Gift and Hospitality Policy

Upon reaching the Office of Finance Minister, one could see some banting banners on ‘No-gift policy’ prominently put up at strategical places within the Ministry. As we begin to settle down, a social media viral went wild that the YB Transport Minister has declined a smartphone presented to him as a token of appreciation after officiating at a ceremony. He mentioned that, “We walk the talk, and we also hope future event organisers to take note that all ministers do not need gifts when we are invited to attend an event.”

Well, not many realized that shortly after Pakatan Harapan’s victory in the 14th General Election, on 8th June, 2018, Prime Minister Tun Dr Mahathir Mohamad had announced that the new government will impose a no-gift policy on its ministers, their political secretaries, support staff and throughout the civil service. The only gift a civil servant is allowed to accept are flowers, fruits, and food. Anything more than RM500.00, one has to seek approval from the Prime Minister himself. This is strongly recommended and echoed by Tan Sri Abu Kassim Mohamed, head of Governance, Integrity and Anti-Corruption Centre (GIACC).

I believed that PKNS and Petronas were first among the state-owned enterprises to put up a ‘No-Gift Policy’ and today, many commercial organizations are putting in place the gift and hospitality policy in their Code of Conduct and Ethics Compliance Program. I remembered well on 22nd March 2016, I was attending the ISO/PC 278, Plenary Meeting in Miami, Florida, USA. The host, Microsoft Legal Director was treating us, the leadership of this project committee, responsible for the design and development of ISO 37001:2016, to a dinner, the night before the official meeting. I ordered a T-bone steak and half way through dinner, the Legal Director politely asked me whether I am a ‘public official’ or not. I replied, “What if, I am one?”. He explained that I may have to pay for my dinner since he has had forgotten to inform his Ethics Committee. Obviously, Microsoft’s Standards of Business Conduct spelt out that, “Giving and receiving gifts, hospitality and travel can build strong working relationships and goodwill between Microsoft and those we do business with. But gifts, meals, or trips that are extravagant or lack transparency or a legitimate purpose may be viewed as bribes or as simply inappropriate. These things erode trust and harm our business.” No. I didn’t have to pay for my dinner!

Meanwhile, the South Korea has this “Improper Solicitation and Graft Act” a.k.a Kim Young-ran Act which was passed in 2015 and started being enforced on 28th September, 2016. This law makes it illegal for public officials (including journalists, private school teachers and their spouses) to accept lunch or dinner (free meals) valued more than 30,000 Korean won (US$30); gifts of >50,000 won (US$50) or >100,000 won (US$100) at closed events such as weddings and funerals. In addition, the law also prohibits fifteen categories of “improper solicitations to public officials” and such solicitations are prohibited even if not accompanied by a ‘payment, offer, or promise to pay or provide, money or a thing of value. However, the Anti-Corruption & Civil Rights Commission (ACRC) is proposing meal allowance and gift allowance limits to 50,000 and 100,000 won respectively. But these gifts must be Korean, home grown gifts such as ginseng and others.

It was reported that China’s CPC’s Central Commission for Discipline Inspection (CCDI) has punished 36,618 officials in the first half of 2018 for violating their own tough frugality rules. The most common misdemeanours among government officials were the awarding of unauthorised bonuses, the exchange of gifts, and the misuse of publicly owned vehicles. Yet President Xi has warned in July 2018 that the fight against graft is not yet over.

Nevertheless, India has also passed their Prevention of Corruption Act (Amendment) 2018 on 24th July, 2018. The amendment is an important step for India towards criminalizing alternative forms of bribery (i.e. undue advantage, which may not be measurable in value) and bringing commercial organizations under the purview. While bribe givers are also made liable for bribery, the commercial organization and their representatives (directors / managers) can be punished for involvement. Just like our MACC (Amendment) Act 2018, Section 17A, “Offence by Commercial Organization”, which states that commercial organization commits an offence if any person associated with that commercial organization commits a corrupt or bribery act in order to obtain or retain business or advantage for the organization.

Yes. Both commercial organizations in India and Malaysia can have a defense provided they are able to demonstrate that they had in place “adequate procedures and processes” for compliance to prevent such conduct of bribery. By taking cues about compliance from the US DOJ’s FCPA and UK Bribery Act, most commercial organizations should create a compliance framework adopting FCPA’s ten (10) Hallmarks or Bribery Act’s six (6) Guiding Principles to put in place their “adequate procedures and processes” so as to combat, curtail and curb bribery with high ethical business practices. Now, in Malaysia we have a Ministerial Guideline on Adequate Procedures which spelled out five (5) principles namely (a) Top-level Commitment; (b) Risk Assessment; (c) Undertaking Control Measures; (d) Systematic Review, Monitoring and Enforcement; and (e) Training and Communication