Marked increase in bribery in SA – survey

By News24 23 September 2016

Cape Town - Incidents of bribery are on the rise in South Africa, according to the findings of the latest ENSafrica annual anti-bribery and corruption survey.

About 132 respondents took part in the third annual anti-bribery and corruption (ABC) survey and Steven Powell, forensics director at law firm ENSafrica, released the results at a briefing on Friday.

Most survey respondents work in the financial services sector, followed by manufacturing, retail and wholesale. The rest of the respondents are active in the energy, consulting, telecommunications, mining, transport, IT and electronics; and tourism sectors.

And the survey found that 39% of respondents have experienced incidents of bribery and corruption in the past two years.

Although 92% believed that their companies demonstrated a culture of compliance and 90% indicated that their companies had an anti-bribery and corruption policy in place, it turned out there actually was an absence of certain important measures, according to Powell.

About 27% of respondents said they were highly exposed to bribery in Africa – this is up from 17% in 2015 – while 57% said they were moderately exposed.

About 15% of companies indicated that their companies did not, for instance, do due diligence on merger and acquisition transactions.

Meanwhile, 28% said no due diligence was done on new employees and 35% said no due diligence screening was done on third parties.

About 79% of respondents indicated that their companies did not provide anti-bribery and corruption training to third parties. This is despite 76% of respondents indicating that the most significant anti-bribery and corruption risk faced by their companies was the use of third parties.

About 52% of respondents said they were exposed to the risk of bribes and 48% to facilitation payments. The exposure of employing government officials or their relatives jumped from 8% in 2015 to 21% in 2016.

About 92% of respondents indicated that the area that would be most severely impacted by bribery or corruption would be their “corporate reputation”, followed by financial loss (55%), possible debarment from government contracts or trading (29%) and a negative impact on the share price (24%).

The most frequent means of reporting incidents, according to the survey results, were verbal reports to management, followed by whistle-blower hotlines and email.

“From a practical perspective, the importance of whistle-blower hotlines cannot be over-emphasised as they provide employees and third parties with a vital channel to report suspected incidents of bribery and corruption to senior management,” explained Powell.

“Many systems allow whistle-blowers to remain anonymous, which can address fears of victimisation and personal danger.”

“The key findings of the survey suggest that a regulator may perceive the commitment of certain companies to anti-bribery and corruption as being superficial and unable to pass muster if placed under scrutiny,” said Powell.

“This could in turn expose companies and senior management to significant legal liability.”

He added that for some corporates operating in Africa there may be a prevailing view that compliance with anti-bribery and corruption laws is simply too costly and that business cannot be effectively conducted if stringent controls were to be put in place and enforced.

“Regulators have been dishing out staggering fines in recent years – with US and UK regulators leading the charge,” said Powell.

In his view, the arrest of the son of a former Gabonese prime minister in August this year for allegedly paying bribes on behalf of a US company in Zimbabwe, the Congo and Libya, re-affirms the focus of the US regulators on bribery in Africa.

“Corporates that believe they can escape the jurisdiction of foreign regulators should be cautious as ultimately there is a global wave of change towards zero tolerance to non-compliance,” said Powell.

“When it comes to corrupt activities, prevention is better than cure and anti-bribery and corruption compliance should be non-negotiable for all corporates operating in Africa.”

Powell emphasised the importance of the tone for a culture of anti-bribery and corruption to be set from the top in a company.

“Actions do ultimately speak louder than words and it is important that the tone from the top is confirmed by actions to improve anti-bribery and corruption compliance,” said Powell.

Of particular importance in his view, is the extent to which resources and funding are dedicated to anti-bribery and corruption compliance.

Powell also emphasised the importance of continuous monitoring.

Ten important “ingredients”

Powell highlighted ten aspects that should form part of an effective anti-bribery and corruption programme:

– A commitment to compliance at the highest management level;
– Written and widely disseminated compliance policies;
– Periodic review and updates;
– Independence and funding;
– Training and guidance;
– An internal reporting mechanism;
– Investigations;
– Enforcement of policies and disciplinary measures for non-compliance;
– Paying attention to third party relationships;
– Monitoring and testing.



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