Public procurement fraud in Malaysia: A political economy approach

This study investigates the practice of public procurement fraud in Malaysia. The aim of this research is to understand the nature and extent of the persistence of procurement fraud in the Malaysian public sector. Fraud in public procurement results in large losses of public funds which are needed by the government for delivering public services in order to build public infrastructure and facilities for healthcare and education, poverty eradication, security, defense and economic growth. A primarily qualitative methodology is employed in this study using the political economy approach in order to understand this social phenomenon. First, documentary analysis helps identifying some possible factors for the existence of fraud in public procurement in Malaysia. Then, qualitative data from semi-structured interviews are obtained using the Snowball Sampling Method (SSM). The interviews with 40 stakeholders (regulators, professionals, politicians, academics and media actors) reveal their „hidden‟ voices so as to understand public procurement fraud in Malaysia. Nevertheless, this study does not aim to make generalizations and reach concrete conclusions about this issue, but instead seeks to understand why public procurement fraud persists in Malaysia through an analysis of the subjective narratives of the stakeholders. This research identifies several possible factors explaining why fraud in Malaysian public procurement continues to exist: (1) the prevailing power of political and economic forces, (2) complexities in the check and balance system, (3) deficiencies in procurement practices, (4) constraints on the civil servants, and (5) characteristics of the Malaysian society. The findings contribute to the body of knowledge by focusing on an unexplored area of the institutional arrangements between the state and businesses in Malaysia. The institutional arrangements between state and private sector appear to be legitimate, but they have the potential to conceal fraudulent practices, thus making fraud possible. Given the sensitive nature of the subject matter of this research and the fact that fraud by its nature is often concealed, it is possible that the findings have only revealed the „tip of the iceberg‟ of public procurement fraud in Malaysia.