SA’s latest anti-corruption weapon Section 43 of the regulations:
Section 43 of the regulations, accompanying the Companies Act, brings South Africa into line with an agreement with the Organisation for Economic Cooperation and Development (OECD), which requires that certain measures be taken to combat and prevent corruption.
South Africa and 142 other countries are signatories.
Section 43 of the regulations require the establishment of a social and ethics committee, and applies to every state-owned, listed and public company. It also applies to unlisted companies of a certain size.
Calculations to assist unlisted companies to determine if this applies to them can be found in regulation 26 (2) and is based on the company’s scores.
Scores are awarded as follows: one point per average employee number; one point per every R1-million in third party liability; one point for every R1-million in turnover and one point for every person with direct or indirect beneficial interest in issued securities.
Social and ethics committee:
This is required to monitor the company’s progress and standing regarding – OECD recommendations on preventing corruption, which include :
- Not offering or giving undue pecuniary or other advantage to public officials or employees of business partners
- Develop and adopt adequate internal controls, ethics and compliance programmes or measures for preventing and detecting bribery, developed on the basis of a risk assessment addressing the individual circumstances of an enterprise, in particular the bribery risks facing the enterprise (such as its geographical and industrial sector of operation)
- Prohibit and discourage facilitation of payments
- Perform due diligence on agents and intermediaries and ensure that contracts with them outline the company’s requirements with regard to bribery and corruption
- Enhance the transparency of their activities in the fight against bribery, bribe solicitation and extortion
- Promote employee awareness of and compliance with company policies and internal controls, ethics and compliance programmes or measures against bribery, bribe solicitation and extortion
- Compliance with the 10 principles set out in the UN Global Compact which deals with prevention of corruption.
Principles in UK Bribery Act that can be used as guidelines for SA firms:
These guidelines set out by the UK Justice Department to comply with the stringent UK Bribery Act overlap with most of the requirements imposed by the OECD and can be used as a short list for reaching reasonable compliance.
Steven Powell of Edward Nathan Sonnenbergs believes that companies need to show that they have made every effort to at least comply with these principles:
- A commercial organisation needs to ensure its procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation's activities.
- Top level management of a commercial organisation – whether it be a board, the owners or an equivalent body or person – should be committed to preventing bribery by persons associated with it.
- The commercial organisation is required to assess the nature of the risk and extent of its exposure to potential external and internal risks of bribery on behalf of persons associated with it.
- The commercial organisation must apply due diligence principles, taking a proportionate and risk-based approach, in respect to the persons who will perform or perform services or on behalf of the organisation, in order to mitigate identified bribery risks.
- The organisation needs to make sure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, which is proportionate to the risk it faces. (Powell recommends training for agents or intermediaries too).
- The organisation continually monitors and reviews procedures it has put in place to prevent bribery by persons associated with it, and makes improvements were necessary.
Useful link:
Companies regulations 2011 in the Government Gazette
The following guidelines are based on data supplied Edward Nathan Sonnenbergs and the new regulations.
