MARCH 21 — The Malaysia Anti-Corruption Commission (MACC) charged a private company under the Corporate Liability provision (Section 17A) of the Malaysian Anti-Corruption Commission (MACC) Act 2009. The offshore vessel support company became the first commercial entity in Malaysia to be charged under Section 17A of the Act since the law came into force on June 1 last year.
Datuk Norazlan Mohd Razali, MACC’s Director of Investigations has recently said that with the enforcement of Section 17A, more arrests and charges for corruption are expected to be made against commercial organizations and individuals.
In Malaysia, the key legislative change in the fight against corruption in or by the private sector is the insertion of Section 17A in the MACC Act 2009 which imposes criminal liability on commercial organisations for their failure to prevent corruption.
Commonly termed Corporate Liability, Section 17A states that “A commercial organization shall be deemed to have committed an offence if a person associated with the commercial organization corruptly offers or gives any gratification to any person with an intent to obtain or retain business or advantage in the conduct of the business of the commercial organization”.
It further provides that “Where an offence is committed by a commercial organization, anyone who is a director, controller, officer or partner of or who is concerned with the management of the affairs of the commercial organization at the time of the commitment of the offence will likewise be deemed to have committed the same offence and be similarly liable to punishment”.
The burden of proof has thus now shifted to the commercial organization, wherein the charged individual must show that the offence was committed without his/her knowledge or consent, and he/she had exercised sufficient diligence to prevent the commission of the offence. This can be done by showing that adequate procedures were in place within the organization to prevent persons associated with it from undertaking such corrupt practices.
To further strengthen the MACC Act, it is also timely that we introduce the “Misconduct in Public Office” provision to address misconduct by public officials which results in huge financial losses incurred by the government. These losses inevitably involve tax payers’ money and mainly stem from procurement fraud, negligence and non-compliance with requirements or procedures in government agencies.
The Hong Kong government has legislation in place to address this offence, with penalties of up to 7 years imprisonment. In 2017 Donald Tsang, the former Chief Executive of Hong Kong and the highest-ranking ex-official to be charged in the city's history, was jailed for 20 months for misconduct in public office.
Malaysia needs this provision for both punitive and deterrent purposes. It should fairly apply to “everyone” involved in the decision making process and that includes cabinet ministers and politicians. They are elected by the rakyat and should be held to a higher standard. No one is above the law and should have the ability to use “shadow instructions” for his/her personal benefit. Equally important, there should not be double standards in the enforcement and prosecution of the law.
Such laws with strong punitive penalties can be an effective deterrent against acts of corruption and abuse of power by those holding public office as they will be afraid of the consequences. By holding both government officers and politicians accountable and liable, it can prove to be a valuable legislative tool in the fight against institutional corruption.
Datuk Sri Azam Baki, the MACC Commissioner has stated that often public servants responsible for causing financial losses had been found to have taken orders from their higher-ups including ministers and politicians. However, when these public servants are apprehended their bosses who gave the instructions are often nowhere to be seen, leaving them to fend for themselves. Such public servants are torn between doing the right thing and taking orders from their superior.
Some public servants, ministers and politicians use power, opportunity, pressure and rationalisation factors to perpetrate corruption. The KPPA needs to be aware of these risks and should consider strengthening the existing internal control policies and best practice to address these problems. Public servants should at all times know that they are protected when discharging their rightful duties and be able to exercise their right to ignore politicians who try to interfere in their work, especially when the request is contrary to the civil service code of conduct and not in accordance with the law.
Hence, the law should get to the root of the case and nail both the master and the executor. It is only fair that those who ordered such expenditure, which led to financial losses to the government, be held responsible and face the consequences too.
A few years ago, the former Auditor General Tan Sri Ambrin Buang stated that giving oral warnings to erring public servants is not sufficient. The guilty are not punished and escaped disciplinary actions. He predicted that up to 30 percent of Malaysia's public sector project value was lost owing to mismanagement and corruption. Imagine the amount of savings that can be achieved or new projects that could be implemented if this 30 percent loss was effectively addressed.
Azam Baki further stated that corruption cases involving leakages in government procurement are seen to be increasingly critical. Without revealing more, he said that 50% of such cases involved government agencies. Transparency International in 2020 estimated that bribery and corruption can cost between 10 to 50% of a public contract’s value. This, according to UNDP further erodes the trust that should be found between the public buyer and private suppliers.
The MACC is keen to have the “Misconduct in Public Office” provision inserted in the MACC Act 2009. It is worth noting that when the Section 17A amendment was tabled and debated in Parliament in 2018, it received strong bipartisan support from our Parliamentarians. It is hoped that the “Misconduct in Public Office” provision will receive similar support from the cabinet and unilateral backing in Parliament.
With this new provision, the government will be better equipped to reduce fraud, leakages and wastage of public funds. Given the financial challenges the current pandemic has placed on government finances, the need for this provision to be supported and passed soon is abundantly clear.
Source: https://www.malaymail.com/news/what-you-think/2021/03/21/after-corporate-liability-its-time-to-consider-liability-provision-for-publ/1959625