First Criminal Charge under Malaysia’s Corporate Liability Provision

On 17 March 2021, the Malaysian Anti-Corruption Commission (MACC) announced that the MACC will be making the first charge under Malaysia’s corporate liability provision – section 17A of the MACC Act.

MACC’s press release is set out below (in the Malay language only):

Corporate Liability Summary

I had written about the six key issues to look out for when analysing the corporate liability provision.

In summary, corporate liability first bites when there is a person associated with the commercial organisation. The person associated would have carried out the corrupt act to obtain business or advantage for the commercial organisation.

Then, the law will treat it almost as a double deeming provision. The commercial organisation will then have committed an offence. At the next level, the directors and the management of the commercial organisation will also be deemed to have committed an offence.

As a defence, the commercial organisation has to show it had adequate procedures in place to prevent such corrupt acts. Adequate procedures essentially mean that the organisation had a system demonstrating top level commitment, risk assessment, undertook control measures, systematic review, and with training and communication.

For the directors and management, they have to show that the corrupt act was committed without their consent and that they exercised due diligence to prevent the offence.

Application to this Case

Here, the person associated was a former director of the company. The person associated allegedly paid a bribe totalling RM321,350 between 29 June to 14 October 2020 in order to secure a sub-contract for the company to lease ships for oil and gas mining work.

Under section 17A of the MACC Act, the company will now have committed an offence. The burden is now for the company to show that it had adequate procedures in place to prevent such corrupt acts.

The other directors and management of the company in question would also be deemed to have committed this offence under section 17A of the MACC Act. If any of them are also charged, the burden is for them to show that the bribe occurred without their consent and they had exercised due diligence to prevent such an offence.

If there is a conviction for such offences, the company is liable for a maximum fine of ten times the gratification or RM1 million ringgit, whichever is higher. Here, it could be a maximum fine of more than RM3.2 million. If the directors and management of the company are convicted, they could face a maximum imprisonment of 20 years.

I will update this article once there are more details of the criminal charge.

My past articles on the corporate liability provision:

Leave a Reply