IN recent times, there are clear signs of the Malaysian Anti-Corruption Commission (MACC) casting its net wider to encompass PLCs (public listed companies) who are engaged in project tie-ups with government-linked companies (GLCs) especially if there is suspicion or evidence of company personnel – from junior to senior level to company directors – engaging in graft-related activities.

This becomes more glaring following the implementation of the corporate liability provision involving all commercial organisations under Section 17A of the MACC Act 009 which came to force on 1 June 2020.

Lately, power infrastructure provider Pestech International Bhd had been thrust into the limelight as its subsidiary CRSE Sdn Bhd is assisting the MACC in the agency’s investigation of a corruption case related to the Mass Rapid Transit 2 (MRT2) project.

This follows various media reports on the MACC investigation into alleged corruption by two engineering firms involved in the MRT2 project.

Pestech explained that CRSE is currently executing the power supply and distribution system (PSDS) package for the MRT2 project. As such, CRSE as one of the contractors to the MRT2 project has also been required to assist in the MACC investigation.

To recap, Bernama had in March this year reported that three directors and two former directors of an engineering firm had been detained by the MACC to assist in a corruption case investigation that is linked to the MRT2 project worth over RM650 mil.

According to the news report, four men, including one with the title “Datuk” and a woman –all aged between 43 and 63 – were detained when they turned up to give their statements at the MACC headquarters.

Two former company directors were believed to have received RM27 mil in bribes from another engineering firm as kickbacks to be appointed as a consultant for the project in 2017.

The case is being investigated under Section 16 of the MACC Act for soliciting and accepting bribes.

Apart from detention of company officials which is deemed a direct action, MACC had also in recent times acted in a more subtle manner as experienced by lingerie manufacturer Caely Holdings Bhd which confirmed on 20 April that the graft buster has issued a freeze order on all the operational bank accounts of the company and its subsidiaries.

Caely said that the freeze order by MACC was never made known to the company but that it had merely received the notice from one of its bankers – that its accounts had been frozen.

First PLC implicated under Section 17A

On Aug 19 last year, Deleum Bhd said its 60%-indirect subsidiary Deleum Primera Sdn Bhd (Primera) had been issued a RM1 mil compound by the MACC over the illegal scheme involving several of the latter’s directors and certain subcontractors.

According to its stock exchange filings, the upstream oil and gas services group became aware around January 2020 of unusual irregularities in Primera’s conduct of business, prompting it to appoint PwC Consulting Associates (M) Sdn Bhd to conduct a special audit and forensic investigation for the subsidiary.

Later, their investigation revealed that senior management personnel, directors and shareholders of Primera had entered into an illegal scheme with certain subcontractors of Primera that resulted in a loss to Primera.

Following this, a civil suit involving claims of RM19.88 mil has been brought by Primera against seven individuals and three companies.

The case came about after Pristine Offshore Sdn Bhd became the first company to be charged under the newly introduced Section 17A of the MACC Act 2009 on March 31 last year with one count of bribery involving RM321,350 to ensure that it was awarded a subcontract from Petronas Carigali Sdn Bhd as well as one count of bribery framed under Section 16(b)(A) of the MACC Act 2009.

The bribe was allegedly given to a senior officer of Deleum Primera between June and October 2020 to ensure Pristine Offshore was awarded the subcontract from Petronas Carigali.

Conclusion

Section 17A of the MACC Act is a powerful corporate liability provision with a deeming personal liability implication. Directors, management, and associates must be fully aware of its implications and what the directors, management, and associates can do to avoid or mitigate liability.

The recent experiences of these PLCs demonstrate the need for board of directors of PLCs – especially the audit committee – to play a more proactive role by being vigilant in ensuring that all funding for projects can be accounted for or leakages can be quickly plugged.

In addition, the audit committee should also determine whether appropriate policies and controls are in place for the detection and mitigation of risks related to bribery and corruption.

In essence, PLCs have no better option than to conduct their businesses with utmost integrity without having to resort to corruption.

This is a given since the provisions under Section 17A of the MACC Act 2009 stipulates a corporate liability principle where a commercial organisation can be considered guilty if any of its employees and/or associates commit corruption for the benefit of the organisation.

At the same time, apart from the organisation, the directors and management can also be considered guilty (until they can prove their innocence) regardless of whether they or their upper management sanctioned – or was aware of – the corrupt acts being committed by its employees or associates.

If a commercial organisation is found guilty under Section 17A, the penalty is a fine of not less than 10 times the value of the bribe or RM1 mil whichever is higher or imprisonment for up to 20 years or both. – May 15, 2022

Devanesan Evanson is CEO of the Minority Shareholders Watch Group (MSWG).

https://focusmalaysia.my/macc-looks-beyond-glcs-to-clamp-down-on-corrupt-practices/