News & Views

CORPORATE MALAYSIA PREPARES FOR NEW ANTI-CORRUPTION LAW AS ENFORCEMENT DATE APPROACHES

Posted on 6th November 2019

A new Section 17A of the Malaysian Anti-Corruption Commission Act 2009, was enacted in May 2018 and is targeted to be enforced on 1 June 2020. As that enforcement date draws near, many Malaysian companies are seeking legal advice on how they can protect themselves from liability through implementation of the “adequate procedures” required by the legislation as a defence to prosecution. As this is an offence by imputation, the legal burden is placed on corporations to show that they took adequate measures to prevent the commission of corrupt acts in the organisation as well as in dealings by associates. As businesses are dynamic, no exact prescription of the “adequate procedures” is provided and corporations must develop their own level of anti-corruption practices and protocols as befit their operations.

Section 17A not only imposes corporate liability on a commercial organisation (which includes companies, corporations and partnerships), but unlike its Section 7 counterpart under the UK Bribery Act, also extends liability to any director, controller, officer, partner or manager of a commercial organisation for the same offence if the commercial organisation is found liable, unless the relevant individual can prove that the offence was committed without his or her consent, and that he or she had exercised due diligence to prevent the commission of the offence.

The operative provisions of Section 17A 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 commercial organisation. Section 17A(6) defines “person associated with a commercial organisation” to include directors, partners and employees of the commercial organisation, as well as any person “who performs services for or on behalf of the commercial organization.” Oddly, the definition does not include subsidiaries or shareholders. This mean that a commercial organisation may be liable for the corrupt acts of any of its employees, agents or distributors, thereby extending the need for far wider and greater vigilance in ensuring proper business conduct and operational protocols.

The penalty for an offence under Section 17A is stated to be a fine of not less than 10 times the value of the gratification in question or RM1 million, whichever is higher, or imprisonment for not more than 20 years, or both. The financial penalty for a corporate liability offence is much higher than the existing financial penalty for a bribery offence under the MACC Act, which is only a fine of not less than five times the value of the gratification in question or RM10,000/=, whichever is higher.

Section 17A(3) of the MACC Act provides that a director, controller, officer, partner or person found to be liable for corruption under Section 17A, shall be deemed to have also committed the same offence, unless the relevant individual can show that the offence was committed without his or her consent and that he or she had exercised such “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.

RLSE Corporate Team