In February 1991 I was transferred from Kuala Lumpur to Ipoh, Perak and appointed as the Pegawai Kewangan Negeri or State Financial Officer of Perak.
I was to be the eleventh State Financial Officer of Perak. The first State Financial Officer of Perak was Mr. H.J.A. Cassidy, appointed in 1958.
For 22 years since 1970 I had been a civil servant at the federal level in Kuala Lumpur. I had been involved in many high level policy matters. But, beyond minor administrative decisions my role was limited to providing information and making analysis. Major decisions were only made by the Minister or senior officers.
However, as the State Financial Officer of Perak I was a Head of Department. More than that, as per the Law I was the Financial Authority of the state. I was an ex officio member in the State Executive Council and the State Legislative Assembly. These were appointments not enjoyed by civil servants at the federal level, no matter how senior they were. At the state level I had some of the power of the Minister of Finance and the Secretary General of the Treasury. This meant that, beyond the administrative power of a head of department I had many discretionary powers in terms of financial management in the state. I had my first taste of real authority.
I had consulted my friends in the state audit department on limits of my financial authority. They had advised me that once the state budget was approved by the State Legislative Assembly, as the state financial authority I had very wide latitude to operate. I would not be faulted on a discretionary financial decision unless there were elements of bad faith in decision-making.
Legally, State Financial Officers in most states in Malaysia had extensive financial authority. But some of my colleagues in other states surrendered their authority to others higher up in the state heirachy. That was their choice. In my case I chose to do what was right.
I was very aware of the pitfalls. Authorities and pressure groups always had their own interests and preferences. They always had their suggestions. But responsibility and accountability rested with the Financial Authority. The rule was simple: if I approved and signed up for something then I had to bear the burden of the decision.
How then did I exercised such authority?
There were many laws on financial matters of the State, including civil service regulations. But, the written laws were often not well understood by administrators like myself. Only lawyers understood them well. When the written laws were explicit there would be no debate. But when discretion was allowed and sometime even required then detailed operational guidelines were needed to help administrators make correct, quick and practical decisions. More important there should be consistency in decision-making.
As a civil servant I gave my loyalty to the Civil Service, next only to the Nation, and God. Although I was the Financial Authority of the state, I was also entrusted with promoting economic development. There was therefore a need to balance “correctness” and “practicality” in decision-making.
My mission as a civil servant was to carry out my managerial responsibilities well while at all times maintaining a minimum level of disquiet in the organization. As a matter of principle, a little bit of disquiet in management was always acceptable. After all a completely quiet organisation was symptomatic of a dead organisation. Too much disquiet in an organization would have created management difficulties.
In decision-making my strong inclination was usually to be “left-of-centre” (see my earlier blog post on ‘past wisdom, old values’). But the development mantra of the day then was about promoting businesses and generating rapid economic development. As a civil servant I had to give due respect to the philosophy of the government of the day. Sometimes these values did not rhyme in harmony.
So, I adopted three governance principles in making decisions:
- Follow all financial procedures. There were many financial procedures to comply in the form of Treasury Instructions and other Government circulars. As a first rule, I insisted that matters considered for approval must as far as possible complied with all financial procedures. This was a basic requirement for a good decision. Exemptions, where provided by law, were only considered only on exceptional bases in the interest of state development.
- No self-interest. There were many laws on self-interest in the forms of anti-corruption laws and various government regulations and circulars. Lawyers could argue continuously about their limits. But, as an administrator I needed simple and straightforward guidelines on decision-making. So I took a simple approach. Unless clearly specified in the written laws, it was sufficient that ‘no self-interest’ meant that, as a minimum, I and my immediate family should not gain materially from my decision. This way, my conscience would be clear and economic development would be expedited.
- Avoid hurting a third party. This third principle was basically a rule of caution. In making a decision which favoured one party, one should also look at its effects on competing parties. If a decision caused serious negative effects on a competing party, then if discretion was allowed by law the case merited a second look. For example, transferring state financial deposits from a small rural bank to a large city bank may have generated higher efficiency or even higher financial return. But, I normally avoided making such decision if it seriously affected the viability of the small bank and may lead to its closure. My philosophy was that development was about generating positive growth and overall development in society, and not about promoting one and destroying another.
The above three principles worked reasonably well as operating guidelines. But they were not perfect. Some of my colleagues and peers hinted that I was too strict. I was regarded as a bit too rigid with the rules and not flexible enough to be business-friendly for rapid economic development. But that was my brand of financial administration. In the later years this characteristic was to slow down my career progression in the civil service.
I served as the State Financial Officer of Perak for the period February 1991 until March 1993. I was subsequently assigned to another civil service position in Kuala Lumpur.