What’s In It For Corporate Entities?
The Malaysian Anti-Corruption Commission (“MACC”) (Amendment) Bill 2018 was presented at the parliament on 26 March 2018 and gazetted on 4 May 2018 as MACC Amendment Act 2018. With the new emphasis on corporate liability clause – amended Section 17A, the introduction of the Act was aimed at combating corruption in the corporate sector.
As defined under Section 17A(1) of the Act, a commercial organisation commits an offense if a person associated with the commercial organisation corruptly gives, agrees to give, promises or offers to any person any gratification, whether for the benefit of that person or another person with intent:
- To obtain or retain business for the commercial organisation; or
- To obtain or retain an advantage in the conduct of business for the commercial organisation.
While the other changes in the Act shall take effect on 1 October 2018, the new corporate liability clause will be enforced on 1 June 2020. The corporate liability clause affects the following commercial organisation (by virtue of Section 17A(8) of the Act):
- A company incorporated under Companies Act 2016 (Act 777) and carries on a business in Malaysia or elsewhere;
- A company incorporated elsewhere but carries on a business or part of a business in Malaysia;
- A partnership under i) Partnership Act 1961 (Act 135) and carries on a business in Malaysia or elsewhere or ii) which is a limited liability partnership registered under the Limited Liability Partnerships Act 2012 (Act 743) and carries on a business in Malaysia or elsewhere; and
- A partnership wherever formed and carries on a business or part of business in Malaysia.
Consequences To The Corporate Organisation?
Any commercial organisation who commits under this section shall on conviction be liable to:
- Ten (10) times of the gratification sum or RM1 million, whichever is higher; or
- Imprisonment term not exceeding 20 years; or
By virtue of Section 17A (3) of the Act, where an offence is committed by a commercial organisation, a person who is:
- Director, controller, office or partner; or
- Concerned with in the management of its affairs,
at the time of the commission of the offence, is deemed to have committed that offence unless that person proves that the offence was committed without his consent and that he had exercised due diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his function in that capacity and to the circumstances.
If the commercial organisation is charged for the offence, the commercial organisation shall prove that adequate procedures are in place to prevent persons associated with the commercial organisation from undertaking such conduct. A person associated with the commercial organisation are referred to as director, partner or an employee of the commercial organisation or he is a person who performs services for or on behalf of the commercial organisation.
Preparing Ahead For The Legislation
The Guidelines on Adequate Procedures (“GAP”) which was issued by the Prime Minister’s Department, will take effect from 1 June 2020, pursuant to the Section 17A(5) of MACC Amendment Act 2018. The GAP elaborates the five (5) components below:
- Top level commitment;
- Risk assessment;
- Undertake control measures;
- Systematic review, monitoring and enforcement; and
- Training and communication.
1. Top Level Commitment
The Board of Directors sets the “tone at the top”, leadership by example and cultivates a transparent culture towards anti-bribery and anti-corruption. This sets the stage for establishment of Anti-Bribery and Anti-Corruption policies and procedures, including Code of Ethics/ Code of Conduct. Furthermore, the Board of Directors provides assurance to internal and external shareholders that the organisation is operating in compliance with its policies and any applicable regulatory requirement.
2. Risk Assessment
It is recommended to conduct comprehensive “corruption risk assessment” every 3 years with intermittent assessment when necessary (e.g. change in law or circumstances of the business). The assessment shall cover the following:
- Potential corruption and fraud activities arising from weaknesses in the organisation’s governance framework;
- Suspicious financial transactions indicating disguised corrupt payments;
- Past legal and regulatory non-compliances related to anti-bribery and anti-corruption; and
- Relationships with third parties in its supply chain, indicating exposure to corruption risk in procurement.
Establish policies and procedures, due diligence process and reporting channel (whistleblowing channel, secure information management system and prohibit retaliation).
Due diligence should be conducted on relevant parties or personnel (such as Board Members, employees, agents, vendors, contractors, suppliers, consultants, senior public officials, etc.). As such, the due diligence process can be embedded into key processes relating to procurement, recruitment and selection, business development and project tendering.
4. Systematic Review, Monitoring and Enforcement
Conduct internal or external audits to assess the performance, efficiency and effectiveness of the anti-bribery and anti-corruption programme. External audits by independent third party of at least once every three (3) years can be considered to obtain assurance that the organisation is operating in compliance with its anti-bribery/ anti-corruption policies and procedures.
5. Training and Communication
Anti-bribery and anti-corruption management (including policies, roles and responsibilities) shall be communicated and adequate training provided to ensure thorough understanding by the employees. Training, seminars and refresher workshops on a periodic basis are effective means to promote anti-bribery and anti-corruption awareness.
How Can We Add Value?
- Assist organisation in the development and enhancement of anti-bribery and anti-corruption statement, policies and procedures, as well as Code of Ethics/ Code of Conduct;
- Provide advisory services on bribery and corruption risk assessment;
- Introduce effective reporting channel such as fraud hotline, whistleblowing module and dedicated e-mail whistleblowing channel; and
- Provide anti-bribery and anti-corruption awareness, refresher sessions, including self-assessment module.
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