Anti-corruption drive dodges political donations and criminal liability

Nay Pyi Taw has stepped up its efforts to curb corruption by empowering the anti-graft body and reaching out to the private sector. Yet, the announcement from the Directorate of Investment and Companies Administration (DICA) has created confusion among businesses.

Myanmar Times

Myanmar has recently adopted the 4th Amendment to the 2013 Anti-Corruption Law. The amendment enlarges the duties of the Anti-Corruption Commission (ACC) and includes a new power (Article 16p) to issue a Notification giving guidance to companies on establishing their own systems to prevent corruption. Owing to this amendment, the Commission can now even take investigative action on its own initiative, instead of only acting on complaints.

Troels Vester, country manager of United Nations Office on Drugs and Crime (UNODC) Myanmar, called the Amendment “a step in the right direction”. “Active corruption”, i.e. the offering or giving of bribes, has been redefined to include the attempt and a better definition of embezzlement has been also put forward in the law.

“UNODC is working with ACC to ensure implementation of the law, there is good progress but there is still room for improvement in the investigation and prosecution of corruption cases. The law does not include progress on civil liability for corruption, but the civil liability of legal persons for money laundering cases is already in place and that’s a very good feature of the legal system,” he told The Myanmar Times.

 

Still no criminality for bribing

The United Nations Convention against Corruption entered into force for Myanmar in January 2013. Criminal liability of companies for corruption offenses and the establishment of foreign bribery is essential to ensure compliance with UNCAC. But these provisions are lacking in Myanmar. Right now, companies can be held accountable only for money laundering and not for corruption.

Mr. Vester stressed that laws establishing criminal liability are very new in the region. For foreign bribery, the situation is even more complicated in relation to the bribery of officials in another country in order to secure a business advantage. Since prosecution of foreign bribery in ASEAN countries is extremely limited, he said there isn’t a big gap in Myanmar in comparative terms, and there are not many Myanmar companies investing abroad.

For Vicky Bowman, director of Yangon-based Myanmar Centre for Responsible Business, Thailand’s anti-corruption regulatory framework and enforcement experience are more developed than Myanmar’s.

Hence, she said, drawing on it could be helpful for Myanmar. For example, the Thai Commission’s Guidelines which establish some basic principles for company controls have been praised by businesses as practical and realistic.

 

DICA’s announcement

In their latest drive to crack down on corruption, DICA issued an anti-corruption code of ethics announcement for businesses in August. The announcement covered a lot of ground, such as political contributions, donations, and travel and hospitality expenses.

“All of these are important issues to address in combatting corruption,” Ms. Bowman commented. However, those companies who have studied the DICA Announcement and their legal advisers, are concerned that “it raises more questions than it answers.”

One problem is that the rest of government bureaucracy doesn’t seem to be aware of what it says. Ministries are still sending letters to hotels requiring them to provide government officials with free-of-charge rooms – this is something that the DICA Announcement labels unacceptable.

“This confusion puts companies in a difficult position and needs to be cleared up through collaboration between DICA, the ACC, and others. These issues are very complex. All of this will take time to fix and needs to be part of a wider democratic debate,” Ms. Bowman continued.

 

Political donations

Despite the numerous changes, political contributions and donations remain in a grey area. Current guidelines do not regulate the donation activities carried out by charitable foundations associated with companies or by business investors/ owners. In Myanmar, many company owners, instead of companies, make political donations. Hence, there is a loophole in the law.

A window of opportunity is to fill this gap lies in the upcoming bylaw. U Tun Tun Win, director of ACC Office, told The Myanmar Times last week that bylaw is in the process of being drafted.

Ms. Bowman said restrictions on political contributions by business should be a matter for the Election Commission. Since there are no restrictions in the current legal framework, this should be the subject of primary legislation debated by the legislature.

“The question of ‘donations’ by companies is also closely tied to a lack of clarity concerning whether charitable donations are tax deductible and how, which in turn is linked to the absence of a charities register,” the MCRB director observed.

With so many questions unanswered, the DICA announcement has drawn attention to the need for companies to establish an anti-corruption code of conduct.

The anti-graft agency can issue an order under the 4th amendment to private businesses to adopt and follow a Code of Conduct to prevent corruption, according to the UNODC. “If requested by ACC, UNODC can provide assistance in drafting a model Code of Conduct which can guide private businesses in developing and implementing their own Code of Conduct also covering political contributions and charitable donations,” Mr. Troels explained.

 

Doing good vs bad

Ultimately, the efforts to curb corruption and tackle grey areas should be part of a broader debate about responsible business. Myanmar ranked bottom in the 2018 Doing Good Index for Asia, produced by Hong Kong-based Centre for Asian Philanthropy and Society (CAPS). This index is not a measure of generosity. Instead, it is about the environment for philanthropic giving in terms of regulations, tax and fiscal policy, ecosystem, and procurement.

“Getting this right is something MCRB wants to work on with government, business, and others. We believe there is a good opportunity with the new ACC to ensure that the blurred lines between doing good and doing bad are clarified and that ‘donation’ is no longer a euphemism for a bribe,” Ms. Bowman noted.

 

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