The Malaysian Anti-Corruption Commission’s (MACC) corporate liability law will come into force on 1 June 2020.
Under the new Section 17A of the MACC Act 2009 (“Act”), a commercial organisation can be charged with a criminal 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 the said commercial organisation.
Commercial organisations can now be held liable for the corrupt acts of their directors, partners, employees, or any person who performs services for or on their behalf. When an organisation commits an offence under Section 17A of the Act, its directors, controllers and key management are automatically deemed guilty, unless it can be proven that the organisation “had in place adequate procedures designed to prevent persons associated with the commercial organisation from undertaking such conduct”. The directors, controller and/or management officers must also prove that they had exercised due diligence to prevent the commission of the offence.
The new corporate liability law puts the burden of proof on businesses to show that they had undertaken sufficient due diligence to prevent corruption.
The human resources department as the function that manages people in the organisation, obviously has a crucial role to play in ensuring their business is prepared for the upcoming corporate liability law. Here are some things which HR should start looking at:
- Engage the business team to assess their usual practices especially when dealing with or entertaining customers, suppliers or government authorities. This will assist the formulation of a proper and customised anti-corruption policy that will make it clear to employees what sort of behaviour is not acceptable. You may be surprised to learn that many employees may not view certain obvious conduct as corrupt. Addressing specific, common activities in your anti-corruption policy will provide much needed clarity to employees.
- Establish procedures and avenues for employees to report corrupt behaviour or any suspected wrongful activity. HR should facilitate an avenue for employees to report these incidents anonymously (e.g. some companies set up an independently managed, anonymous hotline that employees can call to make reports), and implement whistle-blowing policies to protect those who come forward from retaliation.
- Check your training and development programmes. These should include regular anti-corruption training. For example, some companies make it mandatory for all employees to complete an online anti-corruption training once a year.
- Standardise the hiring process. If the hiring and recruitment procedure is standardised, this mitigates the risk of hiring decisions being made solely by one person, or being used for corrupt purposes (e.g. hiring the son of a government official in exchange for certain business advantages). If HR has a strict and centralised process for recruitment, this ensures hiring decisions are made independently and objectively.
- Orientation of new employees. Orientation is a perfect opportunity for HR to introduce the Company’s stance against corruption and to educate new recruits about its anti-corruption policies.
- Consider special work arrangements for positions that are more corruption-prone. For example, departments like purchasing, sales and finance. As part of risk management, some companies implement mandatory block leave (employees go on leave for a fixed stretch of time so their work can be audited) or job rotation (employees do not serve in the same position for too long) for these roles. Such arrangements reduce the risk of employees being susceptible to corruption, and allows the company more opportunities to uncover possible corrupt practices.
This article was written by Donovan Cheah. Donovan has been named as a recommended lawyer for labour and employment by the Legal 500 Asia Pacific 2017, 2018, 2019 and 2020, and he has also been recognised by Chambers Asia Pacific and Asialaw Profiles for his employment law and industrial relations work.
Donovan & Ho is a law firm in Malaysia. Our practice areas include employment law, dispute resolution, tax advisory and corporate advisory. Have a question? Please contact us.