Addressing corruption has become a priority for policymakers and companies, as the negative impact on social and economic, the latter which arises through the distortion of law and weakening of institutional foundation on which economic growth depends. It threatens democracy, contributes to the unjust distribution of income and burdens taxpayers. Although corruption has negative implications wherever it is present, the impact on developing nations is often heightened, as it reduces the economic resources available to address social, economic and political issues which may hinder development. In turn, it is a greater detriment to the poor, worsening income inequality and poverty.
Corruption is generally defined as the abuse of public power and the violation of rules for private gain. Forms of corruption include bribery, extortion, fraud, embezzlement, illegal gambling, money laundering, nepotism, etc., all of which involve the misuse and abuse of public power and authority. World Bank once identified corruption and bribery as one of the main impediments to social and economic development. This involves officials accepting or offering bribes in the form of money or services, which is dishonest, and therefore often abusing trusted power for personal gain.
Malaysia has a long history of dealing with corruption, with cases like the Sabah Water Department, 1MDB, PKFZ, and Immigration Department Scandal highlighting the pervasive nature of corruption in the country's institutions. From a business perspective, it additionally reduces the efficiency of firms and increases the costs of business. The damage caused by corruption in Malaysia is estimated to reach up to 10 billion Malaysian ringgits per year, which is equivalent to US$2.3 billion. This is estimated to be up to 2% of Malaysia's Gross Domestic Product (GDP). The Asian Financial Crisis acted as a catalyst in the fight against corruption, changing public perception of corrupt practices, which brought them to the forefront of public policy.
The Malaysian Anti-Corruption Commission (MACC) Amendment Act 2018 was passed by Parliament in April 2018. Instead of the word "bribery", the MACC Act defines the word "gratification" to include both monetary and non-monetary bribery. Gratuity is generally defined as money, donation, gift, thing of value of any kind, waiver of demand for money or its equivalent, any other service or favour of any kind, or any offer, promise or undertaking of such gratuity. According to the MACCA, "It is an offence when a person, either alone or through or in concert with any other person, fraudulently solicits or obtains or promises to receive for himself or any other person; or fraudulently rewards, promises or offers to any person, actual or proposed, for the benefit of, or as an inducement or reward to, or in other response to, that person or any other person, to do or fail to do anything in a matter or transaction that is likely to arise; or when an employee of a public body does or fails to do anything in relation to an actual or proposed or likely matter or transaction to which the public body is a party."
An offence will be committed even if the officer has no power, right or opportunity to do so, or indicates or refrains from doing so, or receives the reward unintentionally, or if the encouragement or reward is unrelated to the duties of a public authority. Attempting, conspiring to commit or aiding in the commission of any of the above offences is also prohibited, as is dealing, using, possessing, receiving or concealing any property that is the subject of any of the above offences. Though political donations are not specifically covered by any law in Malaysia, particular care must be taken in ensuring that such donations are not construed as an inducement or a reward for doing or forbearing to do any act as this would fall within the general prohibitions of the MACCA.
As a rule, a public official may not accept or give gifts from any individual, organization, legal entity, or group of individuals, or permit his/her spouse or other person to accept or give gifts, material or otherwise, on his/her behalf, provided that the giving of such gifts is in some way directly or indirectly related to his/her official duties. However, there are exceptions in personal cases such as retirement, transfer, marriage, etc. There are also exceptions in cases where it is difficult for a public official to refuse a gift. For example, the guidelines provide that a public official may accept gifts presented while performing official duties at a seminar, symposium, workshop, or official event, provided that the public official has not been notified in advance of the gift being given. MACCA does not contain any minimum threshold provisions. Guidelines on the giving and receiving of gifts in the Public Service/Service Circular No. 3 of 1998 sets out the conditions for the giving and receiving of gifts and provides that generally the amount/value of the gift is a reasonable purpose if its value exceeds one-quarter of the employee's monthly salary or MYR500 (whichever is lower).
Penalties for involved individuals and involved companies/corporations provide that in the more serious cases of bribery, there will be a maximum imprisonment of 20 years and a fine of not less than five times the total amount/value of the reward, if of any value, whether of a monetary nature or not, or RM10,000, whichever is greater. In addition, there is also a general penalty imposed in the form of a fine not exceeding RM10,000 or imprisonment not exceeding two years, or both. This applies to all, whether the bribery was committed between private persons or whether it involved a public official.
MACCA – a new corporate liability statutory offence under section 17A of the MACC Act 2009 came into force on 1 June 2020. Section 17A (8) of the MACC Act defines a commercial organisation as a company or partnership incorporated under the laws of Malaysia or carrying on business in Malaysia, or part of a company or partnership. Under section 17A of the MACC Act 2009 (Amended 2018), a commercial organisation may be prosecuted if any of its officials, including third parties, commits a corruption offence. MACCA prohibits public and private bribery. MACCA does not distinguish between bribery in the private sector and bribery of public officials. This applies to all individuals, regardless of whether the bribery is between private parties or involves a public official. An organization's only defence to avoid liability under Section 17A is to show that it has in place adequate procedures to prevent corrupt activities from occurring. If it fails to prevent bribery by related persons, as part of its "defence", the organization must demonstrate that it has in place an effective third-party risk management programme designed to deter related persons from engaging in corrupt activities. Malaysian law does not regulate compliance programmes. However, with the introduction of corporate liability through amendments to MACCA which took effect in 2020 has changed the legal landscape. Now, companies can be held liable for the corrupt acts of their employees, making it essential for them to take appropriate measures to prevent corruption and establish strong defence mechanisms.
Evidence that can be used to prove corruption are testimonies of people who have seen or heard anything related to corrupt activities, photographs, audio recordings or videos, reports from experts, NGOs, journalists, news agencies or reputable organizations, financial records of transactions, ownership documents, asset declarations, contracts, decision-making bodies of public authorities. Warning signs of bribery and corruption in the workplace include unnecessary or inappropriate purchases, questionable invoices, persistent acceptance of substandard quality, conflicts of interest, unqualified third parties and incomplete travel and expense reports.
To curb corruption in any organization, it is now imperative to have strict compliance practices in place. Employers must primarily conduct employment and criminal background checks, followed by education verification, name/DOB/identity checks, address verification and pre-employment credit checks. Having screened employees means having a safer, and more secure work environment. A code of ethics for management and employees will helps set the culture and expectations. Regular fraud risk assessments and the implementation of effective internal controls can help reduce fraudulent activities in the compliance program. Programs can be built to encourage employees, customers and contractors to embrace the concept of whistleblowing by providing anonymous reporting systems such as telephone hotlines or online portals.
The MACC is responsible for investigating bribery offences under the MACCA and the Penal Code (PC). Other Malaysian law enforcement agencies may also investigate bribery offences under both laws but may not have access to the investigative tools of the MACCA. As the MACC Chief Commissioner has the status of Assistant Prosecutor, the MACC can also prosecute bribery offences under the MACCA and the PC. However, prosecutions for all bribery offences can only be commenced with the consent of the Public Prosecutor, i.e. the Attorney-General of Malaysia.