Inflated Claims and Fake Invoices: How Section 18 Can Land You in Court Even Without a Bribe

A plain-English guide to the false claims offence under the Malaysian Anti-Corruption Commission Act 2009, the everyday documents it covers, and how companies can spot fake, inflated and duplicate invoices

A Corruption Offence Without Corruption

Most offences under the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”) involve a bribe, which the Act calls “gratification”. Section 18 is different. It targets people who use false paperwork to mislead an employer or other principal. The book describes it as quite distinct from the other bribery offences in the Act.

The stakes can be enormous. The book mentions that the MACC remanded several people in connection with false claims of about RM27 million for a digital technology training programme that was never conducted. Companies that fall victim to false claims can lose millions of ringgit paid for work never done, or for poor-quality goods and services worth far less than what was paid. Often, the rogue employees who approved the claims are the main beneficiaries.

What Section 18 Says, in Plain English

A person commits an offence under Section 18 if:

he gives to an agent (for example, an employee of a client or government department), or
being an agent himself, he uses with intent to deceive his principal (for example, his employer),

any receipt, account or other document that the principal has an interest in, which he has reason to believe contains a statement that is false, erroneous or defective in a material particular, and which is intended to mislead the principal.

What the prosecution must prove	What it means in practice
The accused gave a document to an agent, or as an agent used it	A supplier handing an invoice to a client’s staff, or an employee submitting a claim to the company
The document was one the principal was interested in	A document relevant to the employer’s or client’s affairs, usually money matters
It contained a statement that was false, erroneous or defective in a material particular	An important detail was wrong, such as quantities, dates, amounts or whether work was done
The accused had reason to believe it was false and intended it to mislead the principal	He knew or had sufficient cause to believe it was wrong and meant to deceive

The offence has a long history. Similar provisions existed in the Prevention of Corruption Act 1961 and the Anti-Corruption Act 1997, and it was originally adopted from the United Kingdom’s Prevention of Corruption Act 1906. Several of the cases below were decided under the 1961 Act, but the principles remain relevant.

Rule 1: No Bribe and No Personal Benefit Required

The earliest challenge to this offence came in the English case of Sage v Eicholz, decided under the UK’s 1906 Act and later relied on by the Malaysian courts. A property owner submitted a “claim for empties” to the water authority, falsely stating that parts of his building had been empty longer than they actually had, so that he could pay lower water rates. He argued that because the Act was about corruption and no one had been corrupted, he could not be guilty.

The English court rejected this. The court noted that the word “corruptly” appears in the two bribery limbs of the section but was deliberately left out of the false claims limb, probably because corruption is often very difficult to prove. Where the words of the law are clear, the title of the Act cannot be used to narrow them. The Malaysian courts have followed this position.

Case Spotlight: Abdul Rahim Hassan & Anor v Public Prosecutor [1997] 4 CLJ Supp (High Court, Johor Bahru)

Facts: The first appellant was the Officer in Charge of the Johor Bahru Police District. He signed three letters to the Road Transport Department (JPJ) stating that three cars had been sold at police auctions to the second appellant and asking the JPJ to help register them. In fact, no such auctions ever took place. The cars had originally been registered in Singapore. When Customs later seized the vehicles and made enquiries, subordinate officers were instructed to doctor police files to make it look as though the cars had been unclaimed vehicles properly auctioned.

Defences raised: He argued that he had received no money, that he was an overworked officer who had simply signed letters prepared by his clerk without checking, that the “agent” should have been named personally in the charge rather than by job title, and that letters were not the kind of “document” covered by the law.

Decision: The High Court dismissed his appeal. It held that whether he received any monetary benefit was a non-issue, as the prosecution did not need to prove any benefit. His conduct in having the files doctored afterwards showed he knew the letters were false, and his defence was nothing more than a denial. Naming the agent as “Director, Road Transport Department, Johor Bahru” was sufficient. The letters related to money matters because they signified that auction money, which is government revenue, had been or would be collected, so they counted as “other documents”. His sentence of 12 months’ jail on each charge, to run concurrently, stood.

What happened to the second appellant: His abetment conviction was quashed. There was no evidence that he delivered the letters to the JPJ as the charges alleged.

Lesson: Signing documents without checking is no protection where the evidence shows you knew they were false. And a senior officer can be convicted even if he gained nothing personally.

Rule 2: Everyday Documents Are Covered

Section 18 refers to “any receipt, account or other document”. The MACC Act does not define “document”, so the courts have had to decide what counts. The approach has widened over time.

An early High Court case, Public Prosecutor v Kyle-Little & Anor [1971] 1 MLJ 125, took a narrow view. It held that “other document” meant paper writing of the same character as a receipt or account, dealing with money matters, such as bills, cheques, indents, payrolls and invoices. Pipes with writing and markings on them did not qualify. Later courts moved to a broader test: was the document used to claim a monetary benefit?

Case Spotlight: Two railway employees, two everyday documents

Nadimuthu v Public Prosecutor [1974] 1 MLJ 20 (Federal Court): A Malayan Railways employee submitted two sick certificates in 1968 and was paid wages for the two days off. The certificates were fake. There was no registered doctor by the name shown, the phone number belonged to the JKR Waterworks, and no address was given for the “dispensary”. He argued that a medical certificate was not the same kind of document as a receipt or account. The Federal Court disagreed. Because the certificates were used to claim monetary benefits he was not entitled to, they were documents under the law. He had been fined $25 on each charge.

Public Prosecutor v Wilson [1988] 1 MLJ 243 (Supreme Court): A Keretapi Tanah Melayu employee prepared his own time sheet claiming an allowance for working in Kuala Lumpur during a period when he was actually attending a military training course elsewhere, for which he had already been paid. The High Court had acquitted him, relying on the English case of R v Tweedie, where a trading sheet used only for a company’s internal accounting was held not to be covered. The Supreme Court held that the time sheet was a document, because it was the basis of a claim for money he was not entitled to. It distinguished Tweedie on its facts, and said the time sheet could not be regarded as merely for internal use.

Lesson: Claiming pay, leave, allowances or benefits using a false form or certificate can be a criminal offence under the MACC Act, not just a disciplinary matter.

Document	Case	Covered?
Indent for construction of a drain	Hashim v Public Prosecutor [1967] 1 MLJ 251 (treated as an “account”)	Yes
Local purchase order	Voon Ah Shoon v Public Prosecutor [1979] 2 MLJ 131	Yes
False medical certificate used to claim wages	Nadimuthu v Public Prosecutor [1974] 1 MLJ 20	Yes
Letter of clearance giving a financial advantage	Ibrahim Helmi Mohd Liki v Public Prosecutor [1984] 2 CLJ Rep 71	Yes
Time sheet used to claim allowances	Public Prosecutor v Wilson [1988] 1 MLJ 243	Yes
Letters stating vehicles were sold at police auction	Abdul Rahim Hassan & Anor v Public Prosecutor [1997]	Yes
Official travel allowance claim forms	Johnny Uvang Ajeng v Public Prosecutor [2018] MLJU 2180 (charged, though acquitted on other grounds)	Treated as the relevant document
Pipes with writing and marks on them	Public Prosecutor v Kyle-Little & Anor [1971] 1 MLJ 125	No
Internal trading sheet for accounting only	R v Tweedie (England)	No (not yet tested in Malaysia)

The book notes that the Supreme Court in Wilson did not reject the English Tweedie test outright. It simply distinguished it. Whether purely internal documents fall outside Section 18 therefore remains open to be tested in the Malaysian courts.

Rule 3: “Reason to Believe” Is Enough

Under the old 1961 and 1997 Acts, the prosecution had to prove that the accused actually knew the statement was false. Section 18 of the MACC Act lowers the bar. It is now enough that the person had reason to believe the document contained a false, erroneous or defective statement.

Under the Penal Code, a person has “reason to believe” something if he has sufficient cause to believe it. The court looks at the circumstances and applies an objective test: would any reasonable person in that position have seen sufficient cause to believe the statement was false? This makes it much harder to escape liability by claiming ignorance.

Deceive, not defraud

The accused must intend to deceive the principal, but does not need to intend to cause loss. The book cites Public Prosecutor v V Neelakandan & Anor, which held that intending to deceive means intending to induce a frame of mind, and should not be stretched to mean an attempt to defraud. An English case, Re London & Globe Finance Corporation Ltd, drew the line neatly: to deceive is to make someone believe something false is true, while to defraud is to use deceit to make someone act to their own harm. For Section 18, the first is enough.

Who Can Be Caught

A false claims offence must involve an agent and a principal. The claim must be given by any person to an agent, or used by an agent against his principal. The book notes that the courts have held “any person” to be wide enough to include anyone.

Agent (any person employed by or acting for another), including	Principal, including
Officers of public bodies	Any employer
Trustees	Beneficiaries of a trust and trust estates
Administrators and executors of estates	Estates of deceased persons and people with an interest in them
Subcontractors	Public bodies, for people serving in them
Anyone employed by or acting for the above

These words are given their ordinary meaning, not the technical meaning from the law of agency in the Contracts Act 1950. The book cites Voon Ah Shoon for this point in Malaysia, and the English Court of Appeal in R v Ail and Ors [2016] took the same view. The Ail case also held that the offence covers agents of foreign principals. In addition, the MACC Act has effect outside as well as within Malaysia.

When Both Sides Are in It Together

False claims frequently involve collusion between an outsider who submits the false document and an insider who approves it. The book notes that both can be charged under Section 18.

Example: The UiTM sports equipment case

As described in the book, Datuk Md Saberi Md, a former Dean of UiTM’s Faculty of Sports Science and Recreation, was sentenced by the Sessions Court to three years’ jail and a RM10,000 fine for acknowledging receipt, in good condition, of sports equipment worth RM138,600 in March 1999, when the equipment had never been delivered. The owner of the supplier, Zaleha Abdul Rahman, received the same sentence for producing the false invoice. Both were charged under the false claims offence.

Alternatively, the insider may be charged with abetting the offence under Section 109 of the Penal Code. According to the book, this may be easier to prove, because the prosecution must show that the main offender committed the offence and that the abettor knew of the deceit and substantially assisted. In Ahmad Ashaarie bin Rejie & Anor v Public Prosecutor [1999] MLJU, as described in the book, an officer was convicted of abetment for certifying a purchase order stating that items had been supplied when none had been.

However, abetment charges must still be proved. In Abdul Rahim Hassan, the alleged abettor was acquitted because there was no evidence of the specific act of abetment charged. And in the case below, the court held that an abetment charge was the wrong charge altogether for the officer who certified the delivery.

Why Some Section 18 Cases Fail: The Charge Must Be Right

Several Section 18 prosecutions have failed not because the conduct was acceptable, but because the charge was badly framed. For companies and individuals, these cases are a reminder of how technical this offence is.

Case Spotlight: Law Tzy Ping & Anor v Public Prosecutor [1995] MLJU 332 (High Court, Kuching)

Facts: A supplier billed the Police Field Force in Kuching for 6,000 packets of packed rations under each of two purchase orders in 1982, when only 2,880 and 3,840 packets had actually been supplied. The false parts of the claims were valued at about $49,639 and $34,366. The police quartermaster certified on the bills that the rations had been received. The supplier was convicted and sentenced to two years’ jail and a $5,000 fine on each count, and the quartermaster, who was convicted of abetment, received two years’ jail on each count.

Decision: The High Court set aside both convictions. The charges named “Polis Di Raja Malaysia” as the agent. But an agent must be a natural person. The police force is a public body, not a person, so the charges should have named the officer holding the relevant post. As for the quartermaster, the court held that as a government agent certifying receipt in his official capacity, he should have been charged directly under the false claims provision for using the false documents, not as an abettor.

Lesson: The acquittal turned on how the charges were drafted. The underlying facts of billing for thousands of packets never delivered were not excused.

Case Spotlight: Johnny Uvang Ajeng v Public Prosecutor [2018] MLJU 2180 (High Court, Limbang)

Facts: A forest ranger with the Sarawak Forestry office in Limbang was convicted under Section 18 on three charges relating to official travel allowance claims of RM1,615, RM3,170 and RM1,870 in 2015. The prosecution alleged that he claimed to be on duty guarding seized timber in Ulu Sungai Lubai on dates when he was not there. He was sentenced to short jail terms and fines of RM10,000 to RM15,000 on each charge.

Decision: The High Court allowed his appeal. The charges given to him said the claims contained “false material particular/contains material mistakes/is incomplete in a material particular”. The court held that “material mistakes” and “incomplete” particulars do not match the elements of Section 18, and the wording prejudiced him because he was relying on a defence of mistake of fact. He had also been unrepresented when the trial began. The court further found reasonable doubt, because a clerk who keyed the claims into the system admitted she might have made typing errors.

Lesson: Section 18 is about deliberately false statements, not honest mistakes. Charges must reflect that, and genuine processing errors can create reasonable doubt.

The book also describes Abd Rashid Abdullah & Anor v Public Prosecutor [2012] MLJU 1427, where convictions were set aside because the charge against one accused failed to state that he was an agent of the Government of Malaysia, and the charge against the other wrongly described the agent’s designation.

These are not loopholes to rely on

These acquittals turned on errors in how the prosecution framed the charges. They do not mean the conduct was lawful. Prosecutors learn from such cases, and anyone who submits or approves false documents remains at serious risk.

How Heavy Is the Penalty?

A person convicted under Section 18 faces imprisonment of up to 20 years and a fine of at least five times the value of the false, erroneous or defective particular where it can be valued, or RM10,000, whichever is higher. This is far heavier than the old 1961 Act, which provided for a fine of up to $10,000 or up to five years’ jail, or both.

What About the Company? Section 17A and False Claims

Under Section 17A, a company can be liable when an associated person corruptly gives gratification for the company’s benefit. The book explains that an employee making a false claim, on its own, does not automatically trigger corporate liability, because no gratification is involved.

But the two often go together. The book gives this example: an employee of Company B gives a false invoice for services never performed to an employee of a client, to be processed and paid by the client, for Company B’s benefit. If gratification is also involved, for example a cut for the client’s employee who approves the invoice, Section 17A may come into play. The book also notes that false invoices are often used to generate funds for bribes.

Protecting Your Company: Red Flags in Invoices

The book identifies three common types of fraudulent invoices: false invoices for goods or services never provided, inflated invoices charging more than the true value, and duplicate invoices that lead to paying twice for the same thing. It warns that weak controls, where approvers sign off based on their staff’s word without checking, allow such claims to slip through.

Drawing on the International Anti-Corruption Resource Center, the book lists red flags that finance teams should watch for:

Red flag	What to check
Invoice does not match the contract, purchase order or supporting documents	Compare line by line before approving
No supporting documents	Ask for delivery orders, reports or evidence of work done
Unusual round-number amounts	Query how the figure was calculated
Several vendors sharing the same address	Check whether they are related or shell companies
Vague or incomplete information, blank fields or no date	Return the invoice for proper details
No goods received or services completed report, or mismatched details	Confirm receipt with the user department
Sudden spike in amounts, or amounts far out of line with previous invoices	Compare with the vendor’s history and market rates
Amount exceeds the approved contract limit	Require fresh approval before paying
Multiple similar invoices from the same or related vendors for the same period	Look for splitting or duplication
Repeated purchase order numbers, descriptions, amounts, invoice numbers or dates	Check for duplicate billing

Red flags alone are not enough

The book cites PwC’s Global Economic Crime and Fraud Survey 2022, which found that internal perpetrators were the main culprits in 31 per cent of serious fraud cases. Red-flag guidelines are useless if the person approving the invoices is part of the scheme. The book therefore recommends additional safeguards:

Due diligence on contractors to confirm they are genuine businesses able to supply the goods or services, and to check whether they have been investigated or sanctioned for fraud or false invoicing.
Separation of duties, so that the person who orders, the person who confirms receipt, and the person who approves payment are not the same.
Multiple signatories and clear approval limits for transactions, as suggested in the Government’s Guidelines on Adequate Procedures.
Training and written policies so that employees understand the risks of false claims and that submitting or approving them is a crime.
A clear tone from the top that making false claims for or on behalf of the company is against company policy.

Practical Checklist

Employees: never sign or certify what you have not checked, such as delivery receipts, completion certificates or claim forms.
Employees: never submit a claim you have reason to believe is wrong, including medical certificates, time sheets and travel or overtime claims.
Suppliers: never bill for goods or services not delivered, or inflate quantities or prices, even if the client’s staff suggest it.
Companies: match every invoice against the contract, purchase order and goods received note before payment.
Companies: separate ordering, receiving and payment approval, and require more than one signatory for larger amounts.
Companies: run background checks on new vendors and monitor for related vendors sharing addresses.
Companies: review invoice data regularly for spikes, round numbers and duplicates.
Companies: build these controls into your adequate procedures under Section 17A, scaled to the size of the business.

Conclusion

Section 18 shows that the MACC Act is not only about bribes. A false invoice, an inflated claim or a fake medical certificate can lead to a criminal charge carrying up to 20 years’ jail, even if no one was bribed and no one personally profited. The courts have steadily widened the range of documents covered, and the MACC Act has lowered the mental threshold from knowledge to “reason to believe”.

Interestingly, the book notes that the United Kingdom, where this offence originated, no longer has it in its Bribery Act 2010. False claims there are now dealt with under the more general Fraud Act 2006. It remains to be seen whether Malaysia will one day move the offence into the Penal Code or separate legislation. Until then, it sits in the MACC Act, and companies and employees alike should treat every document they submit or approve with care.

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