Pristine Offshore Sdn. Bhd., a ship chartering company providing ship rental services in Malaysia has become the first commercial organisation to be charged under Section 17A of the Malaysian Anti-Corruption Commission ("MACC") Act 2009 since the provision came into force on 1 June 2020. Section 17A of the MACC Act 2009 (as introduced by the 2018 amending Act) provides that a commercial organisation, in this context, the said company, can be held liable due to the corrupt actions of its "persons associated" which include directors, employees or even its service providers.
MACC issued a statement on 17 March 2021 stating that the current director of the ship chartering company had been called in to assist in the investigation due to the potential liability of the company. We understand that this case involves the actions of an ex-director allegedly giving bribes amounting to RM312,350 over a period of 29 June and 14 October last year to secure a sub-contract for ship rental as part of an oil exploration project said to be worth RM1 billion.
The ex-director of the company, a 64-year-old man was detained on 17 March 2021 at the MACC headquarters in Putrajaya. Incidentally, this individual has also been separately charged under Section 16 b(A) of the MACC Act 2009 which carries individual liability for his corrupt actions. His actions as a director at the relevant point in time ("person associated") also implicates the company for corporate liability under Section 17A.
If the company is found liable under Section 17A, a penalty of ten times the gratification sum or RM1 million, whichever is higher, may be imposed. On the facts, we note that the company's exposure would be a fine of up to RM3.12 million. To absolve or mitigate liability under Section 17A, the company bears the burden to prove it had "adequate procedures" in place to prevent bribery and corrupt acts.
If the company is found to be liable for corporate liability, then an automatic deeming provision kicks in to impose personal liability on the relevant directors and management at the time of the offence. The burden is placed on these individuals to show that the offence had occurred without their consent and connivance and they had exercised due diligence to prevent such an offence. These individuals can be liable to a similar fine or to imprisonment of up to 20 years.
Is your company adequately protected against corrupt practices to avoid Section 17A type corporate liability?
If you have any queries on how Section 17A of the MACC Act 2009 will impact your organisation, do reach out to us for assistance.