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Head in the Sand - Malaysian companies lose gamble over anti-corruption law

CoNet Administrator

One can understand the logic - the Malaysian government has a tendency to make its laws out of the public eye, then to announce an in-force date and then, when everyone moans they aren't ready, to postpone it. Getting a postponement works for e.g. so-called "e-hailing" drivers. The public likes them and so a few hashtags go a long way. But there is little public sympathy for companies and even less when there is a suggestion that the new law is designed to reduce corruption.

The issue of corruption in Malaysia is everywhere. Pretty much everyone has a tale to tell as to how payment has been demanded by an enforcement officer of one kind or another to avoid prosecution or a fixed penalty, known as a "compound" in Malaysia. Many more tell of how competitors have been able to obtain an advantage by paying bribes.

And then there's the elephant in the room, the one that's both casting a large shadow and that remains a rich source of conversation. 1MDB. That's been reactivated after a relative of the former Prime Minister, Najib, has been afforded a plea deal under which he will repay a small proportion of the amount he is accused of expropriating and the case against him will be, as Malaysian law allows, dismissed without a finding. It's not withdrawn and it's not what might be considered a clean acquittal. In fact, the prosecution can bring new proceedings - except that there is now an agreement, entered into the Court record, not to do so provided the money is paid. There is general public distaste for this closed door deal, announced after the event. The former regime, which has been replaced by a process that avoided an election (itself viewed with distaste by many who voted for change but now find the old guard in power supported by the very people that a significant proportion of the population voted to keep out of power. There is no sensible allegation that the method of restoring the old party back in power was financially corrupt, there remains considerable feeling abroad that the old government was corrupt to the core and that leopards don't change their spots.

And so to the point: the current Prime Minister, who says he had nothing to do with the Najib decision, would raise his head further above a parapet he's doing his best to hide behind while he and his party continue to deals to secure their control of both national and state governments if he were to suggest that an anti-corruption measure should be delayed.

Section 17A of the MACC (Amendment) Act 2018 has ever since it was revealed had an in-force date of 1 June 2020. Some in industry have said that they don't have time and, given that the past three months have had extraordinary disruption due to restrictions imposed to control CoVid-19. They have requested more time.

However, they have had more than two years to prepare. Maybe, like the "e-hailing drivers" who were given a deadline to deal with certain requirements but tried, en masse, to deal with them at the last minute, overwhelming government offices and compelling a delay, they thought they would get away with it. But it's not the same - there's no registration process, there's no need to go to a government office; they just have to have internal processes in place.

Large companies should have had most if not all of the required systems in place anyway - there is significant similarity between the Malaysian law and the UK's Bribery Act which is now a decade old. That Act has been used as a model, not quite a template, for laws in many countries. Those laws often have extraterritorial provisions and businesses operating internationally have long been aware of the policies and procedures they must have.

The central provisions are, as in the UK's Act, that a company is liable for the corrupt actions of its officers and employees - and agents or other representatives. There is also the offence of failing to prevent bribery.

All business entities in Malaysia are subject to the Act, regardless of where the conduct takes place or where the benefit is delivered.

The trouble with sticking your head in the sand is that sometimes you get kicked somewhere tender. That's not the case here - the PM has merely confirmed, within the last few hours, that implementation of a long published law will happen as scheduled.

As it should.

Further reading - legislation - http://www.federalgazette.agc....

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