Distinguishing between genuine
hospitality, promotional gifts and what could constitute a bribe,
is a grey risk area that South African corporations need to take
into account – particularly those associated with British
Dave Loxton, director and Forensics
Practice Area Head at Werksmans Attorneys, says that defining this
legal distinction presents a challenge across jurisdictions
However, he points out that the UK
Bribery Act is different to the Foreign Corrupt Practices Act in
the US, and the South African legislation, in that it specifically
provides for a strict liability offence to cater for corporations
that do not have adequate measures in place to mitigate their
Referring to the UK Bribery Act,
Loxton cites the example of a company that invites its business
partners to a variety of events, such as dinners and sporting
occasions, to cement relationships.
In this instance, private bodies and
individuals pay their own travel and accommodation costs, but the
cost of the travel and accommodation of any foreign public
officials attending is met by the host company.
Loxton cautions: "We now enter
a very grey area as to whether this is bona fide marketing, or
constitutes bribery, which would be an obvious contravention of the
UK Bribery Act.
"Werksmans advises corporations
associated with British companies to conduct bribery risk
assessments relating to their dealings with business partners - and
in particular foreign public officials - and specifically
investigate the provision of hospitality, entertainment and other
Among other safeguards, Loxton
advises these companies to publish policy statements committing
themselves to "transparent, proportionate, reasonable and bone
fide hospitality and promotional expenditure".
They should also issue internal
guidelines on procedures that apply to hospitality and/or
promotional expenditure - and indicate areas where employees might
potentially be in breach of the legislation.
In addition, recipients of
hospitality and gifts should not be given the impression that they
are under any obligation to confer business advantages, or that
their independence will be compromised.
Criteria should also be applied when
deciding the appropriate levels of hospitality and the type of
hospitality that is appropriate in different sets of
Loxton adds that companies should
regularly monitor, review and evaluate internal procedures, as well
as compliance with them. Appropriate training and supervision
should also be provided to employees.
He points out that if South African
corporations associated with UK companies do not have adequate
measures in place to deal with possible contraventions of the UK
Bribery Act, they risk incurring a strict liability offence (where
intention is not a requirement).
"The fact that they did not
have measures in place would put them fairly and squarely in breach
of the Act," he warns.
"In addition to fines, jail
sentences can be imposed on those people who are in breach of the
Act. The British legislation is more onerous than the US
legislation, not only in that it imposes a strict liability, but in
that it does not provide for the payment of facilitation payments,
which the US legislation permits."
Loxton recommends that, as a general
principle, companies faced with contraventions of the Act need to
follow due disciplinary processes in dealing with employees, to
send a clear message to other employees that such activities will
not be tolerated.
Then they need to co-operate with
the authorities in full and - if necessary - to agree to criminal
prosecution of the employees concerned. This may help mitigate any
fines and damages that the company may be in line for.
In December 2009, a Federal High Court in Asaba, Delta State discharged and acquitted James Onanefe Ibori of all 170 charges of corruption brought by the Economic and Financial Crimes Commission (EFCC).
Corruption in South Africa has reached staggering proportions. Daily newspapers are rife with reports of widespread corruption in both the public and private sectors.
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