By Wilma den Hartigh
South African companies operating in the UK could find themselves in trouble if they don’t comply with the country’s new Bribery Act. The new law, which came into force on 1 July 2011, is also drawing attention locally as it contains important lessons that could help South Africa in its fight against corruption.
The Gordon Institute of Business Science and the British High Commission in Pretoria hosted a discussion on the Act on Thursday in Illovo, Johannesburg.
The UK’s new robust approach to bribery has far reaching implications for South African businesses with operations in the UK, including their sub contractors, suppliers, joint ventures, employees, subsidiaries, branches and agents.
However, the new law is also an opportunity for companies to ensure that they have formal and active processes in place to deal with acts of corruption such as bribery. Some of the key areas that are under scrutiny are kickbacks, facilitation payments, gifts and entertainment.
New tool to address commercial bribery
Speaking at the event, Roderick Macauley, criminal law adviser to the UK ministry of justice, explained that there has been no other law like this in the UK.
Macauley was also instrumental in developing and implementing the new Act.
“The Bribery Act in itself won’t change the world, but it forms part of a growing consensus that will eventually tip the balance in favour of those who wish to pursue their business objectives ethically,” he said.
He said the Bribery Act is widely regarded as cutting edge legislation, which encourages a culture of bribery prevention. “This is not about creating paper compliance,” he said.
“Bribery is a global problem,” he said, adding that it is bad for business, it damages economies and destabilises international markets.
The requirements in a nutshell
Section 7 of the Act is what makes the new legislation stand out, as it deals with the failure of a commercial company to prevent bribery.
According to the Act companies are required to set up a policy to prevent bribery from happening.
To help companies achieve this, the government has published guiding principles as part of the Act to help businesses structure such a policy.
Matthew Woodford, a partner at UK-based law firm Browne Jacobson LLP, says although the guidelines aren’t legally binding, it is a good place to start.
He encouraged companies to ensure that adequate procedures are in place, and to keep detailed records of their policy’s implementation, application and revision, in the event of legal action.
A South African perspective
Prof Deon Rossouw, CEO of the Ethics Institute of South Africa, said that laws are not always that effective at promoting responsible behaviour, but what the new Bribery Act sets out to do is place an emphasis on being proactive and building a ethical culture in business that would make bribery less likely to occur.
“What the Bribery Act introduces is not new, it is an interesting reconfiguration,” Rossouw said.
He said South Africa has elements of the Act in place, but under numerous laws and regulations such as the Companies Act, the Prevention and Combating of Corrupt Activities Act and the King III report on Corporate Governance.
“What I like about UK Act is that there is consolidation,” he says.
He also supports the introduction of guiding principles. “These are good because it is principles based on guidelines, instead of a tick-the-box approach.”
He believes that putting a stop to corruption in business starts with support from top management. “The King III report speaks to this need and the role of top leadership to instil a culture of ethical behaviour in a company.”
Strong laws, weak enforcement
David Lewis, executive director of Corruption Watch, said South Africa has a strong statutory legislative framework to combat corruption, but enforcement is lacking.
“There is a high level of corporate tolerance and complicity to corruption,” Lewis said, adding that despite good laws, contrary legislation such as the Secrecy Bill will trump the Promotion of Access to Information Act.
The goal of Corruption Watch is to encourage and enable public participation in combating corruption, and also hold accountable those who control public resources.
“Corruption in all its manifestations is an offense against the public. The economic costs of corruption are huge,” he said, and those worst affected are people who are dependent on public resources in health, transport and security.
“Service delivery protests are a manifestation of the most disadvantaged communities’ opposition to corruption.”
He agreed that business has an important role in the fight against corruption through compliance programmes. Corruption Watch is involved in discussions about the possibility of introducing JSE-listing requirements for companies to develop anti-corruption compliance policies.
Modern laws for a global problem
Macauley said the Bribery Act is a modern law that is creating a new ethical currency in business.
“Coupled with various mechanisms put in place by a variety of organisations, it means that the momentum against the use of bribery in international trade and markets is becoming something which even the most corrupt regimes can no longer ignore.”
South African companies operating in the UK could find themselves in trouble if they don’t comply with the country’s new Bribery Act.