Congrats, Tan Sri Dr. Samad Alias

September 8, 2015


Congrats, Tan Sri Dr. Samad Alias for doing the Right Thing

Nazir Razak

Reputable corporate figure Nazir Razak (above) has questioned what signal was being sent to government-linked companies (GLC) and agencies when state-owned 1MDB could deny information to its own adviser.

Nazir, who is also Prime Minister Najib Abdul Razak’s brother, said this in response to Abdul Samad Alias who revealed yesterday that he had resigned from the 1MDB advisory board after his repeated requests for information, over six months, were denied.

“Respected, honest professional appointed by the government and welcomed by the (1MDB) chairman with fanfare.But denied access to information by management. If this is true and tolerated, what message does it send to other GLC/ agencies?” Nazir said in a posting on Instagram today.

TS Dr Samad AliasSamad (photo), who is also Malaysian Deposit Insurance Corporation (MDIC) chairperson, was appointed to the 1MDB advisory panel on January 25 this year. However, he resigned on July 29, after futile attempts to get a briefing on the state firm’s affairs.

“I waited for six months. Despite repeated requests, I didn’t get any,” Samad had said. Najib is also chairperson of the 1MDB advisory board.

In a separate Instagram posting, Nazir shared also shared some words of wisdom – politics and family should not mix. He said this after informing his Instagram followers that he had finished watching two seasons of the American drama series, Tyrant.

“Entertaining, violent drama about a crumbling Arab dictatorship. Moral of the story – politics and family is a toxic mix,” Nazir said.

Malaysia: Forgive Najib and Fawning Ali Hamsa for they know not what they are doing

August 11, 2015

COMMENT: Both Prime Minister Najib Razak and Chief Secretary  Ali Hamsa are exponents of INSEAD’s Blue Ocean Strategy for our civil service since the day they assumed office. What is Blue Ocean Strategy?

Najib's Blue Ocean StrategyHe cannot even navigate the Pahang River

I did not know what they were talking about. So I googled and found out that:

“Blue Ocean Strategy is a book published in 2005 and written by W. Chan Kim and Renée Mauborgne, Professors at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute.

The book is divided into three parts:

1. The first part presents key concepts of blue ocean strategy, including Value Innovation – the simultaneous pursuit of differentiation and low-cost – and key analytical tools and frameworks such as the strategy canvas, the four actions framework and the eliminate-reduce-raise-create grid.

2. The second part describes the four principles of blue ocean strategy formulation. These four formulation principles address how an organization can create blue oceans by looking across the six conventional boundaries of competition (Six Paths Framework), reduce their planning risk by following the four steps of visualizing strategy, create new demand by unlocking the three tiers of non-customers and launch a commercially-viable blue ocean idea by aligning unprecedented utility of an offering with strategic pricing and target costing and by overcoming adoption hurdles. The book uses many examples across industries to demonstrate how to break out of traditional competitive (structuralist) strategic thinking and to grow demand and profits for the company and the industry by using blue ocean (reconstructionist) strategic thinking. The four principles are:

  1. how to create uncontested market space by reconstructing market boundaries,
  2. focusing on the big picture,
  3. reaching beyond existing demand and
  4. getting the strategic sequence right.

3. The third and final part describes the two key implementation principles of blue ocean strategy including tipping point leadership and fair process. These implementation principles are essential for leaders to overcome the four key organizational hurdles that can prevent even the best strategies from being executed. The four key hurdles comprise the cognitive, resource, motivational and political hurdles that prevent people involved in strategy execution from understanding the need to break from status quo, finding the resources to implement the new strategic shift, keeping your people committed to implementing the new strategy, and from overcoming the powerful vested interests that may block the change.

In the book the authors draw the attention of their readers towards the correlation of success stories across industries and the formulation of strategies that provide a solid base to create unconventional success – a strategy termed as “blue ocean strategy”. Unlike the “red ocean strategy”, the conventional approach to business of beating competition derived from the military organization, the “blue ocean strategy” tries to align innovation with utility, price and cost positions. The book mocks at the phenomena of conventional choice between product-service differentiation and lower cost, but rather suggests that both differentiation and lower costs are achievable simultaneously.

The authors ask readers “What is the best unit of analysis of profitable growth? Company? Industry?” – a fundamental question without which any strategy for profitable growth is not worthwhile. The authors justify with original and practical ideas that neither the company nor the industry is the best unit of analysis of profitable growth; rather it is the strategic move that creates “blue ocean” and sustained high performance.

The book examines the experience of companies in areas as diverse as watches, wine, cement, computers, automobiles, textiles, coffee makers, airlines, retailers, and even the circus, to answer this fundamental question and builds upon the argument about “value innovation” being the cornerstone of a blue ocean strategy. Value innovation is necessarily the alignment of innovation with utility, price and cost positions. This creates uncontested market space and makes competition irrelevant.”‘-wikipedia

So Blue Ocean Strategy is about corporate governance and making your competition irrelevant. Of course, it can be adapted for civil service management.But it cannot be mere sound bytes. Civil service reform is a serious business of making the civil service rakyat driven.

But look at the state of Malaysian civil service. From being one of the best in our region decades ago with English as the language of public administration, the PTD, as it is referred to, is now a laggard. Senior civil servants have become lapdogs of politicians in power.

KOTA KINABALU 03 Disember 2014. Ketua Setiausaha Negara, Tan Sri Dr. Ali Hamsa (dua dari kiri) menunjukkan buku laporan pada sesi pembentangan Laporan Suruhanjaya Siasatan Pendatang Asing di Sabah di Kota Kinabalu. NSTP/Malai Rosmah TuahWhy? The reason is simple enough: bad leadership by Najib Razak as Prime Minister and by Hamsa Ali as Civil Service chief. In fact, Ali Hamsa  is not an innovator, but just another run of the mill civil servant who got lucky.

Given the legendary excellence, professionalism and integrity of the Singapore Civil Service, what our Prime Minister said in Singapore about Malaysia sharing  common aspirations on good governance sounds  hollow.  A bad joke, if you like. Latching on to Singapore’s success is a bad idea.

1MBD and related matters show that we have become a regional model what governance is not. It may be too damning for me to say that our country is a basket case of corruption and blatant abuse of power, but the truth is that we are under the leadership of Prime Minister. –Din Merican

Malaysia: Forgive Najib and Fawning Ali Hamsa for they know  not what they are doing

by Jahabar

Over the weekend, Singapore celebrated its 50th year as an independent nation and both the Malaysian and Singaporean Prime Ministers toasted each other, writing warm messages in the main English dailies in both countries.

Prime Minister Datuk Seri Najib Razak wrote in Singapore’s Straits Times, and ended with the following paragraph.

“The reality is that we share your aspirations for good governance; for a strong, inclusive and sustainable economy based on sound fundamentals; and for stability, harmony and diversity.”


Perhaps Tan Sri Dr Ali Hamsa, the Chief Secretary to the Government, can then explain what good governance is when two senior officers from the Malaysian Anti-Corruption Commission (MACC) are treated as ping-pong balls for their “behaviour“.

The officers who were transferred on Friday to the Prime Minister’s Department – MACC Special Operations Division Director Datuk Bahri Mohamad Zin and Strategic Communications Director Datuk Rohaizad Yaakob – have since been reinstated following outcry that the move was a form of harassment amid the agency’s ongoing probe in a former subsidiary of government strategic investor 1Malaysia Development Bhd (1MDB).

They were to have started new postings at the Prime Minister’s Department yesterday but had instead met with Ali, as well as the Director-General of the Public Services Department, where they were given the opportunity to explain their positions.

“It’s just how public officers should behave,” Ali told reporters yesterday at the civil servant’s Hari Raya gathering in Kuching, Sarawak.

Ali, however, would not elaborate on what sort of behaviour he meant and how it was wrong. The Head of the Civil Service also said that the transfers had “nothing to do with the investigation”, referring to the police’s probe into the MACC for alleged leaks of official information on 1MDB.

The shock transfer has further damaged the Najib administration, a week after the Prime Minister reshuffled his Cabinet, sacking UMNO Deputy President Tan Sri Muhyiddin Yassin as the Deputy Prime Minister and party Vice-President Datuk Seri Shafie Apdal as a minister.

Attorney-General Tan Sri Abdul Gani Patail was also removed from his post while the Special Branch chief had his contract ended.

In many ways, the MACC transfers and the July 28 sackings came as suddenly as 1MDB found itself with a new boss, banker Arul Kanda, last January 5.No matter how it is explained, it reeks of a government throwing tantrums and re-arranging the furniture of a sinking ship.

Yes, everything that Najib wrote is something that we all can agree on. But his government’s actions are taking us far and away from that, and confidence has evaporated.

Ali and the rest of the civil service have to do better than arbitrary transfers if they want Malaysians to retain whatever little confidence they have in the government. We have a trust deficit that keeps getting higher every day.

It is time the government walked the talk, be it on good governance or the already discarded catchphrase of People First, Performance Now. Mere words cannot match the deeds done.

* Jahabar Sadiq runs The Malaysian Insider.

Well done, Dato’Seri Nazir Razak

July 9, 2015

CIMB starts internal inquiry into Banker’s wrong WSJ analysis

by Elizabeth Zachariah

Malaysia’s CIMB Bank is to investigate its Islamic Bank Chief Executive Officer Badlisyah Abdul Ghani, who had made a wrong analysis in disputing the Wall Street Journal’s (WSJ) documents over the alleged trail of funds which landed in Datuk Seri Najib Razak’s bank accounts.

Nazir RazakDato’ Seri Nazir Razak

In an Instagram post last night, CIMB Group Chairman Dato’ Seri Nazir Razak apologised over the matter, saying that Badlisyah should not have made comments on the documents as it was a “technical matter”.

Nazir’s post was accompanied with a picture of CIMB Group Chief  Executive officer Tengku Datuk Zafrul Tengku Abdul Aziz and CIMB Islamic Bank Chairman Datuk Dr Syed Muhamad Syed Abdul Kadir showing Badlisyah’s comments made on Facebook to a “surprised” Tan Sri Md Nor Yusof, who is a former CIMB chairman.

“Zafrul and Syed showing a surprised Md Nor the Facebook post by Badli (CEO CIMB Islamic) on WSJ article,” said Nazir, who is also brother to Prime Minister Najib.

“Posts have been removed as it is a technical matter on which he should not be commenting. Our apologies, we will conduct an internal inquiry.”

In his original comment on his Facebook page, Badlisyah accused the global business daily of using false documents in its report alleging that US$700 million (RM2.67 billion) worth of 1MDB-linked funds were pumped into the Prime Minister’s personal accounts.

Badlisyah said there was a discrepancy in the “Swift” code mentioned in the documents uploaded online on Tuesday. He said the documents released by WSJ stated that the Swift code for Wells Fargo Bank was “PNBUS3NANYC”, but it should actually be”PNBPUS3NNYC”.

“The Swift Code PNBPUS3NANYC belongs to Alfa-Bank Moscow. This is not just a tell-tale sign the document is an absolute hoax but a very firm confirmation that the document is a hoax or a fraud.

“How could WSJ miss this factual error?” he said in the Facebook post circulated on pro-Umno blogs.But the Malaysiakini news portal later disputed the banker’s assertion, saying that it examined Badlisyah’s claim and found that the Swift code for Alfa-Bank Moscow was ALFARUMM.

“Badlisyah correctly pointed out that the particular Wells Fargo bank branch should have a Swift code of ‘PNBPUS3NNYC’ instead of ‘PNBUS3NANYC’ as listed on the documents released by WSJ,” reported Malaysiakini.

“A check showed that the ‘PNBUS3NANYC’ Swift code belonged to its predecessor, Wachovia Bank, which was subsequently taken over by Wells Fargo Bank in 2008.

“It is unclear why the transaction used a Swift code belonging to the predecessor of Wells Fargo Bank or how long the transition to a new Swift code would take.”

Badlisyah also said the document erroneously listed the bank’s address as “375 Park Avenue, NY 4080, New York, NY”.

The “real address” of the particular Wells Fargo bank branch is “375 Park Avenue, 10th floor, New York, NY 10152”, he said.

However, Malaysiakini said here was no discrepancy in the address, as both “4080” and “10152” are part of the Bank’s address, which is: “375 Park Avenue NY 4080. New York, NY 10152”.

Following that, Badlisyah admitted he made an error in his analysis and said that he has since corrected it.

“I would like to make clear that all the views published on my Facebook account are strictly my PERSONAL views and not the views of any other individual or organisation. They were meant for private consumption among a group of friends.

“I would also like to acknowledge that I had made an error in my post with regards to my analysis of the various SWIFT codes.

“The mistakes were correctly pointed out by a report in Malaysiakini on the matter, and I have also made the correction on my Facebook page,” said Badlisyah in a statement issued last night.

1MDB– it is mismanagement or fraud, get it Lodin

June 10, 2015

1MDB– it is mismanagement or fraud, get it Lodin

by  P. Gunasegaram

QUESTION TIME Really, 1MDB chairperson Lodin Wok Kamaruddin, as a long-time corporate chieftain, should know better than to ascribe the company’s cash flow problems to the postponement of the listing of its energy assets.

He said other things besides but this stands out in what he said to the Business Times, the business section of the New Straits Times. And despite what he maintains, 1MDB is not a case of the public perceiving it wrongly – the fact is that 1MDB has done many things wrongly as we shall show.

This is not the first time Lodin is spewing out misinformation. We took issue with another instance here.

Let’s look in detail at what he said this time.  He  said that if 1MDB had been successful in listing its energy assets in 2014, things would have turned out differently for the strategic development fund – “had the initial public offering gone ahead, it would have strengthened 1MDB’s cash flow.”

Lodin said that listing Edra Energy Global Bhd on Bursa Malaysia remains on the agenda for 1MDB, in order to raise cash for expansion and reduce its borrowings. He said it aims to raise about RM11 billion from the IPO.

Let’s remember that 1MDB had RM42 billion in borrowings as at end March 2014. According to its own statement just last week, it paid RM12 billion for the power assets which had their own debt of RM6 billion. Knocking RM12 billion off the debt, 1MDB still has RM30 billion to play around with.

Surely if it has invested the remainder money properly it would have had plenty of cash flow left because property involves long-gestation projects that require little money to be invested now. So the cash flow problem can only be due to mismanagement, or worse, fraud, by 1MDB.

By almost all accounts 1MDB overpaid for these energy assets, some of which were expiring pretty soon. The amount overpaid could be as high as RM3 billion on RM12 billion worth of assets. In the accounts for the year ended March 31, 2014, an amount for impairment loss of RM1.2 billion had already been made on these assets.

Under such circumstances it is extremely doubtful that the listing of the power assets would have gained 1MDB the RM11 billion anticipated from the IPO. Even if it sold all of 1MDB it probably will not be able to obtain RM11 billion at this point of time when the whole world knows that 1MDB is in dire need of cash despite borrowing RM42 billion and showing only RM12 billion in hard assets besides property. In any case the property was acquired cheaply from the government.

Project now in limbo

Lodin goes on to say that the listing was postponed because the group “wanted to obtain Track 3B (a 2,000 MW coal-fired power plant project) and all the necessary approvals for the listing. The timing was also not right to launch the IPO because of weak market sentiment and the volatile stock market.”

But 1MDB could not proceed with Track 3B for various reasons, including the inability to raise money, with the project now in limbo and Tenaga Nasional contemplating its takeover.

Lodin (photo) said the fund’s plans had always been to venture into property development and energy generation from the start. He said, “1MDB is basically involved in long-term investments. With the little money we had as paid-up capital totalling RM1 million when we started in 2009, we had to borrow from banks to build the business in Malaysia and overseas.”

Well, with the little money that it had, 1MDB borrowed lots of money without even considering how it is going to repay interest let alone the principal. The rate at which borrowings rose was obscenely high especially since 1MDB had no clear explanation at all for what was being done with the money and the expected returns.

The only hard assets besides property was in energy and for this it paid RM12 billion. Property assets don’t need much cash right now, so what was the necessity to borrow a further RM30 billion on top of the RM42 billion? In what assets has 1MDB invested this money to give a decent return over the cost of its borrowings?

Lodin said he regretted there was a wrong perception of 1MDB and that people are not seeing the true value of 1MDB.

He said, “I am sorry that there is a wrong perception of 1MDB. People do not see the true value of 1MDB and how we have invested. 1MDB, through Edra, has 15 independent power producers (IPPs) in Malaysia, Pakistan, Egypt and Bangladesh with a collective 5,500MW capacity. Compared with Malakoff Corp which only has 5,300MW capacity, we are bigger.”

Sure, but Malakoff has a market value of only RM9.3 billion for just 200MW less in generating capacity. Even if we put the potential market value of 1MDB at RM10 billion, if 1MDB cuts its stake down to 50 percent as a result of the IPO, it would have just raised RM5 billion.

But given the substantial mistrust of anything to do with 1MDB and its poor, well-deserved reputation, its IPO is not likely to be well received at all. And remember too that Malakoff’s power generation is all in Malaysia under lucrative, iron-clad contracts. That may not be so for 1MDB’s energy assets.

An albatross already hanging around your neck

Najib and 1MDB

If the entire IPO is valued at RM8 billion instead, the write-down in assets under the new valuation will be a massive RM4 billion from the RM12 billion acquisition price. Perhaps that’s the main reason why 1MDB postponed its IPO. How do you float a successful IPO when you have an albatross already hanging around your neck, weighing you down.

Further, Lodin will do well to explain what was so strategic (1MDB is a self-styled strategic development company which aims to bring strategic investments into the country) about buying over Malaysian-owned energy assets and then putting them back into the market via an IPO.

Sorry, Lodin, you have got it all wrong. It is not a matter of perception – 1MDB has borrowed too much money and it can’t even explain where a huge proportion of them are. At least RM15.4 billion are not even properly accounted for and the financing costs of RM5.4 billion to date are beginning to hurt real bad.

And all of this happened during your watch, Lodin. Instead of spewing out half-truths about 1MDB and dismissing one of Malaysia’s largest scandals as one of wrong perception, you should be spending your time putting 1MDB in order.

You can start by answering just two simple questions. Why did 1MDB need to borrow RM42 billion when eventual hard assets acquired amounted to just RM12 billion? Where exactly, and we mean exactly, and in what form exactly are all the assets of 1MDB?

If you can’t answer these questions you should step down from 1MDB and let someone else take over who can give us some real answers. But remember that does not absolve you or any other member of the 1MDB board from responsibility for the utterly shameful and possibly fraudulent dealings at 1MDB.

It’s time to change, the public has long ago wised up to 1MDB’s antics.

Datuk Seri Ahmad Husni never let Arul Kanda play games with you on 1MDB

June 7, 2015

Datuk Seri Husni never let Arul Kanda play games with you on 1MDB

by Alexander Winifred

najibhusni3Dato’ Seri Husni and PM Najib

The Finance Ministry-owned 1Malaysia Development Bhd’s (1MDB) attempt to explain its RM42 billion debt to silence detractors may have backfired.

Instead of putting to rest all the allegations about the “missing” money, the summary of 1MDB’s expenditure and debt released on Wednesday only raised more questions about the government development fund’s dealings.

“Companies don’t usually borrow funds for operating expenditure. It appears 1MDB may not have followed good business practices,” said Tan Sri Ramon Navaratnam, a former World Bank alternate ExectuiD and Deputy Treasury Secretary-General, referring to 1MDB’s RM5.8 billion borrowings for financial expenditure.

“The revelation by (1MDB president and CEO) Arul Kanda Kandasamy essentially revealed nothing that we don’t already know. The questions which we asked, however, remained completely unanswered,” said Public Accounts Committee (PAC) member and MP Tony Pua, who has emerged as an outspoken 1MDB critic over the last few years.

Most of the questions were aimed at 1MDB’s placement of a large percentage of its investment funds into overseas tax havens, said to be an unusual move.

1MDB had placed as much as RM15.4 billion of its borrowings into the largely engimatic investment funds in the Cayman Islands (Brazen Sky, RM6.1 billion) and British Virgin Islands (1MDB Global Investments Ltd (1MDB GIL), RM5.1 billion), as well as RM4.2 billion into Abu Dhabi-based Aabar Investment PJS.

Aabar, a subsidiary of the International Petroleum Investment Co with links to the Abu Dhabi royal family, last reported total assets of US$10.15 billion (RM37.54 billion) after it had been delisted from the Abu Dhabi Securities Exchange and taken private in 2010.

According to its website, Aabar holds a 21.6% stake in RHB Capital Bhd, the owner of RHB Bank Bhd and RHB Investment Bank Bhd. Brazen Sky’s funds are reportedly managed by Hong Kong-based Bridge Partners.

Bridge Partners’ website does not contain information about its management team or track record, but it does list about 70 business deals (mostly with Chinese firms) it has conducted as a financial advisor.

“We don’t have much (of an) idea about these overseas fund managers,” said Phua Lee Kerk, chief strategist at fund manager Phillip Mutual Bhd.

Phua said it “was a little abnormal” that 1MDB would choose to put such significant portions of its investment funds into foreign funds in tax havens, based on his understanding of the company.

“Generally, funds in tax havens are perceived to have higher returns but also carry higher risks. What we see in these funds is usually low transparency in nature,” said Phua.

He said companies with similar structures to 1MDB, which he likens to a sovereign fund, would normally only invest 10%-20% of their excess profits into high risk funds, usually associated with overseas hedge accounts.

The bulk of funds under a sovereign fund manager would usually be invested directly into businesses, instead of into little-known funds such as Brazen Sky and 1MDB GIL.

“In my opinion, it would have been better to give such large amounts to local fund managers to nurture the industry,” said Phua.

“I would very much prefer to have taken a conservative approach and after all, it’s the rakyat’s hard-earned money,” he said. “What exactly was the RM6.1 billion of investment in Brazen Sky which was parked in Cayman Islands?

Najib and !MDB ExecutivesThey must hang together

“Why is it that despite Arul Kanda announcing that all of Brazen Sky’s investments have been “redeemed”, there’s still no cash at all in the BSI Bank Singapore?” asked Phua, a former head of a firm listed in Singapore’s second bourse.

Despite earlier saying it would wait for the Auditor-General’s report on 1MDB, the PAC commenced an investigation in late May.

“The Prime Minister’s statements and public responses made it necessary for the PAC to carry out (its own) inquiry as soon as possible,” Dr Tan Seng Giaw, Deputy Chairman of the committee, told The Malaysian Reserve yesterday.

Tan said the PAC’s investigation would concentrate on 1MDB’s financial governance, including “how, why, when and where 1MDB had acquired its funds, the ways these have been spent, the total amount of debts incurred and the interests”.

Meanwhile, the announcement of a formal inquiry by Malaysia’s central bank on Wednesday was welcomed but seen as overdue.

Bank Negara Malaysia (BNM) could have completed its enquiries easier if the authority had begun its investigation earlier, said the head of leading anti-corruption watchdog Transparency International’s Malaysian (TI-Malaysia) affiliate.

TI-Malaysia President Datuk Akhbar Satar said action in the “earlier stages” of concern would have facilitated smoother evidence gathering by the authorities.

BNM now needs to perform the investigation without fear or favour, said Akhbar, who formerly led the Malaysian Anti-Corruption Agency’s Training Division as its Director.

“Come out with the truth. This is an opportunity for 1MDB’s credibility in the eyes of the public to be restored,” he said. Malaysians are concerned that a 1MDB default would be disastrous to the economy, which is trying to break into the league of high-income nations by 2020.

In an interview on national television on Wednesday, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Putrajaya would fail to meet its budget deficits if it was forced to shoulder the debt of the troubled company.

“What will happen? Our ratings will drop. When our ratings drop, our companies borrow from abroad, our currency value will drop like in 1998 when our ringgit at one point was over RM4, then how to pay debts?”

Ratings agency Moody’s said last week if governmental support for 1MDB moves away from fiscal consolidation measures, it could provoke a reassessment of its outlook for the country’s sovereign rating

Leadership by moral legitimacy

June 7, 2015

Leadership by moral legitimacy

by Graham Harris*

*After completing a degree in Botany and PhD in Plant Ecology atgraham_harris Imperial College, London in the late 1960s, Professor Graham Harris worked at McMaster University in Canada for 15 years where he became a Professor of Biology and carried out research on the ecology and management of the Laurentian Great Lakes.

He came to Australia in 1984 and worked for CSIRO for over 20 years where he held many research management and senior executive appointments. Graham has worked in a range of disciplines including plant ecology, freshwater and marine ecology, space science and remote sensing. He was the foundation Chief of Division for CSIRO Land and Water, and until 2003 he was Chairman of the CSIRO Flagship Programs. After completing this task he stepped down as Flagships Chair and was made a CSIRO Fellow. He left CSIRO in early 2005.

Graham is the Director of ESE Systems Pty. Ltd., a consulting company specialising in research into, and the management of, complex environmental, social and economic systems. He is an advisor to a range of universities, research agencies, private companies and government jurisdictions both in Australia and overseas.

Graham is an Affiliate Professor at the Centre for Environment, University of Tasmania and an Honorary Research Professor in the Sustainable Water Management Centre at Lancaster University, UK. He was awarded the CSIRO Chairman’s Gold Medal in 1996 and was elected a Fellow of the Australian Academy of Technological Sciences and Engineering in 1997. In 2002 he was elected a life member of the International Water Academy, Oslo. He was awarded the Australian Centenary Medal in April 2003 for services to environmental science and technology. Graham has published more than 140 papers, and three books. His latest book Seeking sustainability in an age of complexity was published by Cambridge University Press in June 2007.

The_Thinker_in_NTHU_TaiwanThe Thinker @NTHU, Taiwan

We still seem to be fighting Cold War battles over whether neoliberalism and individualism – the “bottom up” strategy – is the best model for modern democracies, or whether more state intervention – the “top down” control model – is preferable. The debate in the West is quite brutal with polarized politics and biased media coverage frequently providing only a partial view.

[The Web does however provide an antidote to the prevailing ethos by providing access to other points of view; blogs by George Monbiot and Harry Shutt for example.]

When confronted by complexity most of the decisions we must make are not just uncertain they are logically un-decidable (see Pascal Perez’s comments on my last post). The fundamental problem is that “facts” and models in such situations are under determined; they are inevitably supported by beliefs about what counts as evidence and what constitutes a proof, and values creep in. Without an appropriate moral stance to aid decision-making these limitations are becoming ever more obvious.-G. Harris

As we find we have to deal more and more with systems of systems – which requires both systems thinking and an appreciation of complexity – we are finding that simple slogans and remedies do not suffice (even though the air waves and the Web are flooded with them). To quote H.L. Mencken “For every complex problem there is an answer that is clear, simple, and wrong.” The predominant debate is too simplistic and does not provide sufficient nuances or sophistication.

I am reminded of David Berlinski’s concluding words in “On systems analysis: an essay concerning the limitations of some mathematical methods in the social, political and biological sciences” (1976): viz. “Grand efforts brought low by insufficient means”.

When confronted by complexity most of the decisions we must make are not just uncertain they are logically un-decidable (see Pascal Perez’s comments on my last post). The fundamental problem is that “facts” and models in such situations are underdetermined; they are inevitably supported by beliefs about what counts as evidence and what constitutes a proof, and values creep in. Without an appropriate moral stance to aid decision-making these limitations are becoming ever more obvious.

Faced with such a situation we have both a knowledge problem and a collective action problem – and they are inextricably intertwined. The conjunction of constraints, complexity and community provides us with a perfect epistemological, political and moral storm. There is a moral space for communities to fill, but it is presently vacant. We require a new approach.

David Colander and Roland Kupers in “Complexity and the art of public policy: solving society’s problems from the bottom up” (2014) – hereafter C&K – have provided an alternative – middle ground – view on how to organise institutions and economics in a complex world. They favour what they call laissez-faire activism – combining both top down and bottom up innovation and facilitation. In a complex system of systems knowledge will always be partial, and neither the market nor state regulation will be able to provide complete solutions. History shows us the truth of this.

We can do without the brutal debates between the political right and left (they are more and more indistinguishable anyway), between the positivists and the relativists or between, say, the followers of Hayek or of Keynes. Indeed C&K show how the debate has been engineered to deliberately polarise the political and economic landscapes. The original positions of many intellectual luminaries were much more nuanced and sophisticated than is now made out. It is the old story: the messiah got it right – just beware the disciples.

Through the air waves and the Web we are flooded with emotivism. The polarised Western debate is no more than this. Statements of the form “this is good” can be taken to mean “I approve of this: do so as well”. Our moral debate consists mostly of shrill, impersonal assertions; our language of morality is in a state of disorder.–G. Harris

As Kwame Anthony Appiah has argued in “Cosmopolitanism: ethics in a world of strangers” (2006) the prevalent liberalism and positivism favours the belief in value free (scientific) “facts” because we can hold and assert our own individual beliefs. Values, on the other hand, are more about things we share and how we deal with each other in communities. So values require us to discuss and debate their context and efficacy, but because the mantra is “there is no such thing as society” we rarely do this.

C&K take an optimistic view of people as “smart and adaptive” and argue that the role of government is to set norms for behaviour and to provide leadership by moral legitimacy. They agree with Kwame Anthony Appiah who argued in “The honour code: how moral revolutions happen” (2011) that it is morality and values – our shared norms – that best regulate how we deal with each other and our environment.

Alasdair MacIntyre in “After virtue” (2007, 3rd Ed.) has argued that one of the main failures of modernity has been the demise of morality and the instrumental behaviour of bureaucrats and corporate managers in commercial and institutional settings. There is much confusion of means and ends and people and the environment frequently get used and abused. This is also true of politicians and politics and it explains why there is an evident and rapid decline in trust.

Through the air waves and the Web we are flooded with emotivism. The polarised Western debate is no more than this. Statements of the form “this is good” can be taken to mean “I approve of this: do so as well”. Our moral debate consists mostly of shrill, impersonal assertions; our language of morality is in a state of disorder.

At the moment there seem to be few sanctions for unethical or even criminal behaviour in many spheres of public life. Despite clear indications of criminal activities associated with the financial crash of 2008 and of irregularities in global markets since – collusion and market rigging – very few sanctions or criminal prosecutions have been pursued. Worse there is no evidence that anyone feels shame or remorse. The guardians have been inactivated.

Environmental degradation is, likewise, a moral issue. No amount of attempts to monetise environmental values or design market-based instruments will alter this. Easily quantifiable substances like water and carbon dioxide may be traded, but for complex 2nd order cybernetic entities like ecosystems everywhere is different. Concepts like markets for ecosystem services and biodiversity offsets are therefore a fraud. We cannot swap like for like and ill-defined incommensurate values cannot be monetised. Offset payments to a conservation fund are a sop for the conscience.

To arrest the decline in trust and moral behaviour Appiah and MacIntyre argue that we need a return to concepts of virtue, honour, shame and esteem. To grease the wheels of society we need a debate about codes of honour that are compatible with morality and professional ethics. We can have positive regard for people who meet certain standards of behaviour and we can sanction those who do not. Those standards need to be debated, clearly stated and enforced.

C&K see a key role for government in providing the leadership and in setting those norms. Geoffrey Brennan and Philip Pettit have noted in “The economy of esteem: an essay on civil and political society” (2005) that because we all (should) have a stake in making society work the cost of policing an honour world is very low and we do not have to worry about who is guarding the guardians. We all have a role to play.

Now I am sure some will argue that liberalism and modernism have defeated such outdated concepts, but the failings of Western politics since the 1970s are now clear: instrumental reason, rising inequality, environmental degradation, lack of political will and moral corruption. Governance and leadership by moral authority and legitimacy? Now wouldn’t that be something to behold!