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Wednesday, September 26, 2012

US multinational fined RM80m for bribery in Malaysia and other countries

By Lee Wei Lian 
September 25, 2012

KUALA LUMPUR, Sept 25 — US multinational Tyco has agreed to pay US$26 million (RM80 million) to settle charges by the US government that it engaged in corrupt practices in more than a dozen countries in Asia and the Middle East, including Malaysia.

According to documents from the US Securities and Exchange Commission (SEC), Tyco is alleged to have bribed officials, including an employee of a Malaysian government-controlled entity, in order to win lucrative contracts.

The SEC said in a media statement yesterday that the global manufacturer allegedly perpetuated schemes that typically involved payments of fake “commissions” or the use of third-party agents to funnel money improperly to obtain the contracts.

It also said that Tyco, whose place of incorporation was shifted to Switzerland in 2008, agreed to pay more than US$26 million to settle the SEC’s charges.

Other countries that Tyco was alleged to have engaged in bribery include China, India, Thailand, Croatia, Serbia, Saudi Arabia, Libya, Syria, the UAE, Mauritania, Congo, Niger, Madagascar, Turkey, Poland and Egypt.

The SEC’s charges against Tyco claim that the latter made payments to approximately 26 employees of customers in Malaysia, including an employee of a government-controlled entity.

It also claimed that Tyco’s Malaysian subsidiary inaccurately described these expenses as “commissions” and failed to maintain policies sufficient to prohibit such payments, resulting in Tyco’ s books and records being misstated.

Tyco is a leading provider of electronic security products and services, fire protection and detection products and services, and valves and controls. 

A Tyco spokesman was quoted by UK’s Financial Times yesterday as saying: “We’re committed to maintaining our rigorous compliance programmes across all of our business activities.”

Malaysia, which is attempting to stamp out corruption, has made international news over several other cases related to graft by multinationals in the country including one involving Australian banknote company Securency and French telecommunications giant Alcatel.

The headlines could reinforce perception that Malaysia has a reputation where bribes are paid to public officials.

Corruption was identified by the World Economic Forum this year as one of the top five problems facing businesses in Malaysia.

Malaysia also slipped four spots to 60th in Transparency International’s Corruption Perception Index last year.

The Najib administration has made corruption one of the National Key Result Areas of its Government Transformation Programme to reform the government and make it more efficient and transparent.

Alcatel admitted in 2010 that it had bribed Malaysian government officials some time between 2004 and 2006 to win a US$85 million contract.

Earlier this month, it was reported that Australian central bank officials were told in 2007 that Securency had engineered a scheme to hide a RM492,000 payment to a Malaysian arms dealer in order to secure contracts from the Abdullah administration despite an earlier denial.

The arms dealer — Abdul Kayum Syed Ahmad — was charged here last year with two counts of giving RM50,000 bribes in 2004 and 2005 to former Bank Negara assistant governor Datuk Mohamad Daud Dol Moin in order to procure a contract to print the RM5 polymer bank notes by Reserve Bank subsidiary Note Printing Australia Ltd.

Abdul Kayum has pleaded not guilty.

Tun Abdullah Ahmad Badawi has also denied allegations that the Australian banknote firms attempted to bribe him for a RM100 million Malaysian currency contract during his tenure as prime minister.

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