Effective from 1 June 2020, amendments towards the Malaysian Anti – Corruption Commission Act 2009 (MACC) has introduced corporate liability provisions for bribery and corruption under Section 17A of the act. Previously, the MACC Act only emphasizes on prosecuting individuals involved in corruption. However, with the enactment of Section 17A, organizations involved in corruption may be held liable and prosecuted, along with the individuals from the organization who are convicted committing the offence.
Under Section 17A, a commercial organization is said to be committing a criminal offence if a person who is associated with the organization is convicted offering or accepting any gratification with the intent to benefit the organization.
‘Person associated with an organization’ includes:
- organization’s director, controller, officer, partner and employees
- anyone who performs services on behalf of the organization
Any commercial organization that is found guilty under Section 17A will be liable to a fine of not less than 10 times (10x) the value of the monetary gratification received, or imprisonment of up to 20 years.
Guidelines on Adequate Procedures
Under Section 17A, guidelines on adequate procedures have been added to assist commercial organizations in preventing corrupt practices in the organization. The procedures are summarized with the acronym: T.R.U.S.T.
T: Top Level Commitment
The top-level management is responsible in practicing the right integrity and ethics as well as ensuring all activities in the organization are abiding the law, to combat corruption.
The top-level management could develop standards of practice and policies in order to minimize the risk of corruption, which includes:
- establishing and conducting a periodical review on anti-corruption policy compliance
- promoting a culture of integrity
- establishing an “Anti-Corruption Policy” that addresses corruption risks and outlines regulations, authorisations required, sets out specific monetary thresholds, for associated persons in an organisation to comply with
- communication and practice of anti-corruption policies in dealings with internal and external stakeholders
- encouraging whistleblowing in relation to corruption incidents
- ensuring that the results of any audit, reviews of risk assessment, control measures and performance are reported to each and every top-level management, including the full Board of Directors, and acted upon.
R: Risk Assessment
A framework can be set up to identify potential risks. Periodical risk assessments should be done and reported in order to minimize the possible occurrence of corruption in the organization.
The risk assessment should involve the following areas:
- identifying and grading the potential opportunities for corruption and fraud activities in the conduct of the commercial organisation’s business operations
- occurrence of financial transactions or facilitation payments that may act as a cloak to disguise any hidden corrupt payments
- relationship with third party organizations
U: Undertake Control Measures
Appropriate control measures should be implemented once corruption risks are identified, which includes:
- Due Diligence – conducting background checks with relevant parties to identify source of corruption.
- Reporting channel – developing a confidential reporting channel for internal or external stakeholders to report any alleged incidents of corruption in the commercial organization.
S: Systematic Review, Monitoring and Enforcement
Top-level management is encouraged to hold regular reviews to assess the performance, efficiency and effectiveness of the anti-corruption policies, through internal or external audits. Such audits allow for possibilities to improve the current policies to strongly enforce the anti-corruption controls and measures.
T: Training and Communication
Commercial organizations should conduct training programs for employees and business associates to provide them a better understanding on the organization’s policies, controls and measures regarding corruption practices, and have constant communication to update on any amendments or information pertaining to corruption practices.
