With companies in Malaysia soon to become liable for the corrupt behaviour of their employees, businesses must ramp up their preventative provisions, says Errol Oh
This article was first published in the November/December 2017 Malaysia edition of Accounting and Business magazine.
If things go according to plan, the Malaysian government will by now have tabled a bill in Parliament that will explicitly make companies liable for their employees’ corrupt acts. Several months ago, the deputy chief commissioner of the Malaysian Anti-Corruption Commission (MACC) said the cabinet had approved the bill, adding that it would be presented to the lawmakers in October.
The idea of inserting corporate liability provisions in the MACC Act 2009 has been floating around for a few years. Datuk Paul Low, Minister in the Prime Minister’s Department, brought up the idea publicly in mid-2013, saying that the government wanted to introduce a law that would hold company directors and CEOs responsible for employees involved in bribery.
Of course, it would be unfair to penalise companies if their employees commit these offences because they lack integrity. For the companies, the way out is to prove that they have measures in place to prevent corruption.
The tweaking of the MACC Act is necessary because prosecution of bribery and corruption has been heavily focused on individuals, although it technically allows action against corporations. The MACC has frequently been in the news recently with arrests and court cases, many centred on high-profile business people, politicians and civil servants. The commission has also recently launched awareness campaigns. This signals an escalation of the war against corruption and abuse of power in Malaysia. And that means the corporate sector has to play a part as well.
In the past, top MACC officers have spoken about the need to combat institutional corruption and the perception among foreign companies that paying bribes is part and parcel of doing business in Malaysia. It does not help that the local business community has been apprehensive about the corporate liability provisions. For example, in February 2014, the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) expressed concerns about the prospect of companies being punished for wrongdoing that arise from employees’ poor ethics, also noting the additional costs of compliance.
Perhaps this stance has since softened. It has to. Instead of wringing their hands over the impact of the proposed change in the law, companies should do more with their policies and controls to minimise the risk of being linked with graft.
PwC’s Global Economic Crime Survey 2016 revealed that when it came to bribery and corruption in corporate Malaysia, there was a glaring disconnect between the tone at the top and the reality on the ground. While most companies made it clear to staff that bribery and corruption were unacceptable, the number of respondents experiencing such practices rose from 19% in 2014 to 30% in 2016.
Clearly, the weight of the law is required to nudge corporations towards finding better ways to avoid bribery and corruption.
Errol Oh is executive editor of The Star
"Instead of wringing their hands, companies should do more to minimise the risk of being linked with graft"