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COMPLIANCE WITH ANTI-BRIBERY AND CORRUPTION LEGISLATION

Gill Bolton

In recent years, there has been increasing concern internationally about bribery and corruption. As a result, many countries have passed laws (or have sought to implement existing laws more actively) that target bribery and corruption, both inside and beyond their national borders. Apart from any reputational risk management issues, penalties for non-compliance are potentially very severe for offending parties, so it’s not just a case of “doing the right thing” from an ethical standpoint.
 
Bribery is, almost universally, defined extremely widely. It covers not only direct cash payments to public officials, but also, for example,  “loans” or the settlement of debts owed by them to third parties as well as fees such as those to secure the award of tenders (often called “facilitation fees”) and so on - even if paid via third parties.
 
Businesses, therefore, need to understand not only the laws of the country in which they primarily operate.  They need to understand those of other jurisdictions in which they may have an office/representation, agents or contractors or business interests more generally - or in which they may hope to do so in future.    
 
The most widely known of the anti-bribery and corruption laws are perhaps the USA’s Foreign Corrupt Practices Act (the FCPA) (of 1977) and the UK’s more recent Bribery Act (of 2010) (which is in many ways even more stringent than the FCPA). However, other BRICS countries such as Brazil and China are also taking a far tougher line on corruption in order, amongst other things, to attract and retain foreign investment.
 
The implication of these sorts of laws is that a business may be subject to scrutiny not only in the country where it primarily does business but even beyond that jurisdiction. Businesses could therefore become of interest to law enforcement agencies in foreign countries, even if they only have an office or are represented there or if they merely engage in certain business transactions in that country. A high-profile case in the late 2000s is the prosecution of Siemens under the FCPA - and in a related matter by the Munich Public Prosecutor’s Office - for certain activities outside the USA and Germany. Significant criminal fines and other penalties for the company alone in terms of certain agreements reached and excluding the prosecution of individuals involved, were the result.
 
In South Africa, apart from any criminal prohibitions under the common law or in terms of any other legislation, in 2004, the Prevention and Combating of Corrupt Activities Act (more commonly referred to as PRECCA) was enacted. (This was done to enable South Africa to comply with the relevant international conventions to which it is a party).
 
PRECCA criminalises the giving of “gratification” to someone in a position of power, in order to do something illegally or refrain from doing something, “Gratification” is widely defined and includes money, donations, fees, rewards, status, property, avoidance of loss and the discharging of loans. Section 34 of PRECCA also requires all persons in positions of authority to report instances or suspicions of fraud, corruption, theft and certain other offences involving more than R100, 000.00 to the SAPS. Failure to do is a criminal offence.
 
In addition, companies also need to be aware of the applicable provisions of South Africa’s new Companies Act of 2008 and its Regulations, which provide a number of anti-corruption provisions including appropriate monitoring activities by social and ethics committees.
 
A baseline compliance check (to be repeated periodically) is therefore recommended for all businesses so that systems, processes, procedures, practices and controls can be designed, documented, implemented and monitored to minimise the potential for a business to contravene one of the pieces of anti-bribery and corruption legislation that may apply to them.