Section 17A MACC Act 2009 Guidelines on Adequate Procedures
Introduction to MACC Act 2009 (Malaysian Anti-Corruption Commission Act 2009)
- Malaysia Anti-Corruption Commission (Amendment) Act 2018 [Act A1567] has been tabled in the Parliament of Malaysia, and passed as follows:
- Dewan Rakyat (House of Representatives) on 04 April 2018;
- Dewan Negara (Senate) on 05 April 2018;
- Royal assent was given on 27 April 2018;
- Gazetted on 04 May 2018; and
- Enforced on 01 June 2020.
A new Section 17A MACC Act 2009 was inserted into the existing MACC Act 2009.
- The provision under Section 17A MACC Act 2009 is a provision that stipulates a corporate liability principle where a commercial organisation can be considered guilty if any of its employees and/or associated persons commit corruption for the benefit of the organization.
- Under the current MACC Act 2009, if an individual in an organization is found to be involved in gratification, the prosecution is only against that particular individual.
- However, after the amendment in 2018, if an individual in an organization is found to be involved in gratification, it now becomes Corporate Liability.
What is Corporate Liability?
Corporate Liability is the legal responsibility of the corporation for CRIMINAL ACTIONS, or the FAILURE TO ACT, in some cases, committed by the company’s employees or associated persons. If the actions were done for the benefit of the company, as a result of negligence or if they occurred due to a lack of responsible management by the company, the corporation can be prosecuted and punished.
Who Are Commercial Organisations?
Section 17A(1) of the MACC Act says that:
“A commercial organization commits an offence if a person associated with the commercial organization corruptly gives, agrees to give, promises or offers to any person any gratification……for the benefit of the company…”
Section 17A (8) of the MACC ACT defines Commercial Organizations as:
- Local companies that are established under the Company Act 2016;
- Foreign companies that carry on businesses in Malaysia;
- Foreign partnerships that carry on business in Malaysia;
- Local partnerships established under the Partnership Act; and
- Local partnerships established under the Limited Liability Partnership Act.
Who Are Associated Persons?
17A(1) A of the MACC Act says that “commercial organization commits an offence if a person associated with the commercial organization corruptly gives, agrees to give, promises or offers to any person any gratification……for the benefit of the company…….”
Section 17A (6) of the MACC ACT defines Associated Persons as:
- Partner
- Employee
- Director
- Service Provider
Guidelines on Adequate Procedures further extends Associated Persons to include:
- Controller
- Trustee
- Shareholder
What are the Misconducts to avoid?
Section 17A (1) of the MACC Act says that “A commercial organization commits an offence if a person associated with the commercial organization corruptly:
- gives;
- agrees to give;
- promises;
- or offers to any person any gratification
for the benefit of the company……..”
What are Gratifications?
Section 17A(3) of the MACC Act 2009 (Amendment 2018) defines gratification as:
- Money and Property (whether moveable or immoveable)
- Office and Employment
- Valuable consideration i.e. discount, rebate
- Release of liability against any loan
- Service or favour i.e. protection against penalty or forbearance of the same
- Release of monetary legal liability
What are the Penalties imposed?
Section 17A (2) of the MACC Act says that on conviction be liable to:
- 10 times the gratification (if can be calculated); or
- RM1,000,000; or
- Whichever Is Higher.
- Imprisonment up to 20 years; or
- BOTH.
What are the defences?
Section 17(3) and (4) of the MACC Act 2009 render these defences to save Senior Personnel and Commercial Organizations.
How does Senior Personnel save herself or himself?
As Senior Personnel of the commercial organisation, you have to prove that the offence is committed without your consent or knowledge or connivance.
You have to exercise due diligence to prevent such commission as she/he ought to based on your position.
What happens if you as a Senior Personnel have successfully proven defence?
The Charge against You is NOT YET dropped!
NOW it is time for the Commercial Organisation to prove its defence!
How does Commercial Organization save itself?
Section 17A(4) of the MACC Act states that “a commercial organization shall be acquitted of a charge under Section 17A if it proves that it “had in place adequate procedures designed to prevent persons associated with the commercial organization from undertaking such conduct.”
Commercial Organization has to implement a system that complies with Adequate Procedures.
What are Adequate Procedures?
Is Guidelines to prevent “associated persons” from corrupt practices in relation to the organization's business activities.
It is merely a guideline and not a definite defence as you must prove the actual implementation.
ADEQUATE PROCEDURES PRINCIPLES:
T . R . U . S . T
Principle I: Top-Level Commitment
Principle II: Risk Assessment
Principle III: Undertake Control Measures
Principle IV: Systematic Review, Monitoring & Enforcement
Principle V: Training & Communication
Principle I: Top-Level Commitment
- Promote a culture of integrity.
- Ensure that the highest level of integrity and ethics is practised.
- Ensure full compliance with the applicable laws and regulatory requirements.
- Key corruption risks of the organization must be effectively managed.
- Provide assurance to internal and external stakeholders that the organization is in compliance with its policies and applicable regulatory requirements.
- Establish, maintain and periodically review an anti-corruption compliance program.
- Encourage the use of any reporting (whistleblowing) channel.
- Results of 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.
- Instruct the implementation of an anti-bribery programme.
- Assign a competent person or function.
Principle II: Risk Assessment
- To conduct Bribery Risk Assessment.
- To establish appropriate processes, systems and controls (anti-bribery and corruption management program or system) to mitigate risks.
- To put all these in Company’s Risk Register.
Principle III: Undertake Control Measures
The control measures procedures should cover:
- key criteria and methodology for due diligence on any relevant parties;
- a reporting channel for corruption incidents (whistleblowing);
- an anti-bribery and corruption policy for the organisation;
- conflict of interest;
- a set of policies on gifts, entertainment, hospitality and travel, donations, and sponsorships; and
- an established protocol on facilitation payments, financial controls and other non-financial controls.
Principle IV: Systematic Review, Monitoring & Enforcement
- To appoint a Competent Person & Competent Internal Audit.
- To enforce penalties against non-compliance.
- To establish reviews of policies and procedures for continual improvement.
- To consider ISO 37001 certification.
Principle V: Training & Communication
- To develop and disseminate internal and external training and communications.
- The anti-corruption policy should be made publicly available.
- To establish Communication Plan.
- Employees and business associates should be provided with adequate training.
Successful defence by Company
Section 17A(4) of the MACC Act states that “a commercial organization shall be acquitted of a charge under Section 17A if it proves that it “had in place adequate procedures designed to prevent persons associated with the commercial organization from undertaking such conduct”.
When the commercial organization has successfully been defended:
The Associated Person proven to be offering gratification would be charged under:
- Section 16; or
- Section 17 of the MACC Act under his/her personal capacity.
MLOK’s methodology and approach to making your company comply with Guidelines on Adequate Procedures
We adopt three stages of the most practical and methodological process to help you comply with the Guidelines on Adequate Procedures.
Stage 1: Planning
Conduct Kick-Off Meeting to:
- to introduce you to Section 17A MACC Act 2009;
- to set up Project Time Line;
- to establish Anti-bribery Management System Committee Members; and
- to establish ABMS Documentation Framework or Structure.
Stage 2: Documentation
Drafting and writing documents to comply with Guidelines on Adequate Procedures:
- ABMS Manual
- ABMS Policy
- ABMS Objectives
- ABMS Job Description;
- ABMS Core Procedures;
- ABMS Supporting Process Procedures;
- ABMS System Procedures; and
- ABMS Forms, Work Instructions and others.
Stage 3: Implementation
- Guidance and advice on the implementation of the documented ABMS.
- To conduct a Guidelines on Adequate Procedures ABMS Internal Audit Training.
- To conduct a Guidelines on Adequate Procedures ABMS Internal Audit.
- To conduct a Guidelines on Adequate Procedures ABMS Management Review Meeting.
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