BACKGROUND
Briefly, the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”)came into force on 1 January 2009. Subsequently, in 2018, pursuant to the MACC Amendment (Act) 2018 (“2018 Amendment”), Section 17A corporate liability was introduced into the MACC Act. The new section imposes penalties on directors and top management for corruption offences committed by the commercial organization and/or its associated persons.
Prior to the new Section 17A, the liability for corruption is limited to the employee or director who is directly involved in the corrupt act but the commercial organization itself did not suffer any penal consequences. In fact, the commercial organization benefited from the corrupt act committed by the individual. With the new Section 17A, both the commercial organization and its top management may be held liable for fines or imprisonment for corrupt practices committed for the benefit of the commercial organization, whether it was committed by the commercial organization or persons associated with the commercial organization. In other words, top management of a commercial organization can be held liable or imprisoned for the conduct of a third party (ie. business associates, distributors, agents, consultants etc)
Under the new section 17A, 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) obtain or retain an advantage in the conduct of business of the commercial organisation.
A person will be considered to be associated with a commercial organisation if he/she is a director; a partner, an employee or a person who performs services for or on behalf of the organisation (i.e. agents, consultants, third party business associates etc).
MACC Act vs the 2018 Amendment
| MACC ACT (Section 16 and 17 of the MACC Act) | 2018 Amendment (Section 17A of the MACC Act) |
| Came into force on 1 January 2009 | Came into force on 1 June 2020 |
| Liability is only limited to INDIVIDUALS | Liability is expanded to INDIVIDUALS AND CORPORATE BODIES |
| Prosecution of individuals directly involved in the corrupt practices | Prosecution of individuals and additionally Prosecution of directors/top management |
| Penalty for individuals: Fine of not less than 5 times the amount of the bribe or at least RM10,000 and imprisonment of up to 20 years per offence | Penalty for corporate liability: A fine of not less than 10 times of the amoount of the bribe or at least RM1 million; or For its officers concerned (i.e. directors and top management) imprisonment up to 20 years; or both. |
First charge under the new section 17A
While companies are in the midst of restructuring business to survive the COVID-19 lockdowns in Malaysia, the first charge brought against a commercial organization under the new Section 17A was instituted in the court against an offshore vessel support company. The company, Pristine Offshore Sdn Bhd, was charged in March 2021 with offering a bribe of RM321,350 to ensure that it was awarded a subcontract from Petronas Carigali Sdn Bhd. If found guilty the company may be liable for up to 10 times the amount of the bribe or RM1 million, whichever is higher. The directors/top management may also be liable to imprisonment of up to 20 years.
The conviction and sentencing under section 17A would not be for the offence of bribery but for the failure to prevent the offence. Once the act of corruption has been proven against the individual or the company, it is for the company to show that it had in place adequate procedures to prevent persons associated with the commercial organization from undertaking such conduct.
The Defence of Adequate Procedures
The MACC Act does not define “adequate procedures” but the Minister has issued an Official Guidelines on Adequate Procedures that the organization can put in place to prevent bribery by persons associated with them. Adequate procedures should be reasonable and proportionate to the commercial organization and the risks, nature, scale and complexity of its commercial activities.
The Adequate Procedures Principles (“TRUST”) are:
(1) Top Level Commitments
(2) Risk Assessment
(3) Undertake Control Measures
(4) Systematic Review Monitoring and Enforcement
(5) Training and Communication
Essentially, adequate procedures will entail establishing an anti-bribery policy and implementing anti-bribery programmes within the commercial organization. Any anti-bribery policy or programmes should embody the TRUST principles. While we cannot yet draw conclusions from the Pristine Offshore case in Malaysia for the interpretation of adequate procedures, but we can draw guidance from other jurisdictions which have decided that adequate procedures are not only limited to having on paper anti-bribery policies and programmes, but the commercial organization must be seen to drive the effort to truly embrace a corruption-free and zero-tolerance culture.