MODUL KIAR 2023 - 6 CORPORATE LIABILITY.pptx

kiar notes

1. INTEGRITY & ANTI CORRUPTION COURSE KIAR Kementerian Pendidikan Tinggi 2.0 Building a Generation with Dignity, Integrity and Corruption Free ” “

2. C ORPORATE L IABILITY 6 Module

3. Offence of CORRUPTION by commercial organisations Section 17A of the Malaysian Anti-Corruption Commission Act 2009

4. BACKGROUND Is a new provision in the MACC Act 2009. Section 17A MACC Act 2009 - corruption offence by commercial organisation Approved by Parliament on 5 April 2018. Effective June 1, 2020.

5. United Nations Convention Against Corruption (UNCAC) Article 26(1) - Liability of legal persons “Each State Party shall adopt such measures as may be necessary, consistent with its legal principles, to establish the liability of legal persons for participation in the offences established in accordance with this Convention.” FULFILL INTERNATIONAL OBLIGATIONS

6. 3 OBJECTIVES Encouraging business activities to be conducted honestly and free from corruption. Encourage commercial organisations to implement anti-corruption measures within the organisation . Promote good governance and compliance with anti-corruption laws. Section 17A of the MACC Act 2009

7. Other countries that have this provision United Kingdom - Section 7, UK Bribery Act 2010 United States - The Foreign Corrupt Practices Act 1977 Brazil - Federal Law No. 12, 846/2013 Canada - Criminal Code & Corruption of Foreign Public Officials Act Australia - Criminal Code Act 1995

8. Companies or commercial organisations are punished for colluding with their officers and employees to commit bribery in order to obtain a project (or gain an advantage). CORPORATE LIABILITY

9. Section 17A MACC Act 2009 - Offences by commercial organisations - (1) A commercial organi s ation commits an offence if a person associated with the commercial organisation corruptly gives, agrees to give, promises, or offers to any person any gratification, whether for the benefit of that person or for the benefit of another person, with the intent - to obtain or retain business for the commercial organisation ; or to obtain or retain an advantage in the conduct of business for that commercial organisation .

10. A person associated with a commercial organisation Giving/agreeing to give/promising/offering a bribe Purpose of bribery: t o acquire or maintain business for that commercial organisation ; or to obtain or maintain advantage in doing business for that commercial organisation . In short, an offence occurs when…

11. categories of organisations that can be prosecuted for corruption. “commercial organisation ” 4 D efinition

12. C ommercial organisation ? Organisations incorporated under the Companies Act 2016 A business registered under the Partnership Act 1961 A business registered under the Limited Liability Partnership Act 2012 Foreign companies/firms conducting businesses in Malaysia 1 2 3 4

13. Corrupt acts by these individuals can lead their organisations being prosecuted. D efinition “a person associated with a commercial organisation ”

14. Someone associated with a commercial organisation ? Directors, partners or employees. Individuals who perform tasks on behalf of the commercial organisation concerned.

15. A fine of not less than 10 times the value of the bribe, or RM1 million, whichever is higher; OR IF GUILTY… IMPRISONMENT of not more than 20 years; OR Both

16. Examples of real cases that can be prosecuted under Section 17A of the MACC Act 2009

17. PUTRAJAYA, 20 December 2016 - The former Head of Regional Customer Accounts, Alcatel Network Systems (M) Sdn Bhd was sentenced to 6 months in prison and fined RM125,000 after being found guilty of corruption. The accused had given a bribe of RM25,000 in the form of a check from Alcatel Network Systems (M) Sdn Bhd to the Assistant Manager of Procurement, Telekom Malaysia Berhad . Bribery aimed at obtaining tender information "for the supply of Wideband Code Division Multiple Access (WDCMA) Mobile Communication System and the Provision of Works phase II". The offence was committed at Shangri-La Hotel, Jalan Sultan Ismail on 17 February 2006. A former senior Alcatel official was jailed and fined for bribery

18. FIRST CASE Section 17A MACC Act 2009 18 March 2021

19. SHAH ALAM, 18 March 2021 - Ship charter company, Pristine Offshore Sdn . Bhd. charged in the Shah Alam Sessions Court on charges under Section 17A(1)(a) of the MACC Act 2009. The company represented by its new director, Datuk xxxx , pleaded not guilty to the charges. According to the charges, a person associated with the company, namely its director, Mr. ABC, has GIVEN a bribe to the Chief Operating Officer of a company amounting to RM321,350 . The bribe is intended to ensure that Pristine Offshore Sdn . Bhd. AWARDED SUBCONTRACT for vessel rental in oil exploration works. The act was done in Kinrara Town, Puchong between 29 June and 14 October 2020. Pristine Offshore - the first company to be charged with corruption

20. If a commercial organisation is found guilty, who can be punished? The commercial organisation itself Directors, persons in control (of commercial organisations ), partners or officers. Anyone involved in the management of the commercial organisation concerned.

21. UNLESS… the individual concerned proves: The offence was committed without his permission or involvement. The individual involved has made all reasonable efforts to avoid committing the offence.

22. AVOIDING CORPORATE LIABILITY A commercial organisation that is accused in court must prove that adequate procedures (efforts) to prevent the crime of corruption have been implemented in the organisation involved. Section 17A(5) MACC Act 2009 - The Minister issued Guidelines on Adequate Procedures to prevent officers or staff from engaging in corruption. These guidelines were issued and launched by the Prime Minister on 10 December 2018.

23. Principle T . R . U . S . T

24. T .R.U.S.T Tone from the top Assurance to stakeholders that the organisation will fully comply with the laws and regulations in force Monitor the level of integrity and governance of the organisation Provide budget and human resources related to corruption prevention efforts T op level commitment

25. Carry out risk assessment of corruption and fraud in the organisation . Recommended - every 3 years Improve weak systems and procedures Also involving external parties appointed by commercial organisations .   T. R .U.S.T R isk assessment

26. T.R. U .S.T U ndertake control measures Company policy on bribery Perform due diligence Encourage reporting of corruption Conflict of interest Gifts and celebration Contributions and sponsorships, including political contributions Facilitation payment Important : Ensure anti-corruption policies, procedures and initiatives are documented

27. T.R.U. S .T Continuous evaluation / improvement of: - anti-corruption policies and procedures - anti-corruption programme Appoint competent individuals for internal audit of anti-corruption initiatives Appoint external audits to monitor compliance with anti-corruption procedures - for example, ISO 37001 Monitor officers/staff Take action against those involved in corruption and misconduct S ystematic review, monitoring & enforcement

28. T.R.U.S. T T raining & communication Anti-bribery policies and procedures must be publicised Members of the organisation training in corruption prevention Anti-corruption awareness programme   NO to corruption

29. Examples of overseas cases related to CORPORATE liability

30. S weett Group PLC UK Bribery Act 2010

31. Sweett Group PLC (Sweett), is a provider of professional services in the construction sector in the United Kingdom. Sweett became the first company to be prosecuted and convicted for corruption in the United Kingdom. The Serious Fraud Office (SFO) investigation into Sweett began around June 2014.

32. The investigation found that Sweett's subsidiary in the Middle East, Cyril Sweett International Limited, had bribed the senior officials of Al Ain Ahlia Insurance Company. The bribe was aimed at winning a contract for consulting services for the construction of the Rotana Hotel in Abu Dhabi.

33. In December 2015, Sweett pleaded guilty to failing to take steps to combat and carry out anti-bribery efforts as required by Section 7(1)(b) of the UK Bribery Act 2010. On 19 February 2016, Southwark Crown Court fined Sweett £2.25 million and ordered Sweett to pay the SFO's £95,000 investigation costs.

34. S kansen Interiors Limited UK Bribery Act 2010

35. Skansen is a small company that carries out renovation works. Skansen only has 30 employees and has been dormant since 2014. Skansen was charged when its former Managing Director bribed former DTZ Debenham Project Manager Tie Leung. The £10,000 bribe was intended to win a contract to refurbish two offices in London worth £6m.

36. On 21 February 2018, Southwark Crown Court convicted Skansen of bribery under Section 7 of the UK Bribery Act 2010. The court found that Skansen failed to implement adequate efforts to prevent corruption. Despite being convicted, the court did not impose any penalty on Skansen . The decision was made because the company was inactive and did not have any assets.   Court conviction

37. Ironically, corruption in Skansen's company was self-reported by Skansen's new management. In fact, Skansen management fully cooperated with the authorities during the investigation process.

38. ACTIVITY

39. Discuss The corruption scandal involves the following companies:

40. Additional Information WHAT IS A DPA? MAIN FEATURES OF DPA The Deferred Prosecution Agreement (DPA) was introduced in the UK on 24 February 2014. DPA is an agreement between the prosecuting parties and the organisation being prosecuted for fraud, corruption and other economic crimes. The DPA will defer prosecution of an organisation under certain conditions. DPA is implemented under judicial supervision. The DPA only applies to organisations and not to individuals. Enables the organisation to correct the criminal offences that it has committed. Prosecuting the organisation will have too many negative effects on its image and business and cause its employees to lose their jobs. DPAs are regulated by the courts. The term agreed under a DPA must be fair, reasonable and appropriate. DPAs avoid lengthy court proceedings and are certainly costly. DPAs are transparent and the results are communicated to the public.