Dear Corruption Watch, South African businesses seem very concerned with understanding and adhering to the US Foreign Corrupt Practices Act and the UK Bribery Act. And yet they’re not so worried about our own legislation?
Lekker Local
Dear Lekker Local
Your perception is not wrong. Here at CW we have certainly experienced, in our interaction with our large multinational companies, that while many of their representatives appear to have a good grasp of US or UK anticorruption statutes, they struggle to identify the relevant South African legislation.
Although some may argue that our anticorruption legislation is perhaps too fragmented, as it is contained in many different statutes, including the Prevention and Combating of Corrupt Activities Act, the Companies Act and the Financial Intelligence Centre Act, the law is definitely in place. However, effective legislation implies effective enforcement, and therein lies the rub. The perception appears to be that noncompliance with US and UK anticorruption law poses a greater risk to their operations – and consequently to their bottom line – owing to the active enforcement of the relevant statutes by US and UK authorities as opposed to weak law enforcement by our authorities.
The US specifically has been very active in this regard over the past three decades and has handed out hefty fines to non-US companies in terms of its Foreign Corrupt Practices Act.
The success of that act can be attributed largely to its substantial penalties for contravention and the considerable rewards offered for whistle-blowers, which may range between 10% and 30% of the penalties recovered from offending companies. In 2010, for example, German multinational Siemens was fined $1.6-billion for charges related to the conduct of its subsidiaries in various South American countries. The US has also made it clear that it is prepared to assert jurisdiction in respect of bribery cases on such tenuous bases as that payments were routed through US accounts or e-mails were transmitted through US-based servers.
The UK Bribery Act came into force in 2011. This goes even further than the Foreign Corrupt Practices Act in that it targets private bribery as well as the bribery of government officials, and introduces corporate liability of companies that fail to prevent bribery. South African companies associated with the UK therefore need not only be familiar with the Bribery Act, but must take positive steps to prevent bribery or face potential prosecution.
Sadly, until authorities here start to actively and publicly enforce South African legislation, local businesses will continue to fear the US and UK laws while ignoring our own.
• Do you face an ethical dilemma? Do you suspect corruption? If you need help to resolve such issues, write to the Corruption Watch experts at letters@businesstimes.co.za. Mark your letter ‘Dear Corruption Watch’.
• This article was first published in Sunday Times: Business Times
