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Corruption in Malaysia
02 May, 2012

There are many things that can stunt a country’s growth but one of the often unseen and most insidious causes of this phenomenon is corruption. The Malaysian government is determined to fight and eradicate corruption in the country.

Under the Economic Transformation Programme (ETP) and the Government Transformation Programme (GTP), various national key result area (NKRAs) have been identified, one of which is solely devoted to combating corruption.

In December 2010, the Ministry of Finance Malaysia implemented guidelines to the Integrity Pact, under the initiatives of the anti-corruption arm of NKRA. The Integrity Pact (IP) is meant for government procurements and seeks to enhance the levels of transparency in the process of procuring government contracts. This initiative hopes to reduce and eventually eradicate corrupt practices, as well as ensuring a smoother and more efficient procurement process.

The IP was initially conceived by Transparency International, a global movement for change to assist governments, business institutions as well as the public in the uphill battle against corruption, especially in the area of government procurement. Transparency International outlines the costs of corruption in public contracting: a distortion of fair competition, waste of scarce resources and the neglect of citizens’ basic needs which perpetuates poverty. Also, market inefficiencies can be caused from corruption as well as slowing development opportunities, marked by inferior goods and services and wasteful purchases.

Dato’ Hajah Sutinah Sutan, MACC Deputy Chief Commissioner of Prevention, met with Milan Sadhwani of The Expat to highlight the importance of the Integrity Pact.

Dato’ Sutinah stressed the fact that the IP is a written commitment between the project owner and the vendor, and is a preventive tool in public procurement. “Public procurements are one of the areas which are highly exposed to corrupt practices,” says Dato’ Sutinah, adding that all public procurements should ideally be strengthened by the IPs.

The objectives of the IP are to avoid bidders from offering bribes as well as calling for bidders to report any acts of corruption to authorities and to ensure the government is not burdened with “unnecessary costs”. The implementation of the IP is also to increase awareness among civil servants and all parties involved in government procurement on the subject of corruption offences. Among such practices are: the offering, seeking and accepting bribes to or from companies, firms or individuals and civil servants.

Bribes can be in the form of money, gifts, donations, discounts, bonuses or jobs, all of which are specifically defined under Section 3 of the Malaysian Anti-Corruption Commission Act 2009 [Act 694].

Corrupt practices also include the abuse of power by civil servants in the selection process of companies or firms in which civil servants may have vested interests.

False claims or declarations by the representative(s) of the companies or firms and civil servants is also considered a corrupt practice as well as forgeries of information, documents and records which might influence the evaluation process and procurement decisions.

Lastly, conspiracy among companies, firms or individuals and civil servants to obtain government contracts is also considered corruption.

Dato’ Sutinah also explains that it is important that both parties (the project owner and the project vendor/main contractor) disclose any payments made to any third-parties.

It is common for project vendors to engage a consultant company that acts as an intermediary but it is also common in corrupt practices to bribe said third-party. Project owners and project vendors should also commit to carrying out anti-corruption programmes for their staff, which will be conducted by the MACC.

The training programme is intended to create awareness on the offences of corruption, the causes of corrupt practices in government procurement, and thereby help prevent future instances of corruption.

Since the implementation of the IP up through June this year, there have been a total of 102,674 IPs signed with a total of 2,163 contracts.

The IP concept also applies to mega projects, says Dato’ Sutinah, and an example of this was the IP signed for the MRT project last year in July. Dato’ Sutinah also informs us that MACC will carry out monitoring to ensure compliance to the IP. “We will visit the departments and check whether the vendors and offices have signed the IP and are following the requirements,” says Dato’ Sutinah.

This is done by carrying out discussions with the company’s compliance unit and checking to see if they have an anti-bribery policy put into place in the company’s code of ethics.

Another vital area that MACC will monitor is to see if they have referral policies put into place. Referral policies are mechanisms which facilitate people to report cases when they are confronted with bribes or corruption.

Policies that are against conflict of interest will also be checked, under the code of ethics. As the IP concept is built around transparency and accountability, MACC will blacklist any party that is found guilty of corruption, and the guilty party can be blacklisted for up to five years, which means that these companies will be ineligible to qualify for open tenders.

The fight against corruption is ongoing but it is important to remember that everyone plays a role, including those who are not directly involved. To report corruption to the MACC, please call 1.800 88 6000.

This article was written by Milan Sadhwani for The Expat magazine and has been edited for Expat Go.
Source: The Expat November 2011
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