Part 3 of T.r.u.s.t : undertake control measures

Section 17A - Corporate Liability Provision - Adequate Procedures

This is part 3 of a 5 part series on T.R.U.S.T. - the acronym for the Guidelines on Adequate Procedures to mitigate Section 17A - Corporate Liability provision. In Part 3 of T.R.U.S.T, we discuss Principle 3 - Undertake Control Measures.

The Corporate Liability provision was enacted to promote business growth in an environment free from corruption. It was designed to plug existing loopholes within the MACC Act 2009 that did not adequately address liability for corporations and their senior management when corruption was used as a means to benefit the commercial organisation.

When the Corporate Liability provision – Section 17A of MACC Act (Amendment) 2018 – comes into force on 1 June 2020, companies shoulder the burden of proof that they have put in place adequate procedures to mitigate the risk of corruption and bribery in their organisation. These are designed to protect both the business and their directors and senior management from personal liability in the event of a corruption investigation by the enforcement authorities.

Due Diligence

Performing a due diligence on key counter parties of your organisation is an essential element of undertaking control measures. Identifying the key criteria for such assessment depends on the individual organisation. The extent of due diligence should ideally cover both suppliers and customers and designed to identify red flags that would require further review before proceeding to formalise the business relationship.

Background checks on employees and senior members of management have the aim of safeguarding the enterprise from potential internal integrity threats that can be both costly and difficult to detect.

Reporting Channels

A secure channel for reporting such internal misconduct within the organisation is advisable and encouraged. The reporting channel can be in the form of a well-developed whistleblower hotline or a simple email address. This channel should be used to report incidents of corruption and lapses in the anti-corruption compliance program that could present loopholes to be exploited by unscrupulous parties. Such a reporting channel should safeguard the informant who forwards data in good faith.

Policies and Procedures

A wide range of policies and procedures must be developed and adequately promulgated within the business. These includes policies and procedures on anti-bribery, gifts and hospitality, conflict of interest, sponsorship and donations and entertainment. A Code of Ethical Conduct that is applicable throughout the enterprise establishes the entity’s stance on business integrity.

The adequate procedures – T.R.U.S.T. - are principles based and work best when encapsulated within an organisation-wide anti-corruption compliance program. The guidelines, whilst not being prescriptive, nevertheless forward compelling arguments that an anti-corruption program designed and developed by compliance professionals both meet the spirit and the intent of adequate procedures.

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RC Compliance Consultancy is a boutique compliance consultancy firm based in Kuala Lumpur, Malaysia specialising in business integrity and anti-corruption compliance programs and frameworks that comply with the adequate procedures of Corporate Liability provision (Section 17A MACC Amendment Act 2018) and in line with ISO 37001:2016 Anti-Bribery Management System.

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