South African businesses with associate links to UK corporations
– or who are represented by agents in their dealings with
such companies – need to be aware of the potential
implications of the UK Bribery Act on a business transaction
relating to donations and charities.
Dave Loxton, director and Forensics Practice head at Werksmans
Attorneys, says that while there is no case law from which to draw
legal precedents in this area, the Act will impact South African
companies "associated" with UK companies.
"An agent acting on behalf of a particular UK company would
also fall under the ambit of the Act," Loxton explains.
He cites the case study of an exporter who sends a
representative to a foreign country to discuss supplying a new
strain of seed to a local farming co-op. In this meeting, the head
of the co-op tells the representative that there is a scarcity of
anti-retroviral drugs in the face of a high local HIV infection
In a subsequent meeting an official of the co-op suggests to the
representative that the exporter could pay for the necessary
anti-retroviral drugs. He says that this would be a very positive
factor for the government in considering whether or not to grant a
licence to import the seeds.
Says Loxton: "Hidden in that particular proposal is the
inferred undertaking that if the company pays to help solve that
country's Aids problem, they will be given the
In a further meeting, the same official indicates that the
company should donate money to a certain charity, which would
purchase and distribute the drugs.
Loxton says, "clearly this is a potential bribery
He adds: "The UK legislation is fairly wide-ranging in that
it does provide for allowances to be made for the effect of local
legislation in jurisdictions where a business transaction relating
to donors or charities is taking place.
"So where the local legislation requires government
involvement and, for example, payment for - or shared costs of -
corporations doing business in that particular country, then it
will not fall foul of the UK legislation," says Loxton.
"But this is a very grey area. A charity such as the one in
this case study could well be a slush fund for government officials
and the money could find its way into the hands of the wrong
"And where the local legislation provides for facilitation
payments, but it is clear from the nature of the business
transaction that such payments are not in fact facilitation
payments, then the UK legislation will kick in."
Loxton emphasises: "Corporations must implement measures to
mitigate their risks. In this case, these could include a proper
due diligence of the official, as well as an investigation of that
particular country and its approach to corruption.
"It would be important to have a clause in the sales
agreement terminating the relationship the moment there are any
inklings of corrupt payments. There should also be a contractual
allowance to chase the funds or follow the payment of
He says that the role of a legal advisor in such instances would
be to advise clients on compliance and the possible legal risks of
falling foul of the act.
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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).
Incidents of bribery have increased, but so has general awareness of anti-bribery compliance among organisations: these were some of the high-level findings of a recent survey conducted by ENSafrica.
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