By Valencia Talane
Africa has steadily positioned itself over the past few years as an increasingly favourable place to do business for various markets across the world. However, the levels of economic crime – bribery in particular – has got researchers worried, and is a dent in its image that could prove threatening if not challenged.
A recent survey by legal firm ENS Africa has revealed that many companies across Africa are better equipped to deal with anti-corruption regulators than they are to actually curb the crime. Bribery remains the most prevalent form of corruption worrying companies across the continent, and only 19% of companies surveyed admitted that they have never conducted an anti-bribery risk assessment.
Those that do have anti-bribery programmes have greater success at avoiding the crime than their more lax counterparts, but exposure to it is high and in many cases the support of top management is lacking, which makes things more difficult. Some of the findings of the ENS survey show that:
- companies with anti-bribery compliance programmes experienced fewer incidents of bribery than those without;
- those with dedicated anti-bribery policies reported fewer incidents of bribery as opposed to companies without one;
- commitment from top level management of companies resulted in fewer incidents of bribery being reported, compared to those of companies lacking commitment;
- companies that conducted anti-bribery due diligence on their business partners reported fewer incidents of bribery as opposed to those who did not;
- those that provided their staff with anti-bribery training experienced fewer incidents of bribery as opposed to those who did not.
The survey also found that companies cited financial loss and reputational damage as two of the biggest threats to their existence under the current conditions. Another common view expressed was one of fear of the potentially high costs of enforcement if corruption was discovered within their organisations.
Bribery a fast-growing crime
A broader study, the findings of which were released by global auditing firm PricewaterhouseCoopers in February this year, shows that bribery and corruption are the fastest growing forms of economic crimes, particularly in South Africa. The most common types of crimes are procurement, human resources fraud and bribery, followed by financial statement fraud.
Over 5 000 senior businessmen and women from 93 countries around the globe participated in PwC’s online survey in 2013.
“While not the most prevalent economic crimes in South Africa, bribery and corruption may pose the greatest risk to organisations doing business across borders, especially if they are affiliated with the US or the UK,” reads the ENS Africa survey. The statement applies to the effect of anti-bribery legislation created in these countries that are home to many companies doing business in Africa.
“For years the US was the only country that rigorously pursued the payment of bribes outside of its territorial boundaries through the Foreign Corrupt Practices Act. More recently, the British Government has also become a serious anti-bribery compliance enforcement role player through the UK Bribery Act of 2010,” states ENS.
Corruption a hindrance to business development
Writing for Risk.net late last year, Andrew Legg, a partner at British law firm Eversheds, highlighted the risks involved in operating in a business environment that is prone to bribery, as is the case with Africa.
“The fact is that bribes still remain a relatively common fixture of daily life across the continent,” writes Legg. “Transparency International's latest Global Corruption Barometer, which gathers data from 95 countries around the world on bribery, indicated seven out of the nine countries with the highest reported bribery rate are in sub-Saharan Africa, with Sierra Leone, Liberia and Kenya among the main offenders.”
He adds that the situation should not deter multinational companies from doing business in Africa – and asserts that this can be done without resorting to bribes. However, companies should be aware of the potential knock-on consequences.
“For example, operational costs can be higher if bribes are not paid and time lines may mysteriously extend without facilitation payments to speed up processes.”