Gift or bribe? Drawing a clear line on corruption

by Gan Pei Ling / 27 Dec 2014 © Focus Malaysia

Can my company still send hampers to customers during festive seasons? What about treating a potential client to a free dinner or spa to secure a business deal? What sort of gifts could be consid­ered a bribe to solicit or retain business?

These are just some of the questions an upcoming amendment to the Malay­sian Anti-Corruption Commission (MACC) Act 2009 will soon throw up, especially for companies without an explicit anti-corruption policy.

On Dec 9, Minister in the Prime Minister’s Department Datuk Paul Low had announced that the Corporate Lia­bility Provision is expected to be tabled in Parliament in March. The provision allows the MACC and Attorney-General’s Chambers to investigate and prosecute not just staff accused of giving or accept­ing a bribe but also the company’s top executives for their failure to implement measures to prevent bribery.

The Performance and Management and Delivery Unit (Pemandu) says the draft amendment is not publicly available yet as the government is still finalising it.

However, Pemandu senior manager Lokman Affandy Yahya tells FocusM the Corporate Liability Provision is modelled after the UK’s Bribery Act. As such, companies’ management can safeguard themselves against legal liability as long as they have put in place adequate anti-corruption measures.

In other words, Malaysian companies would have to put in place corporate integrity system, which would include a clear gift policy, whistleblowing pro­cedure and staff training, among others.

The Selangor State Development Cor­poration (PKNS) is one of the companies that began implementing a corporate integrity system in 2012.

The Selangor investment arm esti­mates it has saved more than RM400 mil over four years since it began practising an open tender system and prohibits direct negotiation.

PKNS integrity manager S Normalis Abdul Samad says the savings were calculated based on the Public Works Department estimation of project cost minus the price quotations of contractors that won the tenders.

“We need to get the best prices, the best value for money without compro­mising on quality. We’re very stringent now,” Normalis tells FocusM in a phone interview.

She adds that the state-owned com­pany practises a no-gift policy.

“If a contractor sends a hamper to us, we will write a thank you letter but politely ask it to not do so anymore in future. We want to send out a clear signal that if you want to do business with PKNS, there is no need to give tips or hampers,” Normalis explains.

Transparency International Malay­sia’s (TIM) consultancy TI BIP Malaysia Sdn Bhd director Mark Lovatt, who worked with PKNS to set up a corporate integrity system, says other govern­ment-linked companies such as Telekom Malaysia and Tenaga Nasional Bhd have also begun implementing such a system on their own.

“Telekom Malaysia, for example, no longer allows its staff to accept ham­pers. The first year it did not decline but directed the hampers to be collected on a stage at its lobby and sent to charity homes,” he says.

The next year, few contractors sent hampers to Telekom’s headquarters as they found out that the hampers would not reach their intended recipients.

Apart from state-linked companies, some private businesses have also started implementing clear integrity policies and procedures to deter corruption.

Home-grown printer Thumbprints United Sdn Bhd chairperson Tam Wah Fiong tells FocusM that 16 years ago, his company spent over RM100,000 in entertainment cost annually to secure business deals.

Now Tam, an executive committee member of TIM, strictly prohibits his staff from bribing authorities. In addition, his company spends only about RM5,000 in entertainment cost per year, yet his business has grown four-fold since then, recording a revenue of RM36 mil last year.

When asked if he lost businesses when his company cut down its enter­tainment cost, Tam admits he did lose some clients but gained new ones.

“We gained access to the export market, the US and Europe. Reducing entertainment cost means our company competes strictly on price and the quality of our product and service. It forces us to be more competitive internationally,” says Tam.

He adds that bribery among busi­nesses creates an unhealthy culture where companies splurge on lavish dinners, karaoke sessions or spas to “entertain” potential clients to secure business deals.

“[Bribery] inflates the cost of doing business, and allows uncompetitive businesses to get away with providing sub-quality services or products,” Tam notes.

Tam adds that employers need to consider the implications of condoning bribery on their businesses: “If I can bribe my customers, won’t my vendors and suppliers try to do the same with my staff too?”

KPMG Malaysia Fraud, Bribery and Corruption Survey 2013 reported that 71% of respondents believed bribery and corruption was an inevitable cost of doing business.

However, if Malaysia wants to become a technologically-advanced and global­ly-competitive economy like Germany and the US, Tam believes local compa­nies need to think long term and focus on improving their product or service quality, rather than relying on bribes to stay in business.

While enacting the Corporate Liability Provision is unlikely to completely wipe out corruption, it would perhaps send out the right signal that Malaysian top executives are increasingly intolerant of bribery and anti-competitive behaviour in business.