Dear Corruption Watch,
In my work as a corporate advisor I am continually astonished that executives are only vaguely aware of the impact our anti-corruption laws and those particularly in the US and Britain might have on their business practices. I am often asked what top three things they should do to start assessing company culture and structure to prevent corruption in the ranks. What would you advise?
Fellow corruption-buster
Dear Fellow corruption buster
It is surprising – indeed, shocking – to learn that the executives who come to you for advice are not already on pins and needles about the attendant risks of corruption and the impact that the South African law, let alone the US and UK law have on the future growth and running of their organisations.
The US Foreign Corrupt Practices Act as well as the UK Bribery Act prohibits offers, gifts, payments or any other promises to pay government officials, including foreign government officials with the sole purpose of influencing their acts and decisions in order to obtain business from them. This also includes any payments that may be made to intermediaries.
These prohibitions apply not only to the US or UK Companies. They apply to any company, including foreign companies that are associated with the US and the UK and their subsidiaries. Therefore, South African companies that are listed on the US stock exchange and the UK stock exchange are subject to the anti bribery provisions in the respective Acts.
The sanctions associated with the violations of these Acts include criminal penalties, civil penalties, suspension or bar from doing business in the US or UK, ineligibility to receive export licenses and private suits for damages.
In South Africa corruption is criminalised in the Prevention and Combating of Corrupt Activities Act 12 of 2004 (PRECCA). This Act also makes it an offence to bribe foreign public officials. Our courts also have jurisdiction in relation to corrupt activities that may be committed by South African companies outside of the country.
PRECCA imposes a duty to report any knowledge or suspicion of corruption, involving R100 000 or more to a police official. Failure to report attracts a criminal sanction.
It is therefore of great importance for companies to implement and adopt anti-corruption programmes to ensure compliance with all the above mentioned Acts and create a culture that encourages reporting and combating of corruption at all levels of their organisation.
My advice to the executives would be to consider the following measures that would prevent or help in detecting corrupt activities in their companies:
• Be careful not to offer bribes, promises or give any other advantage to public officials, their employees or business partners that may be considered as bribes;
• Implement written anti-corruption policies which deal with reporting of corrupt activities within the company;
• Create a culture that promotes awareness and compliance with the company anti-corruption policies that is geared at assisting the entire staff to recognise and report corrupt activities in the company;
• Make themselves aware of the anti-corruption laws and company laws of the foreign countries where they do business;
• Conduct internal audits of foreign businesses that they are associated with;
• Avoid the use of intermediaries or third parties to help broker deals overseas;
• Conduct due diligence on the third parties should they have to make use of them; and
• Keep proper accounting books and records that reflect the transactions of the company.
