Delaying enforcement of Section 17A MACCA – would this help or harm business owners?

It seems that anything and everything can be laid blame on Covid-19. The latest of these laments is the requests to Putrajaya to delay the gazetting of enforcement under Section 17A, the provision in the Malaysian Anti-Corruption Commission Act 2009 that will enforce corporate liability for the criminal offence - corruption. Some companies are asking for more time to recoup their business that was lost due to Covid-19 first before `hurrying along’ to consider the less pertinent concerns presently, such as curbing corruption within their business activities.

Since the updated provision, Section 17A was gazetted in May 2018, the Prime Minister’s Office has put in a lot of effort to raise awareness and educate the public, government employees and corporate citizens through the media, government agencies’ websites and seminars. There is the unwavering advocacy on suppressing corruption in Malaysia by change organizations like Transparency International Malaysia and Centre to Combat Corruption and Cronyism. In December 2018, the Guidelines on Adequate Procedures to deter corrupt practices from happening, was published by the Prime Minister's Office. It has been 16 months in, and in this IOT-driven era, tons of information relating to the development of Section 17A is abundantly accessible. Remarkably, many forward-looking companies have succeeded to equip themselves with Adequate Procedures.

If it is one experience that any discerning company would learn from this crisis is to use the time under lockdown to create or improve their business continuity plan and enterprise risk management. Granted, companies are putting together strategies to widen their business prospects during and/ or post Covid-19. But it should never just be about focusing on the top-line and bottom-line. It is worth the time tweaking or overhauling everything else in between that does not work in today’s highly regulated marketplaces – think flushing out business malpractices, making better and informed decisions with integrity, developing effective policies, utilising technology to support business procedures, minimising wastage, etc.

Under Section 17A, owners, directors, and anyone in position of authority to lead a company can be exposed to vicarious liability for the illicit actions undertaken by their employees or third-party business partners when performing their duty or rendering their service for their company. These implications cannot be overstated. Yet, there are companies that adopt a `wait and see’ sentiment, stand behind the belief that Covid-19 has been impeding their business growth, and therefore a grace period should be accorded to them to prepare themselves. This rationale on the onset of Covid-19 is unfounded.

Investing into developing an anti-corruption compliance culture can assure all stakeholders to the company that the latter may be defensible against corruption claims. It is a relatively small business cost to pay. In the long run, businesses will evolve to becoming smarter, accountable and ethical industry players, and that starts with eliminating old `norms’ like spends on inappropriate entertaining, tendencies to offer kickbacks in order to win tender biddings or having undisclosed relationships with government officials to obtain or procure lucrative government contracts. Not because these business costs are `high-maintenance’ in comparison – these are improper conducts under many like anti-corruption legislations!

As the former Deputy Attorney-General of the US, Paul McNutty once said – If you think compliance is expensive, try non-compliance.

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