mat Awin
Dr Barry Rider
Distinguished guests and participants
Ladies and Gentlemen
The timing for this conference on commercial crime here in Malaysia could not have been more appropriate. Over the last week or so, the Malaysian public have been treated to some shocking news about the discovery of the public share issue refund cheques fraud. Like most people, I have always believed that the transfer of funds through the post by means of crossed cheques are 100 per cent secure. With the discovery of this novel fraud, we are suddenly jolted into the realisation that against the diabolic ingenuity of the criminal mind we have to be ever vigilant. We cannot ever be complacent.
Novelty, ingenuity and surprise, of course, are the chief characteristics of these commercial crimes. This fact poses the greatest challenge to regulators and investigators alike. It has therefore become a matter of urgency for the regulatory bodies, law enforcement agencies as well as the business community itself to come up with equally ingenious ideas for detecting and preventing similar frauds and abuses.
I would like to commend the National Chamber of Commerce and Industry of Malaysia for its initiative in organising this conference. Commercial crime is a problem not just for the regulator and the law enforcer. If allowed to flourish unchecked, it will undermine public confidence in the integrity of the business community. Even when the commercial sector is the primary target and victim of so many of these frauds and scams, the general public will eventually have to pay for these crimes, directly or indirectly -- in higher prices, hingher insurance premiums, poorer service and so on. But more importantly, and we cannot over-emphasize this, the effect of these crimes, perpetrated from within the business community itself, will cause a lost of trust in the country as a whole and will delay its emergence as an international commercial centre.
The sophisticated modern marketplace pays a high premium for merit. Its heroes are rewarded for their intelligence, innovativeness, and hard work. These are the captains of industry. Unfortunately, the very same qualities of the market and its atmosphere of intense competition and acquisitiveness have also bred the crooked minds of the white-collar criminals. In this world, law makers and policemen are often like fish out of water. That is why it is most gratifying that the leaders of the business community themselves are in the front ranks of the battle.
I have used warlike terms here because I believe we must truly wage war against these crimes. And like every other kind of warfare, we must carefully deliberate strategy and tactics, and array our weapons. On our part, we intend to marshal the entire panoply of the law to combat these enemies, not only of the business community, but the people as a whole.
Allow me to quote at some length from a recently published book by an investigative journalist and an editor of the Wall Street Journal, James B. Steward. The book is called "Den of Thieves" and it refers to none other than Wall Street and the financial and securities scandal of the eighties involving such notorious characters like Michael Milken and Ivan Boesky.
I quote: "Financial crime was commonplace on Wall Street in the eighties. A common refrain among nearly every defendant charged in the scandal was that it was unfair to single out one individual for prosecution when so many others were guilty of the same offences, yet were not charged. The code of silence which allowed crime to take root and flourish on Wall Street, even within some of the richest and most respected institutions, continues to protect many of the guilty".
"To dwell on the ill-gotten gains of individuals, however, is to risk missing the big picture. During this crime wave, the ownership of entire corporations changed hands, often forcibly, at a clip never before witnessed. Household names - Carnation, Batteries, General Foods, Diamond Shamrock - vanished in takeovers that spawned criminal activity and violations of the security laws".
"Others, companies likes Unocal and Union Carbide, survived but were nearly crippled. Thousands of workers lost their jobs, companies loaded with debt to pay for the deals, profits were sacrificed to pay interest costs on the borrowings, and even so many companies were eventually forced into bankruptcies and restructuring. Bondholders and shareholders lost many millions more. Greed alone cannot account for such a toll. These are costs of greed coupled with market power - power unrestrained by normal checks and balances of the free market or by any fears of getting caught".
"Nor should the financial implications of these crimes, massive though they are, obscure the challenge they pose to the nation's law enforcement capabilities, its judicial system, and ultimately, to the sense of justice and fair play that is the foundation of a civilized society. If ever there were people who believe themselves to be so rich and powerful as to be above the law, they were to be found in an around Wall Street in the mid-eighties. If money could buy justice in America, Milken and Drexel were prepared to spend it, and spend it they did. They hired the most expensive, sophisticated and powerful lawyers and public relations advisors, and they succeeded, to a frightening degree, at turning the public debate into a trial of government lawyers and prosecutors rather than of those accused of crime." Unquote.
Ladies and Gentlemen,
Thankfully, we have not reached such a state of affairs in this country. But what would stop it from happening here? What would prevent this hideous culture of greed and lust for power from taking over and undermining the foundation of our own society? At the height of his power, Ivan Boesky advised an audience of graduates of the University of California saying "Greed is all right." Indeed, it became a slogan and that slogan almost destroyed Wall Street during the last decade.
Greed is not all right. Greed we do not need to power our economy. Honest toil, diligence and hard work will bring more lasting fruits. Our economy is vibrant enough to generate comfortable profits for every businessman by honest means, but certainly not enough to satisfy every businessman's greed.
In this country we want to create an environment for honest businesses to thrive and multiply. Certainly we can and will tighten laws and plug loopholes in regulations. But fundamentally dishonest people cannot be curbed simply by legal means. They rather thrive upon the challenge of finding ways to circumvent the law. This is where the leaders of the business community themselves can assume a prominent role as promoters of ethical behaviour in commerce and industry.
We believe that profitability, important it is no doubt, is not the sole aim of business and industry. The true value of an enterprise to society is not measured only by its profitability, and still less by fortunes made in the course of shuffling papers around. Businesses must generate real wealth for the well-being of the society -- uplifting living standards of all its workers, enhancing skills by providing adequate training opportunities and facilities for research, supporting the arts and culture and the overall intellectual development of society -- in other words, tangible benefits for the community at large. This is what we mean by profitability with social responsibility.
Ladies and Gentlemen,
Having said that, we are determined to stamp out all forms of commercial and financial crime. But this will done with due regard for the process of law. No one need fear our acting out of malice or caprice. There will be no witch hunts. Nor do we act upon rumours.
We Malaysians must be thankful to our law enforcement agencies, especially the Commercial Crime Division of the Police, for their vigilance in ensuring that businesses operate within the limits of the law. Our special thanks also to Dr Rider and the Centre for International Documentation on Organized and Economic Crime for extending to us their experience and expertise. This effort by the National Chamber of Commerce and Industry of Malaysia to increase the awareness of the public, especially the business community, in the danger posed by commercial crime is most commendable. I have therefore great pleasure in declaring this conference opened.