Anti-Corruption Policies in Asia and the Pacific Self-Assessment Report Malaysia

ADB/OECD Anti-Corruption Initiative for Asia and the Pacific The Secretariat Anti-Corruption Policies in Asia and the Pacific Self-Assessment Report Malaysia Over the last decade, societies have come to realize the extent to which corruption and bribery has undermined their welfare and stability. Governments, the private sector and civil society alike have consequently declared the fight against corruption to be of highest priority. In the Asia-Pacific region, twenty-one countries have expressed their commitment to fight corruption by endorsing an anti-corruption action plan within the framework of the ADB/OECD Anti-Corruption Initiative for Asia and the Pacific, a first-of-its-kind partnership between all stakeholders of Asian and Pacific countries. The Action Plan comprehensively promotes the regions objectives and needs for reform to develop effective and transparent systems for public service, to strengthen anti-bribery initiatives, to promote integrity in business operations, and to support citizens involvement. In order to gain a comprehensive and structured overview of the endorsing countries legal and institutional framework in place to ensure and enhance transparency in the public sector, combat bribery and promote transparency in business operations, and facilitate public involvement in the fight against corruption, endorsing countries of the Action Plan have decided to take stock of their relevant legal and institutional provisions in place. The following report reflects the Anti-Corruption Policies that Malaysia has reportedly in place as of October 2003. Organized along the topics of the Anti-Corruption Action Plan for Asia and the Pacific, it outlines the legal and institutional framework governing each of its issues, the respective implementing agencies and recent of planned reforms. Self-assessment reports provided by the other countries that have endorsed the Anti-Corruption Action Plan for Asia-Pacific as well as a summarizing overview of the anti-corruption policies in the region are available at the Initiative s website (www1.oecd.org/daf/asiacom/stocktaking.htm). For further information about the Anti-Corruption Initiative for Asia-Pacific and its work, please refer to www1.oecd.org/daf/asiacom/. Jak Jabes, Director, Governance and Regional Co-operation, ADB jjabes@adb.org phone: +63 2 632 5749, fax: +63 2 636 2193 Frederic Wehrlé, Co-ordinator, Anti-Corruption Initiatives, Anti-Corruption Division, OECD frederic.wehrle@oecd.org phone: +33 1 4524 1855, fax: +33 1 4430 6307

Pillar I: Developing Effective and Transparent Systems for Public Service Action Plan objective Regulatory or legal framework (pls. corresponding Institution in charge of implementation (i.e. ministry, department, independent internal or external oversight body etc.) Relevant recent or planned reforms in this area, i.e. their objectives, implementation stages, Integrity in Public Service: Establish systems of government hiring of public officials that assure openness, equity, and efficiency and promote hiring of individuals of the highest levels of competence and integrity through: a) Development of systems for compensation adequate to sustain appropriate livelihood and according to the level of the economy of the country in question Salary system in Malaysia is constantly reviewed. New remuneration system has been introduced effective on 1/11/02. Public Service Department (PSD) and Ministry of Finance Full implementation of this system is January 2004 b) Development of systems for transparent hiring and promotion to help avoid abuses of patronage, nepotism, and favouritism, help foster the creation of an independent civil service; and help promote a proper balance between political and career appointments New recruitment and promotion will be handled by PSD. There is a certain set of procedures to follow such as interview the penal of which consist of personnel from PSD and the agency concern. In certain cases the candidates will only be called for interview after passing the aptitude test Public Service Department and Agency concern c) Development of systems to provide appropriate oversight of discretionary decisions and of personnel with authority to make discretionary decisions This could be found in the Police Act 1967 Royal Malaysian Police d) Development of personnel systems that include regular and timely rotation of assignments to reduce insularity that would foster corruption There is a guideline on job rotation especially the counter service Public Service Department In the process of drafting 2

Action Plan objective Regulatory or legal framework (pls. corresponding Institution in charge of implementation (i.e. ministry, department, independent internal or external oversight body etc.) Relevant recent or planned reforms in this area, i.e. their objectives, implementation stages, Integrity in Public Service: Establish ethical and administrative codes of conduct that proscribe conflicts of interest, ensure the proper use of public resources, and promote the highest levels of professionalism and integrity through: a) Prohibitions or restrictions governing conflicts of interest By way of Code of Ethics in the work place and Section 15 of Anti-Corruption Act 1997 All agencies On going b) Systems to promote transparency through disclosure and/or monitoring of, for example, personal assets and liabilities Declaration of assets for all public officers in every 5 years. For new recruits has to be done within 1 month after report duty Declaration of assets of Public Officers under section 32(3) ACA 1997 All agencies On going c) Sound administrative systems which ensure that contact between government officials and business services users, notably in the area of taxation, customs and other corruptionprone areas, are free from undue and improper influence Systems and procedures are constantly reviewed by the agency concern and ACA to pluck the loopholes and minimise the opportunity for corruption. The government procurement is done by way of e-commerce and e-procurement which is more transparent - Section 8(c) (d) and (e) of the ACA 1997 Treasury Department, MAMPU, Public Complaints Bureau and Anti-Corruption Agency On going and constantly reviewed d) Promotion of codes of conduct taking due account of the existing relevant international standards as well as each country s traditional cultural standards, and regular education, training and supervision of officials to ensure proper understanding of their responsibilities United Nation Convention Against Corruption which is on the way is an instrument which spell out the code of conduct of international standard. Training and retraining of officers with regards to strengthen their level of accountability, integrity and responsibility Anti-Corruption Agency and Attorney General s office PSD and Malaysian Public Administrative Institute (INTAN) In the process 3

Action Plan objective Regulatory or legal framework (pls. corresponding Institution in charge of implementation (i.e. ministry, department, independent internal or external oversight body etc.) Relevant recent or planned reforms in this area, i.e. their objectives, implementation stages, e) Measures which ensure that officials report acts of corruption and which protect the safety and professional status of those who do Section 17 of Anti-Corruption Act 1997 provides for the obligation of officials to report acts of corruption failing which is an offence under this act Section 53 of the Act provides for the protection of informers and the information given Anti-Corruption Agency, Police and Attorney General s office On going Accountability and Transparency: Safeguard accountability of public service through effective frameworks, management practices, and auditing procedures through a) Measures and systems to promote fiscal transparency There is a mechanism to ensure transparency one of which is by way of Treasury Instruction and the directives on government procurement Treasury Department On going b) Adoption of existing relevant international standards and practices for regulation and supervision of financial institutions The standard adopted by Malaysia is in accordance with International Standard and in accordance to domestic laws and regulation Treasury Department and all government agencies On going c) Appropriate auditing procedures applicable to public administration and the public sector, and measures and systems to provide timely public reporting on performance and decision making Yearly auditing and report by Auditor s General Office in the Parliament There is a system of public reporting adopted and all government agencies are practicing an open day with their clients which is done every month Auditor s General office All agencies d) Appropriate transparent procedures for public procurement that promote fair competition and deter corrupt activity, and adequate simplified administration procedures Under Treasury Instruction procedures for public procurement has been set out to promote fair competition. To deter corruption Section 15 of ACA 1997 prohibit the officers dealing with the procurement to have conflict of interest Treasury Department and ACA On going e) Enhancing institutions for public Government procurement by way of open tender Treasury Department and Ministry of Finance On going 4

b) Ensuring the existence and effective enforcement of anti-money laundering legislation that provide for substantial criminal penalties for the laundering of the proceeds of corruption and crime consistent with the law of each country Anti Money-laundering Act 2001. Central bank as Competent Authority who receives the report of suspicious transaction from commercial banks and channel it to enforcement agency such as Police and ACA for investigations and prosecutions c) Ensuring the existence and enforcement of rules to ensure that bribery offences are thoroughly investigated and prosecuted by competent authorities; these authorities should be empowered to order that bank, financial or commercial records be made available or be seized and that bank secrecy be lifted Anti-Corruption Act 1997 Penal Code Customs Act (1967) Election Offences Act (1954) Section 31 ACA 1997 d) Strengthening of investigative and prosecutorial capacities by fostering inter-agency co-operation, by ensuring that investigation and prosecution are free from improper influence and have effective means for gathering evidence, by protecting those persons helping the authorities in combating corruption, and by providing appropriate training and financial resources There is an existing mechanism of check and balance where investigation done by ACA will be perused and decided by Attorney General Reports by Integrity management committee of each agency on the act of corruption and abuse of power Provision on protection of informers and information and protection of witnesses against criminal proceeding or civil suit. Provision of section 44 on agent provocateur Officers were sent for training locally and abroad. Financial resources and logistics were provided under the budget of Prime Minister s Department department, independent internal or external oversight body etc.) Central bank On going ACA Police Customs 6

department, independent internal or external oversight body etc.) d) Strengthening bi- and multilateral co-operation in investigations and other legal proceedings by developing systems which in accordance with domestic legislation enhance (i) effective exchange of information and evidence, (ii) extradition where expedient, and (iii) co-operation in searching and discovering of forfeitable assets as well as prompt international seizure and repatriation of these forfeitable assets Steps taken to enhance bilateral and multilateral cooperation by having this kind of relationship with other anti-corruption agencies in Asia such as Anti- Corruption Bureau Brunei, ICAC Hong Kong, ICAC Korea and NCCC Thailand Mutual assistance in criminal matters was made possible by having Mutual Assistance in Criminal Matters Act in place. Anti-Money Laundering Act was also put in place to cater for the offence of hiding the ill-gotten gains abroad ACA, Attorney General and Central Bank On going Corporate Responsibility and Accountability : Take effective measures to promote corporation responsibility and accountability on the basis of existing relevant international standards through a) Promotion of good corporate governance which would provide for adequate internal company controls such as codes of conduct, the establishment of channels for communication, the protection of employees reporting corruption, and staff training The existing Codes of Conduct governing all public servant There is a committee in every agency to look after the report on the integrity of its officers prior to reporting to ACA Section 53 of ACA 1997 gives protections to the informers. Section 22(7) protects any person discloses information or produces documents from any proceeding or civil liability b) The existence and the effective enforcement of legislation to eliminate any indirect support of bribery such as Bribe is crime. There is no tax deductibility on bribes. Offences of corruption was also mention in other act like Customs Act 1967, Election Offences Act 1954 7

tax deductibility of bribes and Penal Code c) The existence and thorough implementation of legislation requiring transparent company accounts and providing for effective, proportionate and dissuasive penalties for omissions and falsifications for the purpose of bribing a public official, or hiding such bribery, in respect of the books, records, accounts and financial statements of companies This is governed by Companies Act and subject to auditing and if found will be reported to ACA d) Review of laws and regulations governing public licenses, government procurement contracts or other public undertakings, so that access to public sector contracts could be denied as a sanction for bribery of public officials Constantly reviewed and to ensure the regulations were adhered to effectively department, independent internal or external oversight body etc.) Registrar of Companies ACA 8

Pillar III: Supporting Active Public Involvement department, independent internal or external oversight body etc.) Public Discussion of Corruption: Take effective measures to encourage public discussion of the issue of corruption through a) Initiation of public awareness campaigns at different levels National Survey Public Perception of Corruption in Malaysia ACA and National University of Malaysia b) Support of non-governmental organisations that promote integrity and combat corruption by, for example, raising awareness of corruption and its costs, mobilising citizen support for clean government, and documenting and reporting cases of corruption National University of Malaysia and other local universities Giving talks/lectures and seminars to the nongovernmental organisations c) Preparation and/or implementation of education programs aimed at creating an anti-corruption culture Strengthening campaign at grass root level School curriculum Programme of foster parent to form four students in Putrajaya Secondary School and programmes for the youth Community Education Division of ACA Ministry of Education On going Access to information: Ensure that general public and the media have freedom to receive and impart public information and in particular information on corruption matters in accordance with domestic law and in a manner that would not compromise the operational effectiveness of the administration or, in any other way, be detrimental to the interest of governmental agencies and individuals, through 9

department, independent internal or external oversight body etc.) a) Establishment of public reporting requirements for justice and other governmental agencies that include disclosure about efforts to promote integrity and accountability and combat corruption Establishment of Public Complaints Bureau Freedom of the Press Convention on Integrity Management Committee Clients charter A day with clients b) Implementation of measures providing for a meaningful public right of access to appropriate information On line system of certain agencies Website Public participation: Encourage public participation in anti-corruption activities, in particular through a) Co-operative relationships with civil society groups such as chambers of commerce, professional associations, NGOs, labour unions, housing associations, the media, and other organisations They are invited to attend seminars, talks, conference and conventions relating integrity and corruptions and signing a memorandum of understanding with other agencies and organisations b) Protection of whistleblowers Section 53 of ACA 1997 and working on the witnesses protection act c) Involvement of NGOs in monitoring of public sector programmes and activities 10