It maintained its index score at 6.3 out of 10 in the reassessment study.
“It also ranked No. 9 among 100 large emerging market companies,” said Transparency International-Malaysia (TI-M) President Akhbar Satar in a statement.
“Petronas paralleled the regulated reporting practices of Indian public-listed companies.”
Akhbar was announcing the performance of the only company in Malaysia featured in the TRAC study by TI.
“TI-M lauds the outstanding voluntary disclosure of Petronas in both organisational transparency and reporting on its anti-corruption programme, awarded 100% and 88% respectively.”
Petronas also showed a small improvement in country-by-country reporting by 0.8% when compared with the previous study in 2013.
State-owned enterprises like Petronas are often confronted with specific governance challenges, conceded Akhbar.
“These are grounded in the intrinsic closeness between government and the company, including political interference.”
Corruption risks arise from the complexity of accountability chain, favouritism and unfair procurement practices.
TI-M called on Petronas to take immediate action to prohibit political contributions without any exception.
“Petronas policy allows political contributions with certain disclosure,” noted Akhbar.
“Yet, it remains ambiguous and opaque without specifically naming the politicians or parties and the amount involved.”
TI-M believes that Petronas, as the caretaker of national resources, should be neutral and non-partisan in managing the assets and revenues.
“It’s unjustifiable to provide contributions without any favour in return.”
TI-M also strongly urged Petronas to disclose financial data in terms of revenues and taxes for key subsidiaries, joint ventures and key associates that operate in foreign countries.
Financial disclosure by country was useful to detect fraudulent activities, minimise the corruption risk and provide greater public scrutiny, it said.
“We believe this reporting regime can contribute significantly for Petronas to penetrate markets like America and EU where stringent legislation are imposed on extractive companies.”
The report revealed that 31 out of 100 large emerging market companies are doing business in Malaysia, among which 26 companies do not publish a policy prohibiting facilitation payments and 22 companies do not disclose tax payments.
Indian companies have such disclosures as required under their Country’s Companies Act and they have performed fairly well.
On the other hand, Chinese companies operating in Malaysia have shown weak disclosures in all three dimensions measured in the survey.
From the observed trend, governments and regulatory bodies play crucial roles to adopt and enforce the highest possible reporting standard in all companies that operate in Malaysia.
TI-M has welcomed the introduction of the 2016 Malaysian Code of Corporate Governance by the Securities Commission. It mandates non-financial disclosure for operation, sustainability and promotion of business integrity as a whole.