BUILDING A CORPORATE ETHICAL CULTURE

TRACKER Unit of measure 1 Footnote SOURCE: Source 2 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES Introduction To Malaysian GTP and aspiration Corruption Perception Indexes (CPI,GCB,BPI) Corporate Integrity Pledge (CIP) How and Why Corruption Perception Exist??? Integrity Pact (IP)

ETP Malaysia’s 10 th & 11 th Plan To achieve the 2020 Vision, Malaysia introduced… People First Performance Now

Target target 0% / Neutral As percentage of GDP (rebased figures) * forecast **2015 Target as per 10 th Malaysia Plan 6.6% 5.6% 4.8% 3% 4.5% 4% 2012* Target 2013 Gradual Reduction in Fiscal Deficit… Under Act 637 of the Loan (Local) Act 1959, and Act 275 of the Government Investment Act 1983: Combined loans raised domestically should not exceed a ceiling of 55% of the nation's GDP. Current figure: 53% ActWhat it says Note: 2012 MoF estimate Malaysian National Debt is Governed by Law

& To Become A High-Income Nation, We Need: We need “Drivers” to ensure focus on high-impact areas FOCUS NKEAs We Need “Enablers” To Ensure Competitiveness COMPETITIVENESS 51 Strategic Reform Initiatives12 National Key Economic Areas

SRI: Competition, Standards & Liberalisation Competition Act Enforced on 1 January 2012 Remove Anti-Competitive Agreements Remove Abuse Of A Dominant Position X

TRACKER Unit of measure 1 Footnote SOURCE: Source 7 People FirstPerformance Now 1MALAYSIA Fighting Corruption Low Income Households Reducing Crime Education Rural Basic Infrastructure Urban Public Transport The Government Transformation Programme (GTP) launched to support Malaysia’s transformation into developed & high-income nation

GRAND CORRUPTION Prevent the abuse of power and public resources by politicians and senior civil servants *Enhance the delivery of justice against corruption GRAND CORRUPTION Prevent the abuse of power and public resources by politicians and senior civil servants *Enhance the delivery of justice against corruption GOVERNMENT PROCUREMENT Reduce leakage in the funds allocated for national development and operations * Ensure fairness in the award of contracts GOVERNMENT PROCUREMENT Reduce leakage in the funds allocated for national development and operations * Ensure fairness in the award of contracts REGULATORY/ ENFORCEMENT AGENCIES Regain public confidence in our enforcement agencies * Enhance competitiveness of Malaysia as a place to do business REGULATORY/ ENFORCEMENT AGENCIES Regain public confidence in our enforcement agencies * Enhance competitiveness of Malaysia as a place to do business Sub NKRA ASPIRATIONS Reduce corruption through enforcement and compliance Enhance transparency to improve our score in Corruption Perception Index (CPI) Improve public perception on the integrity of the government and civil service CORRUPTION = POWER + DISCRETION – ACCOUNTABILITY – TRANSPARENCY Integrity of Civil Service Legal and regulatory framework Detection, prosecution and punishment

Strong commitment and message from our leaders - ‘Zero Tolerance’ for corruption No political interference in public administration and perverting the course of justice Checks and balances to uphold independence of judiciary, legal and law enforcement institutions Efficiency and effectiveness of law enforcement agencies Transparency and accountability in public administrations, politics and the business sector Political Will Legal & Institutional Reform Effective Enforcement Public Participation Civil Service Reform Freedom of Press Allow access to information to promote public scrutiny Increase awareness of the rights of the people Provide channel for people to voice out opinions Comprehensive and robust systems and processes to ensure check and balance Institutionalize culture of excellence and integrity Strong voice from People to endorse leaders who drive positive change Serve as watchdog to ensure governance Report corrupt practices, and assist investigations Top Down Framework Bottom Up Framework

Base: All respondents (n=640). Q. Which one of these are you most concerned about? Source: Frost & Sullivan, 2012 Rakyat perceived Grand Corruption, Government Procurement and Enforcement Agency as their Key Concerns

% 2011 Results have been encouraging! 109% % Overall composite scoring Reducing CrimeAnti-CorruptionRural Basic InfrastructureUrban Public TransportLow Income HouseholdEducationCost of Living

Corruption Figures: 2010, 2011, 2012,2013 Whistleblower Protection Corruption Offender Database Integrity Pacts Corruption Courts Government Contracts Corporate Integrity Pledge 6,688 government contracts published online 14 corruption courts Reduces 600 Backlog cases Whistleblower Protection 11,665 reports received, 191 Awarded protection 142,268 Integrity Pacts have been signed 1,172 corruption offenders Published in MACC website 441 Companies Signed CIP Building Blocks showing encouraging results

TRACKER Unit of measure 1 Footnote SOURCE: Source 13 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES Introduction To Malaysian GTP and aspiration Corruption Perception Indexes (CPI,GCB,BPI) Corporate Integrity Pledge (CIP) How and Why Corruption Perception Exist??? Integrity Pact (IP)

CORRUPTION PERCEPTION INDEX (CPI)

What is the Corruption Perceptions Index (CPI)? The CPI ranks countries/territories based on how corrupt their public sector is perceived to be. It is a composite index, a combination of polls, drawing on corruption-related data collected by a variety of reputable institutions. The CPI reflects the views of observers from around the world, including experts living and working in the countries/territories evaluated. Transparency International Malaysia

Is the country/territory with the lowest score the world’s most corrupt nation? No. The CPI is mostly an assessment of perception of administrative and political corruption. It is not a verdict on the levels of corruption of entire nations or societies or of their policies and activities. Citizens of those countries/territories that score at the lower end of the CPI have shown the same concern about and condemnation of corruption as the public in countries that perform strongly. Further, the country/territory with the lowest score is the one where public sector corruption is perceived to be most prevalent among those included in the list. There are more than 200 sovereign nations in the world, and the 2011 CPI ranks 183 of them. The CPI provides no information about countries/territories that are not included. Transparency International Malaysia

1- 56 th place/178 countries Score – 4.4 Constituent Survey th place/178 countries Score – 4.4 Constituent Survey th place/ 183 countries Score – 4.3 Constituent Survey th place/ 183 countries Score – 4.3 Constituent Survey - 12

Corruption Improved Transparency International Results 49* * Score under new methodology is 50/100 Malaysia’s CPI Ranking: 2013: : :

GLOBAL CORRUPTION BAROMETER (GCB)

Personal experiences of bribery The survey asked people if they had come into contact with 1 of 9 identified services in Malaysia. For each of these services they were then asked if they had paid a bribe, identify the services where people were most likely to pay a bribe and the % of people paying a bribe for each service is given as a proportion of people who had accessed that service. Those people that did not come into contact with each service were excluded from the analysis. The results by service were then aggregated such that a bribe payers was considered someone who had paid for any one or more of the services in the last 12 months. Only 1.2% of people have paid a bribe to one of 9 service providers in Malaysia.

BRIBE PAYERS INDEX (BPI)

However, only 2 questions on corruption was taken into CPI survey which dragged us down with the percentage of 2.7%. Transparency International Malaysia Source: Global Corruption Barometer Percentages are weighted. Figures are calculated for respondents who paid a bribe to the service providers. Groups were defined using cluster analysis. Countries Rank Netherlands 1 Belgium 3 Japan 4 Australia 6 Canada 6 Singapore 8 United Kingdom 10 France 11 South Korea 13 Malaysia 15 Hong Kong 15 Taiwan 19 Saudi Arabia 22 Argentina 23 Indonesia 25 Mexico 26 China 27 Russia 28 Malaysia is ranked 15 th out of 28 countries with a score of 7.6 out of 10 sharing with Hong Kong, Italy and South Africa. Survey is about Malaysian traders who paid bribe when doing business abroad.

TRACKER Unit of measure 1 Footnote SOURCE: Source 23 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES Introduction To Malaysian GTP and aspiration Corruption Perception Indexes (CPI,GCB,BPI) Corporate Integrity Pledge (CIP) How and Why Corruption Perception Exist??? Integrity Pact (IP)

TRACKER Unit of measure 1 Footnote SOURCE: Source 24  LACK OF TRANSPARENCY  INCONSISTENT ACTION  BAD OR DELAYED DELIVERY SYSTEM  NOT RESPONSIVE TO COMPLAINTS  LIVING BEYOND MEANS WHY CORRUPTION PERCEPTION EXIST?

TRACKER Unit of measure 1 Footnote SOURCE: Source Receiving and giving gratification as reward or inducement for favors. 2. Using documents which contain false material particulars for certain pecuniary advantage. 3. Using office or position for personal interest.

TRACKER Unit of measure 1 Footnote SOURCE: Source 26 To become A Developed Country with High Income Nation, We need to MANAGE the CORRUPTION PERCEPTION. HOW???

Encourage Transparency And Good Governance

Inculcate Good Values Within The Organisation

TRACKER Unit of measure 1 Footnote SOURCE: Source 29 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES Introduction To Malaysian GTP and aspiration Corruption Perception Indexes (CPI,GCB,BPI) Corporate Integrity Pledge (CIP) How and Why Corruption Perception Exist??? Integrity Pact (IP)

Corporate Integrity Pledge: proposed tools 1 i ii unilaterally entered into pledge to uphold Anti- Corruption Principles To be endorsed by members of Roundtable Made available on websites of Bursa and IIM bilateral, between parties committing to each other to uphold the Principles Target contracts relating to national development etc. – e.g. under Economic Transformation Programme Appendix I - Integrity pledge Appendix II - Integrity agreements Anti-Corruption Business Principles

CORPORATE INTEGRITY PLEDGE (CIP) 31 “a voluntary unilateral declaration – a written commitment by a company that it will not commit corrupt acts, will work toward creating a business environment that is free from corruption and will uphold the anti-corruption principles in the conduct of its business and its interactions with its business partners and the government” “a voluntary unilateral declaration – a written commitment by a company that it will not commit corrupt acts, will work toward creating a business environment that is free from corruption and will uphold the anti-corruption principles in the conduct of its business and its interactions with its business partners and the government”

TRACKER Unit of measure 1 Footnote SOURCE: Source 32 Initiative overview THE CORE PRINCIPLES OF CORPORATE INTEGRITY PLEDGE (C.I.P.) To promote principles of transparency, integrity and corporate governance To include anti-corruption elements to strengthen its internal procedures To adhere to the anti-corruption laws To eradicate all forms of corruption To support anti-corruption initiatives by the MACC and the Government

Corporate Integrity Pledge: proposed governance mechanism Principles published on Bursa/ SC / CCM/ IIM website Companies that sign on listed on Bursa website Agreements signed and accounted for under GTP/ ETP and published on PEMANDU website

TRACKER Unit of measure 1 Footnote SOURCE: Source Committed in promoting values of integrity, transparency and good governance 2. Strengthening internal systems that support corruption prevention 3. Compliance of the laws, policies and procedures 4. Zero tolerance on corrupt practice 5. Support MACC anti-corruption initiatives. ANTI-CORRUPTION PRINCIPLES FOR CORPORATIONS

TRACKER Unit of measure 1 Footnote SOURCE: Source 35 ENTERPRISE POLICIES AND GUIDELINES ON : GIFT RECEIVING POLITICAL CONTRIBUTIONS CHARITABLE CONTRIBUTIONS/ SPONSORSHIP FACILITATION PAYMENTS GIFTS/HOSPITALITY AND EXPENSES CONFLICTS OF INTEREST REFERAL POLICY CORPORATE SOCIAL RESPONSIBILITY (CSR)

TRACKER Unit of measure 1 Footnote SOURCE: Source 36 RAISING CONCERNS AND SEEKING GUIDANCE Provide secure and available channels through which employees and others able to raise concerns and whistle-blow (without retribution) (i.e establish an integrity unit) Provide guidance in respect of the interpretation of the Principles/ Code

Code of Ethics and Code of Conduct is a must

71 companies had signed CIP Among those are:

TRACKER Unit of measure 1 Footnote SOURCE: Source 39 SIGNEES OF C.I.P. UPLOADED IN CISM PORTAL NO COMPANIES/BODIES SIGNEES MULTI NATIONAL COMPANIES (MNCs) GOVERNMENT LINK COMPANIES (GLCs) PRIVATE LINK COMPANIES (PLCs) SMALL MEDIUM ENTERPRISES (SME)/INDUSTIRES NON GOVERNMENT ORGANISATION & OTHERS GOVERNMENT BODIES TOTAL

TRACKER Unit of measure 1 Footnote SOURCE: Source 40 MALAYSIAN TRANSFORMATION PROGRAMME ANTI-CORRUPTION INITIATIVES Introduction To Malaysian GTP and aspiration Corruption Perception Indexes (CPI,GCB,BPI) Corporate Integrity Pledge (CIP) How and Why Corruption Perception Exist??? Integrity Pact (IP)

Ministry of Finance issued Integrity Pact directive on 1st April 2010; guidelines on 16 December 2010 Official invitation to participate in tender/quotations Declaration of abstention from bribery – by all parties, at all stages of contracting (including registering as a supplier/ firms) Formulation of Code of Conduct Contractual provision to abstain from bribery

TRACKER Unit of measure 1 Footnote SOURCE: Source 42 WHAT IS AN INTEGRITY PACT (IP)? 42 “an agreement between the government, or a government department (the authority, the project owner) and all bidders for a public sector contract” - An IP is both a document (a legal contract) and a process - An IP is an activity of the CIP - Use in public procurement/contracting - To ensure clean bidding, a level playing field

It contains rights and obligations that all parties will not engage in, pay, offer, demand or accept bribes while carrying out the contract A pact between a government office inviting public tenders for any type of contracts related to goods and services and the bidders for the contract Undertaking by the principal that its officials will not demand or accept any bribes, gifts etc., with appropriate disciplinary or criminal sanctions in case of violation Statement by each bidder that it has not paid, and will not pay, any bribes in order to obtain or retain the contract Each bidder to disclose all payments made in connection with the contract to anybody (including agents and other middlemen as well as family members etc.) Pact Elements of IP Code of conduct Sanctions Independent monitoring system Source: Transparency International Description Bidders are also advised to have a company Code of Conduct (clearly rejecting the use of bribes and other unethical behaviour) and a compliance programme for the implementation of a Code of Conduct throughout the company A pre-announced set of sanctions for any violation by a bidder which may include: –Denial / loss of contract, forfeiture of the bid security and performance bond, liability for damages to the principal and the competing bidders, debarment of the violator by the principal for an appropriate period of time The use of arbitration as a conflict resolution mechanism and the instance to impose sanctions Use of an independent monitoring body which can be performed by any structure with independence, accountability and credibility Solutions

IMPLEMENTATION OF INTEGRITY PACT ON MEGA PROJECT Element of IPCurrent Status Legal undertakings etc. Covered by MoF directive/ directives on Government contracting Monitoring of bidding process and execution MACC and Auditor General’s Department are among the body monitoring the implementation. ArbitrationNo provision currently; to consider The MRT SBK Line project was proposed for full-scale showcasing of Integrity Pact 2 NEXT ACTIONS: 1.To include arbitration clause in the next project. 2.To implement IP on privatisation project as well.

Role to Play by Employer : >Reduce Bureaucracy/Red Tape >Simplify Processes >Encourage Reporting on Corrupt Practices or Abuse of Power >Protect Whistle Blower >Know your employee (Be busy body) and take care of their welfare.

Direct interaction between two parties who holds a position and involves discretionary power gives opportunity for corruption. Automation is the best solution to reduce discretion. 246 CCTV installed at 17 entry points involving 12 states

TRACKER Unit of measure 1 Footnote SOURCE: Source 47 CHALLENGES 1. PUBLIC APATHY AND EMPATHY - LACK SUPPORT 2. PERCEPTION ISSUES 3. DIFFERENCES IN: - CULTURE & TRADITION – eg. gift giving during festive seasons - VALUES of the gifts – nominal, modest, non-commercial - LEGAL PRACTICES – anti-corruption laws, facilitation payments

TRACKER Unit of measure 1 Footnote SOURCE: Source 48 'NO GIFT POLICY' BY PETRONAS BEST PRACTICES ‘WHISTLE BLOWING POLICY’ BY PKNS

WHISTLEBLOWER PROTECTION ACT 2010 IMPACT: Whistleblowers will be encouraged to report and will receive: Protection of confidential information Immunity from civil/ criminal suits Protection against detrimental action Dec 15, 2010 – Act came into force

Smile Say ‘Thank you’ Respect Others Tolerate UPHOLD INTEGRITY

Putrajaya at night CONTACT US Malaysian Anti-Corruption Commission Block D6, Complex D, Federal Government Administrative Centre P.O Box Putrajaya, Malaysia Tel : Fax : SMS :

TRACKER Unit of measure 1 Footnote SOURCE: Source 52 The Essential Elements : A pact (contract) between the project owner and the main contractor; - An Undertaking by the principal – written declaration that its officials will not demand or accept any bribes; - A statement by each bidder that he has not paid, and will not pay any bribes in order to obtain or retain contract; - An undertaking by each bidder to disclose all payments made in connection with the contract including to third parties (agents/middlemen0 as well as family members; - The explicit acceptance by each bidder that the no-bribery commitment and the disclosure obligation, as well as the corresponding sanction, remain in force for the bidder until the contract has been fully executed;

TRACKER Unit of measure 1 Footnote SOURCE: Source 53 - Bidders must have company’s Code of Conduct/Ethics (clearly rejecting the use of bribes and other unethical behavior) and a compliance programe - The use of arbitration as a conflict resolution mechanism and the instance to impose sanctions; - A pre-announced set of sanctions for any violation by a bidder of its commitments or undertakings, including * denial or lost of contract, * forfeiture of the bid security and the performance bond; * liability for damages and performance bond. * debarment of the violator by the principle for an appropriate period of time. - An independent monitoring system, which can be performed with active civil society participation or any other structure with independence, accountability and credibility. The Essential Elements :-