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COORDINATING AMONG PUBLIC AND PRIVATESTAKEHOLDERS IN FIGHTING CORRUPTION:

MALAYSIA’S EXPERIENCE

Presented by:Chuah Chang Man

Malaysian Anti-Corruption Commission (MACC)

3rd Meeting of the Open-Ended IWG on thePrevention of Corruption

27 -29 August 2012

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Preventive and Community Education FunctionsSec. 7 MACC Act 2009 (Act 694)

(c) To examine the practices, systems and procedures of publicbodies in order to facilitate the discovery of offences underthe MACC Act and to secure the revision of such practices,systems or procedures as in the opinion of the ChiefCommissioner may be conducive to corruption;

(d) To instruct, advise and assist any person, on the latter’srequest, on ways in which corruption may be eliminated bysuch person;

(e) To advise heads of public bodies of any changes in practices,systems and procedures compatible with the effectivedischarge of the duties of the public bodies as the ChiefCommissioner thinks necessary to reduce the likelihood of theoccurrence of corruption;

(f) To educate the public against corruption; and(g) To enlist and foster public support against corruption

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PART ICORPORATE INTEGRITY PLEDGE (CIP)

BACKGROUND

Anti-Corruption Principles forCorporations (ACPC) 2011

MalaysianAnti-Corruption

Commission(MACC)

MalaysianInstitute of

Integrity (IIM)

CompaniesCommission of

Malaysia(CCM)

SecuritiesCommission

(SC)

Bursa Malaysia(formerly

known as KualaLumpur Stock

Exchange)

PerformanceManagementDelivery Unit(PEMANDU)

National KeyResult Area –

FightingCorruption

CoordinationDivision

TransparencyInternational –

MalaysianChapter (TI-M)

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CORPORATE INTEGRITY PLEDGE• A unilateral declaration that allows

companies/corporations to make a commitment touphold the ACPC

• Consists five principles to demonstrate theircommitment toward creating a businessenvironment that is fair, transparent and free fromcorruption

Anti-Corruption Principles forCorporations (ACPC) 2011

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• Strengthening internal systems thatsupport corruption prevention

• Complying with laws, policies andprocedures relating to fighting corruption

• Supporting corruption preventioninitiatives by the MalaysianGovernment and MACC

• Committing to promoting values ofintegrity, transparency and goodgovernance

• Fighting any form of corruption

Anti-Corruption Principles for Corporations(ACPC) 2011

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Committing to promoting values of integrity,transparency and good governance

• To prohibit bribery and corruption inany form, whether direct or indirect,in the business place and all businessrelationships, including suppliers,contractors, customers and other thirdparties

• To ensure full compliance with codesof ethics at all times

• To give recognition and reward thosehaving high integrity and ethics

• To create a positive culture thatupholds integrity in order to create aclean business

• To create a secure and accessiblechannel through which employees andothers may report violations

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Strengthening internal systems that supportcorruption prevention

•To develop an anti-corruptionprogrammes that articulatevalues, policies and procedureto be used to preventcorruption

•To improve existing systemsand procedures to preventany corrupt practices

•To conduct constant internalaudit in order to deter misuseof fund and asset

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Complying with laws, policies and proceduresrelating to fighting corruption

To ensure that all laws andcompany policies andprocedures relating to fightingcorruption are strictly compliedwith

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Fighting any form of corrupt practices

To take proportionate actionagainst any employee, staff orother person involved incorruption in relation tobusiness, regardless of positionand status

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Supporting corruption prevention initiatives bythe Government and the MACC

• To support anti-corruption effortsby the Government and the MACC

• To provide full cooperation tothe Authorities, oversightagencies and the MACC in theprevention and enforcement ofanti-corruption legislation

• To maintain relationships withthe authorities, regulators andthe MACC

• To continuously organizecorruption preventionprogrammes

• To constantly develop trainingmodules based on corruptionprevention, ethics and integrity

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Zero Tolerance forCorruption

Zero Tolerance forCorruption

Integrity Enhancement andCorruption Prevention

Programme

Integrity Enhancement andCorruption Prevention

Programme

Dual ApproachDual Approach

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A company, by signing the pledge, makesa declaration as follows:

will refrain from all forms of corrupt activities

will work towards creating a businessenvironment that is free from corruption

will uphold the Anti-Corruption Principles forCorporations in the conduct of its business and inits interactions with its business partners and the

Government

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• To introduce/create awareness programmes on theoffences of corruption and bribery

• To promote awareness on the offences of corruption andbribery in collaboration with the MACC

• To introduce compliance programmes in respect of therelevant code of conduct in the execution of project

• To establish an independent monitoring system

• To impress the importance of disclosure of interest and/orconflict of interest among the Parties’ top management

• To place procedures on the prevention of corrupt practices

Purpose of CIP

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The Principles in Action

Companiesidentify an action

plan tostrengthen

systems

Action plansimplement e.g.

Pledge

Companies signpledge

Companies workto self-assess

strength of theircorporate

integrity system

Companiesinclude anti-corruptionelements in

audits

Companiesinclude

reporting onanti-corruption

measures inannual

reporting

ReportClose GapsSelf -assess

Adopt anti-corruption business

principles

Establishinfrastructure; e.g.

Governance &Ethics BoardCommittee

ConductingTraining

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Monitoring of CIP

Periodic PledgeSynchronization

Meetings

Inclusion ofanti-corruption

elements inaudits

Enclosure of implementedanti-corruption initiatives

in annual reports

Monitoring of Reports onAnti-corruption Efforts

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Implementation of CIP

A total of 131 companies have signed the CIP

Out of this total, 18 Organizations (companies andtheir subsidiaries)* have signed the CIP with theMACC and the balance of 113 were signed (on line)with the Malaysian Institute of Integrity (IIM)

(*) Included in the 18 Organizations, the EU-Malaysia Chamberof Commerce and Industry represented 14 companies andPilgrims Fund Board represented 7 of its subsidiaries while 5are from the Malaysian Business Community

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EU COMPANIES SIGN INTEGRITY PLEDGE

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CIP Activities/Programmes

Integrity assessment checklist for Organization

Lectures on corruption offences and its preventiontargeted at vendors/suppliers

Chief Integrity Officer (CeIO) programmes

Seminar and training on Integrity Enhancement

Corruption Risk Management Training/Courses

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Encourage a companyto work on their own

anti-corruptionprogramme and

internal systems andprocesses Benefits/

Effects

A company will bemaking a clearstand on how it

operates

A company can usethis pledge to set

itself apart from itspeers

Positive impact -increased level of

confidence fordomestic and foreign

investment

Benefits/Effects for executingthe Corporate Integrity Pledge

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PART IIINTEGRITY PACT (IP)

The Integrity Pact comprises of a declarationprocess by bidders not to offer or give any form ofbribes as a means to obtain a contract or tofacilitate certain processes in GovernmentProcurement.

Bidders and civil servants are required to sign a pactto refrain from getting involved in corrupt practicesthroughout the procurement processes until theproject is completed

Integrity Pact

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Objectives

To avoid bidders from offering or giving bribes

To require bidders to report any bribery/act ofcorruption to the authorities

To ensure the Government does not incur“unnecessary cost” in carrying out GovernmentProcurement

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Implementation of IP

In the implementation and execution of theProject, the owner and the contractor agree tointroduce appropriate measures necessary fromtime to time, to assist the Parties in creatingawareness amongst their employees and agents intheir efforts to comply with anti-bribery laws andlegislation. These measures are known as IntegrityPact

By year end of 2011 a total of 132,459 IntegrityPacts had been signed between the Governmentand its vendors/suppliers

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Sanctions against Non-Compliance

Charged for offences under the Malaysian Anti-Corruption Commission Act 2009 and onconviction be fined not less than 5 times theamount of corruption involved or RM 10,000whichever is the higher and imprisonment up to20 years

Black listing of companies from doing businesswith the Government up to five years if found tohave been involved in corruption

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PART IIIMEGA PROJECT MONITORING BY

INTEGRITY GOVERNANCE COMMITTEE

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• Development Projects that involves a cost of RM 500million (approx. €129 million or US$ 161 million)and above; and/or

• Projects that of public interest that has an impact onthe community, environment and its financialresources

Mega Projects

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Functions

Identify weaknesses in policies, laws, regulationsand procedures to identify corruption risks

Monitor compliance with policies, laws, regulationsand procedures

Detect any non-compliance with contractualagreements (cost, time, quality, quantity)

Strengthen the integrity among officers working /executive officer either at the department /agency, government or private

As dissemination of information / complaintsrelated to corruption

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Example of ImplementationMass Rapid Transit (MRT) costing RM 36 Billion (approx. €9.3billion or US$ 11.6 billion) and impacting 6 million users in theKuala Lumpur and its surrounding

Monitoring carried out by three sub-committees:Land Acquisition – Chaired by Director General Land and MinesDepartmentResponsible to monitor the process of land acquisition and risk inmanipulation of the compensation value of land acquired

Integrity Pact – chaired by TI-MalaysiaResponsible to verify IPs prepared by the project owner andproject delivery partner and contractor

Anti-Corruption Communication and Education – Chaired byMACCResponsible for implementing anti-corruption educationprogrammes for those involved in this mega project

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Codes of Ethics in Business:Collaboration Between MACC and SME Corp

The MACC and SME Corp are also coming up with a SME Code ofEthics for SMEs. The purpose of the codes is to ensure all SMEswill not involve in corruption, abuse of power and malpractices

By having codes of ethics, its assists to reduce corruption badeffect in those sectors and at the same time enhancing qualityof the product, safe human life (consumer) and underminebusiness trust

By strengthening the integrity in those sectors, directly willincrease product quality

The codes of ethics in those sector will eliminate the sources ofcorruption in which the parties involve will be moretransparent, high integrity and less greedy. Above all the sectorswill implement good governance in their business

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CAPACITY AND CAPABILITY BUILDING

The MACC, the Malaysian Institute of Integrity and TransparencyInternational Malaysia will provide training to the companies toenhance the level of integrity within the organization

The training module is based on the outcome of the assessmentof the company corporate integrity systems

MACC through its Inspection and Consultancy Division alsoprovides assistance to companies in formulating the Code ofEthics as well as advices on ways to strengthen the system andprocedure to plug any loopholes for corruption

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ANTI-CORRUPTION CLAUSE INGOVERNMENT CONTRACTS

On 28 February 2009 the Ministry of Finance has issuedSpecial Circular to instruct all parties involved in governmentcontracts not to commit any corrupt practices in anygovernment procurement

All agencies are required to include a corruption offenceclause in government contract documents, at all levels of theprocess including document preparation, tender invitation /quotation / e-Bidding

This clause was initiated by MACC based on the findingsreported in the Auditor General’s Reports

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DISCLOSURE OF PROCUREMENTINFORMATION

MACC is tasked with the responsibility in the fight againstcorruption with Chief Commissioner acting as the Coordinatorunder the National Key Result Area (NKRA) – FightingCorruption initiative. There are nine core initiatives which areidentified as Big Wins and one of that directly involves withprivate sector is the Disclosure of Procurement Information

The Ministry of Finance through this initiative has publicizedthe Government Procurement information through itsMyProcurement Portal on 1 April 2010

The success of this initiative also enables the Public PrivatePartnership Unit (UKAS) to create the MyPartnership Portal indisclosing information on privatization projects. The portal isperceived to enhance the level of transparency, integrity andaccountability in Government procurement

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Thank You