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Corruption and Corporate Criminal Liability

Jun 17, 2020 | NKPT

Joachim Xavier
Partner
Corporate Criminal Liability practice
Tel: +6016 4100264
Email: xavier@nkpt.com.my

 


The Prime Minister’s Office in a statement on 21 May 2020 announced[1] that the amendment to the Malaysian Anti-Corruption Commission Act 2009 introducing corporate criminal liability will come into force on 1 June 2020. This announcement ends months of speculation as to whether the amendment would be enforced by the Malaysian Anti-Corruption Commission (MACC) given the challenges faced by businesses during the Covid-19 pandemic.

The amendment to the MACC Act 2009 by way of introduction of section 17A imposes corporate criminal liability on commercial organisations (whether Malaysian companies or foreign ones doing business in Malaysia) if a person associated with it commits a corruption offence.

A person is defined to be associated[2] with the commercial organisation if he / she is a director, partner, employee or even third person who performs services for or on behalf of the commercial organisation.

Further, if a commercial organisation is found to be guilty of an offence, a director, controller, officer, partner or any other person in management can also be deemed guilty of the same offence[3], unless they are able to prove that the offence was committed without their consent and that due diligence was carried out to prevent the offence.

Prior to this amendment, the law did not provide for explicit commercial organisation liability which inevitably resulted in only the individual committing the corrupt offence being charged and convicted for corruption offences.

With the coming in force of this amendment, commercial organisations and their senior officers are now at risk of being exposed to criminal liability on account of acts by its members. The offence is a strict liability one and the punishment imposed is severe in the form of a fine of not less than ten times the sum or value of the gratification (bribe) or one million ringgit, whichever is the higher, or to imprisonment for a term not exceeding twenty years or to both[4].

A commercial organisation charged for an offence committed by an associated person, may be able to rely on the statutory defence that it had put in place adequate procedures to prevent the associated person from engaging in corrupt practices[5].

While the amended MACC Act 2009 does not itself define what these measures are, it is likely that these adequate procedures may include getting legal advice so that it is educated on the scope and applicability of section 17A to its business, issuing internal anti-corruption guidelines and standard operating procedures (particularly in procurement activities), conduct anti-corruption training programmes for employees and vendors, create safe and confidential corruption reporting avenues and effective communication of anti-corruption policies to all members of the commercial organisations.

The last two years have seen an uptick in corruption complaints, investigations, and cases including those involving high profile individuals. The latest amendment is seen by MACC as the coming of a full circle. MACC’s latest statement[6] reflects its unwavering resolve despite calls by business owners to postpone the enforcement of this provision owing the Covid-19 pandemic.

Commercial organisation, especially big ones, that do put in place such adequate procedures stand a much better chance of defending itself in the event an act of corruption is committed by any of its members.

If you have any queries, please feel free to contact author of this article at the above numbers.

 


[1] https://www.nst.com.my/news/government-public-policy/2020/05/594350/msias-corporate-liability-provision-take-effect-june-1
[2] Section 17(A)(6)
[3] Section 17A(3)
[4] Section 17(A)(2)
[5] Section 17(A)(4)
[6] https://www.thestar.com.my/news/nation/2019/05/30/macc-to-use-new-provision-to-prosecute-companies-not-just-individuals