The new Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (Amendment 2018) (‘MACC Act’) which comes into effect on 1 June 2020 introduces corporate liability for corruption.
Section 17A of the MACC Act directly addresses corporate liability for corruption and attaches responsibility squarely on directors, controllers, partners and management for the commercial organization’s corrupt acts.
It is to be observed that the main salient points on corporate liability provisions can be summarised as follows:-
The attribution of the corrupt acts of “a person connected with the commercial organization” to the commercial organization; and
The commercial organization is liable to a maximum fine of ten times the sum of the gratification involved or one million ringgit, whichever is the higher; or to imprisonment of a term not exceeding 20 years, or both.
It bears iterating that this offence carries not only monetary fine but most importantly, penal liability i.e. imprisonment.
Once an offence is committed by a commercial organization, a director, controller, partners or person concerned with the management 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.
The new Section 17A of the MACC Act reads:-
“17A. Offence by commercial organization
A commercial organization commits an offence if a person associated with the commercial organization 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—
to obtain or retain business for the commercial organization; or
to obtain or retain an advantage in the conduct of business for the commercial organization.
Any commercial organization who commits an offence under this section shall on conviction be liable to a 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.
Where an offence is committed by a commercial organization, a person—
who is its director, controller, officer or partner; or
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.
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.
The Minister shall issue guidelines relating to the procedures mentioned in subsection (4).
For the purposes of this section, a person is associated with a commercial organization if he is a director, partner or an employee of the commercial organization or he is a person who performs services for or on behalf of the commercial organization.
The question whether or not a person performs services for or on behalf of the commercial organization shall be determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between him and the commercial organization.
For the purposes of this section, “commercial organization” means–
a company incorporated under the Companies Act 2016 [Act 777] and carries on a business in Malaysia or elsewhere;
a company wherever incorporated and carries on a business or part of a business in Malaysia;
a partnership–
under the Partnership Act 1961 [Act 135] and carries on a business in Malaysia or elsewhere; or
which is a limited liability partnership registered under the Limited Liability Partnerships Act 2012 [Act 743] and carries on a business in Malaysia or elsewhere; or
a partnership wherever formed and carries on a business or part of a business in Malaysia.”.
Strict Liability
The new law thus employs a deeming provision to shift the burden of proof to the directors, controllers, partners and management. What is required to rebut the deeming effect or the burden of proof is to show that there was due diligence measures implemented by commercial entities to prevent corruption.
Defence of adequate preventive measures
The law now contained in section 17A(4) of the MACC Act seeks and imposes commercial entities to establish proportionate or adequate anti-bribery measures that allow for the prevention, detection and eventually response, in the event of bribery.
It is thus a defence for a commercial organization to prove that it had in place adequate procedures to prevent the corrupt conduct.
MACC ‘Guidelines on Adequate Procedures’
The MACC under section 17A(5) of the MACC Act has issued the “Guidelines on Adequate Procedures” (“Guidelines”) to assist commercial organizations to implement and set up the necessary procedures and measures to prevent corrupt practices.
Under the Ministerial Guidelines, there are five (5) principles outlined which are known as the “TRUST Principles” (T – top level commitment; R – risk assessment; U – undertake control measures; S – systematic review, monitoring and enforcement; T – training and communication).
The TRUST Principles thus prescribes the steps and measures which may be implemented by commercial organizations in preventing corruption.
It seeks to establish an inherent structured corporate culture to fight corruption with a top-to-bottom approach adopted by the senior management.
These Principles also underscores the significance of establishing set of procedures on risk assessment, reviews, control measures and training/communication with whistle-blowing procedures.
Conclusion
As the public holds with bated breath whilst Corporate Malaysia ushers and embraces this momentous moment on 1 June 2020, what remains to be seen is the will to implement these provisions without impunity to achieve the objectives desired.
Perhaps, it will be more than fitting to quote Abdoolcader J (as His Lordship then was) in Merdeka University Berhad v Government of Malaysia [1981] 2 MLJ 356:
‘Fiat justitia ruat caelum - Let justice be done though the heavens should fall’.
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