In recent months, Malaysia has seen momentum in efforts to combat corruption. The principal legislation governing corruption in Malaysia is the Malaysian Anti-Corruption Commission Act 2009 (“MACCA” or “Act”), which came into effect on 1 January 2009. The Act sets out several key offences, including but not limited to, the offence of corruptly giving and receiving gratification, the offence of corruptly procuring the withdrawal of a tender, and the offence of bribing an officer of a public body. A salient feature of the MACCA is its extra-territorial reach. Under the Act, a Malaysian citizen or permanent resident who commits an offence outside of Malaysia may be subject to prosecution under the Act. Nevertheless, the MACCA does not expressly provide for corporate liability to make board members, chief executive officers, and corporate bodies vicariously liable for the actions of their employees. As such, the area of corporate criminal liability in Malaysia remains under-developed. In addressing the issue of corruption in Malaysia, the local legislature in 2013 announced that corporate liability provisions would be inserted into the MACCA, to include body corporates as potential wrongdoers under the Act. While the proposed amendments have not reached the parliamentary stages, it appears from recent statements that amendments are likely to go through in the near future to keep up with efforts in combating corruption at the international level.

Recent Traction on Amendments to the MACCA

To address the uncertainty in the existing legislation, AttorneyGeneral Tan Sri Abdul Gani Patail is reportedly considering amendments to the MACCA to address corporate liability. In addition, in an interview at the Malaysian Anti-Corruption Commission (“MACC”) headquarters in conjunction with the commission’s 46th anniversary, MACC Deputy Commissioner Datuk Sutinah Sutan referred to the proposed amendments and stated that “once passed in Parliament, it will mark a new age in the country’s war against corruption”. The MACC’s proposed amendments would be aimed at giving the agency more leeway to go after domestic and multinational companies regardless of their country of origin. To this end, the MACC has announced that it is considering the United Kingdom Bribery Act (“UKBA”) as its model in the proposed amendments, as well as the United States Foreign Corrupt Practices Act’s (“FCPA”) broad application to Malaysian corporations. Although no specific details on these amendments have been revealed thus far, it is highly likely, therefore, that the amendments will be consistent with the spirit of these two laws, further described as follows:

  1. The UKBA was recently revised to include a new strict liability offence for failure to prevent bribery, where such offence can be committed by a relevant commercial organization (“RCO”). In this case, the RCO can be made liable if a person associated with the RCO bribes another person intending to obtain or retain business for the RCO, or to obtain or retain a business advantage in the conduct of business for the RCO.
  2. The anti-bribery provisions of the FCPA prohibits payment to a foreign official in connection with obtaining or retaining business for or with, or directing business to, any person and apply to any United States “issuers” (i.e., publicly traded companies required to make filings with the United States Securities and Exchange Commission), and any “domestic concerns” (i.e., United States citizens, nationals, residents, any company organized under the domestic laws or with a principal place of business in the United States). These two classes of entities are liable for any act that promotes a corrupt payment by use of any means or for an act which occurs within or outside of the United States. U.S. Enforcement Authorities have taken an expansive interpretation of FCPA “territorial” jurisdiction, for example, through on the transmission and storage of two e-mails on U.S. servers in one case and wire transfers through correspondent bank accounts in the United States in furtherance of a bribery scheme in another.

Malaysian Companies Act

A review of the Malaysian Companies Act 1965 will also reportedly be undertaken to potentially include a set of rules and procedures to govern corrupt business dealings. While it is anticipated that draft proposals to amend these two pieces of legislation would be available by early 2015, there has been no firm indication as to the when the proposed amendments will be tabled in the Malaysian Parliament.

Conclusion

While this is not the first time that the idea of a corporate liability provision has been discussed, the Malaysian Government’s continuing efforts to curb corrupt activities at a corporate level should be welcomed. The amendments to the MACCA and the Malaysian Companies Act is a positive step towards establishing greater accountability for companies’ corrupt practices. It is only a matter of time before the corporate liability provision is introduced in the MACCA. As such, corporations are encouraged to look into their gifts and entertainment policies to ensure compliance with the proposed amendments. Corporations are also encouraged to monitor closely the conduct of their directors, agents, and employees when dealing with third party vendor(s) or public officer(s) as corporations may be liable for their actions post-amendments. At this point, it may be worth noting that corporate liability provisions are typically designed to hit where it hurts most and are expected to be accompanied by heavy fines.

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