[Jointly Written by Bryan Boo with Richard Wee of Messrs Richard Wee Chambers]
The Malaysian Anti-Corruption Commission (“MACC”), established by the Malaysian Anti-Corruption Act 2009 (“MACC Act”), is the agency tasked in combatting corruption in Malaysia. The Preamble to the MACC Act reads:
An Act to provide for the establishment of the Malaysian Anti-Corruption Commission, to make further and better provisions for the prevention of corruption and for matters necessary thereto and connected therewith.
The MACC Act also provides for what activities/actions are deemed to fall under ‘corruption’ and deems these activities/actions to be offences under the MACC Act. They are, inter alia,:
- Soliciting or receives gratification as an inducement to or reward for a person to do or omit to do anything in respect of any matter or transaction;
- Offering or giving of the said gratification;
- Using any receipt, account or document to deceive a principal;
- Corruptly procuring the withdrawal of tender; and
- Using office or position for gratification.
Corporate Liability under Section 17A MACC Act
However, in 2018, the MACC Act was amended and Section 17A of the MACC Act was added to introduce corporate liability for bribery and corruption. Section 17A of the MACC Act reads as follows:
Offence by commercial organisation
17A. (1) A commercial organisation commits an offence 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 –
(a) to obtain or retain business for the commercial organisation; or
(b) To obtain or retain an advantage in the conduct of business for the commercial organisation.
(2) Any commercial organisation who commits an offence under this section shall on conviction be liable to fine of not less than ten times the sum or value of the gratification which is the subject matter of the offence, where such gratification is capable of being valued or is of pecuniary nature, or one million ringgit, whichever is the higher, or to imprisonment for a term not exceeding twenty years or to both.
Presumption of offence by management of the commercial organisation
Section 17A places a heavy burden on the director(s) or partner(s) of the organisation to constantly be in the know of the employees’ activities and to ensure that there is no corruption. Section 17A(3) reads:
(3) Where an offence is committed by a commercial organisation, a person –
(a) who is its director, controller, officer or partner; or
(b) who is concerned 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 or connivance and that he 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.
Therefore, Section 17A(3) essentially places a presumption that the director(s), partner(s) or the management of the commercial organisation has committed the offence of corruption when it has been established that the commercial organisation has committed the offence. The burden is then on the said director(s), partner(s) or management of the commercial organisation to prove that not only was the offence committed without his/her consent but also that he/she had exercised due diligence to prevent the commission of the offence.
It must be noted that for the commercial organisation to have committed the offence, all that is required is for a person associated with the commercial organisation to have committed the offence. In fact, Section 17A makes it clear that whether or not a person performs services for or on behalf of the commercial organisation shall be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between him/her with the commercial organisation.
Statutory Defence – Implementation of Preventive Measures
Nonetheless, while Section 17A might seem onerous and burdensome on the management of the commercial organisation, Section 17A(4) does provide a specific defence. Essentially, where a commercial organisation is charged for a Section 17A(1) offence, the commercial organisation may, in its defence, prove that it had adequate procedures in place to prevent persons associated with it from committing such an offence. Section 17A(4) reads:
(4) If a commercial organization is charged for the offence referred to in subsection (1), it is a defence for the commercial organization to prove that the commercial organization had in place adequate procedures to prevent persons associated with the commercial organization from undertaking such conduct.
As to what amounts to ‘adequate procedures’, the Minister had on 4 December 2018, through the Prime Minister’s Department, released the ‘Guidelines on Adequate Procedures Pursuant to Subsection (5) of Section 17A Under the Malaysian Anti-Corruption Commission Act 2009’. Further, Malaysia does have a system of certification in relation to anti-bribery mechanisms and procedures implemented by commercial organisations known as the ISO 37001.
The ISO 37001 Anti-bribery Management System Certification
The ISO 37001 is a standard of Anti-Bribery Management designed to help commercial organisations prevent, detect and respond to bribery incidences. The ISO 37001 set out the requirements and guidance in assisting an organization establish an efficient anti-bribery management system. Essentially, the ISO 37001 certification seeks to address 2 key areas:
- Bribery by the organisation, its employees or persons associated with the organisation for its own gain; and
- Bribery of the organisation, its employees or persons associated with the organisation
There are numerous benefits to the ISO 37001 certification, including:
- Establishes a risk-based anti-bribery management system to optimise the identifying and managing of bribery;
- Heightens the organisation’s ability to detect fraud;
- Enhances an organisation’s reputation and image by assuring legal compliance and commitment to anti-bribery practices; and
- Provides confidence and trust to the public.
Anti-Bribery Policies and Procedures – A Prudent Practice
Section 17A places a heavy burden on the commercial organisation in which the management of the commercial organisation is responsible for the conduct of its employees and affiliated persons. With the Malaysian government’s announcement on 21 May 2020 that Section 17A of the MACC Act will come into force on 1 June 2020, it is prudent that commercial organisations ensure that they have in place anti-bribery policies and measures to address and prevent corporate corruption.