The cost of corruption
LEONARD Glenn Francis, also known as Fat Leonard, is a Malaysian who made headlines globally for paying cash, liquor and prostitutes and other perks to US Navy officers for information to ensure the US Navy ships stopped at ports where his firm operated.
But the law has since caught up with him and he is awaiting trial for alleged corruption charges.
He is not alone. Several global companies, including telecoms equipment providers, have been brought to book for bribing government and political party officials, besides telecoms company officials, to win contracts to supply equipment across the globe.
There are laws in the US and Europe that charge not just individuals but also companies that bribe to procure contracts.
Both Datasonic Group Bhd and MyEG Services Bhd have come under the spotlight after former Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi was implicated in graft charges recently. He was slapped with 45 counts of corruption charges involving RM114mil.
Datasonic and MyEG’s share prices have taken a beating, though Datasonic has distanced itself from the case saying that it did not pay any money to Ahmad Zahid. MyEG said it is not under investigation by the authorities.
Getting kickbacks for opening doors and getting privileged information to approve contracts is common in some markets, and Malaysia is no exception. There has been several cases of individuals who have been brought to book for receiving bribes.
The question is, if individuals are charged for taking money, which is seen as a bribe, are companies also liable for the corruption?
What action then can be taken against these companies if they are bribed directly or via a third party to get information or contracts?
A lawyer says “any company is treated exactly like a natural person if it pays bribes to a third party in order to secure any commercial contract. The company and the officers of the company from board members to senior management officers can be hauled up and charged in court. No individual can hide behind the veil of corporation, assuming the company paid the bribe money”.
Corruption in business can be anything from misappropriation of funds, bribery and misuse of office by company officials to dishonesty in financial matters. Corruption can hurt the image of a company and jeopardise the business.
Companies that pay to get preferential information or pay individuals to secure contracts should be taken to task by their respective regulators. Corruption can only be reduced or removed if all parties play their role, as otherwise, it will remain a mainstay to win contracts.
Transparency International’s “Corruption Perception Index 2017” released early this year placed Malaysia in the 62nd place in the overall ranking of 180 countries. In 2016, it was 55 out of 176 countries, and 54 out of 168 countries a year earlier. That needs to improve.