Earlier this year, the Malaysian Parliament amended the Malaysian Anti-Corruption Commission Act 2009 (MACC Act) to incorporate a new Section 17A on corporate liability for corruption. The new section not only establishes a new statutory corporate liability offence of corruption by a commercial organisation, but also deems any director, controller, officer, partner or manager to be personally liable for the same offence unless the relevant individual can prove that the offence was committed without their consent and that they had exercised the requisite due diligence to prevent the commission of the offence.
In legislating these amendments, the Malaysian Parliament has adopted features of the UK Bribery Act into the MACC Act. The amendments are not yet in force and will come into force upon a gazette notification by the Minister.
Key takeaways about the recent amendments to the MACC Act
- Corporate offence of corruption committed by an associated person: Section 17A(1) of the MACC Act provides that a commercial organisation commits an offence if a person associated with it corruptly gives, offers or promises any gratification to any person with an intent to obtain or retain business or a business advantage for said commercial organisation.
Persons considered to be “associated” with a commercial organisation include directors, partners and employees of the commercial organisation, as well as any person “who performs services for or on behalf of the commercial organization”. This means that a commercial organisation will not only be liable for bribery by its directors or partners, but also its employees, agents, distributors, and potentially even its joint venture partners.
- Parallel personal criminal liability for senior personnel: Section 17A(3) of the MACC Act provides that senior personnel, such as a director, controller, officer, partner or person who is concerned with the management of a commercial organisation found to be liable for corruption at the time of the commission of the offence, shall be deemed to have also committed the same offence, unless the individual proves that the offence was committed without their consent or connivance; and that they had 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.”
In other words, if a commercial organisation is found to be liable under Section 17A, its senior personnel holding office at the time of commission of offence will be deemed to have personally committed the offence as well.
- Comparison with the UK Bribery Act 2010: The UK Bribery Act was expressly cited as the model for the new Section 17A of the MACC Act. However, Section 17A goes beyond the UK approach. This is because the UK Bribery Act provides for two distinct statutory offences:
- First, the offence of failure by commercial organisations to prevent bribery (Section 7), where a commercial organisation would be liable if a person associated with it commits bribery in order to obtain or retain business or a business advantage; and
- Second, the personal criminal liability of senior officers of corporations and partnerships for bribery committed by the relevant corporation or partnership (Section 14),
which the MACC Act has merged in the new Section 17A. Thus, a senior manager of a company operating in Malaysia will be deemed to be personally liable for bribery committed by a person associated with the company (including third parties such as agents), unless the senior manager can prove that the bribery was committed with his or her consent or connivance and that he or she had exercised sufficient due diligence to prevent the offence.
- Statutory defence against corporate offence of corruption: Like the UK Bribery Act, the amended MACC Act has also incorporated a statutory defence against the offence of corruption by a commercial organisation. Section 17(4) of the MACC Act states that a commercial organisation shall be acquitted of a charge if it proves that it “had in place adequate procedures designed to prevent persons associated with the commercial organization from undertaking such conduct.” This provision is in pari materia with Section 7(2) of the UK Bribery Act.
The new provisions have effectively reversed the burden of proof – by creating a presumption of criminal liability through a deeming provision which then requires the accused person to disprove his or her liability by showing that the offence was committed without his or her consent or connivance, and that he or she had exercised the necessary due diligence in the circumstances.
The recent amendments are a clear signal of the Malaysian government’s intention to hold managers accountable for corrupt acts perpetrated through their organisations.