Johannesburg - South African companies that have operations
in the UK or the US - or are listed in these territories - that fail to comply
with anti-corruption legislation could be on the receiving end of devastating
fines or even incarceration of key stakeholders.
This is according to Steven Powell‚ a Forensics Executive at
ENS (Edward Nathan Sonnenbergs)‚ who spoke at an Anti-Corruption Compliance
Seminar in Johannesburg last week.
Powell highlighted the UK Bribery Act (UKBA) of 2010‚ which
came into effect on 1 July 2011‚ as the most dramatic change to the global
corruption environment since the introduction of the Foreign Corrupt Practices
Act (FCPA) in the US more than 25 years ago.
“The UKBA is not only more aggressive‚ but also has more
far-reaching consequences for South African companies than the FCPA‚ as it
allows regulators radical powers to impose fines in respect of corruption
matters.
In addition‚ unlike the FCPA‚ the UKBA applies to both
public and private sector corruption and has also criminalised of facilitation
payments‚ which is endemic in most parts of Africa‚” says Powell.
Additionally the UKBA has created a new corporate offence‚
namely the failure by a commercial organisation to prevent bribery. This
requires companies to put rigourous measures to prevent bribery.
He explains that from a South Africa perspective‚ the UKBA
applies to companies that are resident in the UK or have an affiliate in the
country. “No direct involvement from parent companies is required in order to
be prosecuted. For example‚ if an agent of a South African company‚ with a
subsidiary in the UK engages in bribery in Africa‚ the company would be liable
to be prosecuted in the UK.”
Powell says that with more and more South African companies
expanding into Africa‚ it is crucial that they educate foreign subsidiaries‚
including agents and suppliers‚ about anti-corruption policies‚ especially new
or updated ones.
“As with the FCPA‚ the UKBA regulators will be targeting
large corporates.”
He says that that cost of FCBA non-compliance by companies
in 2011 of $508.6m is a warning to local companies‚ as many were fined due to
activities by their foreign subsidiaries.
“For example‚ Aon were fined $16.2m for non-compliance in
Costa Rica‚ Egypt‚ Vietnam‚ Indonesia‚ the United Arab Emirates‚ Myanmar and
Bangladesh; and Bridgestone were fined $28m for non-compliance in Mexico.
“The UKBA will add increased momentum in identifying
offenders globally.”
He explains that the Ministry of Justice has communicated
six principles that companies should consider when wishing to prevent bribery
being committed on their behalf and if they adopt those principles they will
have a defence against prosecution in respect of the corporate offence of
failing to prevent bribery. These six principles are:
- Proportionate procedures. “Companies need to have
anti-bribery policies in place for both internal and external stakeholders.”
- Top level commitment. “Management tone is critical and the
top level management of a company (be it the board of directors‚ the owners or
any other equivalent body or person) should be committed to preventing
bribery.”
- Risk assessment. “Companies need to actively assess the
nature and potential for bribery risk.”
- Due diligence. “‘Companies need to do their homework and
ensure that they don’t use corrupt suppliers‚ as well as inform agents and
affiliates of the company’s anti-bribery policies and procedures.”
- Communication (including training). “The company needs to
ensure that its bribery prevention policies and procedures are embedded and
understood throughout the company via internal and external communications‚
including training.”
- Monitoring and review. “The company needs to continually
monitor and review its procedures designed to prevent acts of bribery‚ as well
as make improvements‚ where necessary. Site visits are also crucial for
companies with affiliate offices in other territories.”
Powell says that South Africa as an emerging economy is
playing a much more active role globally and there is an urgent need for local
companies to comply with both national and international anti-corruption
legislation.
“Locally‚ we already have a weapon in the form of Section 43
of the 2011 regulations to the Companies Act‚ which requires the establishment
of a social and ethics committee which has to ensure that all listed companies‚
large unlisted companies and state owned companies implement the OECD recommendations
on preventing corruption which are effectively what is required by the UKBA.
Non compliant SA companies face fines of millions of rands.
“However‚ the global anti-corruption landscape is changing radically and regulators are now talking to each other much more than previously. With increased merger and acquisition activity‚ as well as more business partners being appointed‚ South African companies need to ensure that rigorous anti-bribery and corruption structures are put in place in order to avoid being made an example of‚” concludes Powell.