Company directors held responsible now

THE business community in Malaysia is still buzzing over news that a private offshore vessel support company has been charged under the newly gazetted Section 17A of the Malaysian Anti-Corruption Commission (MACC) Act 2009 on Corporate Liability. It is the first company to be charged under this section.

Under Section 17A, the MACC is now able to directly impose corporate liability on commercial organisations whose internal or external associated persons are involved in corrupt practices or dishonest commercial misconduct. This happens when a charge sheet is directed towards any associated person who offers, agrees to give, promises or gives any gratification to another party to gain an advantage or retain or attain new business for that organisation.

Pursuant to Section 17A (5), Ministerial Guidelines were issued in December 2018 on adequate procedures covering key principles to be established as a line of defence for commercial organisations as well as those charged with the governance and management of such organisations.

The key to the principles are strong commitment from the top; assessment and management of bribery/corruption risks; monitoring, reviewing and enforcing internal policies/procedures; as well as training and communication to internal and external parties associated with the organisation.

Company directors now play a vital role in safeguarding the interests of shareholders by setting the organisation’s anti-bribery objectives/strategies; ensuring regulatory compliance; endorsing related policies; and reviewing and monitoring organisational activities in relation to those established policies, processes and procedures.

This is in line with Sections 213 and 214 of the Companies Act 2016, that they perform fiduciary duties and exercise care, skill and diligence throughout their tenure as stewards of the organisation.

Today, the roles of company directors are further elaborated with the need for an eye for detail and knowledge/expertise in the assessment and management of key bribery/corruption risks their organisation might face.

This includes the call to drive/supervise an organisation’s compliance function, establishing appropriate lines of authority and reporting, setting anti-bribery objectives and supporting the allocation of resources to achieve those objectives, questioning and communicating efforts taken by the organisation to mitigate the bribery/corruption risks observed, ensuring that there is an easily accessible whistleblower hotline, and systematically reviewing audit findings on the effectiveness and efficiency of the organisation’s anti-bribery/corruption programme.

All actions taken in this respect must be well documented and communicated to all stakeholders. If an investigation is pursued against the organisation, the MACC would require the organisation to produce the relevant documentary evidence that showcase these efforts and provide testimony from those charged with governance and compliance within that organisation.

It may seem like it is a mountainous task for company directors to protect themselves and shareholder interests, however, it is time more emphasis is put on a director’s ability to recognise these concerns and put the brakes on the existential threat of bribery/corruption in their organisation once and for all.

RAYMON RAM

Petaling Jaya

Note: The writer is the managing principal of a forensics and fraud management solutions provider.