Overview of the laws on corruption and bribery in Malaysia

‍Introduction

Recently, it was reported that the MACC arrested eight people, including the CEO of a highway concessionaire, in connection with bribes involving two highway projects in the Klang Valley. The probe is being carried out under section 16(a)(A) of the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”).

The MACC Act is the main legislation that governs bribery and corruption in Malaysia. This article will provide a summary of the relevant laws in Malaysia pertaining to bribery and corruption, with an emphasis on the MACC Act.

The governing laws

The MACC Act

Objectives and scope

The MACC Act came into force on 1 January 2009. It was created to establish the Malaysian Anti-Corruption Commission (“MACC”) and to enhance measures for preventing corruption. It aims to promote integrity and accountability in both public and private sector administration through educational initiatives and enforcement by the independent and accountable MACC. The MACC Act applies broadly, regulating both public and private sectors, and is effective both within Malaysia and internationally.

The powers conferred on the MACC

The MACC as an enforcement agency established by the MACC Act is conferred broad powers to investigate offences relating to bribery and corruption. This includes the power to investigate reports, examine persons, search and seizure as well as the power to arrest.

Further, the MACC can prosecute bribery offences with the consent of the Public Prosecutor (who is also the Attorney General of Malaysia).  

Bribery and corruption

Simply put, corruption is the act of giving or receiving of any gratification or reward in the form of cash or in-kind of high value for performing a task in relation to his/her job description. A clear-cut example is where a contractor rewards a gift in the form of an expensive item to a Government official for awarding a project to the company belonging to the contractor.

However, there is no definition of the words “bribery” and “corruption” in the legislation. On the other hand, the word “gratification” is defined in section 3 as follows:

"gratification" means-

(a) 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;

(b) any office, dignity, employment, contract of employment or services, and agreement to give employment or render services in any capacity;

(c) any payment, release, discharge or liquidation of any loan, obligation or other liability, whether in whole or in part;

(d) any valuable consideration of any kind, any discount, commission, rebate, bonus, deduction or percentage;

(e) any forbearance to demand any money or money's worth or valuable thing;

(f) 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

(g) any offer, undertaking or promise, whether conditional or unconditional, of any gratification within the meaning of any of the preceding paragraphs (a) to (f).

There are many offences under the MACC Act. One such offence is section 16, which provides:

Any person who by himself, or by or in conjunction with any other person-

(a) corruptly solicits or receives or agrees to receive for himself or for any other person; or

(b) corruptly gives, promises or offers to any person whether for the benefit of that person or of another person,

any gratification as an inducement to or a reward for, or otherwise on account of-

(A) any person doing or forbearing to do anything in respect of any matter or transaction, actual or proposed or likely to take place; or

(B) any officer of a public body doing or forbearing to do anything in respect of any matter or transaction, actual or proposed or likely to take place, in which the public body is concerned,

commits an offence.

The punishment for the said offence is imprisonment for a term not exceeding twenty years and a fine of not less than five times the sum or value of the gratification which is the subject matter of the offence, where such gratification is capable of being valued or is of a pecuniary nature, or ten thousand ringgit, whichever is the higher.[1]

Corporate responsibility

In 2018, the MACC Act was amended to include the principle of corporate liability by the introduction of section 17A, which states that a commercial organisation commits an offence if a person associated with the organisation corruptly gives, agrees to give, promises or offers to any person any gratification, whether for the benefit of that person or another person, with intent to obtain or retain business for the commercial organisation, or to obtain or retain an advantage in the conduct of business for the commercial organisation.  

Other related legislations

In addition to the MACC Act, offences for bribery and corruption can also be found in the other legislations, including the following:

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. For instance, sections 161 to 165 cover corruption offences by or relating to public servants; and

1. The Election Offences Act 1954 governs offences relating to corruption and bribery in the context of influencing the outcome of elections. Part III of the Act is in respect of “Corrupt Practices”, which covers “Personation”, “Treating”, “Undue Influence” and “Bribery”. Section 10 in particular covers bribery and sets out the situations which constitute the offence and the persons who are deemed to have committed the offence of bribery. Interestingly, it is implied in section 11 that the original jurisdiction to try the offences of inter alia Part III of the Act rests with the Sessions Court. The punishment for the said offences imprisonment for a term up to two years and to a fine of at least one thousand ringgit but not more than five thousand ringgit.

Further, 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. A “reporting institution” means a person who carries on any activity listed in the First Schedule to the AMLATFA, which, broadly, includes financial institutions.

Another key legislation is the Whistleblower Protection Act 2010 (“WPA”), which plays a crucial role in promoting corporate transparency, accountability, and adherence to regulations. We have written on the importance of WPA previously, which can be accessed here.[2]

Conclusion

In conclusion, the legal framework governing bribery and corruption in Malaysia is robust and comprehensive, with the MACC Act serving as the cornerstone. There is of course always room for improvement in terms of enforcement and the legislation itself.

However, it must be noted that this legislation, along with related laws such as the Penal Code, Election Offences Act 1954, AMLATFA, and the WPA reflect Malaysia’s increasing commitment to combatting corruption at multiple levels. The recent arrests by the MACC underscore the active enforcement and investigative powers granted to this body, aiming to uphold integrity and accountability in both the public and private sectors. As Malaysia continues to strengthen its anti-corruption measures, it is crucial for both individuals and organizations to remain vigilant and compliant with these laws, ensuring a transparent and ethical environment for all.

A commercial organisation must have at least the following:

1. Anti-bribery and corruption policy or statement;
2. Whistleblowing policy
3. Code of business conduct and ethics;
4. Standard operating procedures for due diligence; and
5. Written confirmation and undertakings in contractual documents.

These policies and procedures should receive approval from top-level management, be regularly updated, and be communicated clearly to all associated individuals, ensuring they are always easily accessible. Employment agreements should mandate that all employees adhere to these policies and procedures as they are established by the organization. Ideally, employees should also be required to acknowledge receipt and understanding of all issued policy documents.

If you would like more information on implementing the above policies and procedures, or reviewing the same or other related matters, contact us by clicking here.

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This article is written by Raja Nadhil Aqran (Partner) and only contains general information. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such.

[1] Section 24 of the MACC Act.

[2] The article can also be accessed here.

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