New Corporate Liability Provision Will Lead to More Investigations

July 27, 2020
corporate liability

The corporate liability provision under Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (the Act) came into force on 1 June 2020. Organisations were given fair warning in the lead up to its enactment, and now Malaysian officials say the stage is set for action against corruption.
“We believe there will be a number of cases on this offence in the future. We are expecting more to be charged after the implementation”, said Datuk Norazlan Mohd Razali, Investigation Director for the Malaysian Anti-Corruption Commission (MACC) (New Straits Times, 2020).

Corporate liability has been a major risk and compliance issue for organisations worldwide, but laws like Malaysia’s new provision under Section 17A raise the stakes considerably. The provision is modelled after the United Kingdom’s Section 7 of the Bribery Act 2010, which is widely regarded as “the toughest anti-corruption legislation in the world” (New Straits Times, 2019).

Now, a corporation can be held criminally liable for the acts of individuals, such as directors, employees and others associated with the organisation. The time-tested defence of claiming that an employee went “rogue” does not stand up to these new compliance standards and won’t provide cover if the organisation doesn’t have proper prevention processes in place.

That’s the bottom line when it comes to corruption in Malaysia – in terms of liability, the corporate liability provision requires that a company be able to prove that it had adequate procedures and control measures in place to prevent bribery, fraud and similar financial crimes. These must be documented, demonstrable and robust to provide a defence in a corporate corruption case.

Control measures

Adequate procedures to prevent corruption within a company can follow guidelines issued by the Prime Minister’s Department in December 2018, pursuant to Section 17A (5) of the MACC Act (The Star, 2020). The guidelines are based on the five principles of TRUST:

  • Top level management’s commitment
  • Risk assessment
  • Undertake appropriate controls and contingency measures
  • A systematic review, monitoring and enforcement of the anti-corruption programme
  • Training and communication relevant to its anti-corruption management system.

 

ISO 37001: A comprehensive standard against corruption

ISO 37001:2016 Anti-Bribery Management certification provides the best program of compliance for demonstrably meeting the liability standard “adequate procedures” for the corporate liability provision. ISO 37001 is a standard for preventing bribery and corruption, developed by world-recognised and respected International Organisation for Standardisation (ISO). Certification requires the demonstration that processes have been implemented effectively – with follow-up evaluations. The program can be tailored to entities of all sizes and industries.

It is crucial to trust your anti-bribery and compliance strategies to accredited ISO 37001 certification providers. Powered by CRI Group, ABAC® Center of Excellence has recently announced that the United Kingdom Accreditation Service (UKAS) has accredited its ABAC Certification services for administering the ISO 37001:2016 Anti-Bribery Management Systems standard in Malaysia, along with the UK and UAE. ABAC® provides ISO 37001:2016 anti-bribery management systems certification for all types of organisations across the globe that implement prescribed measures to prevent, detect and address bribery.

Benefits of ISO 37001

ISO 37001:2016 provides the following benefits for your organisation:

  • Ensures that your organisation is implementing a viable anti-bribery management system using widely accepted controls and systems.
  • Provides your organisation with the tools it needs to prevent bribery and mitigate related risks.
  • Provides assurance to management, investors, business associates, personnel and other stakeholders that the organisation is actively pursuing internationally recognized and accepted processes to prevent bribery and corruption.
  • Helps your company create new and better business partnerships with entities that recognise your certified status, including supply chain manufacturing, joint ventures, pending acquisitions and co-marketing alliances.
  • Potentially reduces corporate insurance premiums.
  • Provides your customers, stakeholders, employees and partners with confidence in your business operations and ethics.
  • Provides a competitive edge over non-certified organisations in your industry or niche.
  • Provides acceptable evidence to prosecutors or courts that the organisation has taken reasonable steps to prevent bribery and corruption.
  • Helps your organisation meet the “adequate procedures” standard in Malaysia’s new Corporate Liability Provision.

The Corporate Liability Provision is now the law of the land in Malaysia, and investigators will soon be taking action under its guidelines. Don’t let your organisation face increased liability risk under this new measure. Contact ABAC® Center of Excellence today and learn how we can help tailor an ISO 37001 certification program to your organisation.

About ABAC® Center of Excellence
ABAC® is an independent certification body powered by CRI Group. ABAC® Center of Excellence offers a complete suite of services and solutions designed to educate, equip & support the world’s leading business organisations with the latest best-in-practice risk & performance assessments, systems improvement & standards certification. ABAC® programs protect your organisation from damaging litigation & safeguard your business in the global marketplace by providing certification & training in internationally recognised ISO standards, such as ISO 37001 Anti-Bribery Management SystemsISO 19600 Compliance Management Systems and ISO 31000 Risk Management Systems.

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