Case Background & Strategy

Under section 17A of the Malaysian Anti-Corruption Commission Act 2009, a commercial organisation commits an offence if a person associated with it corruptly gives or offers gratification to obtain or retain business or an advantage for the organisation. Critically, where the organisation is liable, its directors, controllers, officers and management are deemed personally liable unless they prove the offence was committed without their consent or connivance and that they exercised due diligence.

Who is an ‘associated person’?

Directors, partners, employees — and anyone who performs services for or on behalf of the organisation, which sweeps in agents, intermediaries, distributors and consultants. The organisation can be liable for a bribe paid by a third-party agent it never authorised, which is precisely why the provision reshaped Malaysian compliance practice.

The adequate procedures defence

The organisation’s defence is proof that it had in place ‘adequate procedures’ to prevent corrupt conduct, assessed against the Guidelines issued under the Act and the T.R.U.S.T. principles: Top-level commitment, Risk assessment, Undertake control measures, Systematic review and monitoring, and Training and communication. Paper policies without implementation will not qualify.

The deeming provision and directors

The reversal of burden for directors and management is the sharpest edge of section 17A. Board members must be able to evidence their oversight: approval of the anti-corruption framework, risk assessments, training records, third-party due diligence and audit trails. In boardroom disputes and post-acquisition claims, section 17A exposure increasingly features as leverage.

Frequently asked questions

What are the penalties under section 17A?

On conviction, a fine of not less than ten times the value of the gratification or RM1 million (whichever is higher), imprisonment up to twenty years, or both.

Does section 17A apply to foreign companies?

It extends to commercial organisations incorporated or carrying on business in Malaysia, including Malaysian conduct of foreign entities.

How Messrs Ng, Zainurul, Seke & Khoo can help: our corporate and commercial litigation team advises boards, directors and shareholders across Malaysia on governance disputes, from advisory and board-level strategy through to trial. Contact us for a consultation.