In March this year we wrote about the country’s tardiness in prosecuting foreign bribery under the anti-bribery convention of the Organisation for Economic Co-operation and Development (OECD). The convention first came into force in 1999, and was established with the goal of clamping down on companies who bribe foreign officials to get or inflate contracts, or obtain licences and concessions, thereby dishonestly tipping the scales of global trade in their favour.
Although South Africa adopted the convention in 2007, it has failed dismally to implement it effectively. The March report, titled Phase 3 Report on Implementing the OECD Anti-bribery Convention in South Africa, revealed that only 10 cases of foreign bribery in the seven years since have received attention from authorities, and none have been successfully prosecuted.
The OECD has published three reports on South Africa, starting with a phase one review in 2008. In the phase two report in June 2010, the OECD was already uttering warnings about our shortage of prosecutions, but said the situation could be remedied through “a more proactive approach to the investigation and prosecution of this type of crime”.
This proactive approach has not materialised.
South Africa’s “limited enforcement”
South Africa is the only country on the continent that has adopted the OECD convention, and it is hardly setting the standard for others to follow. Its enforcement is classed as limited, which is a profoundly mediocre result. There are only four countries, out of 41 signatories, actively enforcing the convention, said TI – they are the US, UK, Switzerland and Germany.
What’s more, only five countries were classified as having moderate enforcement, while eight – including South Africa – had limited enforcement.
Almost all the other signatories – 22 of them – party to the OECD Convention are doing little or nothing by way of enforcement, said TI. The 22 countries represent 27% of world exports.
Canada is the only country to show significant improvement since last year’s report, said TI, having significantly improved its foreign bribery law and started several investigations.
“For the anti-bribery convention to achieve a fundamental change in the way companies operate, we need a majority of leading exporters to be actively enforcing it, so that the other countries will be pressured to follow suit,” said TI chairperson José Ugaz in a statement.
Gloomy outlook for foreign bribery prosecution
TI has also released individual country reports – Corruption Watch prepared the analysis of the South African report.
This document starts with the embarrassing revelation that not one case was commenced or concluded in 2013. In fact, said the report, to date, South Africa has never initiated a single prosecution or concluded a case involving foreign bribery.
By comparison, the UK, US, Germany and Switzerland collectively completed 225 cases and started 57 new cases between 2010 and 2013.
It seems unlikely that there will be any immediate improvement in our situation. According to TI, no significant changes have been made to South Africa’s legal framework regarding foreign bribery, and no case law has served to further clarify certain issues pertaining to intent. No significant changes have been made in the enforcement system, either.
In its phase three report, the OECD also voiced its concerns about South Africa’s passive approach to existing foreign bribery investigations. “The reasons for the lack of enforcement are not transparent, but lack of proactivity was clearly a significant factor,” said TI.
The government has said nothing about these findings – the only known response has been the setting up of a special task team to address the recommendations.
Governments need to expose secret company ownership
Today corrupt deals are increasingly masked by sophisticated shell companies whose real beneficial owner is not known, even to authorities, said TI.
A lack of resources to track money-laundering transactions, often involving shell companies, is one of the factors that allow cross-border bribery and corruption to thrive.
"Fifteen years should have been enough to enforce these commitments. The OECD has worked hard to make the convention a powerful tool and pushed governments to adopt tough laws. Now it needs to make sure that enforcement authorities have all the support they need to counter the growing power of cross-border crime networks,” Ugaz said.
TI’s recommendations for South Africa state that the government should:
- Address the recommendations in the OECD phase three report on South Africa in order to strengthen the current legal framework, including the adoption of adequate sanctions for non-compliance, particularly in the private sector.
- Take a more proactive approach in the prosecution of the foreign bribery offence by, among other things, increasing the financial resources of the enforcement agencies and establishing greater inter-agency cooperation and coordination, particularly during the investigations phase.
