THE MALAYSIAN ANTI-CORRUPTION AGENCY FUELLING THE FIGHT AGAINST CORRUPTION

Section 17a Of The Macc 2009

Speakers

* H.Y. Chong, Managing Partner, Azman Davidson & Co.

* Karen Ng Gek Suan, Azman Davidson & Co.

Organised by MIIP

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In many business organisations today, personal gratification of those engaging in business activities and transactions has often taken precedence over ethics. In setting clear boundaries in the fight against corruption in the corporate world, the newly introduced Section 17A of the Malaysian Anti-Corruption Commission Act 2009 offers clear guidelines.

Enforced on 1st June 2020, the Act states that a commercial organisation commits an offence if a person associated with it corruptly gives, offers or promises any gratification to any person with an intent to obtain or retain business or a business advantage for the said commercial organisation. This new law will have impact not only on the commercial organisation itself, but also its directors, officers, and management as well.

“People know what corruption is when they see it, but in the legal definition, many people may not understand what circumstances amount to an offence,” explains H. Y. Chong to MIIP participants via webinar.

Points Discussed

From a legal perspective, a few common practices that amount to corruption include:

• Offering or giving/receiving/soliciting of something; and

• Corruptly influencing the decision or action of a person who is in a position of trust.

The New Section 17a

Under the new Section 17A, modelled after the UK Bribery Act and the US Foreign Corrupt Practices Act, there are two parts to corruption:

• Outgoing corruption, where an organisation offers some kind gratification with the intention to influence the behaviour of another person; and

• Inbound corruption, where a person receives the gratification.

They pointed out that there is a lot of existing laws already dealing with corruption under the Penal Code and the MACC Act, but these provisions essentially deal with personal liability (“of a person”), and so only individuals are themselves personally liable.

However, a new concept comes into play with Section 17A. It expands the responsibility for an act of corruption to commercial organisations – not a legal person, but a legal concept.

Four Fundamental Concepts

The 4 concepts involved in this new Section are:

1. To make a commercial organisation liable for corrupt act(s) of a connected person.

2. To remove the requirement to show the person committing the corrupt act as the “directing mind and will” of the corporation.

3. To promote a culture of fight against corruption.

4. Section 17A expands to cover companies, partnerships AND any form of commercial organisation.

Mandatory Compliance

They shared that the five areas that commercial businesses must be aware of under this new Act are:

1. Introduction of corporate liability for corruption by individuals.

2. “Extraterritorial effect” – if people associated with a commercial organisation have committed a corrupt act outside Malaysia (eg. at an overseas branch in Indonesia), the commercial organisation itself can still be held liable for corruption.

3. “Deeming provision” – people in management, though not actively involved in the corrupt act, and possess no knowledge of another colleague committing the act, can themselves be deemed to be liable as well.

4. “Shifting of the onus” / burden to persons liable – calls for the people involved, people in management to prove their innocence and faith.

5. Organisations now must come up with “adequate procedures” to prevent corruption - businesses must have policies and procedures in place to monitor management and employees. Training must be provided on how and what to (or not to) carry out, anything considered as corrupt practices… it doesn’t matter how big or small an organisation is, all must well have adequate procedures in place as a defence mechanism.

When a commercial organisation is found guilty, the new Act imposes:

• a minimum of 10 times the sum of the value of the gratification; or

• RM1 million – whichever is higher; and

• up to a maximum 20 years imprisonment.

FIVE GUIDING PRINCIPLES FOR ADEQUATE PROCEDURES: T.R.U.S.T. There are five principles which need to be observed by commercial organisations under the purview of this Act:

1. Top Level Commitment – whereby top level management is responsible for ensuring the organisation practices the highest level of integrity and ethics in compliance with laws and regulations.

2. Risk Assessment – second principle risk assessment the organisation will need to conduct, prioritising corruption risks.

3. Undertake Control Measures –appropriate controls contingency measures are to be set in place to address corruption risks.

4. Systematic Review, Monitoring and Enforcement – ensuring regular reviews of effectiveness of anticorruption programme enforcement.

5. Training and Communication – conducting training and communication exercises covering policy training, reporting channels and consequences of noncompliance.