MODUL KIAR 2023 - 8 CAUSES, SYMPTOMS AND EFFECTS OF CORRUPTION.pptx

kiar notes

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

2. CAUSES, SYMPTOMS AND EFFECTS OF C ORRUPTION 8 Module

3. HAPPENS? CORRUPTION Why

4. Power tends to corrupt and absolute power corrupt absolutely.” John Emerich Edward Dalberg Acton ( Lord Acton ) English historian and social critic (1834-1902) “ POWER!

5. Nearly all men can stand adversity, but if you want to test a man's character, give him power .” Abraham Lincoln 16th President of the United States February 12, 1809 - April 15, 1865 “ POWER!

6. The nature of GREED in oneself and there is an OPPORTUNITY to commit corruption

7. Corruption Equation Power + Opportunity - Integrity = CORRUPTION

8. FRAUD TRIANGLE THEORY (Donald R. Cressey , 1953)

9. RATIONALISATION PRESSURE OPPORTUNITY FACTOR OF CORRUPTION 3

10. PRESSURE Not promoted Feeling that the salary does not correspond to the work performed Low/inappropriate SKT assessment Cost of living is high Debt Live in luxury Gambling habit Financial Work FACTOR OF CORRUPTION

11. OPPORTUNITY Weak internal controls There is room for corruption in the system/procedure No monitoring No segregation of duties Lots of discretion FACTOR OF CORRUPTION

12. RATIONALISATION “They want to give. Just take it. I didn’t even ask for it." "The boss also takes bribes. Don’t tell me I can’t do the same." “It is not even his money. He will 'claim’ from the company." "If I don't take it, someone else will." FACTOR OF CORRUPTION

13. Weak internal controls There is room for corruption in the system/procedure No monitoring No segregation of duties Lots of discretion “They want to give. Just take it. I didn’t even ask for it." "The boss also takes bribes. Don’t tell me I can’t do the same." “It is not even his money. He will 'claim’ from the company." "If I don't take it, someone else will." RATIONALISATION Not promoted Feeling that the salary does not commensurate with the work done Low/inappropriate SKT assessment Cost of living is high Debt problem Live in luxury Gambling habit PRESSURE Financial Work OPPORTUNITY FACTOR OF CORRUPTION 3

14. Identify the SYMPTOMS C O R R U P T I O N

15. A sudden change of lifestyle

16. Failure to explain the source of asset acquisition

17. Refused to be promoted or transferred

18. Suspicious phone calls

19. Likes to live a luxurious life.

20. Sudden resignation

21. Close relationship with Company’s/ Department’s customers

22. EFFECTS OF CORRUPTION

23. C ORRUPTION has a major impact on: Safety and Environment The country's reputation and economy Individuals and families Property Organisation

24. The effect of corruption on the ECONOMY & REPUTATION OF THE COUNTRY

25. USD2.6 trillion Estimated amount of global losses each year due to corruption (5% of Gross Domestic Product or GDP) Source: Transparency International

26. Every year, an estimated USD1 trillion in bribes are paid for various purposes.

27. Between 2005 to 2014, MALAYSIA lost RM1.8 TRILLION through illegal financial flows, some of which stem from CORRUPTION . Source: Global Financial Integrity Report 2017

28. YEAR RANK SCORE 2022 Ranked 61 out of 180 countries 47% 2021 Ranked 62 out of 180 countries 48% 2020 Ranked 57 out of 180 countries 51% 2019 Ranked 51 out of 180 countries 53% 2018 Ranked 61 out of 180 countries 47% 2017 Ranked 62 out of 180 countries 47% 2016 Ranked 55 out of 180 countries 49% 2015 Ranked 54 out of 180 countries 50% 2014 Ranked 50 out of 180 countries 52% "The government's target is that CPI Malaysia in position top 30.” YAB PM's presentation related to the 12th RM on September 27, 2021 Affect Malaysia's REPUTATION in CORRUPTION PERCEPTION INDEX (CPI)

29. Effects of corruption on INDIVIDUAL

30. President Mobuto (Zaire) FALL because of corruption! Richard Nixon (United States) President Marcos (Philippines) President Suharto (Indonesia)

31. US Politician Robert Budd Dwyer shoots himself during press conference (1987) Because of Corruption! Minister of Agriculture, Forestry and Fisheries of Japan, Toshikatsu Matsuoka hangs himself (2007)

32. Singapore's Development Minister, Teh Cheang Wan committed suicide during CPIB investigation (1986) The Prime Minister of Israel, Ehud Olmert was jailed for 18 months (from Feb 2016) Because of Corruption!

33. YEAR 2015 2016 2017 2018 2019 ARRESTS 841 939 879 894 1,101 VALUE OF BRIBES RM28.31 mil RM120.42 mil RM1,995.44 mil RM7,069.00 mil RM2,068.7 mil STATISTICS OF ARRESTS BY MACC & VALUE OF CORRUPTION INVOLVED 2015 - 2019 CORRUPTION IN MALAYSIA

34. PRISON not more than 20 years; AND MACC ACT 2009 CORRUPTION: IF GUILTY… FINE 5 times the value of the bribe, or RM10,000, whichever is higher.

35. Section 21(1) of the Pension Act 1980, "... if any person who has been granted a pension or other benefit under this Act is sentenced to death or imprisonment for a certain period by a Court, then the pension or other benefit shall cease immediately.” Imprisonment can result in a civil servant to LOSS OF PENSION ELIGIBILITY

36. The name of the corruptor will be displayed in For a period of 3 years.

37. The effect of corruption on PROPERTY

38. Results of corruption SEIZE & FORFEITURE

39. Content 2015 2016 2017 2018 2019 2020 SEIZE RM22.27 mil RM306.15 mil RM353.06 mil RM2,709.41 mil RM60.83 mil RM999.38 mil FORFEITURE RM3.94 mil RM4.95 mil RM48.56 mil RM37.66 mil RM1.285 bil RM14.113 bil STATISTICS OF SEIZE AND FORFEITURE BY MACC 2015 - 2020

40. MACC seized: 69 accounts worth RM8.33 million, Seized the house 12 luxury cars (Audi, Mercedes Benz, Nissan GTR & Toyota Vellfire). Richard Mille watch (RM400,000) 40 handbags including Hermes brand (RM400,000) Luxury bed sheet set (RM260,000), Cartier pearl ring (RM600,000). 8 March 2016 - MACC arrested the Divisional Secretary , suspected of masterminding a syndicate embezzling RM107 million in Government funds. INFRINGEMENT AT KBS

41. SABAH WATER SCANDAL Ops Water - conducted in October 2016. Involving the Sabah State Water Department. The total loot amounted to RM214,139,537 Cash RM75,803,598 Bank account RM25,091,972 9 luxury cars 575 gold jewellery 346 gem jewellery 93 designer handbags 86 luxury watches 127 plots of land

42. 4 individuals were charged in court for the offence of money laundering under AMLATFAPUAA 2001: - Director of JANS - 14 charges - JANS Director's wife - 21 charges - Deputy Director of JANS - 127 charges - Former Deputy Director of JANS - 4 charges NOTE : Charges were made in stages. The first charge was on December 29, 2016.

43. The effect of corruption on ORGANISATIONS

44. Service becomes inefficient Systems, procedures, and rules become ineffective. There is injustice in the service Loss of public/customer trust Damages the image of the Department/ organisation . Corruption causes...

45. Bribery causes a 10% Source: Transparency International addition to the cost of doing business.

46. Sime Darby announced a loss of RM964 million for the second quarter of the 2010 financial year. 'Ops Billion' by MACC led to the arrest of 4 senior officials including CEO Sime Darby who were involved in corruption. Example Effects of corruption Sime Darby's big loss

47. The company can be prosecuted under Section 17A of the MACC Act 2009 A company or commercial organisation can be prosecuted and punished for allowing its officers / staff to commit bribery in order to obtain a project (or gain a benefit).

48. Rolls-Royce allegedly paid millions of pounds to obtain civil engineering and military contracts in several countries. Bribes were paid by Rolls-Royce officials or through middlemen, from 1999 until 2013. In January 2017, Rolls-Royce agreed to pay a penalty of £671 million to avoid prosecution by authorities in the United Kingdom, the United States of America and Brazil. Case example

49. Siemens AG is one of the largest electronic engineering companies in the world. Allegedly made bribes amounting to €1.3 billion to win bids for major projects. December 2008 - Siemens pleads guilty. Siemens agreed to pay USD1.6 billion in penalties to American and European authorities. Siemens fined USD1.6 billion

50. Fined USD137 million and blacklisted by the Malaysian Government Alcatel-Lucent is accused of bribing government officials in Costa Rica, Honduras, Taiwan and Malaysia, aiming to obtain and retain government contracts worth millions of dollars. On December 28, 2010, Alcatel Lucent agreed to pay a penalty of more than USD137 million to settle the prosecution of the United States authorities. For offences committed in Malaysia, the company has been blacklisted by the Government.

51. The effect of corruption on SAFETY & ENVIRONMENT

52. Corruption causes smuggling and stealing sand. It is estimated that 3,000 trucks are used to transport sand during the year. Losses can reach almost RM600 million. Sand dredging beyond the permitted limit can change the river's water flow pattern and further disrupt plant and animal habitats. Corruption, mining and sand smuggling.

53. It is estimated that 1,000 - 1,500 illegal immigrants enter the country every day. The average payment of the visit pass fee (temporary work) as well as the levy that should be charged is RM800 per person. The Malaysian government is estimated to suffer losses of up to RM86.4 million a year. Additional costs that are difficult to estimate when taking into account safety, social and health implications. The entrance to the country was invaded

54. An estimated RM2.2 billion in customs tax is lost due to corruption and tax fraud. On 28 March 2011, 'Ops 3B' - Raids were carried out against 84 delivery agents, 24 companies and 25 Customs Department premises throughout Malaysia. As a result of the operation and various approaches implemented by JKDM, tax collection increased by 7.4% (RM2.1 billion). - 2010 - RM28.3 billion - 2011 - RM30.4 billion Customs tax leakage

55. ACTIVITY

56. What factors cause corruption? What are the effects of corruption? What are the symptoms of corruption?