Close doors to bad business

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’

In my work as a corporate adviser I am continually astonished that executives are only vaguely aware of the impact our anti-corruption laws and those in the US and Britain might have on their business practices. I am often asked what top three things they should do to start assessing company culture and structure to prevent corruption in the ranks. What would you advise? — Fellow corruption-buster It is surprising, indeed shocking, to learn that the executives who come to you for advice are not already on pins and needles about the risks of corruption and the impact that South African law, let alone that in the US and UK, has on the growth and running of their organisations.

The Foreign Corrupt Practices Act in the US and the UK’s Bribery Act prohibit offers, gifts, payments or any promises to pay government officials, including foreign officials, for the purpose of influencing their acts and decisions to obtain business from them. It includes payments to intermediaries.

The prohibitions apply not only to US and UK companies, but to any company, including foreign companies, associated with the US and the UK and their subsidiaries.

Therefore, South African companies that are listed on the US and UK stock exchanges are subject to the anti-bribery provisions contained in the acts.

Sanctions associated with violations of these acts include criminal and civil penalties, suspension or being barred from doing business in the US or UK, ineligibility to receive export licences and private suits for damages.

In South Africa, corruption is criminalised in the Prevention and Combating of Corrupt Activities Act 12 of 2004.

The act also makes it an offence to bribe foreign public officials. In addition, our courts have jurisdiction in relation to corrupt activities that may be committed by South African companies outside the country.

The act imposes a duty to report any knowledge or suspicion of corruption involving R100 000 or more to a police official.

The failure to report it attracts a criminal sanction.

It is therefore of great importance for companies to implement and adopt anti-corruption programmes to ensure compliance with all the aforementioned acts and create a culture that encourages the reporting and combating of corruption at all levels of their organisations.

My advice to executives would be to consider the following measures to prevent or help in detecting corrupt activities in their companies:

Be careful not to offer bribes or promises or give any other advantage that may be considered to be bribes to public officials, their employees or business partners;

Implement written anticorruption policies that deal with the reporting of corrupt activities in the company;

Create a culture that promotes awareness and compliance with the company anti-corruption policies that is geared at assisting the entire staff to recognise and report corrupt activities in the company;

Make themselves aware of the anti-corruption laws and company laws of the foreign countries where they do business;

Conduct internal audits of foreign businesses that they are associated with;

Avoid the use of intermediaries or third parties to help broker deals overseas;

Conduct due diligence on the third parties if they have to make use of them; and

Keep proper accounting books and records that reflect the transactions of the company.