The Malaysian Government has proposed amendments to the Malaysian AntiCorruption Commission Act 2009 that will make corporations liable for the corrupt
practices of its associated persons. The amendments are set out in the
Malaysian Anti-Corruption Commission (Amendment) Bill 2018 (“
Bill“) that was
tabled for first reading in the Malaysian Parliament on 26 March 2018.

Corporate Liability

The corporate liability provisions are modelled on the Bribery Act in the United
Kingdom. It criminalises commercial organisations (which includes Malaysian
companies and foreign companies conducting any business in Malaysia) if an
associated person corruptly gives any gratification with intent to obtain or retain
business, or an advantage in the conduct of business, for the commercial
organisation.

An “associated person” includes directors and employees, and could extend to
third party service providers.

The Bill imposes strict liability on commercial organisations, in that organisations
can be liable regardless of whether they had actual knowledge of the corrupt
actions of its associated persons. To avoid liability, organisations must be able to
demonstrate that they had in place adequate procedures designed to prevent
associated persons from undertaking corrupt practices.

Where a commercial organisation commits an offence, the directors, officers and
management are deemed to have committed the same offence unless they are
able to prove that the offence was committed without their consent and that they
exercised due diligence to prevent the offence.

The potential penalties are severe, and could be in the form of a fine of not less
than ten times the value of the gratification (if capable of being valued), or
RM 1 million, whichever is the higher, or imprisonment for a term not exceeding
20 years, or both.

In light of these penalties, commercial organisations and management will need
to step up monitoring of its associated persons for corrupt practices. Commercial
organisations should also revisit their gifts and entertainment policies and other
anti-corruption policies to ensure that they are sufficiently robust to allow the
organisation to avoid liability.

Conclusion

The Bill seeks to enhance Malaysia’s combat against corruption, in particular
corruption arising from commercial transactions. The Bill will also have the effect
of promoting better corporate governance and legal compliance in Malaysia by
requiring corporations to take a proactive role in preventing corruption.
We expect that further guidelines will be issued on the procedures that
commercial organisations will need to have in place to avoid liability. Commercial
organisations should take these guidelines into account when preparing or
revising their compliance policies

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