Regional Outlook : Corruption Is Business as Usual in Malaysia, Other Asian Countries : From Indonesia to Thailand, the lines are blurred between politics and private wealth.

Fazrin Azwar could be this nation’s answer to how to succeed in business without really trying.

He is a bumiputera, an ethnic Malay, one of the “sons of the soil” whom the government hoped to assist with an affirmative-action policy designed to help pull them out of poverty in a country whose economy is dominated by ethnic Chinese businessmen.

A committee at the Ministry of International Trade and Industry selected Azwar and five other ethnic Malay investors to buy 1.5 million shares of subsidized stock in the country’s largest manufacturer of electrical cable. Because the stock sold at a steep discount compared to market prices, each investor stood to earn huge short-term profits on the deal.

But an obscure court case revealed a juicy, unpublicized aspect of the sale: Not only is Fazrin Azwar not a poor farmer but a well-to-do lawyer, he is also the son-in-law of Rafidah Aziz, the minister of international trade and industry, whose ministry handed out the subsidized shares.

Despite cries of outrage from the political opposition, Rafidah insisted that she had done nothing wrong.

“May Allah distance me from himself should I ever even think of abusing my powers,” she wrote to one newspaper.

But Rafidah then dropped another bombshell. Responding to a question in Parliament, she acknowledged that the other investors who received subsidized shares included the son of Prime Minister Mahathir Mohamad, the brother of Finance Minister Anwar Ibrahim and the brother-in-law of a top official of the Home Affairs Ministry.

The ensuing scandal--the case has been referred to Malaysia’s anti-corruption agency for investigation--has provided a rare insight into the way money has come to dominate political life in Asia. From the children of Indonesian President Suharto to billionaire ministers in Thailand, “corporate politics” has become a way of life, blurring the lines between government activity and private wealth.

“Over the years, corruption has been allowed to continue, until now it has become a monster,” said Param Cumaraswamy, a human-rights advocate based in Kuala Lumpur. “People think Malaysia is a country of crooks.”

Cumaraswamy has called for the creation of an international, non-governmental agency similar to Amnesty International to monitor corruption in Asia because governments in the region have intimidated opposition politicians and journalists to such an extent that it is rarely exposed.

Nevertheless, the rise of money politics has not visibly dented the region’s economic boom, with many countries in East Asia reporting 8% annual economic growth for a decade or more. Some governments in the region even question if insider arrangements are fairly labeled corruption at all.

While bribery and other forms of old-fashioned corruption have been around Asia since the time of Confucius, academics and diplomats believe that such practices are now mainly confined to low-level bureaucrats seeking to supplement meager wages. Demand for high-level payoffs has actually declined in recent years because of the array of sophisticated new ways for politicians to make large sums.

“The close alliance between politics and business has led to the emergence in Malaysia of an elite minority in whose hands a disproportionate amount of the country’s economic wealth and political power is vested,” a Malaysian academic named Edmund Terence Gomez noted in a recent book about the corporate connections of the country’s political parties. “Equity-based power and hegemonic political position appear to have reinforced each other.”

Yet, the Kuala Lumpur government is so thin-skinned about allegations of corruption that last February it broke off economic relations with Great Britain, canceling billions of dollars in contracts, in retaliation for a London newspaper’s publication of an unproven allegation that Mahathir had been offered a bribe to help secure a construction contract.

Months later, after a procession of British Cabinet ministers had flown out to beg for forgiveness, Malaysia relented and ended the ban.

Similarly, Indonesia nearly broke relations with Australia in 1986 after a Sydney newspaper printed corruption allegations against the Suharto family. It took more than a year before relations were repaired.

Adam Schwarz, a former correspondent in Jakarta for the Far Eastern Economic Review, said in a recent book about Indonesia that “hardly a single major infrastructure contract has been awarded without one Suharto relative or other having a piece of it. Often times, it seems that the tendering process is just for appearances’ sake. The only suspense is over which crony will emerge victorious.”

In Thailand, the government of pro-democracy Prime Minister Chuan Leekpai was deeply embarrassed in December when a deputy minister of agriculture was forced to resign after it was revealed that he had given plots earmarked for poor farmers to rich friends.

Thaksin Shinawatra, Thailand’s new foreign affairs minister, is one of the richest businessmen in Asia. Thaksin, who began his career as a policeman, quickly learned the lucrative way of doing business: He set up his wife as the head of a computer company at the time the police department was spending millions to computerize its records. His wife’s company got some of the business. He has expanded his empire from computers to satellite communications and recently estimated his net worth at $2 billion.

The Philippines recently introduced the death penalty for cases of large-scale corruption, but officials still estimate that the economy loses $3.6 billion a year because of illegal practices. The government of President Fidel Ramos has formed a special commission on corruption to investigate.

A survey by the Hong Kong-based Political and Risk Consultancy found that corruption was worse in the Philippines than in Indonesia and Thailand because businessmen often pay and “come away empty-handed.” The implication was that, in other Asian countries, corruption at least achieved the purpose of efficiently making things work.

Even communist Vietnam is now in the grip of a wave of corruption by high-level officials. Then-Energy Minister Vu Ngoc Hai, the highest-ranking official ever charged, was sentenced last year to three years in prison for his role in “roundabout dealings” concerning four tons of steel destined for a power-line project.

Tiny Singapore, using a mixture of Draconian punishments and perks to keep its civil service in line, stands alone in Asia as being relatively free of corruption.

Many Asian commentators have pointed out that Italy and France recently have endured major corruption scandals, and other Western countries frequently face similar problems. One difference, though, is that, while Western countries may tolerate corruption, the practice is rarely depicted as being in the best interest of the country.

A recent example of the paradox in Asia was the construction of a Malaysian north-south highway, completed last year. The contract for the project, originally estimated to cost $1.4 billion, was given without competitive bidding to a failing Malaysian company called United Engineers.

The highway was finished ahead of schedule, and now motorists can drive the length of the country without once leaving the sleek, six-lane freeway.

But the cost on completion was $2.5 billion, and it leaked out that the construction company was actually owned by an investment trust controlled by the United Malay National Organization, the political party headed by Mahathir.

Confronted in Parliament with this apparent conflict of interest, the prime minister shrugged and replied that the party needed $150 million to pay for a new headquarters.

Competitive bidding is rarely used anymore. Sometimes contracts are even given on a “first come, first served” basis so that the company that makes a proposal first gets the contract. Not surprisingly, the winning companies frequently have high-level government connections.

“Government service in Malaysia has become a path to riches,” a Western diplomat said. “Politicians are principle-less. Politics doesn’t resolve around issues but who can get the best contracts.”

So far, corruption has not become a major political issue in the country, thanks largely to the booming economy.

As long as everyone senses they are better off under the current government, there will be little pressure for change, diplomats said.

Few people ever hear about corruption allegations anyway.

Newspapers and television stations are either controlled by the government or owned by friends and cronies, and allegations against ruling politicians are rarely heard.

There was more news coverage about the Rafidah scandal in the Asian Wall Street Journal and Asiaweek magazine, for example, than in the Malaysian press. While the major newspapers reported her speech to Parliament, most identified recipients of the shares by name only and neglected to mention their high-level connections.