Corporate Governance is a process and structure implemented by companies and businesses to achieve business prosperity and sustainability while ensuring corporate accountability, with the ultimate objective of realising long-term shareholder value, taking into account the interests of all stakeholders. In order to realise a comprehensive and rigorous anti-corruption corporate culture, there is an urgent need for Malaysian companies and businesses to put in place preventive measures that reinforce ethical leadership, good governance, transparency, accountability and respect for the rule of law in their operational procedures.
Earlier in 2018, the Malaysian Anti-Corruption Commission (Amendment) Bill 2018 was passed by the Parliament, thus making companies and their Board and Management liable for corruption compared to only perpetrators previously. This can result in severe penalties, be it in the form of significant fines and/or imprisonment up to 20 years.
What does this mean for companies like CMS? At the foremost, preventive measures should be actively put in place before the new Act comes into force in June 2020. As such, measures and steps must be taken to be demonstrate that we have in place adequate procedures designed to prevent associated persons from undertaking corrupt practices. In simpler terms, directors , officers and management are deemed to have committed the same offence unless they are able to prove that the alleged corruption was committed without their consent and they have exercised due care to prevent the occurrence.
Adequate procedures, based on guidelines issued by the Prime Minister’s Department, to be implemented to prevent the occurrence of corrupt practices in organisations revolve around 5 key principles as below: –
- Top Level Commitment
- Risk Assessment
- Undertake Control Measures
- Systematic Review, Monitoring and Enforcement
- Training and Communication
In addition, the Corporate Integrity System Malaysia (CISM) Value Chain has been introduced as a framework for Malaysian companies and businesses attempting to achieve corporate integrity. Implementation of this system would require all stakeholders to proactively take ownership and maintain a long-term commitment.
In light of all these new and recent developments, we should expect significant measures to be undertaken to strengthen our corporate governance framework as we progress steadily into the second half of 2019. The deadline for implementation of the corporate liability provision of the MACC Amendment Act 2018 is fast approaching i.e. June 2020.