Anti-Corruption in Malaysia

By Kherk Ying Chew* and Eddie Chuah* (Baker McKenzie Malaysia)

Domestic bribery (private to public)

1.1       Legal framework

The key anti-corruption legislation in Malaysia is the Malaysian Anti- Corruption Commission Act 2009 (MACCA), which came into force on 1 January 2009. The relevant authority in charge of the MACCA is the Malaysian Anti-Corruption Commission (MACC). The MACCA applies to both the private sector and to public bodies / officers of a public body. The MACCA does not make a distinction between private sector bribery and bribery of public officials..

1.2       Definition of bribery

Instead of the word “bribe,” the MACCA Act defines the word “gratification,” which includes both pecuniary and non-pecuniary bribes. Generally, gratification is defined as money, donation, gift, any valuable thing of any kind, any forbearance to demand any money or money’s worth or valuable thing, any other service or favour of any kind, or any offer, undertaking or promise of any such gratifications.

The MACCA makes it an offense when “any person who by himself, or by or in conjunction with any other person corruptly solicits or receives or agrees to receive for himself or for any other person; or corruptly gives, promises or offers to any person whether for the benefit of that person or of another person, any gratification as an inducement to or a reward for, or otherwise on account of any person doing or forbearing to do anything in respect of any matter or transaction, actual or proposed or likely to take place; or any officer of a public body doing or forbearing to do anything in respect of any matter or transaction, actual or proposed or likely to take place, in which the public body is concerned.”

There is an additional offense under the MACCA for any person to offer to an officer of any public body, or being an officer of any public body, to solicit or accept any gratification as an inducement or a reward for:

  • the officer voting or abstaining from voting at any meeting of the public body in favour of or against any measure, resolution or question submitted to the public body;
  • the officer performing or abstaining from performing or aiding in procuring, expediting, delaying, hindering or preventing the performance of any official act;
  • the officer aiding in procuring or preventing the passing of any vote or the granting of any contract or advantage in favour of any person; or
  • the officer showing or forbearing to show any favour or disfavour in his or her capacity as such officer.

An offense would be committed even if the officer did not have the power, right or opportunity to do so, show or forbear, or accepted the gratification without intending to do so, show or forbear, or did not in fact so do, show or forbear, or that the inducement or reward was not in relation to the affairs of the public body.

Attempting to commit, conspiring to commit or abetting the commission of any of the abovementioned offenses is also prohibited, as is dealing with, using, holding, receiving or concealing any property that was the subject matter of an abovementioned offense.

1.3       Definition of public official

Under the MACCA, “officer of a public body” is defined as any person who is a member, an officer, an employee or a servant of a public body. This includes a member of the administration; a member of Parliament; a member of a State Legislative Assembly; a judge of the High Court, Court of Appeal or Federal Court; and any person receiving any remuneration from public funds, and where the public body is a corporation sole, includes the person who is incorporated as such. The courts have adopted a broad approach in defining and determining who falls within such definition. A public body includes the federal government, state government, local authorities, and their departments, services and undertakings. Also included are companies or subsidiaries over which a public body has controlling power or interest, and various registered societies and trade unions.

1.4       Consequences of bribery

(a)        For the individuals involved

For more serious bribery, the penalty is imprisonment of up to 20 years and a fine of not less than five times the sum/value of the gratification where it is capable of being valued or is of a pecuniary nature, or MYR 10,000, whichever is higher.

There is also a general penalty of a fine of up to MYR 10,000 or imprisonment of up to two years, or both.

(b)        For the company/legal entity

There is no additional penalty specific to companies.

1.5       Political contributions

There are no specific laws governing political contributions. 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. Further, kindly note that the MACCA deems a corrupt intent in the giving or receiving of gratification unless the contrary is proven.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Under the MACCA, offering and accepting gifts, services and hospitality will be a corruption offense if there is the requisite intention for such an offer/acceptance to be a bribe. The MACCA does not contain any provision for a de minimis threshold.

The Malaysian government has issued the Guidelines on Giving and Receiving of Gifts in the Public Service / Service Circular No. 3 of 1998 (the “Circular”), which sets out the parameters concerning the giving and receiving of gifts. The Circular provides that as a general rule, the amount/value of a gift is considered not commensurate with the purpose of the gift if the value of the gift exceeds one-fourth of the officer’s monthly remuneration or MYR 500, whichever is lower.

Accordingly, public officials are generally not allowed to receive or give gifts, or allow their spouse or any other person to receive or give on their behalf any gift, whether in tangible form or otherwise, from or to any person, association, body or group of persons if the receipt or giving of such present is in any way connected, either directly or indirectly, with his or her official duties. However, there are exceptions for certain personal celebrations such as retirement, assignment transfer or marriage. There is also an exception if the circumstances make it difficult for the officer to refuse the gift. For example, the guidelines provide that an officer would be allowed to receive a gift given to him when carrying out public duties at a seminar, symposium, workshop or any official event, and the public officer was not informed of the presentation of the gift beforehand.

However, the officer is required to submit a written report in such cases.

2. Domestic bribery (private to private)

2.1       Legal framework

The MACCA prohibits both public and private bribery. The MACCA does not make a distinction between private sector bribery and bribery of public officials. For example, the provision dealing with the offense of accepting gratification, as referred to in Paragraph 1.2, has general application and so it applies to any person regardless of whether the bribery was between two private individuals or whether a public officer was involved.

2.2       Definition of private bribery

Malaysia does not distinguish between bribes paid to a public official and those paid in the private sector. See Paragraph 1.2.

2.3       Consequences of private bribery

Malaysia’s anti-corruption legislation does not distinguish between bribes paid to a public official and those paid in the private sector. See Paragraph 1.4.

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Under the MACCA, offering and accepting gifts, services and hospitality will be a corruption offense if there is the requisite intention for such an offer/acceptance to be a bribe. MACCA does not contain any provision for a de minimis threshold. Nevertheless, MACC encourages corporations to adopt a “no-gift” policy to prevent bribery.

3. Corruption of foreign public officials

3.1       Legal framework

The MACCA includes a specific offense of “bribery of foreign public officials.”

3.2       Definition of corruption of foreign public officials

An offense will be committed where foreign a public official solicits, accepts, obtains, agrees to accept or attempts to obtain the gratification as an inducement or reward. Active and passive foreign bribery are covered under the MACCA. Therefore, bribery through intermediaries and bribery that benefits third parties are covered as well. The offense is not limited to foreign bribery in international business transactions.

3.3       Definition of foreign public official

For the purpose of this crime, a foreign public official means:

  • any person who, whether appointed or elected, holds a legislative, executive, administrative or judicial office of a foreign country;
  • any person who exercises a public function for a foreign country, including a person employed by a board, commission, corporation, or other body or authority that is established to perform a duty or function on behalf of the foreign country; and
  • any person who is authorized by a public international organization to act on behalf of that organization.

3.4       Consequences of corruption of foreign public officials

(a)        For the individuals involved

The penalty is imprisonment for a term not exceeding 20 years.

It may also be a fine of not less than five times the sum or value of the gratification that is the subject matter of the offense, where such gratification is capable of being valued or is of a pecuniary nature, or MYR 10,000, whichever is higher.

(b)        For the legal entity

There is no additional penalty specific to companies.

3.5       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Under the MACCA, offering and accepting gifts, services and hospitality will be a corruption offense if there is the requisite intention for such an offer/acceptance to be a bribe. The MACCA does not contain any provision for a de minimis threshold.

4. Facilitation payments

“Facilitation payments” fall within the interpretation of “gratification” under MACCA and are therefore generally prohibited in Malaysia.

5. Compliance programs

5.1       Value of a compliance program to mitigate/eliminate the criminal liability for legal entities

Malaysian laws do not regulate compliance programs. However, this position is likely to change with the introduction of corporate liability (companies could be liable for the corrupt practices of their employees) via amendments to the MACCA, which are expected to come into force in 2018 and where defence mechanisms are available for companies taking appropriate steps to prevent corruption.

5.2       Absence of a compliance program as a crime

N/A

5.3       Elements of compliance program

(a) Legal framework

Malaysian laws are silent on compliance programs, though this will change with the introduction of corporate liability offenses in Malaysia.

(b) Recommended practice

Compliance programs are not commonly adopted by corporations, though this will change with the introduction of corporate liability offenses in Malaysia.

6. Regulator with jurisdiction to prosecute corruption

The MACC has jurisdiction to investigate bribery offenses under the MACCA and the Penal Code (PC) Other Malaysian law enforcement authorities may also investigate bribery offenses under both statutes, though they may not be able to use the investigative tools provided by the MACCA. The MACC may also prosecute MACCA and PC bribery offenses since the MACC chief commissioner has the status of a deputy public prosecutor. However, the prosecution of all bribery offenses can be instituted only with the consent of the public prosecutor, which is the attorney general of Malaysia.

 


Wong & Partners
Level 21, The Gardens South Tower Mid Valley City
Lingkaran Syed Putra 59200
Kuala Lumpur
Malaysia

Kherk Ying Chew

Kherk Ying Chew heads the Dispute Resolution Practice Group in Wong & Partners, the member firm of Baker & McKenzie International in Malaysia. She has more than 28 years of practice in the area of civil litigation and corporate compliance.

Kherk Ying has extensive experience in advising multinational corporations on risk-related issues. She has assisted companies in developing their internal policies and procedures, as well as in managing their corporate compliance programs, particularly in conducting internal investigations, audits and necessary trainings in mitigating risks of non-compliance with anti-corruption and anti- money laundering regulations.

Kherk Ying has represented companies in investigations by local and foreign anti-corruption agencies as well as the central bank of Malaysia, and has advised on legal remedies upon discovery of fraud or corruption. On the employment front, she has successfully represented clients in the termination of company directors as a result of breaching internal anti-corruption policies, and in investigations by the Malaysian Immigration Department for various breaches of employment, immigration and anti-corruption laws.

kherkying.chew@wongpartners.com

Tel: +60 3 2298 7933

Wong & Partners
Level 21, The Gardens South Tower Mid Valley City
Lingkaran Syed Putra 59200
Kuala Lumpur
Malaysia

Eddie Chuah

Eddie Chuah is a partner with the Firm’s Dispute Resolution Practice Group. He focuses his practice on providing advisory and assistance work to domestic and multinational corporations in a broad range of risk-related issues and in compliance with local authorities, particularly concerning anti- corruption related matters. He has represented clients in developing internal policies and procedures, as well as conducting necessary audits and training in mitigating risks of non- compliance. He is also experienced in advising relevant stakeholders on the necessary investigations and legal remedies upon discovery of fraud or corruption.

eddie.chuah@wongpartners.com

Tel: +60 3 2298 7939