PROFESSIONAL ETHICS

OUMM3203

MAY 2020

NAME :

STUDENT ID :

TELEPHONE NO :

E-MAIL :

LECTURER NAME :

LEARNING CENTER :
LIST OF CONTENTS

PAGES
Introduction
1.0 Definition
2.0 History of Bribery
3.0 Practice of Bribery
Analysis Method Of Ethical Problems
4.0 Economic analysis on the act of bribery
5.0 Legal analysis on the act of bribery
6.0 Ethical analysis on the act of bribery
7.0 Summary
8.0 Referenes
Definition

Bribery is defined as the act of giving, receiving and offering of a bribe which purposely to
give or pay someone in power such as officials, semi-official or licensees who are deemed
bound by the ethical standard, accepting of something of value in exchange for a specific
favourable desired outcomes. Bribery can be in the form of money, donation, loan, fee, gift,
expensive collateral, and properties rights in properties or any other similar benefits.

Based on OECD, Convention on Combating Bribery of Foreign Public Officials in

International Business Transactions and Related Documents (2011), Bribery is defined as
offering, promising and giving something of value to alter and influencing a public official in
the execution of their normal duties. To put in other words, it was the act of giving or
receiving a financial or other advantage in connection with someone of a position of trust, or
a function that is expected to be performed transparently or in good faith.

Moreover, According to Zaharuddin Bin Abd Rahman in 2008, he defined bribe as a

reward that is earned by completing a task for a specific party that was supposed to be
done without putting any favouritism on whether to bring benefit to that party or avoiding
harm. Plus, Legal Information Institute (2010) also defined as the offering, giving, soliciting,
or receiving of any item of value as a means of manipulating the actions of a person which
holding a public or legal duty. This type of action results in, matters that should be handled
objectively being handled in a manner best fitting the private interests of the decision
maker. Thus in Malaysia, Act 575, Anti-corruption act was introduced in 1997 to taking
action of reported bribery cases in Malaysia. Anti-Corruption Agency (SPRM) was introduced
to to make further and better condition to prevent or demolished corruption and for matters
necessary there to or connected there with few section.
History of Bribery

Bribery is not a new phenomenon; it has been a part of human societies since the
oldest of times. People use to bribe other to increase their social status or increase their
financial income by doing something unethical and beyond their job scope. Back in the
ancient time, the king of India, Kantilla wrote a book which called Arthashastra which
discussing in detailed about bribery. In medieval era, person who commits bribery will be
thrown in the deepest of hell to repent for their corrupt behaviours. American Constitution
made bribery one of the two explicitly-mentioned crimes currently paid to corruption is
unprecedented and nothing short of extraordinary.

On the late of 1990’s, cases of bribery among officials, political and business leader
are significantly increasing that concerning the international and non-governmental
organization. They urged political and business leaders to establish high standards of
honesty, ethics, and social responsibility. This issues is the turning points to fight against
corruption, money laundering, and black markets around the world as well as to the
recognition of the importance of governance (International Encyclopaedia of the Social
Sciences, 2008).

Practice of Bribery

Malaysia and in many regions of the world, bribery is considered as a serious offense, and it
can be severely punished. Few of bribery practice were discussed which had taken in place
in Malaysia for the past 10 years. One of the largest practices of bribery recorded in the year
of 2015 is the corruption involving Sabah Water Department. A total amount of RM114.5M
which comprises of cash, jewelry, watches, branded handbags and luxury cars was
confiscated by the Malaysian Anti-Corruption Commission (MACC). It is also reported by
MACC that Water Department officials were suspected to have misuse their power by
endowing contracts to 38 companies owned by their families or cronies.

The next largest practices of bribery in Malaysia were involving Malaysia’s former
Prime Minister, Dato Sri Najib Tun Razak in 2016. 1MDB was originally set up as
independent wealth fund to help the country develop through foreign partnerships and
investments. However, leaked financial documents by an anonymous source seemingly
exposed a network of dishonest activity implicating former Prime Minister, Najib Razak and
businessman Jho Low amongst many others. Using the financial expertise of Goldman
Sachs, large amounts of money were borrowed via government bonds and transferred into
bank accounts all over the world. Almost US$800M was sent to Dato Sri Najib’s personal
Ambank account.

Last but not least, the next highlighted bribery practice is involving a subsidiary
company, Iskandar Investment Berhad (IIB). According to Malaysian Anti-Corruption
Commission (MACC), the former CEO is suspected to be involved in a RM400, 000 bribery
cases regarding with the kampong Sungai Pendas Laud road development project. The
project involves the construction of an alternative road in Kampung Sungai Pendas Laut
worth about RM2.7 million in 2011. Corruption is the reason why the cost of projects has
always escalated, and this has to be stopped. Corruption hurts everyone.

ANALYSIS METHOD OF ETHICAL PROBLEMS

Ethical issues have never been easy to resolve between right or wrong. It is a complex

Ethical decisions are not simple choices between right or wrong. They are complex
judgments on the steadiness between the economic and social performances of an
organization. The balance between economic and social performances must be retained.
We can make the balance through these pertinent methods of analysis which resolve ethical
problems in management.

Analysis method of Ethical

Problems

Economic Analysis Legal Analysis Ethical Analysis

Figure 1: Analysis methods of ethical problems

(Source from OUMM3203 Module)

Economic analysis on the act of bribery

Transparency International Malaysia (TI) in 2019 reported that 53% of

Malaysia firms lost business due to bribery which makes Malaysia one of the highest
countries with the highest percentages among other 30 more countries involved. This report
also revealed that more than 39% of 101 companies failed to win new tenders and contract
due to bribery practices of their other competitors. He said that the survey is not based on
merely observation despite it is coming from one individual’s own experience of the real
situation that they faced. Back in year 2008, the Government and Parliament agreed that
the The Malaysian anti-Corruption Commission (MACC) be established in order to enhance
the effectiveness and efficiency of nationwide anti-corruption efforts, as well as to improve
the perception of independence and transparency of the functions of the Commission. MACC
began its operation officially on January 1, 2009, replacing the Anti-Corruption Agency (ACA)
malaysia. it was established by legislation, namely the malaysian Anti-Corruption
Commission Act 2009 (Act 694). Under the National Key Result Areas' (NKRA) anti-graft
initiatives manage to lower bribery cases nationwide.He added that in 2019, Corruption
Perception Index (CPI) which accesses perception of corruption in the public sector, where
as Malaysia scored 53 out of 100 points, to be placed at the 51 th spot among 176
countries surveyed.

According to Mauro (1995), the relationship between economic growth and bribery has been
examined extensively in the literature. From the studies negative correlation between
bribery and economic growth has found. Fisman and Svensson (2000), uses evidence from
Uganda to confirm that bribery retard development at the micro level. The form they studied
the relationship between bribe payments, taxes, and firm growth in Uganda for the period
1995- 97 and found that a one percentage point increase in the bribery rate was associated
with a three percentage point reduction in firm growth.

Another engine of economic growth is foreign direct investment (FDI).

According to Habib and Zurawicki (2002) based on their studies they looked at aggregate
investment flows from seven countries among themselves and 82 other countries over a
three year period (1996-98) and related those flows to the individual country's CPI. They
concluded that "corruption is a serious obstacle to investment". They also found a negative
effect due to the difference in bribery levels between home and host countries suggesting
that investing firms are reluctant to deal with the conditions prevailing in an operating
environment with a different level of bribery. In an undated World Bank document,
Smarzynska and Wei studied the impact of bribery in a host country on the preference of
foreign investors for a joint venture or a wholly-owned subsidiary. They conclude, based on
firm-level data, that bribery reduces FDI and shifts the ownership structure towards joint
ventures.

From the economic aspect, bribery give more negative impact than positive impact because
it is can give effect to the company profits, performance and others. The business for
example must be an ethical because of significant influence on stakeholders and enhance
the business performance. Business actions can affect the organisation various stakeholders
such as its customers, employees and the community. Since the business can have an
enormous influence on its stakeholders, the organisations has to be responsible and ethical
in its actions. In the organization if the top level do or take the bribery and stakeholder
know about it so they will be the loss of their respect to the organization and it is can
decrease their performance on the job and will be the profits of the organization down.

It is can be proved according to the empirical analysis. The results of the

empirical analysis, identified from within firm variation, a higher bribery level block both the
real sales and labour productivity growth of an average form. This is generally consistent
with the existing firm and macro level empirical research. The impact is more significant in
the case of labour productivity growth, possibly because it is subject to rigid contracts with
employees and can better reflect the rent seeking behaviour of forms.

According to Murphy et al. (1991), it shows that corruption forces the

reallocation of talent from production to rent- seeking. As a result, firms may not be
managed by the best talent, and hence expend less or be less productive. Applying the
authors’ arguments to the employment structure of an organisation, from that, we can also
see that a higher bribery can result in a large share of employees being occupied with non-
productive activities, namely bargaining with public officials and searching for ways to
overcome bureaucratic constraints. This can undermine the labour productivity of the
organisation (Kochanova, 2012).

Besides that, business ethics also enhances organisations business

performance. Business can know that ethical action can directly affect their organisations
bottom line. An examples, if the organisation do the unethical things like bribery so it is can
detrimental effect on an organisation such as face with higher financing costs. Besides that
the organisation has also become dishonest firms and tends to lose their customers.
Legal analysis on the act of bribery

“Bribery in criminal law refers to the improper acceptance by a public official, juror, or
someone bound by a duty to act impartially, of any gain or advantage to the beneficiary,
including any gain or advantage to a third person by the desire or consent of the
beneficiary. A gain or advantage may be a pecuniary benefit in the form of money, property,
commercial interests or anything else the primary significance of which is economic gain.”

This approach is depending on on impersonal social forces to decide between

“right” or “wrong”. The research done by the North Carolina State University revealed that,
over a period of time, employers have progressively implemented measures that they feel
will improve worker productivity and profits. These measures include layoffs, outsourcing
jobs, replacing salaried employees with contract staff, and putting employees with contract
staff, and putting employees onto short-term teams designed to tackle individual projects.
In other words Legal responsibility can be defined as the society perception toward
appropriate corporate conducts. Businesses are projected to fulfil their economic goals
within follows the legal framework.

In Malaysia one function is established under the Prime Minister Department

which solely to handle bribery by conducting activities mostly through lecturing. The one of
organisation namely The Malaysian Anti- Corruption Commission (MACC) began its operation
officially on January 1, 2009 replacing the Anti- Corruption Agency (ACA) Malaysia. It was
established by legislation namely the Malaysian Anti- Corruption Commission Act 2008 (Act
694). The functions of the MACC are provided under Section 7 Malaysian Anti- Corruption
Commission Bill 2009 to accept and consider any report of the commission of an offense
under this Act and investigate such of the reports as the Chief Commissioner or the officers
consider practicable and to detect and investigate any suspect conspiracy to commit any
offense under this act. So the government takes the bribery cases with serious.

The other function of MACC is to examine the practices, systems and

procedures of public bodies in order to facilitate the discovery of offenses under this Act and
to secure the revision of such practices, systems or procedures as in the opinion of the Chief
Commissioner may be conducive to corruption such as to instruct, advise and assist any
person, on the latter’s request, on ways in which corruption may be eliminated by such
person.
 To advice heads of public bodies of any changes in practice, system or
procedures compatible with the effective discharge of the duties of the public bodies as the
Chief Commissioner thinks necessary to reduce the likelihood of the occurrence of
corruption. In addition, the functions of MACC are to educate the public against and to enlist
the foster public support against corruption.

Anti- Corruption Act (act 575) states that there are several punishments for
those who taking bribes. If asking/ receiving or offer or give bribe the action that stated in
section 10 (a), (b) and section 11 (a), (b) Apr 1997 will be punished with prison for
minimum 14 days and minimum 20 years and fine for 5 times value of the bribe or RM10,
000, whichever is higher.

Besides that, bribery can give the negative impact to the organisation, it is
because of if they caught up in public scandals that cost them a fortune destroying their
brands, defending themselves and ultimately losing out on business. Bribery also kills the
moral fabric of the society and reeks on the business ethics and the reputation of a
company that is caught in the act. This can result in loss of confidence in the organisation
by members of the public and can also lead to loss of business patronage. From the legal
aspect,if the organisation does the unethical activity like bribery they may be faced with law
action.

Ethical analysis on the act of bribery

Bribery has been described as ‘a practice involving the payment or remuneration of an agent
of some organisation to do things that are inconsistent with the purpose of his or her
position or office” (Adams and Maine, 1998, p. 49). When doing ethical analysis, there are
four models that serve as a framework to structure an argument: utilitarianism in terms of
actions, utilitarianism in terms of rules, rights & duties, and virtue. Utilitarianism is the
process of weighing benefits and harms, and choosing the option that offers the most
benefits for the greatest number of people. Rule-utilitarian thought focuses on benefits and
harms created by rules, while act-utilitarian thought calculates the consequences of actions
themselves. The rights & duties model chooses the course that respects what others are
entitled to (rights) and obligations a stakeholders has to fulfill them (duties). The last model,
virtue, chooses the option that enforces good habits of character for yourself and others.
Each model can be applied when evaluating whether bribery is ethical or not.
                 In terms of benefits and harms to the Malaysian economy, Malaysian firms will
lose deals due to bribery. Where giving bribes is a common practice in procuring contracts,
a

firm or a company that does not offer bribes will clearly be at a disadvantage, at least in the
short term. According to Ida Lim (2012), Malaysia tops the list in a Transparency
International (TI) survey of 30 countries where companies felt they had lost deals because
they did not pay bribes. It is likely to lose out to less scrupulous competitors in the battle for
contracts. Suppose that such a company enunciates its policy clearly, and publicly calls
attention to the corrupt practices of its competitors. While this would probably be
counterproductive in the short run, the result may be to build up good will among the forces
in the country that are fighting against corruption, Should those forces prevail, then the
honest company is likely to be rewarded. In the worst case, it may be necessary to
recognize that there are times when one must choose between immediate self-interest and
ethical behavior. Where corruption is so rampant that it is not possible to do business in an
honest manner, then perhaps the most appropriate response is simply to refrain from doing
business in that country. If this policy were widely adopted, then strong pressure for reform
would be a likely outcome.

            The most powerful argument against bribery is related to the virtue model. Bribery
is a form of corruption that alters a behavior or outcome based on a reward. Rather than
encouraging good habits of character, such as hard work and judiciousness, the action
teaches individuals to cheat in order to get ahead. By using such a tactic to pay off debt, the
Malaysian government is justifying to citizens that the ends justify the means. Such
examples will likely lead to corrupt behavior within the Malaysian economy, because the
government did not fulfill its duty of being a moral representation of the country it
administers.
Summary

In conclusion, the current view of Malaysia from other countries leads to corrupts. As
a Malaysian, we have to realise bribery and economic growth impact each other both
unidirectional and simultaneously. However, the impact of lower levels of bribery on
economic growth is stronger than the impact of higher economic growth rate on reducing
bribery. It was also found that there may not exist any relationship among these two
variables in some countries.

In addition, sinking the prevalence of bribery would chip in to a higher rate of

economic growth and that in turn could further accelerate the decline in bribe taking a
worthy cycle that can contribute to the economic well-being of more of the world's people.

Therefore, let us starts from this second to strengthen the faith and personal lives is
the most powerful fortress to combat corruption by producing an incompetent society,
selfish society, and producing poor quality work.