Kleptocracy through state-owned corporations


The research uncovers gaps in the regulatory framework which have contributed to theft of billions of dollars through 1MDB, a Malaysian state-owned corporation.


Project Background and Aims

1MDB has been at the centre of money laundering investigations internationally. Hailed as one of the largest kleptocracy investigations in history, questions arise as to how scandals of such magnitude occurred despite a seemingly strong corporate regulatory framework.

The research measures the strength of Malaysian legal protections against fraud by corporate controllers and compares it with international benchmarks of good governance. It considers the manner and extent to which the effectiveness of these laws is impeded by the context in which it operates. The research explores the nexus between the state and business in Malaysia and its implications for corporate governance. It investigates the enforcement of corporate law in the context of Malaysia's political economy and the role of regulatory authorities in a developmental state with authoritarian leanings.


The methodology used in the research involves both quantitative and qualitative empirical methods. The strength of Malaysian law is measured using the quantitative ‘leximetric' method, and compared with data from six other countries over 35 years. Legal analysis, descriptive statistics and a socio-legal approach are also used to complement the quantitative analysis.


The research demonstrates the manner and extent to which law modelled on Anglo-Australian regulations which reflect international standards are of limited effect in practice against expropriation of corporate assets by politically-connected corporate controllers. The research highlights the relevance of political economy and the rule of law for the effectiveness of laws. The findings challenge assumptions on which international organisations, such as the World Bank, have premised their reform policies for developing countries around the world. The research contributes to a more nuanced understanding of the relevant considerations for regulatory reforms for countries which have different corporate ownership structures, forms of political governance, and economic and socio-cultural contexts from Anglo models. Findings from the research have been featured by Monash Impact in the article How Malaysian corporate laws can recover after corruption'.