London 2012 Olympic
Malaysia's contingent in the athletes parade at the opening ceremony of the London 2012 Olympic Games.Reuters

The Malaysian Anti-Corruption Commission has uncovered a syndicate that had siphoned off RM100m (£17m, $24.4m, €21.8m) from the Youth and Sports Ministry with the help of an insider. The commission has arrested nine people including a 56-year-old man government official.

According to the investigations, the syndicate billed the finance division of an agency under the ministry to issue payments to at least 14 companies operated by syndicate members for non-existent activities. MACC said in a statement that although no activities were carried out, the senior official with the ministry "played a role in ensuring payments were made to the companies involved."

The syndicate is believed to have been operating since 2010 and so far investigations have uncovered that no less than £17m have been paid out for the fictitious activities. The ministry official is suspected to pocketing at least RM20m of the funds embezzled.

According to the Malay Mail Online, the government official had lived beyond his means. He is alleged to have bought 12 vehicles, 40 designer handbags, expensive watches and jewellery. The nine persons arrested have been remanded until 24 March pending further investigations.

They have been detained under Section 17(a) of the MACC Act 2009 for offering or receiving bribes as well as the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001. The commission also seized 69 accounts containing RM8.3m, homes and vehicles as part of the investigation.

The Transparency International Malaysia (TI-M) criticised the ministry's internal auditors for failing to spot the misappropriation of funds by a ranking officer over a long period of time. Its president Akhbar Satar said that external audits, usually undertaken by the Auditor-General's office, was conducted randomly and that the onus was on the internal auditors to red flag irregularities.

He called on procedures to check on such incidents to be strengthened further. Officers overseeing "important and financial matters" should not occupy the post for more than three years to prevent abuses.

This was seconded by the Agriculture and Agro-based Industry Minister Ahmad Shabery Cheek who said: "It is time for the Public Service Department and Chief Secretary of the Government to promote or transfer public servants holding sensitive posts, including managing finances, to another department after two years. This will ensure the individual will not get too comfortable in his position or else it could lead to abuse."

He continued: "Ministers and ministry's secretary general come and go but the civil servants are there to stay. Ministers trust civil servants as we come up with poliicies but it is they who advise us about operational matters."

The Malaysian Trades Union Congress Secretary General N.Gopal Krishnam believes that the case is just the tip of the iceberg. "What were the respective heads of the ministry doing all this while? The money should have been audited and accounted for as this has been going on for a number of years."

News of the misappropriated funds has angered the sporting community in Malaysia. Mohd Hariff Saleh from the Terengganu Cycling Team. "This should not have happened. The money should have been channelled to the athletes and the associations," he said.

He continued: "The money belongs to the people, to Malaysian youths and sports. Events are being cancelled because of lack of funds but apparently, money was being pocketed by corrupt people."

Ahmad Khawari Isa, the President of the Sportswriters Association of Malaysia questioned how the official managed to misappropriate the funds without being noticed for six years. "We're shocked with the development ... this shows something is clearly lacking within its system. We would like the ministry to reassure us that all funds, especially concerning athletes, are managed in a transparent manner."

The National Archery Association of Malaysia President Yazid Yahya noted how difficult it was to get funds from the Ministry. He said his team received its allocation for the Olympic qualifying event in Turkey last year only 10 days before the event. "Now, we are being told RM100m had been siphoned. It is frustrating."