LETTER | I refer to the Malaysiakini report Let's have a public discussion on 1MDB, says writer after Arul calls him 'coward'.

It is so funny; Arul Kanda is now saying the 1MDB problem is just a "business problem" and stressed that its funds had never disappeared. Earlier, PM Najib has said that the problem in 1MDB is due to wrong “business model”.

How we look at a problem will eventually determine how we solve it. I have some simple questions. If it is just a “business problem” may I know what is it? If the funds had never disappeared, may I know what is the US Department of Justice holding?

If it is due to a “business model” problem, may I know from which business school have we adopted this model? I just don’t understand which business with unwavering state support and resources would give us so much “headache” to begin with.

Similarly what business model would require us to do “restructuring” and “rationalisation” before the company has accomplished anything?

To me, the problem in 1MDB is not unique and I have said it many times before - it is a moral hazard problem which Malaysia has encountered for a long time.

The trouble is the problem is getting bigger because those involved are getting “smarter” and “savvier”. This is especially so when public governance standards have remained undeveloped and feeble.

My take is we shouldn’t be trying to do great things when the enabling conditions are not even present.

From the early days of our public enterprises, privatisation, PKFZ, Felda to the present day GLCs such as 1MDB, the problem is essentially the same – those responsible for managing our resources are not held accountable for the consequences of their actions.

They made deals, went into ventures, and took excessive risks without thinking because it is not their own money – a typical case of privatising profits and socialising liabilities or losses.

Loans were raised excessively because with state guarantees, no one, including the lenders, is bearing any risk. Everyone is enjoying French wine and caviar except the taxpayers who must eventually pay the bills.

There is no inherent incentive to guard against malfeasance and risk in all public enterprises and GLCs because all those involved are protected from the consequences of their unthinking actions.

The problem of moral hazard is real; the World Bank has done numerous studies on this. It is as certain as the sun will rise the next morning those entrusted with public money will misbehave when it is the other party (i.e. the rakyat) that will bear the cost.

It does not matter if it is BN or Pakatan Harapan government if no proper governance standards are instituted and enforced to ensure accountability and compliance.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.