Malaysia: Bribery & Corruption

The Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”) is the primary legislation governing bribery and corruption in Malaysia. The provisions of the MACC Act are widely applicable, in that it regulates both the public and private sectors and has effect within and outside Malaysia. The MACC Act is designed to promote the integrity and accountability of public and private sector administration through education on corruption, and enforcement by an independent and accountable anti-corruption body i.e. the Malaysian Anti-Corruption Commission (MACC).

Apart from the MACC Act, the following legislations also contain specific provisions governing bribery and corruption offences, albeit with limited application, namely:-

1. the Penal Code contains provisions governing the bribery of public bodies, whether between public officials or between a public official and a private individual;
2. the Election Offences Act 1954 governs offences relating to bribery in the context of influencing the outcome of elections;
3. the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFA) imposes reporting obligations on reporting institutions as a counter-measure to prevent or mitigate, among others, corruption and bribery; and
4. the Customs Act 1967 contains provisions governing bribery offences of any officer of customs or other person duly employed for the prevention of smuggling.

The Malaysian Anti-Corruption Commission (MACC) has the jurisdiction to investigate and prosecute bribery offenses under the MACC Act and the Penal Code, and other Malaysian law enforcement authorities such as the Royal Malaysia Police (RMP) may also investigate bribery offenses under both laws, although they may not be able to use the investigative tools provided by the MACC Act.

The prosecution powers of the MACC derives from the MACC Senior Commissioner which has the status of the Deputy Attorney General. However, all bribery offenses can only be prosecuted with the consent of the Attorney General of Malaysia.

Other institutions that are involved in preventing and countering corruption include: Prime Minister’s Department (PMO), National Audit Department, Accountant General’s Department, Financial Intelligence Unit (FIU), Bank Negara Malaysia (BNM), Companies Commission Malaysia (CCM), Securities Commission Malaysia (SC), Labuan Financial Services Authority (LFSA), Ministry of Finance (MOF), Public Service Commission (PSC), Public Service Department (JPA), Enforcement Agency Integrity Commission (EAIC), Public Complaints Bureau in PMO (PCB), as well as Institute of Integrity Malaysia (INTEGRITI) and Malaysian Anti-Corruption Academy (MACA).

The Attorney General’s Chambers plays a fundamental role in the field of international cooperation and asset recovery. A National Coordination Committee to Counter Money Laundering (NCC) has also been established.

Bribery is not specifically defined under the MACC Ac. Yet, s.21 and s.22 of the MACC Act are noteworthy :-

“Bribery of officer of public body

21. Any person who offers to an officer of any public body, or being an officer of any public body solicits or accepts, any gratification as an inducement or a reward for—

1. the officer voting or abstaining from voting at any meeting of the public body in favour of or against any measure, resolution or question submitted to the public body;
2. the officer performing or abstaining from performing or aiding in procuring, expediting, delaying, hindering or preventing the performance of, any official act;
3. the officer aiding in procuring or preventing the passing of any vote or the granting of any contract or advantage in favour of any person; or
4. the officer showing or forbearing to show any favour or

disfavour in his capacity as such officer, […]

Bribery of foreign public officials

22. Any person who by himself, or by or in conjunction with any other person gives, promises or offers, or agrees to give or offer, to any foreign public official, or being a foreign public official, solicits, accepts or obtains, or agrees to accept or attempts to obtain, whether for the benefit of that foreign public official or of another person, any gratification as an inducement or reward for, or otherwise on account of—

1. the foreign public official using his position to influence any act or decision of the foreign state or public international organization for which the official performs any official duties;
2. the foreign public official performing, having done or forbone to do, or abstaining from performing or aiding in procuring, expediting, delaying, hindering or preventing the performance of, any of his official duties; or
3. the foreign public official aiding in procuring or preventing the granting of any contract for the benefit of any person, […]”

“Gratification” being the fundamental “ingredient” to the offences under section 21 and section 22 MACC Act is defined under Section 3 of the MACC Act . Broadly “gratification” includes both percuniary and non-percuniary reward, advantage and/or consideration of value.

“gratification” means:-

1. money, donation, gift, loan, fee, reward, valuable security, property or interest in property being property of any description whether movable or immovable, financial benefit, or any other similar advantage;
2. any office, dignity, employment, contract of employment or services, and agreement to give employment or render services in any capacity;
3. any payment, release, discharge or liquidation of any loan, obligation or other liability, whether in whole or in part;
4. any valuable consideration of any kind, any discount, commission, rebate, bonus, deduction or percentage;
5. any forbearance to demand any money or money’s worth or valuable thing;
6. any other service or favour of any description, including protection from any penalty or disability incurred or apprehended or from any action or proceedings of a disciplinary, civil or criminal nature, whether or not already instituted, and including the exercise or the forbearance from the exercise of any right or any official power or duty; and
7. any offer, undertaking or promise, whether conditional or unconditional, of any gratification within the meaning of any of the preceding paragraphs (a) to (f).

Reading together section 3, section 21 and section 22 MACC Act, “bribery” can be understood as the act of giving or receiving of any gratification or reward as listed above in return for an unfair advantage.

The general offences of bribery in the MACC Act (Section 16, 17, 18 and 20) do not distinguish between bribes paid to a public official and those paid in the private sector. However, the MACC Act does provide additional offences of bribery in relation to public officials.

Section 21 and 22 of the MACC Act are specific offences against an individual who solicits, accepts or offer gratification to an officer of a public body or a foreign public official respectively.

In this regard, an “officer of a public body” is defined in Section 3 of the MACC Act as any person who is a member, an officer, an employee or a servant of a public body, and includes a member of the administration, a member of Parliament, a member of a State Legislative Assembly, a judge of the High Court, Court of Appeal or Federal Court, and any person receiving any remuneration from public funds, and, where the public body is a corporation sole, includes the person who is incorporated as such.

A “foreign public official” is defined in the same Section as (a) any person who holds a legislative, executive, administrative or judicial office of a foreign country whether appointed or elected; (b) any person who exercises a public function for a foreign country, including a person employed by a board, commission, corporation, or other body or authority that is established to perform a duty or function on behalf of the foreign country; and (c) any person who is authorized by a public international organization to act on behalf of that organization.

Further, the Penal Code vide Sections 161-165 specifically provides for offences of bribery in relation to public servants, of which are in similar nature with the offences referred to earlier in the MACC Act.

For the purposes of the offences under the Penal Code, a “public servant” is defined under Section 21 as:

• An officer in the Malaysian Armed Forces;
• A judge;
• An officer of a court of justice;
• An assessor assisting a court of justice;
• An arbitrator or other person to whom any cause or matter has been referred for decision;
• An office holder who holds powers to confine other persons;
• An officer of the Malaysian Government;
• An officer who acts on behalf of the Government;
• An officer who is empowered to carry out survey and assessments for tax purposes; or
• An officer in the service or pay of the Malaysian Government.

A briber and/or a recipient of bribery may be held liable for damages to an aggrieved party based on claims for fraud, conspiracy, breach of fiduciary duty, or tort. Alternatively, an aggrieved party may also recover monies paid as bribe from a recipient of bribery or any other persons who subsequently received such monies based on claims for money had and received, unjust enrichment, dishonest assistance and/or knowing receipt.

Under section 24 MACC Act, any person convicted of an offence under the MACC Act may be liable to:

• Imprisonment of up to 20 years and a fine of not less that five times the sum/value of the gratification where it is capable of being valued or is of a pecuniary nature, or MYR 10,000.00, whichever is higher; or
• In the case of a corporate offence under Section 17A, a fine not less than ten times the sum/value of the gratification where it is capable of being valued or is of a pecuniary nature, or MYR 1,000,000.00, whichever is higher or imprisonment of up to 20 years or both.

With regards to bribery offences involving public servants under the Penal Code, the penalties include a fine and imprisonment of up to 3 years as stipulated under s.161 of the CPC.

While there are no express provisions in the MACC Act to regulate such expenses, the same could nonetheless be deemed as “bribe” if there is the requisite intention for the offer, acceptance or soliciting of those gift, service, and hospitality, to be taken as a form of “gratification”.

Additionally, there are no explicit and/or similar restrictions in regard of foreign public officials.

Notwithstanding, the Malaysian government has taken prudent regulatory measures such as the issuance of the Guidelines on Giving and Receiving of Gifts in the Public Service / Service Circular No. 3 of 1998 (the “Circular”), which sets out the parameters concerning the giving and receiving of gifts. It provides that, as a general rule, a gift made to an officer in the Public Service is deemed to be laced with corruption if the value of said gift exceeds ¼ of the officer’s monthly remuneration or RM500.00, whichever is lower.

The Guidelines however do contain certain exceptions such as personal celebrations of retirements, assignments, transfers, and marriages. It provides for leeway in circumstances where it would be cumbersome or disrespectful to refuse a gift such as in instances where the public official is awarded a gift in a symposium. In these circumstances however, the officer is required to submit a written report.

There are no specific legislations governing political contributions. That being said, there are certain curtails contained within the Election Offences Act 1954 albeit limiting the amount payable and receivable by a political candidate. A similar restriction is not imposed against funds channelled through political parties. Nevertheless, care must be employed just the same to ensure that political contributions, whether channelled through and for an individual or a political party, are not construed as any form of gratification and punishable under the MACC Act.

Facilitation payments refer to payments made to public officials with the intent of expediting the administrative process.

Offences of this nature are expressly provided for in Section 21(d) of the MACC Act and Section 161 of the Penal Code. These offences are couched in terms of the public official or public servant respectively. Any public servant who shows favour to the person from whom gratification is received or attempts to receive, commits an offence.

It is worth noting however that Section 21(d) of the MACC Act makes it an offence for both the person giving or attempting to give gratification as well as the public official receiving or attempting to receive gratification. Yet, section 161 of the Penal Code is solely an offence against a public servant or prospective public servant. For a private individual giving or attempting to give gratification as facilitation payments, the same is an offence under Section(s) 162 and/or 163 of the Penal Code, as the case may be.

There are no defences available to the general bribery offences under the MACC Act nor the Penal Code. It is a defence however, to the corporate offence under Section 17A(4) of the MACC Act for an organisation to prove on a balance of probabilities, that adequate procedures had been set in place to curb corrupt practices, much like the “adequate procedures” defence adopted in the United Kingdom’s Bribery Act 2010.

As alluded to above, it is a defence for an organisation to prove on a balance of probabilities, that adequate procedures had been set in place to curb corrupt practices, much like the “adequate procedures” defence adopted in the United Kingdom’s Bribery Act 2010.

In light of this, the Malaysian government has issued the Guidelines on Adequate Procedures for the purposes of the defence under Section 17A(4) of the MACC Act.

The main facets of said Guidelines comprises of the company (i) displaying top level commitment at the managerial level; (ii) conducting comprehensive risk assessment; (iii) undertaking reasonable and proportionate control measures; (iv) ensuring systematic review, monitoring and enforcement efforts; and (v) conducting adequate training and communication.

Nevertheless, these facets are not to be considered a ‘catch-all’ requirement to be considered by a Court of law in assessing the viability of the defence and will ultimately be viewed upon through a case-to-case basis.

Under the MACC Act, both individuals and corporate entities may be liable for bribery offences with corporate entities only being made liable under Section 17A. In the case of a corporate entity, Section 17A(3) deems the director, controller, officer, partner or the person concerned in the management of the company to have committed the offence unless he/she can prove that the offence was committed without his/her consent or connivance and that due diligence had been exercised to curb the commission of the offence.

The Malaysian government issued Guidelines on Adequate Procedures which predominantly serves as a defence of “adequate procedures” afforded to corporations as against an offence under Section 17A of the MACC ACT.

It ought to be noted that these guidelines do not serve as a ‘one-size-fits-all’ solution to effective anti-corruption practices but nonetheless remains an important foundation to which corporations may improve upon.

The main facets of said Guidelines comprises of the company (i) displaying top level commitment at the managerial level; (ii) conducting comprehensive risk assessment; (iii) undertaking reasonable and proportionate control measures; (iv) ensuring systematic review, monitoring and enforcement efforts; and (v) conducting adequate training and communication.

The Whistleblower Protection Act 2010 (WPA) is the key legislation conferring protection to ‘whistleblowers’ which includes (a) protection of confidential information; (b) immunity from civil and criminal action; and (c) protection of the whistleblower and any person related or associated to him/her against detrimental action (Section 7(1) WPA).

This would extend to include the protection against having confidential information be disclosed or required to be disclosed in a manner which could expose the whistleblower, a blanket immunity from civil and criminal action for the purposes of disclosure made, and protection against reprisals as a result of the disclosure such as termination of employment, withholding of payment due and payable and refusal to enter into subsequent contracts, solely for the reason of the whistleblower having made the disclosure.

The number of investigation papers opened by MACC recorded a decrease of 17.5 per cent to 857 cases in 2020 as compared to 1,039 cases in 2019. Investigation papers for all types of offences decreased in 2020 except for giving bribery which increased 9.2 per cent.

In 2020, the number of arrests made by the MACC decreased by 9.4 per cent. This decrease was contributed by giving bribery (28.4%), false claims (23.5%) and misuse of position (17.1%). Meanwhile, arrests for accepting bribery and other offences increased [Data source: Malaysian Anti-Corruption Commission]

Given the paucity of data for bribery investigations for the full year of 2021, it would be assumptive at best, to gauge the full scale of effects that the Covid-19 pandemic has had towards investigations and enforcements of anti-corrupt practices. The general decrease of the number of investigation papers opened and arrests conducted could not be wholly attributed to the effects of the pandemic.

Nevertheless, it is plausible to expect a general reduction in enforcement efforts given the restricted Standard Operating Procedures (SOP) enforced in Malaysia throughout the pandemic which effectively restricted movement, thereby delaying enforcement and judicial processes.

It would be prudent for the Malaysian government to consider adopting the Deferred Prosecution Agreements (DPA) regime as adopted in the United Kingdom and Singapore, in which a prosecutor would agree to grant amnesty in exchange for a defendant agreeing to fulfil certain conditions and requirements such as, implementing compliance programs and co-operating in investigations involving wrongdoing by certain individuals.

As a general rule, the actions and decisions of the government authority is not open to judicial review. This is expressly provided for in Section 72 of the MACC ACT. The apex court of Malaysia in Suruhanjaya Pencegahan Rasuah Malaysia & Ors v Latheefa Beebi Koya & Anor [2017] 5 MLJ 349, held in a similar vein to state that actions or decisions of a public authority in exercise of its powers in the course of criminal investigation or enquiry is not open to judicial review. There is however a caveat to this otherwise blanket immunity, in that action or decision may be challenged if the aggrieved party is able to prove that the action or decision complained of was tainted with mala fide, irrationality, arbitrariness or an abuse of power (Regina v Director of Public Prosecutions, ex parte Kebilene and others [1999] 4 All ER 801; [2000] 2 AC 326; Dr Michael Jeyakumar Devaraj v Peguam Negara Malaysia [2013] 2 MLJ 321).

The most recent development and reform efforts which is being implemented in Malaysia is the National Anti-Corruption Plan 2019-2023 (NACP) which was introduced by the then Prime Minister of the nation, Tun Dr. Mahathir Mohamad.

The NACP focuses on six facets of importance: political governance, public sector administration, public procurement, legal and judicial proceedings, law enforcement and corporate governance. It proposes reforms in each of these facets via four fundamental principles of good governance: transparency, accountability, efficiency and effectiveness.

In order to adequately quantify and analyse the progress, being the main objective of the NACP, the same contains detailed matrix of 115 specific reforms that comprises of the establishment of new national-level institutions by statute and a major overhaul of existing institutions, the reform of administrative rules, procedures and practices, and the application of new technologies. Each of these reforms will have measurable indicators in order to quantitatively gauge its progress.

Malaysia is a party to the United Nations Convention against Corruption (UNCAC), becoming a signatory on 9th of December 2003 and ratified the same on 24th September 2008. Malaysia is also a party to the Mutual Legal Assistance in Criminal Matters (Among Like-Minded ASEAN Members Countries), and several other bilateral treaties:

• Treaty between the Government of Malaysia and the Government of Australia on Mutual Assistance in Criminal Matters dated 28 December 2006
• Agreement between the Government of Malaysia and the Government of Hong Kong Special Administrative Region of the People’s Republic of China concerning Mutual Legal Assistance in Criminal Matters dated 1 February 2008
• Treaty between the Government of Malaysia and the Government of the United States of America on Mutual Assistance in Criminal Matters dated 21 January 2009
• Treaty between the Government of Malaysia and the Government of the United Kingdom of Great Britain and Northern Ireland on Mutual Assistance in Criminal Matters dated 16 December 2011
• Treaty between the Government of Malaysia and the Government of the Republic of Korea on Mutual Assistance in Criminal Matters dated 27 September 2013
• Treaty between the Government of Malaysia and the Government of the Republic of India on Mutual Assistance in Criminal Matters dated 12 November 2012
• Treaty between the Government of Malaysia and the Government of the People’s Republic of China on Mutual Legal Assistance in Criminal Matters signed on 23 November 2015, in force as of 19 February 2017
• Treaty between the Government of Malaysia and Ukraine on Mutual Legal Assistance in Criminal Matters signed on 4 August 2016 (yet to enter into force).

Malaysian enforcement authorities further cooperate through different mechanisms and networks, including the Financial Action Task Force (FATF), Asia-Pacific Group on Money-Laundering (APG), INTERPOL, ASEANAPOL and the Egmont Group of Financial Intelligence Units.

Malaysian law recognises both legal advice privilege and litigation privilege, the latter being an extension of the former, to include communications for the purposes of or leading evidence for use in legal proceedings. The latter would apply to communications with third parties. However, this would be subject to a two-fold test which to determine if litigation privilege is established. Firstly, whether litigation was pending or contemplated when the information or document was obtained, and secondly, whether litigation was the primary purpose for the preparation of the document or the obtainment of the information. (Dato’ Anthony See Teow Guan v See Teow Chuan & Anor [2009] 3 MLJ 14; Wang Han Lin v HSBC Bank Malaysia Bhd [2017] 10 CLJ 111).

Further, Section 46(2) of the MACC ACT and Section 47(2) of the AMLAFTA both contain similar provisions that restricts the disclosure of privileged information or communication which came to the advocate and solicitor’s knowledge for the purpose of any pending proceedings.

Thus, where a lawyer-led investigation is concerned, the existence of privilege will depend on the circumstances in which the information was obtained, whether purely for fact-finding purposes or in contemplation of litigation, whereby the former may not be privileged.

The position of the Malaysian government, has consistenly been to confront corruption, abuse of power and/or malpractice and its various threats to the nation. This is reflected through various criminal, civil and administrative rules, regulations, and laws that safeguards public law and order, as well as uphold integrity, transparency and accountability of the government and private sectors.

Malaysia’s anti-corruption policy has continuously been developed and integrated into its five-year plans (Annual Plans for Malaysia) from 1966 till present (Eleventh year plan); Government circulars, letters and related documents representing various mechanisms and initiatives in coordination with various institutions and consultancies with stakeholders.

These policy documents attest to Malaysia’s multi-pronged approach in dealing with the danger of corruption in the country and we are certainly hopeful that with continuous and consistent improvements and realisation of policy efforts, Malaysia could lead the way in anti-corruptive practices in the near future.

Anti-corruptive efforts have certainly increased over the years, with the inception of several additional committees and bodies to assist in combatting corruption. These include, inter alia, the Integrity and Governance Committee, the Malaysian Anti-Corruption Academy (MACA) and the National Coordination Committee to Counter Money Laundering (NCC).

Malaysian enforcement authorities further cooperate through different mechanisms and networks, including the Financial Action Task Force (FATF), Asia-Pacific Group on Money-Laundering (APG), INTERPOL, ASEANAPOL and the Egmont Group of Financial Intelligence Units.

The culminative effect of these additions and efforts as well as stringent anti-corruptive laws and regulations, reflects the seriousness of the Malaysian government towards eradicating corruption.

Among the biggest challenges faced by enforcement agencies/regulators is the lack of transparency and reporting from the public at large.

Data by Transparency International (TI) confirms that corruption has increased over the recent years, with Malaysia falling from 23rd position to 62nd position from 1995 to 2019. This is measured through the Corruption Perception Index (CPI), which measures the perception of corruption and indicates the corruption situation within a country.

The number of investigations and arrests however fall far short from the actual corrupt practices recorded. Evidence gathering and subsequent prosecution will be hindered when the individuals involved in corrupt practices do so as a matter of course and with great detail to avoid being detected.

As alluded to above, businesses investigating internal corruption are akin to government authorities investigating corruption at large whereby the lack of transparency, combined with the increasing expertise and mutual propensity to accept and give out bribes as a matter of course, make it increasingly difficult to uproot internal corrupt practices.

The most glaring of all possible challenges is the economic risk faced by businesses with the advent of the Covid-19 pandemic. Businesses of all scales in Malaysia has seen severe economic downturns, with a relatively large percentage of Small to Medium Enterprises (SMEs) having to shut down and even large scale companies having to do the same.

In light of this, the existing corruptive practices may be multiplied by businesses and individuals alike to stay afloat or remain competitive, instead of pure greed. This would certainly be unsustainable and will eventually disrupt the nation’s economy, ultimately leading to the opposite effect of that sought for by these individual or businesses in the first place.

Given the political climate of Malaysia, it is of utmost priority for steps to be taken towards adopting rules on political party financing and to consider adopting requirements for elected officials, prior or upon entry to elected office, to file asset declarations and demonstrate compliance with tax obligations, past and present.

Further, in addition to existing asset declaration requirements, to establish systems and procedures for public officials to declare potential conflicts of interest, which would also help further the detection, enforcement and administrative sanctioning, where appropriate, of conflict of interest violations.

It will also be apt to implement procedures or regulations allowing members of the general public to obtain information on the organization, functioning, expenditure and decision-making processes of the public administration.