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Showing posts with label MACC Act. Show all posts
Showing posts with label MACC Act. Show all posts

Saturday 27 July 2019

Anti-corruption crusade in full force in Corporate Malaysia






Enough time: Ruslan says there should be adequate time for corporates to implement the guidelines by June 1, 2020.

Will the much-anticipated enforcement of Section 17A of the MACC in less than a year result in a corruption-free business scene?


THE Pakatan Harapan government envisions a corruption-free Malaysia in five years’ time, but the journey towards the ambitious objective will be a bumpy one – especially for Corporate Malaysia.



According to PricewaterhouseCoopers’ Global Economic Crime Survey 2018, about 35% of the Malaysian companies surveyed have suffered as a result of bribery and corruption in their daily operations. This marks a sharp increase from just 19% in 2014.

Speaking with StarBizWeek, Transparency International Malaysia (TIM) president Muhammad Mohan cautions that “corruption is rampant and has worsened in the Malaysian business sector over the last few years”.

Despite the worrying trend in Corporate Malaysia, preventive anti-corruption measures among local companies remain limited.

As at end-May 2019, only 59% of listed companies in the country had an internal anti-corruption policy, according to the Securities Commission (SC).

The good news is, the Pakatan administration has been ramping up its anti-corruption initiatives over the last one year.

About a month after the 14th general election (GE14), the government established the Governance, Integrity and AntiCorruption Centre (GIACC) to monitor and coordinate all activities related to combating graft, integrity and governance.

In January 2019, the National AntiCorruption Plan 2019-2023, which was developed by GIACC, was launched by Prime Minister Tun Dr Mahathir Mohamad. The five-year plan has outlined six priority areas and 115 initiatives to achieve zero-tolerance to corruption and bolster good governance.

On July 18, the SC presented its anti-corruption action plan to the Cabinet Special Committee on Anti-Corruption chaired by Dr Mahathir, with recommendations to prevent corruption, misconduct and fraud.

Section 17A comes into force 

In addition to these efforts, beginning June 1, 2020, Corporate Malaysia will take its next step towards a corruption-free business environment via the enforcement of Section 17A of the MACC Act.

The new provision, which was inserted into the anti-bribery act before the GE14, establishes the principle of corporate liability among businesses. Under Section 17A, companies and their directors could be deemed personally liable if an associated person such as an employee or subcontractor is caught involved in corruption for the benefit of the commercial organisations.

Section 17A covers companies, partnerships and limited liability partnerships operating in Malaysia.

The companies and directors could defend themselves against prosecution if they have implemented “adequate procedures” such as internal guidelines or staff training within the commercial organisations.

However, senior lawyer and former Malaysian Bar president Datuk Lim Chee Wee says the existence of adequate procedures does not preclude a commercial organisation or the directors from being charged or prosecuted.

“That is to say, a company may still be charged or prosecuted for corruption offence under section 17A (1), but the fact that the company has in place adequate anti-corruption procedures may absolve it from any finding of criminal liability by the court,” he says.

“However, Section 17A does not put an undue amount of responsibilities on the management. While the definition of associated person under section 17A (6) appears to be general and extensive, there is a safeguard in section 17A (7) which provides for the need for a holistic assessment of the relationship between the company and the associated person to be conducted before any liability of the associated person can be imputed on the company,” he says.

With the anti-bribery provision, companies can no longer hide behind third parties such as consultants or subsidiaries. In the past, holding companies and the board of directors could absolve themselves of any blame if there were corrupt practices at the subsidiary levels.

“Now, the directors and companies are accountable for everything. Even consultants who act for companies come under the MACC Act and the employee hiring processes must be accounted for,” says a CEO of a listed firm.

He adds that the focus should be more on the wide implications of Section 17A, rather than the cost of compliance.

“It is not whether the corporate liability provision is difficult or adds to costs of Malaysian companies.

It is a question of whether the companies and directors are aware of the wide implications with the act coming into force next year.

“The MACC act together with the beneficial ownership laws gives MACC the bite to act on corporations, directors and owners. If they want to get you, they can,” he says.

If found guilty of an act of corruption under the soon-to-be-enforced Section 17A, the penalties imposed on a commercial organisation would be severe.

A company could be fined not less than 10 times the value of the gratification or RM1mil, whichever is higher, or be subject to imprisonment not exceeding 20 years, or to both.

In short, it will not be “business as usual” for Corporate Malaysia come 2020.

Delay in compliance 

While there are only 10 more months before Section 17A is enforced, many businesses in the country have yet to introduce adequate procedures to prevent corruption in their organisations, in line with the “Guidelines on Adequate Procedures”.

On Dec 10, 2018, Dr Mahathir launched the “Guidelines on Adequate Procedures”, which serve as reference points for any anti-corruption policies and controls an organisation may choose to implement towards the goal of having adequate procedures as required under Section 17A.

SC says that even among the listed companies that have an anti-corruption policy, “the majority of these policies contain gaps when compared to the Guidelines on Adequate Procedures”.

TI-M’s Muhammad Mohan hinted that not all government-linked companies (GLCs) will be ready by June 2020 for Section 17A.

“GLCs especially the larger ones are making preparations to handle the corruption risks involved. The problem is many GLCs and non-GLCs have wasted so much time by not implementing or preparing their organisations for this.

“Many businesses are expecting U-turns or extensions to be given,” he says.

Federation of Malaysian Manufacturers president Datuk Soh Thian Lai says the organisation supports the introduction of Section 17A and has undertaken several sessions to educate its members on the implementation of “adequate procedures” as well as the ISO 37001 Anti Bribery Management System.

As the deadline for the enforcement of Section 17A nears, Soh points out that concerns
remain on the readiness and capacity of the small and medium enterprises (SMEs) in ensuring that adequate internal measures have been put in place to potential acts of corruption. specially still lack the know-how lementing such measures. There e greater capacity building in place to assist SMEs,” he says.

However, among major corporations in uch as those related to Nasional and the Employees Fund, the guidelines are being owed, says a CEO of a listed company.

The compliance department has grown bigger, he says.  In an email interview with StarBizWeek, SC says that it will take steps to mandate companies to establish and implement anti-corruption measures.

 "While there may be additional costs in putting these anti-corruption in place, it is important for comealise that these measures will m to avail themselves of the statutory ddefence provided for under Section 17A (4) of the MACC Act,” says the commission.

Vulnerable businesses 

Past experiences indicate that compaed with procurement, governracts and the construction sector ulnerable to corruption and kickbacks.

While government and key industry ve introduced several anti-coreasures such as open tender corrupt practices continue to be prevalent in such sectors.

In fact, between 2013 and 2018, nearly 43% of the total complaints received by MACC were on the procurement sector.

Experts say that the trend is expected to change as businesses in Malaysia fully comply with Section 17A, following its enforcement. The adoption of anti-bribery ISO 37001 standards will also bolster Corporate Malaysia zero-tolerance approach towards corruption.

Facilities management service provider GFM Services Bhd, which is actively involved in government contracts, welcomes the enforcement of Section 17A.

Group managing director Ruslan Nordin believes the corporate liability provision not only upholds a business’ integrity, but also protects shareholders’ value and preserves profitability of the company.

“We view that there is adequate time for corporates in Malaysia to implement the guidelines by June 1 next year,” he says.
Senior lawyer Lim says that Section 17A imposes a duty on all businesses, its directors and officers to be honest in their internal and external dealings.

“This is to be welcomed, corruption increases the cost of transaction, and with this new provision, it should reduce the cost of business,” he says. UHY Malaysia managing director Steven Chong Hou Nian believes that compliance with Section 17A offers businesses an opportunity to exhibit positive values in their corporate culture.

“I opine that the qualitative gains from Section 17A compliance outweigh the additional costs,” he says.

He was also asked whether Section 17A will be successful in reducing corruption within procurement and tendering for government contracts.

To this, he said that the government has pledged to re-design the entire public procurement system while introduce relevant technologies to facilitate a clean, efficient and transparent procurement regime.

“The effectiveness of what Section 17A seeks to achieve, would naturally be premised upon the ecosystem that the MACC Act would operate within.


“The eventual success of the initiative is anyone’s guess, yet I applaud the nation for boldly taking this step forward. This is indeed a success in its own right,” says Chong.

 

Wednesday 9 August 2017

Malaysian MACC Act's Sect.62 declared unconstitutional will be challenged by prosecution

https://youtu.be/WVAfMQAQgu8

Court of Appeal: Section 62 of MACC Act unconstitutional


PUTRAJAYA: The Court of Appeal has ruled that Section 62 of the Malaysian Anti-Corruption Commission (MACC) Act 2009 is unconstitutional.

Justice Datuk Umi Kalthum Abdul Majid, who chaired a three-man bench, made the ruling after allowing the appeals by Penang Chief Minister Lim Guan Eng and businesswoman Phang Li Koon to declare Section 62 as unconstitutional in their corruption cases.

The panel held that Section 62 was ultra vires when read against Article 5(1) and 8(1) of the Federal Constitution.

Section 62 requires accused persons to disclose their defence statements to the prosecution before the beginning of the trial.

However, Article 5(1) states that no person shall be deprived of his life and personal liberty save in accordance with law, while 8(1) states for equal protection under the law.

“We allow the appeals and set aside the order of the High Court,” said Umi Kalthum, who heard the appeals with Datuk Ahmadi Asnawi and Datuk Abdul Rahman Sebli on Monday.

The Court of Appeal granted DPP Datuk Masri Mohd Daud's oral application to stay the proceedings in the Penang High Court pending the prosecution's appeal over the decision.

On March 7 this year, the High Court dismissed Lim and Phang's application after ruling that Section 62 of the MACC Act was constitutional and valid as it did not impede the accused's right to a fair trial.

Lim pleaded not guilty to charges of corruption in relation to the conversion of land from agricultural to residential and the purchase of a plot of land and bungalow at below-market value on June 30 last year.

Lim was charged with using his position as Chief Minister to gain gratification for himself and his wife, Betty Chew Gek Cheng, by approving the application for conversion of agriculture land to a public housing zone in south-west Penang to a company, Magnificient Emblem Sdn Bhd.

He allegedly committed the offence while chairing the Penang State Planning Committee meeting at the operations room, Level 28, Komtar building here, on July 18, 2014.

The charge under Section 23 of the MACC Act 2009 provides for imprisonment of up to 20 years and a fine of up to five times the sum or value of the bribe, or RM10,000, whichever is higher, upon conviction. Lim faces a second charge of using his position to obtain for himself a plot of land and a bungalow located at No, 25, Jalan Pinhorn, George Town on July 28, 2015 from Phang for RM2.8mil, below market value.

The charge under Section 165 of the Penal Code provides for a jail term of up to two years, or a fine, or both, upon conviction.

Phang pleaded not guilty to abetting Lim in obtaining the bungalow at an undervalued cost.

She allegedly committed the offence at the same place and date.

The charge under Section 109 of the Penal Code read together with Section 165, provides for imprisonment of up to two years, or a fine, or both, upon conviction. - Bernama

MACC will appeal against ruling that Section 62 is unconstitutional


PETALING JAYA: The Malaysian Anti-Corruption Commission (MACC) will be appealing the Court of Appeal's ruling that Section 62 of the MACC Act is unconstitutional.

The MACC stated in a statement on Tuesday that its prosecutors would be filing an appeal to the Federal Court "as soon as possible".

"The MACC also wishes to clarify that this decision by the Court of Appeal does not affect the prosecution of Penang Chief Minister Lim Guan Eng and businesswoman Phang Li Koon," it said.

On Monday, the Court of Appeal ruled that Section 62 of the MACC Act was ultra vires when read against Article 5(1) and 8(1) of the Federal Constitution, thus deeming it unconstitutional.

Section 62 of the Act requires accused persons to disclose their defence statements to the prosecution before the beginning of the trial.

However, Article 5(1) states that no person shall be deprived of his life and personal liberty save in accordance with law, while Article 8(1) states that all persons are entitled to equal protection under the law.

The ruling was made after allowing the appeals by Lim and Phang to declare Section 62 as unconstitutional in their corruption cases.

Lim currently faces charges for obtaining gratification for himself and his wife related to the conversion of land into residential development and another charge for using his position to purchase a bungalow below market value. Phang has been charged with abetment. - The Star

MACC: ‘Decision has no bearing’


PETALING JAYA: The Court of Appeal’s decision to declare a section of the Malaysian Anti-Corrup­tion Commission (MACC) Act as unconstitutional does not affect the prosecution of the Penang chief minister and a businesswoman, the graft busting body said.

The MACC said in a statement that its pro­secutors would be filing an appeal to the Federal Court “as soon as possible”.

“The MACC also wishes to clarify that this decision by the Court of Appeal does not affect the prosecution of Penang Chief Minister Lim Guan Eng and businesswoman Phang Li Koon,” it said.

On Monday, the Court of Appeal ruled that Section 62 of the MACC Act was ultra vires when read against Article 5(1) and 8(1) of the Federal Constitution, thus deeming it unconstitutional. Section 62 requires accused persons to disclose their defence statements to the prosecution before the trial begins.

But Article 5(1) states that no person shall be deprived of his life and personal liberty save in accordance with law, while Article 8(1) states that all persons are entitled to equal protection under the law.

The ruling was made after allowing the appeals by Lim and Phang who sought to declare Section 62 as unconstitutional.

Lim currently faces charges for allegedly obtaining gratification for himself and his wife related to the conversion of land into residential development and another charge for allegedly using his position to purchase a bungalow below market value.

Phang has been charged with abetment.

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