CORRUPTION IN MALAYSIA

Legal Updates from YHA Law Firm

In brief

There is a saying that the love of money is the root to all evil. As a result, the vice of corruption or bribery, as an aspect of the “original sin” of the love of money, might be considered to be a root as part of a larger root of all evil.

What is corruption?

Corruption, properly defined in broad terms and inclusively, goes from the simple offering of a bribe to the misappropriation and misuse of public funds under the disguise of authority through the procurement process. When seen in connection to the whole political and administrative framework that allows it to exist, it is a disease that finally drains and corrupts society as a whole. This can be illustrated from the 1Malaysia Development Berhad (1MDB) scandal which was a huge corruption, bribery, and money laundering affair that originated in Malaysia in 2009 but quickly spread throughout the world and was disclosed in 2015. In 2016, the US Department of Justice dubbed it the “biggest kleptocracy case to date,” describing it as “one of the world’s greatest financial scandals.”
Malaysia has continuously placed “high” in Transparency International’s corruption index or scale (TI). The country is ranked 62nd out of 180 nations in Transparency International’s Corruption Perception Index for 2021. These statistics prove that corruption has still been ongoing in Malaysia.

How did Malaysia combat corruption?

.The Integrity Institute of Malaysia (IIM) and an independent Malaysian Anti-Corruption Commission (MACC) were established under Abdullah’s government in 2004 and 2009, respectively. In addition, some may not know that in 2011, a scheme was created by MACC which offered cash rewards to the amount of the bribe, kickback, or graft involved. The Whistleblower Protection Act (2010) and the Witness Protection Act protect whistleblowers (2009).

Q. Let’s just say you were a civil servant and you failed to report the giving of as well as request for bribes. Can you get in trouble in these circumstances?

A. Yes, under section 25 of the Malaysian Anti-Corruption Commission (MACC) Act, you can be penalized for failing to disclose incidents of bribery to the MACC (2009).

Moreover, not to mention, following a two-year moratorium for adjustments and familiarization, Section 17A (Amendment, 2018) of the MACC Act (2009), which imposes severe responsibility for corporate compliance, went into force on June 1, 2020. This means that if their workers or associates are involved in corrupt activities and transactions, “commercial organizations are likewise accountable and can be penalized.” If the commercial organization’s highest management or representatives are aware of the corruption perpetrated by their workers or allies, they may be judged guilty.”
A commercial organization commits a criminal offence under Section 17A if a person linked with it delivers any gratification with the aim to gain or keep any business or benefit for the commercial organization. The crime has a stiff penalty of a fine of not less than ten times the bride’s value or RM 1 million, whichever is larger, and/or a maximum sentence of 20 years in jail.

Examples: Based on Malaysia most biggest scandal in history, this has been shown in Dato’ Sri Najib Razak case where he was sentenced to 12 years in prison and fined RM210 million by the High Court on July 28, 2020, after Judge Mohd Nazlan Mohd Ghazali found him guilty of seven charges involving SRC, including one charge of abuse of power involving Retirement Fund (Inc)’s (KWAP). RM4 billion loans to SRC, three counts of criminal breach of trust involving RM42 million, and three counts of money laundering. However, he has made an appeal to the Federal Court after decisions were made from the Court of Appeal.

Conclusion

Corruption has come to the top of governments’ and business leaders’ priorities. Despite the fact that corruption has always been a problem, there is a growing understanding of its harmful effects on social and economic progress. Malaysia has a long history of enacting anti-corruption and anti-bribery legislation, with instances occurring over the previous four decades with no signs of stopping down. Corruption and bribery are deeply rooted in Malaysia’s political and government institutions, as evidenced by cases such as the Sabah Water Department, 1MDB, Port Klang Free Zone (PKFZ), and Immigration Department Scandal in 2018. However, the implementation of newly formulated measures such as the introduction of corporate responsibility for corruption offences, which will take effect in June, might be a watershed moment in Malaysia’s fight against corruption and bribery.

Sorotan Terkini

ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

In Eletson Holdings Inc & Ors v The Vessel “Paros” [2026] 8 MLJ 80, the High Court set aside an arrest after finding that the plaintiffs had no proprietary or possessory right to the vessel at the time of the writ, as the bareboat charter had already been terminated. The Court held that the claim was in substance a corporate control dispute dressed up as an admiralty action, and emphasised that such disputes do not fall within admiralty jurisdiction. Critically, the plaintiffs’ failure to disclose the termination of the charter when obtaining the arrest warrant amounted to a serious breach, leading the Court to find mala fides or gross negligence and order damages for wrongful arrest. The decision reinforces that ship arrest is a powerful remedy that must be exercised with full disclosure and a proper maritime foundation.

14 Julai ,2026 Tiada Ulasan

GUARANTEE – PERSONAL GUARANTEE ≠ PAY ON DEMAND: COURT DRAWS THE LINE BETWEEN SURETYSHIP AND DEMAND GUARANTEES

In CE Energy DMCC v Bashar [2026] Lloyds’s Rep 267, the Commercial Court clarified that not all guarantees labelled “on demand” will be treated as demand guarantees. On a proper construction, the court held that the personal guarantee in question was a contract of suretyship, requiring proof of the principal debtor’s liability rather than automatic payment upon demand. Crucially, the court found that the debtor’s “irrevocable” admissions of debt in a payment agreement created a binding contractual estoppel, which the guarantor could not challenge. The decision also confirms that, where payment is due on a “day certain”, a seller may still claim the price notwithstanding retention of title. The case underscores the importance of precise drafting and the risks of entering into settlement agreements that conclusively fix liability.

14 Julai ,2026 Tiada Ulasan

MARITIME NEGLIGENCE – PLAINTIFF CLAIMED FOR DAMAGES CAUSED DURING ANCHOR DEPLOYMENT OPERATION – CALDERBANK OFFERS

In Tom Eastwind 365 Sdn Bhd v The Owners of the Vessel “Icon Sophia” [2025] 9 MLJ 397, the High Court held that the doctrine of res ipsa loquitur applied in a maritime collision during an anchor deployment operation, allowing an inference of negligence against the tug owner. The Court clarified that the doctrine is not defeated merely because the defendant adduces evidence explaining the accident – such evidence goes to rebutting the inference, not preventing it. While liability was established due to the tug master’s error of judgment in manoeuvring too close to a stationary barge, the plaintiff failed to properly prove its damages and was awarded only RM50,000. Notably, despite succeeding on liability, the plaintiff was ordered to pay costs after rejecting reasonable Calderbank offers, underscoring the risks of pursuing litigation without properly substantiated claims.

14 Julai ,2026 Tiada Ulasan

JURISDICTION – BILLS OF LADING – BREACH OF HIMALAYA CLAUSE – BREACH OF EXCLUSIVE JURISDICTION CLAUSE – ONEROUS OR UNUSUAL TERMS

In Maersk Guinéa-Bissau SARL v Almar-Hum Bubacar Baldé SARL [2026] 1 Lloyd’s Rep 215, the English Commercial Court held that a shipper was liable for breach of an exclusive jurisdiction clause and a Himalaya clause after commencing proceedings in Guinea-Bissau instead of England. The Court confirmed that such clauses are standard and enforceable, and that commencing foreign proceedings in breach of them can give rise to a claim for damages. Notably, the Court also recognised that Himalaya clauses may be used offensively, allowing subcontractors to recover losses caused by wrongful litigation. The foreign judgment was not recognised due to lack of jurisdiction and denial of natural justice.

14 Julai ,2026 Tiada Ulasan

DELIVERY WITHOUT PRESENTATION OF BILL OF LADING – LOI WON’T SAVE YOU: SHIPOWNER LIABLE FOR MISDELIVERY DESPITE INDEMNITY

In United Overseas Bank Ltd v The “Maersk Katalin” [2026] 1 Lloyd’s Rep 18, the Singapore High Court reaffirmed that delivery of cargo without presentation of original bills of lading remains a fundamental breach, even where carried out against letters of indemnity. The Court held that LOIs merely shift commercial risk but do not authorise misdelivery, and rejected arguments of consent, ratification and causation. Significantly, the Court emphasised that the burden lies on the carrier to prove that the loss would have occurred in any event – a burden not easily discharged. The decision underscores the continued strict liability regime in misdelivery cases, particularly where banks as bill holders are involved.

14 Julai ,2026 Tiada Ulasan

CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE

In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, the Commercial Court held that a clause referring disputes to “the court in accordance with current legislation of the United Kingdom” was a valid jurisdiction clause in favour of the High Court of England and Wales. The Court also confirmed that the Montreal Convention does not apply to pure contractual claims for non-performance, such as repayment and loss of profits. Emphasising a broad and commercially sensible interpretation, the Court enforced the parties’ choice of forum and refused to stay proceedings, reaffirming that jurisdiction clauses will be upheld unless there are overwhelming reasons to depart.

14 Julai ,2026 Tiada Ulasan