MALAYSIANEW AND EMERGING FORMS OF CORRUPTION AND THE
EFFECTIVE COUNTERMEASURESLaw Chin How *The outbreak of the deadly Covid-19 virus, which has been sweeping across the world, hascaused the loss of life in millions in every corner of the world. Governments have come up
with a variety of countermeasures to contain the spread of Covid-19 for the livelihood andsurvival of the mankind. Corruption, which is tantamount to another form of pandemic andmuch more lethal than Covid-19 in causing the irreparable destruction to any civilization, as if
corruption is yet to eradicate society from stem to stern. A new form of corruption has emerged
during the pandemic as some unscrupulous people take advantage of the incentives or subsidies
offered by the government to groups that are underprivileged and who are struggling to makeends meet.
Against that backdrop, the Government of Malaysia announced the economy stimulus
package in March 2020 which includes financial aid, incentives, training or reskilling courses
etc. for the poorer or underprivileged to ease their burdens during the Covid-19 pandemic
movement control order (MCO), or the lockdown, that was implemented by the authorities tocurb the spread of Covid-19 across Malaysia.
For instance, the Ministry of International Trade and Industry (MITI) of Malaysia
introduced the “Service Provider for Employability and Re-Training Local Talent” programme(ERT) which amounted to RM 40 million in June 2020 being the course to enhance skill andvalue of the workforce in the automotive industry that has been badly hit by the pandemic.
Unfortunately, the goodwill of the ministry did not reach the labours of this dying industry, but
the scenario is deteriorating because of some irresponsible parties who manipulated theprogramme and eventually pocketed the financial allocation of the ministry that was initiallymeant to train people earning low incomes to be much more competitive, competent andproductive in this automotive industry. The chief executive officer (CEO) of the subsidiarycompany, i.e. A2Z which is wholly owned by the ministry (MITI), had manipulated this ERT
programme by awarding this programme to another company, i.e. AKSB, and in return the
CEO solicited RM 5 million from AKSB which obtained the ERT programme. The CEO
instructed AKSB to camouflage the corrupt gratification of RM 5 million as a purported
friendly loan given by AKSB by way of entering the loan agreement between the CEO andAKSB. The AKSB channelled the RM 5 million to the account of a law firm that acted as a
stakeholder for the CEO upon the instruction of the CEO after the purported loan agreement
entered by the parties. The said law firm was involved in money-laundering activities by wayof helping the CEO to disburse the corrupt money to various parties on the instruction of theCEO. Moreover, part of the sum of RM 5 million was used by the CEO as paid-in capital to set
up the law firm which eventually helped the CEO with money-laundering activities. Ironically,
the legal practitioners of said the law firm, who supposedly act as guardians to steadfastly
uphold justice and the rule of law but opted to dip themselves into the clandestine moneylaundering plot for the ill-gotten gain.

*

Deputy Public Prosecutor, Attorney General’s Chambers, Malaysia.

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Another new form of corruption took place in Malaysia during the Covid-19 pandemic
when the organizer of an employee training course in the automotive industry misappropriatedthe budget allocated by the MITI (the ministry). The said organizer manipulated the moduleand the syllabus of the training course, that is being designed initially to intensify the skill andexperience of the workforce in this industry. AKSB, the company that organized the employee
training course, was supposed to hold the training at a designated site. Instead, the company
held the online course virtually to dispense with the physical appearance of the employees at
the training site. The change of the training module and syllabus by the organizer at the very
last minutes defeated the goal of having the employees become more productive, efficient andcompetitive regarding the workmanship in the automotive industry as the training course washeld virtually and theoretically without physical practice at the site, defying the golden ruleprinciple of “Practice Makes Perfect” which is applicable in every industry.
On 5 June 2020, the Government of Malaysia announced an economic restructuring planunder which hiring incentives would be paid to the employers who keep their employees in thecourse of business throughout the Covid-19 pandemic. The purpose of the plan was to relieve
the financial burden on the employer for survival and sustainability during this hard time. The
authority in charge was namely, PERKESO, was to reimburse the employer the hiring
incentives which amounted to RM 800 monthly per employee below the age of 40 years old
and RM 1000 monthly per employee above the age of 40 years old. The hiring incentives were
to be paid monthly to the employer in six months continuously after the incentive application
made by the employer was approved by PERKESO. Unfortunately, the hiring incentives weremisused by irresponsible parties who made false statements to substantiate their claims to
PERKESO. ESM, a company which engages in the field of construction, had submitted to
PERKESO incentive applications that contained false particulars such as the number anddetails of the employees are in doubt. The modus operandi of the ESM began with a job offerthat requires the personal particulars as application credentials via a social media platform suchas Facebook or WhatsApp and such personal particulars of the job applicant were stated in the
incentive application to PERKESO. Sometimes, ESM paid RM100 to each job applicant, while
RM800 or RM1000 was received by ESM from PERKESO as hiring incentives albeit no job
applicant was hired by ESM. Seventy-four (74) false incentive applications were submitted by
ESM and approved by PERKESO, which suffered the loss of RM 370,800.00.
Meanwhile, there is a scenario where an unscrupulous employer instructed his employees
to set up new companies and, accordingly, to submit incentive applications that contained false
particulars of the purported working personnel, whereas there is no employment in the light of
the incentive application. All the correspondence and documentation were prepared by theemployer for the approval process of PERKESO before the false incentive application was
submitted by his employee under the purported new company. The said employee will be paid
RM 2000 by the employer in the event that the incentive application of the new company
incorporated by his employee is approved by PERKESO.
On the other hand, there was a company which employed the worker with pay that was
below the minimum wage, which is RM 1000 as prescribed by the government, and thecompany submitted the incentive application to PERKESO in order to facilitate the hiring
incentive claim of RM 800 or RM 1000 per person during the pandemic.
The foregoing reflects that new forms of corruption took place in Malaysia during theCovid-19 pandemic. Such corrupt practices have rendered the entire effort of government invain as the poor keep getting poorer and richer keep getting richer; hence, the needs of society- 106 - 106 -MALAYSIA
are not addressed effectively and efficiently pertaining to the hardship and misery caused by
the Covid-19 pandemic. Indirectly, the spread of Covid-19 failed to be contained by thegovernment, as the poor and underprivileged continued to work during the pandemic to makeends meet although they knew they would be highly exposed to this deadly virus.
In a nutshell, corruption is a menace to the country. Therefore, effective countermeasures
must be taken to eradicate this disease which is much more fatal than Covid-19. I would liketo adopt and apply the principle of T.R.U.S.T, which is distilled from the ministry guidelines
concerning corporate liability, which might give us some ideas in thinking of corruption
countermeasures. The principle of T.R.U.S.T consists of the following:
Top-Level Commitment:(a) The top-level management of the commercial organization (“Top-Level Management”)
must ensure that the highest level of integrity and ethics is practised in the commercialorganization. There should be full compliance with the applicable laws and regulatory
requirements on anti-corruption and key corruption risks of the organization must be
effectively managed.
(b) The Top-Level Management must provide assurance to its internal and external
stakeholders that the organization is operating in compliance with its policies andapplicable regulatory requirements.
(c) The Top-Level Management must establish, maintain and periodically review an anticorruption compliance programme and communication of the organization’s anticorruption policies and commitment internally and externally.
(d) The Top-Level Management must encourage the use of any reporting (whistle-blowing)
channel. The results of any audit, reviews of risk assessment, control measures andperformance are reported to all top-level management including the full Board of
Directors and acted upon.
For instance, in the case study of ERT that I mentioned earlier, there is an urgency to havean effective, efficient and expedient reporting system implemented promptly within or outside
the commercial organization to encourage its subordinate to report any alleged wrongdoing of
anyone including the CEO or director of A2Z to authorities such as the Malaysian AntiCorruption Commission (MACC) or the top management of the commercial organization
before the same report is lodged to the MACC without putting the whistle-blower at the risk ofidentity exposure. Statutory protection is conferred to the whistle-blower under the Whistle
Blower Protection Act 2010, an act to combat corruption and other wrongdoings byencouraging and facilitating disclosures of improper conduct in the public and private sector,
to protect persons making those disclosures from detrimental action, to provide for the mattersdisclosed to be investigated and dealt with and to provide for other matters connected therewith.
Meanwhile, section 17A of the Malaysian Anti-Corruption Commission Act (MACC) 2009
entered into force in June 2019 concerning corporate liability. In the case of ERT, the AKSB
should be indicted under this provision as the AKSB bribed the CEO of A2Z, and the CEO of
A2Z should be charged in court for accepting a bribe. We must eradicate corruption from stem
to stern adamantly and relentlessly. Section 17A of the MACC Act 2009 is reproduced asfollows:

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SIXTEENTH REGIONAL SEMINAR ON GOOD GOVERNANCE(1) A commercial organization commits an offence if a person associated with thecommercial organization corruptly gives, agrees to give, promises or offers to any
person any gratification whether for the benefit of that person or another person withintent(a) to obtain or retain business for the commercial organization; or(b) to obtain or retain an advantage in the conduct of business for the commercialorganization.
(2) Any commercial organization who commits an offence under this section shall on
conviction be liable to a fine of not less than ten times the sum or value of thegratification which is the subject matter of the offence, where such gratification iscapable of being valued or is of pecuniary nature, or one million ringgit, whichever isthe higher, or to imprisonment for a term not exceeding twenty years or to both.
(3) Where an offence is committed by a commercial organization, a person(a) who is its director, controller, officer or partner; or(b) who is concerned in the management of its affairs,
at the time of the commission of the offence, is deemed to have committed that offence
unless that person proves that the offence was committed without his consent or
connivance and that he exercised due diligence to prevent the commission of the offence
as he ought to have exercised, having regard to the nature of his function in thatcapacity and to the circumstances.
(4) If a commercial organization is charged for the offence referred to in subsection(1), it is a defence for the commercial organization to prove that the commercialorganization had in place adequate procedures to prevent persons associated with thecommercial organization from undertaking such conduct.
(5) The Minister shall issue guidelines relating to the procedures mentioned insubsection (4).
(6) For the purposes of this section, a person is associated with a commercialorganization if he is a director, partner or an employee of the commercial organizationor he is a person who performs services for or on behalf of the commercial organization.
(7) The question whether or not a person performs services for or on behalf of thecommercial organization shall be determined by reference to all the relevant
circumstances and not merely by reference to the nature of the relationship between
him and the commercial organization.
(8) For the purposes of this section, "commercial organization" means(a) a company incorporated under the Companies Act 2016 [Act 777] and carries ona business in Malaysia or elsewhere;(b) a company wherever incorporated and carries on a business or part of a business
in Malaysia;(c) a partnership(i) under the Partnership Act 1961 [Act 135] and carries on a business in Malaysia or
elsewhere; or- 108 - 108 -MALAYSIA(ii) which is a limited liability partnership registered under the Limited Liability
Partnerships Act 2012 [Act 743] and carries on a business in Malaysia or elsewhere;or(d) a partnership wherever formed and carries on a business or part of a business in
Malaysia.
Furthermore, top level commitment must be shown blatantly, fearlessly and unreservedly
by the government and the private sector as we do not tolerate any form of corruption in
Malaysia. A good illustration, on 23 August 2022, was when the apex court in the case of Dato
Sri Mohd Najib Bin Hj Abdul Razak v Public Prosecutor (Criminal Appeal No: 05(L)-28912/2021) upheld the conviction and sentence meted by the High Court against the former
premier of Malaysia in respect of 1 charge of abuse power, 3 charges of criminal breach oftrust and 3 charges of money-laundering in relation to RM 42 million entered into the accountof the former premier in the case of SRC International. The former premier has to serve 12
years’ incarceration and pay a fine of RM 210 million.
Risk Assessment:(a) Comprehensive risk assessments are advised to be conducted every three (3) years, withintermittent assessments to be conducted whenever necessary.
(b) Risk assessment should be used to establish appropriate processes, systems and controls
approved by the Top-Level Management to mitigate specific corruption risks and/or
potential corruption risks that the commercial organization may be exposed to.
The government and commercial organization should be taking the risk assessment on
every high-risk position held by any personnel from time to time to prevent any one-man
decision in respect of any matter. In the case of ERT, the impugned CEO held the managerial
position at A2Z with exclusive administrative power since its incorporation without any checkand balance from the board of directors of A2Z. A rotation of high-risk position is reasonable
and in line with the spirit of good governance regardless of the seniority and contribution of
the personnel in the organization.
Undertake Control Measures:(a) Appropriate controls and contingency measures, which are reasonable andproportionate to the nature and size of the commercial organization, are advised to be
implemented and enforced to address any corruption risks arising from weaknesses in
the commercial organization’s governance framework.
(b) The said controls and measures should include due diligence and reporting channels.
(c) Policies and procedures should be endorsed by Top-Level Management, which should
be up-to-date and easily available.
Due diligence must be taken in every decision-making process to avoid any unscrupulous
party from taking advantage of the weaknesses in the system. In the case of misappropriationof the hiring incentives given by the PERKESO to the applicant, i.e. the employer, the wrongful
loss suffered by PERKESO could be avoided as if due diligence performed by the PERKESO
in verifying the particulars of the employee stated in each application such as interviewing the

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said employee or cross checking with the Inland Revenue Board or other agency. Tragically,no due diligence was done by PERKESO, which merely acted as a rubber stamp on eachapplication.
Systematic Review, Monitoring and Enforcement:(a) The Top-Level Management is advised to ensure regular reviews are conducted toassess the performance, efficiency and effectiveness of the anti-corruption programmeof the commercial organization and to ensure the anti-corruption programme isenforced effectively.
(b) Reviews may take the form of an internal audit or an external audit.
(c) Reviews should form the basis of any efforts to improve the existing anti-corruption
controls in place in the organization.
Collaboration among the agencies such as the MACC, Customs Department, Inland
Revenue Board, Police Force, Immigration Department etc. is needed badly and swiftly, which
will prompt positive and fruitful outcomes as each agency plays the role watchdog to one
another in every decision-making process. For example, there is no room for false claims totake place if the Inland Revenue Board or Employee Provident Fund is involved in theinspection of particulars of employees when the incentive application is submitted to
PERKESO, even assuming that PERKESO fails to perform due diligence when discharging its
duty.
Training and Communication:(a) Commercial organizations should develop and disseminate internal and external
training and communications relevant to their anti-corruption management system,in proportion to their operations.
(b) The commercial organization’s anti-corruption policy should be made publicly
available and appropriately communicated to all personnel and business associates.
(c) When planning strategies for communicating the organization’s position on anticorruption, the organization should take into account what key points should becommunicated, to whom they should be communicated, how they will be
communicated, and the timeframe for conducting the communication plan.
(d) Employees and business associates should be provided with adequate training toensure their thorough understanding of the organization’s anti-corruption position,
especially in relation to their role within or outside the commercial organization.”
All public servants and private-sector employees should take the training course in relation
to anti-corruption, which is paramount to society if this detrimental issue is not sufficiently
addressed through deterrence. We must not overlook the cause behind what motivated thepeople who willingly gave their personal particulars to the purported employer who had ill
intention to submit the false incentive application to PERKESO. Such abettors were willing towork in cahoots with others to defraud PERKESO in exchange for RM 100 for personal details
given by him. Based on the statistics given by the MACC, the 61 companies involved in the- 110 - 110 -MALAYSIA
fraud incentives application to PERKESO and 51 wrongdoers were arrested in relation to thismatter. The total loss suffered by PERKESO is RM 38,939,508.00 nationwide. Lack of publicawareness and education of the society on the corruption issue is the main reason why everyone
takes corruption lightly. Some might even think that corruption creates a win-win situation.
The Federal Court in the case of Public Prosecutor v Dato' Waad Bin Mansor [2005] 2
MLJ 101 has articulated the severity and seriousness of corruption which warranted adeterrence sentence to be meted out against the accused who was convicted of a corruption
offence:Any offence, be it murder, rape, robbery or corruption is viewed as an offence against
society and the community at large. By stating that the crime of corruption stands in aleague of its own and cannot be equated with the heinous crimes of murder, rape,robbery, criminal breach of trust etc, the CA has certainly underplayed the effectof corruption in our society. The offence of corruption, if unabated or undeterred, ismore far reaching in its consequences than the crimes of robbery, criminal breach oftrust or rape. Thus, we feel that the sentences imposed for offences of corruption should
be deterrent in nature so as to reflect the gravity of the offences.
Therefore, combating corruption is never done regardless of the form in which corruption
emerges. We all have responsibility in maintaining the integrity of society as justice is neededindefinitely and everywhere for any civilization of mankind.

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