18th March 2021 marks a milestone being the first case by the Malaysian Anti-Corruption Commission (“MACC”) in charging a company under Section 17A of the Malaysian Anti-Corruption Act 2009 (“MACC Act”). Section 17A, in force since 1st June 2020, is the new corporate liability provision under the MACC Act with the effect of making a company automatically liable for the acts of bribery of its “associated persons” which includes its employees, directors and even its service providers.
As reported in the media, the company in question was charged under Section 17A after MACC found that its former director had between 29th June 2020 and 14th October 2020 allegedly given a bribe of RM321,350 as remuneration to secure a sub-contract for the company.
If convicted the company will be facing a fine of not less than 10 times the amount of the bribe or RM1,000,000 whichever is higher. In short, based on the value of the alleged bribe the minimum fine the company would have to pay on conviction will be RM3.21 million.
Under Section 17A the only defence available to the company will be for it to show that it had adopted “adequate procedures” (the Guidelines on “adequate procedures” is issued under the MACC Act) within its organization to prevent corruption.
It is pertinent to note that if the company is found liable under Section 17A, its directors and management are potentially also liable for the company’s offence. It will be interesting to see if MACC will take this further step if the company is convicted.
Section 17A was heralded as an important step by the Government and MACC in the fight against corruption as it forces companies to ensure that there is no corruption in its ranks. It is likely that henceforth whenever MACC acts on a case involving a bribe being given by an individual who acts for a commercial organization, by default that commercial organization will face an action under Section 17A as well. As such this will surely be the first of many cases to come.
Contributed by:
Chew Phye Keat (Management Partner)
T: 03 – 2632 9873
E: chewphyekeat@rdl.com.my
Keshini Vivekananda (Associate)
T: 03-2632 9964
E: keshini@rdl.com.my