Dear Corruption Watch
How do we deal with allegations of corruption by South African companies abroad? Does our legislation cover such acts and what can be done to stop it, because it is affecting business and our country’s reputation? — Embarrassed
Corruption by South African companies operating abroad is addressed under South Africa’s Prevention and Combating of Corrupt Activities Act.
The act creates the offence of corruption and provides for sanctions for this and other related offences.
Section 35 of the law grants the South African government the power and ability to exercise authority over South African companies abroad that commit offences outside the republic — this is known as “extraterritorial jurisdiction”. Our courts are empowered and authorised to enforce their jurisdiction over any alleged offence in terms of the law, regardless of whether the dishonest act is regarded as an offence in the place it is committed.
Thus, South African companies operating abroad that engage in corrupt activities are not beyond the reach of our law.
In addition, South Africa is a party to the Organisation for Economic Co-operation and Development’s anti-bribery convention, which criminalises the act of bribing a foreign public official in international business transactions.
In line with the convention, the Companies Act of 2008 has also incorporated a requirement that state-owned, listed and other medium and large companies put in place measures to implement the convention’s recommendations on corruption.
However, recent global reviews show that South Africa is unfortunately not enforcing the convention strictly.
But South African companies should not be complacent. In addition to falling foul of South African law, firms and their directors may be held liable under the robustly enforced UK Bribery Act.
Then there is the US Foreign Corrupt Practices Act, which has been consistently and vigorously enforced since it became law.
So how do we preserve the reputation of South African companies? Simple: report suspicions of corruption.
Section 34 of the Prevention and Combating of Corrupt Activities Act requires that all those in positions of authority in both the public and private sectors report corruption involving R100, 000 or more to the police. In fact, failing to report corruption is itself a criminal offence.
Those in positions of power are typically directors-general and heads of national and provincial governments, municipal managers, heads of educational institutions, company directors, executive managers, partners and CEOs.
South African companies or individuals abroad who are convicted in South Africa are subject to hefty penalties and prison sentences. The maximum for those convicted in the high court is life in jail. Those convicted in a regional magistrate’s court can be imprisoned for up to 18 years, and up to five years if found guilty by a district magistrate.
Reporting corruption is the key to fighting dishonesty.
Of course, the adoption of anti-corruption programmes to ensure compliance with the law in this country and abroad will also go a long way to ensuring that companies that operate abroad know the law — as well as creating a culture that encourages reporting and the combating of corruption at all levels.
• This article was first published in Sunday Times: Business Times