Aug 28, 2020
TODAY, corruption is borderless in public and private sectors, making it highly complex.
It is likened to a contagious disease, wreaking our economy and institutions, and undermining democracy. The Malaysian Anti-Corruption Commission (MACC) has warned that the level of corruption in commercial and business sector is alarming.
Between last year and June, 390 individuals were arrested, which represented 26.1 per cent of total arrests. Over the last five years, MACC has arrested more than 800 individuals due to corruption cases involving commercial organisations. The illicit assets seized were worth billions of ringgit.
In EY Global Fraud Survey 2016, 83 per cent of respondents viewed enforcement against management as an effective deterrent against fraud, bribery and corruption in the private sector. The private sector should set up an Integrity and Governance Unit or IGU within the organisation similar to the public sector to promote good governance. The IGU should improve existing policies, systems, monitoring, enforcement and awareness programmes to prevent corruption and malpractices.
In this regard, the key legislative change in the fight against corruption in the private sector is enforcement of the new Section 17A in the MACC Act 2009, which imposes criminal liability on commercial organisations for their failure to prevent corruption.
The purpose of these new provisions is to ensure a corruption-free environment.
Section 17A (3) provides an offence has been committed by a commercial organisation, a person who is a director, controller, officer, partner or employee or he is a person who performs services for or on behalf of the commercial organisation such as contractor, vendor, supplier and agent. The onus has shifted to the directors, partners and management, and their defence is to prove that they had put in place adequate procedures to prevent corrupt practices.
The adequate procedures provided by the MACC guideline are:
TOP-LEVEL commitment to practise;
RISK assessment;
UNDERTAKE control measures;
SYSTEMATIC review, monitoring and enforcement; and,
TRAINING and communication.
The offence carries a penalty of maximum 10 times the sum or value of the gratification or RM1 million, whichever is higher, or imprisonment of maximum 20 years or both. Under this law, the company can be imposed with fines.
A company's culture must be instilled by the top management, especially at the board level to enhance business integrity. Boards must comply with the corporate liability rules, strengthen weaknesses and prevent company and the office-bearers from becoming personally liable.
In an article in Forbes, Dr Fred Kiel found high-integrity chief executive officers had a multi-year return of 9.4 per cent, while low-integrity CEOs had just 1.9 per cent. What's more, employee engagement was 26 per cent higher in organisations led by high-integrity CEOs.
Local and foreign industries and trade organisations or associations in Malaysia must collectively support MACC's efforts to curb corruption.
The Association of Certified Fraud Examiner (ACFE), in its Report to Nations 2020, stated that any corporate organisation that did not practise a culture of anti-corruption and integrity may suffer losses of up to five per cent of its profits. By doing so, each company may be able to save two or three per cent of its profits that were used for corruption. So the proposed long-overdue Political Funding Bill, if it ever sees the light of day and approved by Parliament, will enable political parties to be more transparent in the reporting of political spending and business dealings. It will be able to curb money politics, particularly during general elections.
A lack of political integrity and negative influence of money politics can undermine trust in government institutions' integrity and ultimately democracy.
The Sabah Legislative Assembly, barely two years old since the 14th General Election, has been dissolved to pave the way for a fresh state election amid allegations of corruption against elected representatives involved in party-hopping to cause a change of government in mid-stream. MACC is looking into these allegations.
It is an offence if any person who knows and fails to report an act of giving and offering of bribes under Sections 25 (1) and (2) of the MACC Act 2009, which imposes a fine not exceeding RM100,000, and/or imprisonment not exceeding 10 years or both.
Integrity, honesty and transparency are the touchstones of business ethics, as well as the ultimate vaccine for business success, and all of us need to get this right.
The writer is President, Malaysia Association of Certified Fraud Examiners
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