Corporate

Liability – S17A
MACC Act
(amendment)
Ng KK

1
 Module 1

• Introduction

2
• Source:

• https://www.nst.com.m
y/opinion/letters/2019
/10/533711/have-
strong-compliance-
programme-place-
section-17a-takes-
effect

3
• Source:

• https://www.malaymail
.com/news/malaysia/2
020/06/01/section-
17a-of-macc-act-2009-
in-force-
today/1871398

4
Extracts:
• Parliament passed the amendment on 5 April 2018
• Gazetted by Parliament on 4 May 2018
• Government allowed a two (2) year delay to be given to commercial
organisations from that date for appropriate preparation before the provisions
of the new law come into force completely.
• Date of enforcement was issued by the power of the Minister in the Prime
Minister’s Department (Parliament and Law) Datuk Takiyuddin Hassan through
the Federal Government Gazette P.U (B) 247 dated 27 May 2020
• Effective from: 1 June 2020 5
• Source:

• https://www.theedgemar
kets.com/article/section-
17a-macc-act-well-
received-organisations-
says-officer

6
Extracts:
• "However, some have raised concerns over the lack of case references as it is a new
law," he said in an interview on MACC.fm (My Anti Corruption Channel.fm)
here today.
• "Nevertheless, organisations can defend themselves if they can show that they
have ‘adequate procedures’ in place to prevent corruption in their operations,"
he said.
• The law, which came into effect on June 1 this year, can hold a commercial
organisation liable to a fine of not less than 10 times the value of the bribe or
RM1 million, whichever is higher, or imprisonment for up to 20 years, or both,
upon conviction.

7
 Difference between corruption and bribery

• From www.serco.com
• Corruption - is any unlawful or improper behaviour that seeks to gain
an advantage through illegitimate means. Bribery, abuse of power,
extortion, fraud, deception, collusion, cartels, embezzlement and
money laundering are all forms of corruption.

• Bribery - means giving or receiving an unearned reward to influence

someone's behaviour. One common form of bribery is a "kickback" -
an unearned reward following favourable treatment. Both are corrupt.
8
 What is bribery?

• Dishonest or improper action

Includes:
• Institutional bribery
• Personal bribery – receiving / paying bribe without approval of organisation
• Supply-side bribery – person / organisation offering or paying bribes
• Demand-side bribery – person / organisation demanding or receiving bribes
• Gifts, hospitality, donations and other benefits
• Facilitation payment

9
 What is bribery?

From:
• https://www.sprm.gov.my/index.php/en/educati
on/what-is-corruption

10
 Examples – bribery

• A project owner may bribe a government official in order to obtain planning

permission for a project.
• A bidder may bribe the project owner’s designer to design a project in a
manner which improperly favours that bidder over other bidders.
• A bidder may pay a bribe to the project owner’s representative to win the
contract.
• A contractor may pay a bribe to the project owner’s representative to have
defective or non-existent work approved.

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 Examples – bribery

• The project owner may pay a bribe to the project engineer in return for the
engineer refraining from issuing a payment certificate or an extension of time to
a contractor.
• If the parties are in dispute in relation to the construction of the project, one
party may bribe a witness, expert, arbitrator or judge in order to give false
evidence, or to give a favourable opinion or verdict.
• A maintenance contractor may pay a bribe to a representative of the project
owner in return for being awarded a contract to maintain the project during its
operation

12
 Others forms of corruption

• Extortion
• Fraud
• Cartels
• Abuse of power
• Embezzlement
• Money laundering

13
 Extracts from MACC website

• Four (4) main offences stipulated in MACC Act 2009:

• Soliciting / Receiving Gratification (Bribe) [Section 16 & 17(a) MACC

Act 2009]
• Offering / Giving Gratification (Bribe) [Section 17(b) MACC Act 2009]
• Intending to Deceive (False Claim) [Section 18 MACC Act 2009]
• Using Office or Position for Gratification (Bribe) (Abuse of Power /
Position) [Section 23 MACC Act 2009]

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 Amendment to MACC Act (2018)

• Insertion of new S17A

• (1) A commercial organisation commits an offence if a person associated with the
commercial organisation corruptly gives, agrees to give, promises or offers to any person
any gratification whether for the benefit of that person or another person with intent:
☺ To obtain or retain business for the commercial organisation; or
☺ To obtain or retain an advantage in the conduct of business for the commercial
organisation

• (2) Any commercial organisation who commits an offence under this section shall on
conviction be liable to a fine of not less than ten (10) times the sum or value of the
gratification which is the subject matter of the offence, where such gratification is capable of
being valued or is of pecuniary nature, or one million ringgit (RM1 million), whichever is
the higher, or to imprisonment for a term exceeding twenty (20) years or to both
15
 Amendment to MACC Act (2018)

• (3) Where an offence is committed by a commercial organisation, a person:

• Who is its director, controller, officer or partner; or
• Who is concerned in the management of its affairs,
at the time of the commission of the offence, is deemed to have committed that offence
unless that person proves that the offence was committed without his consent or connivance
and that he exercised due diligence to prevent the commission of the offence as he ought to
have exercised, having regard to the nature of his function in that capacity and to the
circumstances.

• (4) If a commercial organisation is charged for the offence referred in subsection (1), it is a
defence for the commercial organisation to prove that the commercial organisation had
in place adequate procedures to prevent persons associated with the commercial
organisation from undertaking such conduct. 16
 Amendment to MACC Act (2018)

• (5) The Minister shall issue guidelines relating to the procedures mentioned in
subsection (4)

• (6) For the purpose of this section, a person is associated with a commercial
organisation if he is a director, partner or an employee of the commercial
organisation, or he is a person who performs services for or on behalf of the
commercial organisation

• (7) The question whether or not a person performs services for or on behalf of the
commercial organisation shall be determined by reference to all the relevant
circumstances and not merely by reference to all the relevant circumstances and not
merely by reference to the nature of the relationship between him and the
commercial organisation 17
 Amendment to MACC Act (2018)

• (8) For the purpose of this section, ‘commercial organisation’ means:

(a) A company incorporated under the Companies Act 2016 and carries on a
business in Malaysia or elsewhere;
(b) A company wherever incorporated and carries on a business or part of a
business in Malaysia
(c) A partnership:
☺ Under the Partnership Act 1961 and carries on a business in Malaysia or
elsewhere; or
☺ Which is a limited liability partnership registered under the Limited Liability
Partnerships Act 2012 and carries on a business in Malaysia or elsewhere; or
(d) A partnership wherever formed and carries on a business or part of a
business in Malaysia 18
 Definition of ‘person’

• S3 Interpretation Act 1948 and 1967

• Include a body of persons, corporate or unincorporated

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 Definition of ‘director’

• S2 and s210 Companies Act 2016

• Include a body pf persons, corporate

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 Module 2

• Other important sections in MACC Act 2009

• ADEQUATE PROCEDURES, OFFENCES and PENALTIES

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 Module 2 - other sections in MACC Act to be
noted

• Extracts for:
• S16 - Offence of accepting gratification
• S17 - Offence of giving or accepting gratification by agent
• S18 – Offence of intending to deceive principal by agent
• S23 - Offence of using office or position for gratification

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 S16 - Offence of accepting gratification

Any person who by himself, or by or in conjunction with any other person:

• (a) Corruptly solicits or receives or agrees to receive for himself or for any other
person; or
• (b) 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:
• (A) Any person doing or forbearing to do anything in respect of any matter or
transaction, actual or proposed or likely to take place; or
• (B) 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,
commits an offence 23
 S17 - Offence of giving or accepting
gratification by agent
• A person commits an offence if:
• (a) Being an agent, he corruptly accepts or obtains, or agrees to accept or
attempts to obtain, from any person, for himself or for any person, any
gratification as an inducement or a reward for doing or forbearing to do, or
for having done or forborne to do, any act in relation to his principal’s affairs
or business, or for showing or forbearing to show favour or disfavour to any
person in relation to his principal’s affairs or business; or
• (b) He corruptly gives or agrees to give or offers any gratification to any
agent as an inducement or a reward for doing or forbearing to do, or for
having done or forborne to do any act in relation to his principal’s affairs or
business, or for showing or forbearing to show favour or disfavour to any
person in relation to his principal’s affairs or business.
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 S17 - Offence of giving or accepting
gratification by agent

• Definition of ‘AGENT’

• … any person employed or acting for another, and includes an

officer of a public body or an officer serving in or under any
public body, a trustee, an administrator or executor of the estate
of a deceased person, a subcontractor, and any person employed
by or acting for such trustee, administrator or executor, or
subcontractor

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 S18 - Offence of intending to deceive principal
by agent

• A person commits an offence if

• he gives to an agent, or
• being an agent he uses with intent to deceive his principal,
any receipt, account or other document in respect of which the
principal is interested, and
• which he has reason to believe contains any statement which is
false or erroneous or defective in any material particular, and is
intended to mislead the principal
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 Other sections

• S19 – Acceptor or giver of gratification to be guilty notwithstanding that purpose

was not carried out or matter not in relation to principal’s affairs or business

• S20 – Corruptly procuring withdrawal of tender

• S21 – Bribery of officer of public body

• S22 – Bribery of foreign public officials

• S23 – Offence of using office or position for gratification

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 Penalties

• S24
• (1) Any person who commits an offence under s16, 17, 20, 21, 22 and
23 shall on conviction be liable to:
(a) Imprisonment for a term not exceeding twenty (20) years; and
(b) A fine of not less than five (5) times the sum or value of the
gratification which is the subject matter of the offence, where such
gratification is capable of being valued or is of a pecuniary nature,
or ten thousand ringgit (RM10,000),
whichever is the higher
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 Penalties

• S24
• (2) Any person who commits an offence under s18 shall on conviction
be liable to:
(a) Imprisonment for a term not exceeding twenty (20) years; and
(b) A fine of not less than five (5) times the sum or value of the false
or erroneous or defective material particular, where such false
or erroneous or defective material particular is capable of being
valued, or of a pecuniary nature, or ten thousand ringgit
(RM10,000),
whichever is the higher
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 Liability for Offences Outside Malaysia

• S66
• (1) The provisions of this Act shall, in relation to citizens and
permanent residents of Malaysia,
• have effect outside as well as within Malaysia, and
• when an offence under this Act is committed in any place outside
Malaysia by any citizen or permanent resident,
• he may be dealt with in respect of such offence as if it was
committed at any place within Malaysia.
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 Liability for Offences Outside Malaysia

• MACC Act 2009 - Extraterritorial reach

• (1) Any person who commits an offence under s16, 17, 20, 21, 22 and 23 shall on conviction be liable
to:
(a) Imprisonment for a term not exceeding twenty (20) years; and
(b) A fine of not less than five (5) times the sum or value of the gratification which is the subject
matter of the offence, where such gratification is capable of being valued or is of a pecuniary
nature, or ten thousand ringgit (RM10,000), whichever is the higher

• (2) Any person who commits an offence under s18 shall on conviction be liable to:
(a) Imprisonment for a term not exceeding twenty (20) years; and
(b) A fine of not less than five (5) times the sum or value of the false or erroneous or defective
material particular, where such false or erroneous or defective material particular is capable of

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 Guidelines of Adequate Procedures

• MACC Act 2009 - Extraterritorial reach

• (1) Any person who commits an offence under 22 and 23 shall on

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 Guidelines of Adequate Procedures (1)

• MACC Act 2009 - Extraterritorial reach

• (1) Any person who commits an offence under 22 and 23

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 Guidelines of Adequate Procedures (2)

• MACC Act 2009 - Extraterritorial reach

• (1) Any person who commits an offence under 22

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Guidelines of Adequate Procedures (3)

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 Guidelines of Adequate Procedures (4)
• (ii) promote a culture of integrity within the organization;

• (iii) issue instructions on communicating the organizations’ policies and

commitments on anti- corruption to both internal and external parties;

• (iv) encourage the use of any reporting (whistleblowing) channel in relation to any
suspected and/or real corruption incidents or inadequacies in the anti- corruption
compliance programme;

• (v) assign and adequately resource a competent person or function (which may be
external to the organization) to be responsible for all anti- corruption compliance
matters, including provision of advice and guidance to personnel and business
associates in relation to the corruption programme;
36
 Guidelines of Adequate Procedures (5)

• (vi) ensure that the lines of authority

for personnel tasked with
responsibility for overseeing the
anti- corruption compliance
programme are appropriate; and

• (vii) ensure that the results of any

audit, reviews of risk assessment,
control measures and performance
are reported to all top level
management including the full
Board of Directors, and acted upon.
37
 Guidelines of Adequate Procedures (6)

• (vi) ensure that the lines of authority

for personnel tasked with
responsibility for overseeing the
anti- corruption compliance
programme are appropriate; and

• (vii) ensure that the results of any

audit, reviews of risk assessment,
control measures and performance
are reported to all top level
management including the full
Board of Directors, and acted upon.
38
 Guidelines of Adequate Procedures (7)

• (vi) ensure that the lines of

authority for personnel tasked
with responsibility for
overseeing the anti- corruption
compliance programme are

39
 Guidelines of Adequate Procedures (8)

• (vi) ensure that the lines of

authority for personnel tasked
with responsibility for
overseeing the anti- corruption
compliance programme are
appropriate; and

• (vii) ensure that the results of an

40
 Guidelines of Adequate Procedures (9)

• (vi) ensure that the lines of

authority for personnel tasked
with responsibility for
overseeing the anti- corruption
compliance programme are
appropriate; and

• (vii) ensure that the results of an

41
 Guidelines of Adequate Procedures (10)

• (vi) ensure that the lines of

authority for personnel tasked
with responsibility for
overseeing the anti- corruption
compliance programme are
appropriate; and

42
 Guidelines of Adequate Procedures (11)

Organisation’s policies should

be:
• i. endorsed by top level
management;
• ii. kept up-to-date;
• iii. publicly and/or easily
available; and
• iv. suitable for use where and
when needed
43
 Guidelines of Adequate Procedures (12)

Organisation’s policies should

be:
• i. endorsed by top level
management;
• ii. kept up-to-date;
• iii. publicly and/or easily
available; and
• iv. suitable for use where and
when needed
44
 Guidelines of Adequate Procedures (13)

Organisation’s policies should

be:
• i. endorsed by top level

45
 Guidelines of Adequate Procedures (14)

Organisation’s policies should

be:
• i. endorsed by top level

46
 Guidelines of Adequate Procedures (15)

Organisation’s policies should

be:
• i. endorsed by top level

47
 Module 3

• Corruption Risk Management

• Anti-corruption considerations

48
 Corruption Risk Management (CRM)

Management process to:

• identify structural weaknesses that may facilitate corruption,
• provides a framework for all staff to take part in identifying risk
factors and treatments, and
• embeds corruption prevention within a well-established
governance framework.

49
 Corruption Risk Management (CRM)

• All organisations are expose to corruption risks.

• Corruption risks may exist at
(1) all levels of management,
(2) in all functions and activities, and
(3) potentially involve internal and external stakeholders

• CRM serves as an important pillar in corruption prevention initiative.

50
 Corruption Risk Management (CRM)

Effective corruption risk management requires:

• commitment from the leadership of an organization,
• their aspiration in building a sound organization culture based on
integrity and honesty, clarity in the expression of corporate values,
and
• a comprehensive policy framework.

51
Corruption
Risk
Assessment
Process
Source:
• https://www.sprm.gov.my/index.php/en
/maca/korporat/142-knowledge/769-
anti-corruption-framework-guidelines-
and-corruption-risk-management-
crm#:~:text=FAQ-
,CORRUPTION%20RISK%20MANAGEM
ENT%20(CRM),a%20well%2Destablishe
d%20governance%20framework.

52
 Corruption Risk Treatment Options

Treatment options for corruption risks include:

• Enhancing existing controls through
(1) better supervision
(2) improved systems
(3) policies and procedures;
• Implementing new controls
• Introducing new methods of detecting corrupt behaviour that could result from a particular
risk

• The chosen treatment for any corruption risk could be a combination of the above options.
• Organisation need to consider the best option in terms of cost, benefits and its effectiveness.
53
 Corruption Risk Treatment Plans

After selecting all the risk treatment strategies, a corruption risk treatment
plan is prepared which detailed down how the treatment options will be
implemented. It should include:
• detailed actions
• resource requirements – human resources, budget, technology
• responsibilities – including cross function involvement
• time frames – realistic and achievable
• performance measures – practical and achievable
• reporting and monitoring requirements
54
Example of risk documentation (1):

• In 2011, BSI Standards published

British Standard (BS) 10500 : Anti-
bribery Management System, which
was developed by a working group of
30 experts from the public and private
sector and representing several
different industry sectors.
• BS 10500 is intended to help an
organisation to implement an effective
anti-bribery management system. 55
Example of risk documentation (2):

• In

56
Example of risk documentation (3):

• In

57
 ISO 37001 : 2016 (1)

• ISO 37001: ABMS strives to meet the vacancy in the efforts to curb
bribery, by allowing for organizations to incorporate a
management system that is intended to evaluate and improve
current compliance practices.
• While it is not meant to address any other corrupt practices, such
as fraud, cartels, anti-trust/competition offences, or money-
laundering, an organization can choose to extend the scope of
the management system to include such activities
58
 ISO 37001 : 2016 (2)

• It is designed to help an organization establish, implement, maintain,

and improve an anti-bribery compliance program or “management
system.”

• It includes a series of measures and controls that represent global anti-

bribery good practices.

• Now, there is an internationally recognised minimum set of measures

for an organisation to have in place to prevent, detect and response to
bribery 59
 ISO 37001 : 2016 (3)

• It is designed to help an organization establish,

implementbribery

60
 ISO 37001 : 2016 (3)

• It is designed to help an organization establish,

implementbribery

61
 ISO 37001 : 2016 (5)

• It is designed to help an organization establish,

implementbribery

62
 ISO 37001 : 2016 (3)

• It is designed to help an organization establish

63
ISO 37001 : 2016 (3)

• It is designed to help an organization establish

64
ISO 37001 : 2016 (3)

• It is designed to help an organization

65
 Areas to look into (1)

• Anti-corruption policy
• Anti-corruption programme
• Audit
• Board responsibility
• Claims code
• Commercial controls
• Communication
• Compliance manager
• Contract terms
• Decision-making process 66
 Areas to look into (2)

• Due diligence
• Employment controls
• Facilitation payments
• Financial controls
• Gifts, hospitality, donations
• Procurement controls
• Records
• Reporting
• Resources
67
 Areas to look into (3)

• Reviewing and improving

• Risk assessment
• Scorecard
• Training
• Transparency

68
 Areas to look into (4)

• Reviewing and improving

• Risk assessment
• Scorecard
• Training
• Transparency

69
 Exercises

• Participants to review the case studies as per attachment

• What are your comments?

• What lessons may you draw from the case studies shown?

70
 Other departments or areas of concern (1) –
human resource
Issues of:
• Favouritism
• Nepotism
• Abuse of authority
• Recruitments
• Promotions
• Compensation
• Conditions of services
• Personal records
71
 Other departments or areas of concern (2) –
human resource

Possible solutions:
• Merit-based HR and recruitment policies
• Transparent pay packages
• Internal controls
• Integrity management systems, including:
a) implementation of codes of ethics
b) ethics training, and
c) whistle-blowing mechanisms
72
 Other departments or areas of concern (3) –
human resource

Further comments:
• Vetting of personnel
• Conditions of appointment
• Induction / informing of personnel
• Conflict of interest
• Competence
• Disciplinary procedures
• Bonuses and targets
73
 Other departments or areas of concern (4) –
sales
Issues of:
• Sales staff, agents or other sales and marketing intermediaries might be bribing customers
to win business for the company
• Construction company might be bribing a government department to obtain a license or
permit
• Marketing providers might be engaged in commercial bribery to obtain information about
competitors or products in a market
• Travel agents might be used as a conduit to pay bribes to customers or offer travel
incentives
• PR agencies in certain countries might be bribing state-owned media for special media
coverage
• Your law firm might be acting as a conduit to bribe a government department for an
approval
74
 Other departments or areas of concern (5) –
direct cash payments

Examples:
• Grease payment: e.g. one-off payment to secure an import
permit
• The out and out bribe: e.g. single payment to obtain a contract

• Regular payments to retain a contract

• Taking a short-cut to achieve a target
75
 Other departments or areas of concern (6) –
direct cash payments - recommendation
GUIDANCE – LOOK OUT FOR RED FLAGS AND FACT PATTERNS
• Avoid getting into a situation when a bribe may be solicited or
demanded
• For example, be aware of red flags such as whether demands for cash
bribes are prevalent in this country or industry.
• Build in longer lead times to avoid being exposed to ‘offers’ to speed
up a lengthier process with the use of unofficial ‘rush’ or ‘express’
services.
• Avoid using procedures that require cash as much as possible,
especially when paying suppliers. Refer all emergencies requiring cash
payments to compliance. 76
 Other departments or areas of concern (7) –
direct cash payments - recommendation

Know how to deal with it if asked for a bribe

• Make sure key staff are trained in techniques to avoid paying
bribes.
• Ensure that any staff who withdraw from a business opportunity
because they refuse to pay a bribe know they will have the
support of their line managers and senior managers

77
 Other departments or areas of concern (8) –
direct cash payments - recommendation

Be alert to others who may be paying bribes

• Are there significant cash transfers that are booked under
generalised cost headings?
• Does the company appear to be retaining a particular contract
even when under-performing or in a market where competitors
might be pricing more keenly?

78
 Other departments or areas of concern (9) –
junkets and jollies

• Hospitality offered to an individual with decision-making power

and influence over new business
• Hospitality used as a facilitation payment to secure a permit
• Excessive hospitality for a senior government official
• Hospitality offered in breach of company policy

79
 Other departments or areas of concern (10) –
junkets and jollies – recommendations

Some red flags:

• Is it in line with company policy?
• Who is being given hospitality?
• Could the hospitality influence the award or extension of business or a
contract?
• The recipient says they’ll have to take the day off. They’d never be
allowed to go ‘officially’.
• Might competitors or a regulator think it is a bribe?
• How would this be perceived by others (e.g. the media)?
80
 Other departments or areas of concern (11) –
junkets and jollies – recommendations

Set reasonable, clear limits

• These should set out precisely how much is acceptable to spend
on corporate entertainments and hospitality in a given situation
and/or country
• These should be recommended by country managers or
supervisors and reviewed regularly

81
 Other departments or areas of concern (12) –
junkets and jollies – recommendations

Implement a review and approval process

• All entertainment should be authorised by management
• Ensure that requests outside of set parameters in the policy
require a detailed application and rigorous approval process

82
 Other departments or areas of concern (13) –
junkets and jollies – recommendations

Implement a review and approval process

• All entertainment should be authorised by management
• Ensure that requests outside of set parameters in the policy
require a detailed application and rigorous approval process

83