Rooting out corrupt activity
ALTHOUGH state capture and the impact it is having on government has been front of mind for some time, the KPMG matter has turned the light on the need to fight corruption and maladministration in the private sector too.
At a recent seminar titled “Anti-corruption and Good Corporate Governance – Local and International Trends, Themes and Developments” corporate South Africa was urged to take the lead in fighting corruption and maladministration.
It explained the anti-corruption legal landscape and explored some of the hurdles around preventing corruption today.
In terms of setting out the legal landscape, South Africa has many statutes aimed at rooting out corrupt activity.
To cherry-pick a few: The Prevention and Combating of Corrupt Activities Act defines and criminalises corruption in very broad terms; the auditing act also deals with corruption, and requires auditing firms to report any suspected corruption to the regulator – even before notifying their clients; and The Companies Act and the Financial Intelligence Centre Act also have provisions dealing with corruption.
Whistle-blowers are protected in South Africa through the Protected Disclosures Act which makes provision for employees to report any irregular and unlawful activities by colleagues and employers, and protects them from “occupational detriment” resulting from these disclosures.
Despite having a fairly sophisticated legislative framework – corrupt activities still take place. The seminar unpacked some of the possible reasons for this.
The first is there may be poor corporate ethical culture and governance. Compliance for some businesses is a tick box exercise and does not involve genuine moral commitment. Business leaders were urged to make real moves towards a strong culture of good corporate governance, from chief executives to ground-level staff.
It is possible to operate in difficult environments and operate to high standards, but you have to pay attention to detail. Slogans are not enough; they need serious work that backs them up, and this starts with the tone of your leadership.
Another challenge facing business when it comes to tackling corruption is an understanding of the impact of the law on certain conduct.
There is a spectrum of conduct which should be scrutinised, on the one end there is maladministration and on the other there is corruption. In between there are unlawful arrangements.
Often what people consider corruption is actually an unlawful arrangement, and these are two very different legal animals. Unlawful conduct is not necessarily corrupt conduct.
The discourse around corruption in South African often conflates unlawful conduct with corrupt conduct. Additionally because there are often values that underlie the assessment of what is unlawful and different people may have different versions on these values – there are grey areas which may be legitimate to dispute.
This creates a level of complexity when distinguishing between unlawful and corrupt conduct.
Giles White is an executive consultant. Prelisha Singh and Kerry Williams are partners at law firm Webber Wentzel.