South African companies that have operations in the UK or the US - or are listed in these territories - that fail to comply with anti-corruption legislation could be on the receiving end of devastating fines or even incarceration of key stakeholders.
This is according to Steven Powell, a Forensics Executive at ENS (Edward Nathan Sonnenbergs), who spoke at an Anti-Corruption Compliance Seminar in Johannesburg last week.
Powell highlighted the UK Bribery Act (UKBA) of 2010, which came into effect on 1 July 2011, as the most dramatic change to the global corruption environment since the introduction of the Foreign Corrupt Practices Act (FCPA) in the US more than 25 years ago.
"The UKBA is not only more aggressive, but also has more far-reaching consequences for South African companies than the FCPA, as it allows regulators radical powers to impose fines in respect of corruption matters. In addition, unlike the FCPA, the UKBA applies to both public and private sector corruption and has also criminalized of facilitation payments, which is endemic in most parts of Africa," says Powell.
Additionally the UKBA has created a new corporate offence, namely the failure by a commercial organisation to prevent bribery. This requires companies to put rigourous measures to prevent bribery.
He explains that from a South Africa perspective, the UKBA applies to companies that are resident in the UK or have an affiliate in the country. "No direct involvement from parent companies is required in order to be prosecuted. For example, if an agent of a South African company, with a subsidiary in the UK engages in bribery in Africa, the company would be liable to be prosecuted in the UK."
Powell says that with more and more South African companies expanding into Africa, it is crucial that they educate foreign subsidiaries, including agents and suppliers, about anti-corruption policies, especially new or updated ones.
"As with the FCPA, the UKBA regulators will be targeting large corporates."
He says that that cost of FCBA non-compliance by companies in 2011 of $508.6 million is a warning to local companies, as many were fined due to activities by their foreign subsidiaries.
Oirignally published by iafrica.com on 23rd July 2012.
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