Friday 29 Mar 2024
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THE Anti-Corruption Advisory Board and Parliament’s bipartisan Special Committee against Corruption have proposed that the Malaysian Anti-Corruption Commission be given more bite to compel individuals to declare their assets.

The government would have to amend Section 36 of the Malaysian Anti-Corruption Commission (MACC) Act 2009 to compel an individual in certain circumstances to declare his finances or assets without the MACC first launching a formal corruption investigation.

Transparency International-Malaysia (TI-M) and the Bar Council have expressed their support for the law to be amended to give the anti-graft body more powers to probe individuals suspected of living beyond their means.

For example, the Hong Kong Independent Commission against Corruption (ICAC) has the legal power to compel those with “tremendous wealth” that does not match the income of their position to declare their assets. This flows from Section 10 of the Prevention of Bribery Ordinance in Hong Kong, which states:

1) Any person who, being or having been the chief executive or a prescribed officer:

(a) maintains a standard of living above that which is commensurate with his present or past official emoluments; or

(b) is in control of pecuniary resources or property disproportionate to his present or past official emoluments;   

shall, unless he gives a satisfactory explanation to the court as to how he was able to maintain such a standard of living or how such pecuniary resources or property came under his control, be guilty of an offence.

There are actually two offences in this section. Section 10(1)(a) is “living beyond means”, and Section 10(1)(b) is “possession of disproportionate assets”. A defendant may only be charged with one of the offences, more often the latter.

Most countries in Africa that have established anti-corruption agencies have adopted the Section 10(1)(b) offence, like Botswana and Zambia, but not necessarily Section 10(1)(a). Proving the offence is normally very difficult. There are only a few cases, even in Hong Kong.

“Living beyond means” first existed as an offence in dealing with corrupt public officials when there was an absence of direct evidence of bribery against them.  It was later widely adopted and written into legislations in many jurisdictions as an offence under organised crime or money laundering, when proving the primary offence against the offenders was not always possible.

Former Deputy Commissioner of ICAC Daniel Li informed me that as far as he could remember, there were not more than three cases of prosecution on  “living beyond means” in Hong Kong and about 20 odd cases on “possession of disproportionate assets”. The conviction rate was over 70%.

All the cases took place in the 1970s and early 1980s, and people were satisfied with the effectiveness of this provision. Since then, there has not been a single prosecution. Basically, the offences now only remain in the books, if they have not totally fallen into disuse.

The offences were very effective when they were first introduced to catch corrupt officials who had had no previous knowledge of such offences and were in direct control of huge assets or were living luxuriously. As such individuals gradually learnt how the authorities investigated the accumulation of assets and became aware of the legislation, they began to devise methods of hiding their assets and to be seen as living normal lives.

Nonetheless, the offences are still good to make life more difficult for the corrupt even if they have become smarter in hiding their assets. What needs to happen, where the regulators are concerned, is to put in extra effort and deploy more resources to do the job.

Practically, from a law enforcement perspective, the strategy needs to be adjusted, and going back to investigate straightforward bribery and related offences would be more rewarding in terms of getting the evidence and successful prosecutions.

The burden of proof still lies on the prosecution but it now only needs to show that there is unexplained wealth that is not commensurate with the accused’s earning capacity.  The defendant is of course entitled to give an explanation as to his assets or means. A common defence is that the wealth is inherited from relatives or comes from other sources of income.

In Malaysia, the Anti-Money Laundering and Anti-Terrorism Financing (AMLATFA) criminalises money laundering of proceeds from serious crimes. The MACC can freeze, seize or confiscate the person’s property during investigation.  More specifically, to make that concept a reality, the MACC has substantially enhanced its forensic accounting capabilities, and has  professional accountants and other staff qualified and trained in forensic accountancy.

Just like ICAC, this group is tasked with projects that include asset and fund tracing; analysis and interpretation of financial data; preparation of financial profiles; giving professional advice during operations in the search and seizure of documents; examining accounting records to establish their evidential value, and interviewing bankers, accountants and other professionals from within the financial and securities industries.

With the advances in information technology and the emergence of rapid changes in the financial markets, corruption-related financial fraud cases are becoming more complex and multi-jurisdictional.

Often, these cases are facilitated by professionals and involve multi-layers of fund flows, large numbers of parties, including offshore companies, and innovative and aggressive accounting techniques. That is why forensic accountancy has become an integral part of our investigation techniques.

The law has to match the needs of the country and be revised from time to time to suit the changing corrupt practices and environment.  After a period of enforcement, people, including the corrupt and the bribers, begin to understand the legislation. If one wants to get involved in corrupt practices, he or she will find ways to avoid such being detected.

ICAC relied heavily on the Section 10 offence to catch the most corrupt government servants in the early days, then changed its tactics to focus on conventional bribery offences, only to find out that the law breakers later became smart enough to leave little trace or evidence.

The result was that ICAC asked for more intrusive investigating powers to secure adduceable evidence for the purpose of laying a prosecution. In recent years, ICAC has chosen to use the common law “misconduct in public office” offence to prosecute corrupt government and public servants, and it so far, has been positive and effective.

I just want to show that the best corruption law will not remain “the best” for long. It will have to be adjusted and revised so that it can continue to exert a deterrent effect on bribers and the corrupt. The law, of course, will only be effective if there is a vigorous zero tolerance enforcement policy.

Learning from the ICAC experience, we have to think seven steps ahead to prevent these white-collar crooks who are intelligent, manipulative, and may not see themselves as criminals, from hiding their assets. They believe that they are merely using the system to their advantage and, in the main, do not even have any direct contact with the victim.


Datuk Akhbar Satar is president, Transparency International Malaysia

This article first appeared in Forum, The Edge Malaysia Weekly, on April 6 - 12, 2015.

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