This article first appeared in The Edge Malaysia Weekly on October 30, 2023 - November 5, 2023

When the Malaysian Anti-Corruption Commission (MACC) takes action against the principal office bearers of corporations, the repercussions are significant.

A major one is that it casts aspersions on the company, its business and particularly its finances. By nature, the duty of the MACC is to investigate possible corruption. But this in turn scares away financial institutions, which tend to pull back financing lines.

Sometimes, things get worse when the MACC freezes the company’s accounts, as in the case of Classita Holdings Bhd (formerly known as Caely Holdings Bhd). The MACC lifted the freeze order on the accounts in December last year without any action taken. By then, the company had already seen a change in control and boardroom.

Another repercussion is that the incumbent shareholders are put at a disadvantage if there is a boardroom battle and the MACC steps in following complaints lodged. That happened with Revenue Group Bhd, which eventually saw the ouster of the two brothers who co-founded the company.

In the case of Revenue, the MACC charged the siblings in March this year, three months after the commission started investigations into the company. The case is still ongoing but there is no certainty of outcome.

In recent months, there have been two instances where the MACC charged the principal executives of companies and the courts dismissed the cases even without going into trial proper. The first was in July, when the case against three principal executives of Pestech International Bhd, including two of its founders, was thrown out.

The second was last week, when the directors of GIIB Holdings Bhd were discharged and acquitted of allegedly furnishing false documents to deceive the company’s auditors.

As far as the MACC is concerned, it takes action against corporations, including listed companies, when there is a genuine complainant who furnishes documents. But the MACC has to be sure that those documents will be able to withstand the defence’s grilling in court.

The MACC cannot afford to make mistakes because its actions affect companies and minority shareholders.
 

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