The Blight of Bribery Comes under Scrutiny in International Deal-making

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"Bribery blights lives," writes Kenneth Clarke, the United Kingdom's (UK's) Secretary of State for Justice. "Tackling this scourge is a priority for anyone who cares about the future of business, the developing world or international trade."

Foreign and, to a lesser extent, local legislation aimed at addressing the corruption challenge is obliging South African companies to put comprehensive anti-corruption policies in place. Far from being costly and imposing onerous requirements upon companies, such measures will help entities to avoid criminal liability and will offer them competitive advantages in a globalized economy.

How the United Kingdom Bribery Act 2010 affects corruption law

The United Kingdom Bribery Act 2010, which came into force on 1 July 2011, has been a particularly important development in corruption law.

This act creates offences for:

the offering, promising or giving of a bribe ("active bribery");

or requesting, agreeing to receive or accepting a bribe ("passive bribery");

the bribery of foreign public officials; and failure to prevent a bribe being paid on an organization's behalf, the Act seeks to address corruption in both the UK and abroad.

It is also indicative of the UK's desire to play an important role in challenging international bribery. With extra-territorial jurisdiction due to its so-called "long arm" application, the Act provides that any commercial organisation based in the UK, or even any entity with a close connection with the UK, is liable to be brought before a UK court for acts of corruption committed by it anywhere in the world.

Whereas anti-corruption laws traditionally targeted the "payer" of the bribe, the UK Act goes even further, creating corporate liability for a commercial organisation that fails to take reasonable steps to prevent bribery (section 7). Bribery in this context extends to acts committed by independent companies that the company is associated with, including employees, agents and subsidiaries and even third party contractors, suppliers and service providers.

Section 7 creates a form of self-regulation by providing a full defence if an organisation can show that it had adequate procedures in place to prevent bribery. With the onus remaining on the organisation, the particular facts and circumstances of the case will determine whether an organisation can, for instance, be held liable for the actions of a rogue employee or contractor.

How the 1998 amendment of the American Foreign Corrupt Practices Act of 1977 affects corruption law

As an effort to clean up business and government following the Watergate scandal, the United States of America (USA) promulgated the Foreign Corrupt Practices Act of 1977 (the US Act). Since an amendment in 1998, this Act now also has extra-territorial reach. Thus, any US person that makes corrupt payments to a foreign official, or any non-US organisations or persons, or who takes corrupt actions while in the USA, may be held liable.

Until recently the US Act's anti-bribery provisions were rarely enforced. In addition, the legislation was frequently criticised for its broad provisions. US President Barack Obama has however encouraged prosecutors to enforce the anti-bribery law - a development that will probably enjoy more attention if he is re-elected.

Anti-corruption measures taken by other countries, including South Africa

Other countries are also starting to develop anti-corruption measures, with Germany, China and Russia introducing similar legislation. South Africa is no exception, with the Prevention and Combatting of Corrupt Activities Act, No. 12 of 2004 also having long-arm reach. Furthermore, the country is bound by international conventions like the Organisation for Economic Cooperation and Development's (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. This convention prescribes legally binding standards to criminalise the bribery of foreign public officials in international business transactions by providing measures for enforcement.

The need for companies to have anti-corruption compliance programmes in place

These developments stress the need for all companies to ensure that they have anti-corruption compliance programmes in place. Especially in an African context, companies need to consider a variety of measures that cannot be limited to generic, one-size-fits-all programmes. Such initiatives could include training programmes to teach employees how to respond to and deal with corruption; measures to protect whistle blowers; limitations on personal interaction in transactions; and effective pre-planning to avoid the need to pay bribes to have things finalised in a hurry. The concept of integrity pacts between companies to encourage ethical behaviour may start taking root too.

Global legislative developments in anti-corruption legislation

In addition, global legislative developments will cause foreign companies to insist on only doing business with local businesses that demonstrate earnest compliance with anti-corruption legislation. Not only are avoiding criminal liability and preserving a company's reputation therefore powerful reasons for taking corruption seriously; but companies that do not have anti-corruption measures in place may find themselves at a serious competitive disadvantage.

Some grey areas do remain in the anti-corruption sphere.

These include:

corporate hospitality,

charitable contributions

and the payment of small facilitation fees to expedite matters like customs clearance.

In exceptional circumstances, when a company has put in place all mechanisms and taken all reasonable practical steps to curtail the payment of bribes but is forced to pay, it should be properly documented and the appropriate authorities in the country concerned should be notified.

As corruption is arguably thriving on the African continent, the need to put anti-corruption programmes in place remains important for all companies operating in Africa. Not only will such measures be beneficial for business by creating clarity and allowing free markets to flourish, but it will also help strengthen democracy and economies by reducing the risks of multi-jurisdictional transactions in Africa.

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