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In response to the Prime Minister’s goal for Malaysia to reach the 25ᵗʰ position in the Corruption Perceptions Index (CPI) by 2033, Transparency International Malaysia (TI-M) President, Dr. Muhammad Mohan recently emphasised the need for a holistic change, which requires cooperation from all sectors, including the public and private sectors, non-governmental organisations (NGOs) and political leaders¹. The CPI is the leading global indicator of public sector corruption, and Malaysia’s CPI score for 2023 stands at 50, placing the country 57th out of 180 nations². However, its relevance extends into the private sector, where anti-corruption efforts are equally critical.
“[B]eyond implementing anti-corruption measures, companies and businesses are encouraged to engage in transparent disclosure as part of their ESG and sustainability strategies.”
The Legal Landscape
In Malaysia, the primary legislation addressing corruption is the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”) effective since 1 January 2009. Part IV of the MACC Act prescribes various offences and penalties applicable to both public officials and private individuals. Notably, Section 17A, which came into effect on 1 June 2020, imposes corporate liability on any commercial organisation if any person associated with it (including employees) engages in corrupt conduct for the organisation’s benefit. Any director, controller, officer, or partner of such commercial organisation, or person concerned in the management of its affairs at the time of commission of the offence, may also be deemed to have committed that offence unless they can prove that:
Mitigating legal Risks, Aligning with ESG goals
With increasing Malaysian Anti-Corruption Commission investigations making headlines, it is a timely reminder for Malaysian companies and business to implement adequate procedures to prevent associated persons or organisations from engaging in corrupt conduct.
They may, among others, implement clear anti-corruption policies, provide comprehensive trainings, conduct regular internal risk assessments, perform thorough due diligence on third parties, establish strong internal controls and monitoring systems, set up whistleblowing mechanisms, appoint a dedicated compliance officer or committee for better oversight, and/or regularly review and update operational procedures.
These measures, however, do not solely aim to mitigate legal risks. They also align with broader ESG and sustainability goals, as corporate corruption is a key concern in the Governance pillar of the ESG framework and poses a threat to sustainable development. Target 16.5, a component of Goal 16 of the United Nations (“UN”) Sustainable Development Goals (“SDGs”), aims to substantially reduce corruption and bribery in all forms by 2030³.
Transparency and Accountability
Beyond implementing anti-corruption measures, companies and businesses are encouraged to engage in transparent disclosure as part of their ESG and sustainability strategies. For instance:
The Way Forward
Looking ahead, adopting robust anti-corruption practices offer more than just legal compliance or alignment with Malaysia’s CPI goals. It also aligns with the ESG framework and advances global sustainability goals. Leveraging these practices will contribute to a more ethical and transparent business environment, driving long-term value for companies and businesses, as well as broader sustainable development.
If you have any queries, please contact the author, Tan Hooi Ping (hpt@lh-ag.com).
REFERENCES:
[1] https://www.bernama.com/tv/news.php?id=2331139
[2] https://www.transparency.org/en/countries/malaysia
[3] https://www.un.org/sustainabledevelopment/development-agenda/
[4] https://blueprint.unglobalcompact.org/sdgs/sdg16/#:~:text=Leading%20businesses%20will%20critically%20examine,rights%2C%20and%20reduce%20violent%20conflict.
[5] https://www.bursamalaysia.com/sites/5bb54be15f36ca0af339077a/content_entry5ce3b5005b711a1764454c1a/5ce3c83239fba2627b286508/files/bursa_malaysia_sustainability_reporting_guide-final.pdf?1570701456
[6] https://sedg.capitalmarketsmalaysia.com/wp-content/uploads/2023/10/SEDG-Full-Guide.pdf
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