Deferred prosecution agreements required in Malaysia before corporate failure-to-prevent-bribery offense is enforced, MACC chief says

02 Apr 2020 12:36 pm by Ben Lucas

Malaysia should adopt deferred prosecution agreements before enforcing its failure-to-prevent-bribery offense, the head of the country’s anticorruption agency has told MLex.

Latheefa Koya, the head of the Malaysian Anti-Corruption Commission, said that the MACC was talking to companies about the incoming corporate liability offense and that it was continuing to listen to feedback and questions from companies on the changes.

The offense, which is set to come into effect on June 1 next year, will make companies and their directors liable for corrupt conduct by their employees.

Companies found to have failed to stop their employees paying bribes could be fined up to 10 times the value of those bribes or 1 million ringgit ($240,000), whichever is higher. The planned changes under Section 17(a) of the country’s anticorruption law will also see prosecutors able to charge company directors with the same offense, with the threat of jail time if found guilty. To deflect charges, they would have to prove that they had implemented and maintained “adequate procedures” to prevent corruption. The new system is modelled largely on the same offense outlined in the UK’s Bribery Act.

But Malaysia, unlike other countries that have introduced similar offenses, doesn’t offer DPAs, which allow companies to avoid prosecution for financial crimes by paying fines and adopting remedial measures.

Asked if she would like to see a DPA system implemented in Malaysia, Latheefa said: “I think it needs to be there before we start prosecutions [of companies for failing to prevent bribery].”

“We are in the midst of explaining to people, giving sessions to make them understand what Section 17(a) is about,” Latheefa said.

“But while we were looking at that, we realized that we needed to first understand that we do not have a deferred prosecution agreement process. We do not have that in our rules, and that is something I think we need to deal with, so we’re in the midst of going back to the minister to discuss that,” she said.

“I think we need to recommend that as well, otherwise it is going to be a difficult process to prosecute,” she said.

Latheefa confirmed that staff at the MACC had started looking into how such a settlement system could work in Malaysia and be implemented alongside the corporate liability offense.

The government published formal guidelines on what “adequate procedures” should look like for companies in December last year.

However, Latheefa said that she wanted to be clear how investigating and prosecuting the failure-to-prevent-bribery offense and assessing companies' anti-bribery systems would work in practice. The MACC doesn’t have prosecution powers and must obtain permission for any charging decision from the Attorney General.

“When you investigate, how far do you go?” she said. “Who do you call in to verify, to get evidence and say actually the system is just a superficial one?”

Latheefa said: “What is adequate? Who decides? How do you deal with that? And so how do you prosecute when a company says it has put in adequate measures? These are things which need to be tightened up.”

In the UK, the burden of proof is on companies. They are able to avoid liability only if they can prove, on a balance of probabilities, to a jury that their compliance systems were adequate and that any incidence of bribery was an anomaly.

Latheefa said that although some people were keen to launch prosecutions of companies under Section 17(a) and then learn from that experience, that would be unwise. “That’s dangerous for me because if it fails, then we can never use it. So we want to actually tighten it up,” she said. “I’m being more careful. I think my idea is to make sure that we have a clear law.”

Other senior figures at Malaysia’s anticorruption agencies have voiced support for introducing DPAs.

Abu Kassim Mohamed, a former head of the MACC who is now the director general of the Governance, Integrity and Anti-Corruption Centre, said at a recent conference that he supported the idea of introducing DPAs.

Anis Yusal Yusoff, the deputy head of the GIACC, told MLex in July that although Malaysia may not be quite ready to implement such agreements, they were being considered.

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