The FCPA Blog, which focuses on enforcement related to the Foreign Corrupt Practices Act, has released its latest list of companies being investigated under the act. The blog has published this list since January 2011, and updates it regularly.
The FCPA is a federal law of the US, and it applies to any person who is a US citizen, national, or resident, or a business organised under that country’s law or that of any state, or which has its principal place of business in the US, or which trades securities in the US.
The act makes it illegal for companies and their supervisors or representatives to engage in foreign corrupt practices such as bribery – whether or not they are physically present in the US. Companies or individuals transgressing the FCPA may incur high financial penalties, among other consequences.
At the moment there are 108 companies on the list which, FCPA Blog editor Richard Cassin points out, is compiled by a research volunteer. These companies are associated with 49 countries – of which South Africa is one.
Country names were disclosed a total of 152 times in the 108 pending investigations, according to the blog. Twenty companies did not disclose any location, and three disclosed geographic regions without listing a specific country.
China leads the countries reported to be involved in FCPA investigations with 40 mentions. Brazil is next with 11 mentions, then India and Russia with eight each. These are South Africa’s four partners in the Brics economic bloc.
South Africa has four mentions – Corruption Watch has confirmed with the FCPA Blog that the companies are Net1, Gold Fields, Quanta Services and Wal-Mart Stores.
The list of countries mentioned most often is as follows:
| Country | GDP in 2013 | Cases |
| 1. China | $9.240-trillion | 40 |
| 2. Brazil | $2.246-trillion | 11 |
| 3. India | $1.877-trillion | 8 |
| 4. Russia | $2.097-trillion | 8 |
| 5. Libya | $74.20-billion | 7 |
| 6. Italy | $2.149-trillion | 4 |
| 7. Mexico | $1.261-trillion | 4 |
| 8. Saudi Arabia | $748.4-billion | 4 |
| 9. South Africa | $350.6-billion | 4 |
| 10. Uzbekistan | $56.80-billion | 4 |
| 11. Angola | $124.2-billion | 3 |
| 12. Argentina | $609.9-billion | 3 |
| 13. Germany | $3.730-trillion | 3 |
| 14. Poland | $525.9-billion | 3 |
| 15. Romania | $189.6-billion | 3 |
Although its association with these investigations is nothing to be proud of, at first glance South Africa’s position might not look too bad. But when the number of cases is considered in relation to GDP – and it’s a known fact that significant portions of countries’ GDP are lost to corruption, money-laundering and the like – South Africa jumps three positions and the picture doesn’t look quite as hopeful.
- Libya
- Uzbekistan
- China
- Angola
- Brazil
- South Africa
- Romania
- India
- Russia
- Saudi Arabia
- Poland
- Mexico
- Argentina
- Italy
- Germany
It also bears remembering that although China’s GDP is vastly bigger than any of the other countries on the list, 40 cases of FCPA-related corruption – with potentially more undisclosed – is still unacceptable.
FCPA investigations that reference South Africa
Corruption Watch has followed the Net1 case – which involves a R10-billion tender for the disbursement of social grants, awarded by the South African Social Security Agency to Net1 subsidiary Cash Paymaster Services (CPS) – for a long time. In September 2013 the organisation appeared as a friend of the court in the challenge by losing bidder AllPay to the awarding of the tender to CPS.
Since 2013 gold mining firm Gold Fields has been under investigation by the US Securities and Exchange Commission (SEC) for a 2010 BEE transaction involving ANC chairperson Baleka Mbete and the granting of the mining license for Gold Fields’ South Deep operation. The mining company has a secondary stock exchange listing in New York, thus the FCPA implication. The Hawks had also conducted a preliminary investigation into the matter, to determine whether or not to proceed to a formal investigation.
Houston-based Quanta Services, a provider of specialty contracting services, became the subject of a bribery probe by the SEC in 2014 into “certain aspects of Quanta’s activities in certain foreign jurisdictions, including South Africa and the United Arab Emirates”.
Wal-Mart, meanwhile, was conducting an internal FCPA inquiry into potential violations of the act, initially only covering its operations in Mexico and then Brazil and China. In 2012, however, it was announced that the retail giant’s lawyers recommended adding its activities in South Africa and India to the investigation. Wal-Mart trades in South Africa through a majority stake in Massmart. The Wall Street Journal reported that “concerns about Wal-Mart’s compliance practices were raised in South Africa in a report commissioned by an independent regulator, co-written by Nobel laureate [and economist] Joseph Stiglitz”.
