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Global antigraft bodies increasingly sharing information on firms operating in multiple jurisdictions

Norton Rose Fullbright business ethics specialists Richard Smith, Sam Eastwood and Andre Vos Discuss business ethics and anticurruption legislation in the US, the UK and South Africa. Camerawork: Nicholas Boyd. Editing: Shane Williams.

9th August 2013

By: Schalk Burger

Creamer Media Senior Deputy Editor

  

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Anticorruption agencies in the US, the UK, the European Union (EU) and South Africa increasingly share information to scrutinise the business ethics and anticorruption practices of companies operating in multiple jurisdictions, says law firm Norton Rose Fulbright Washington DC regulatory and governmental investigations head Richard Smith.

“Companies must consider their international exposure and the ramifications in other countries of any investigative findings or voluntary disclosure.”

Bribery of foreign officials is censured by the Foreign Corrupt Practices Act (FCPA) in the US, which enables prosecutors to charge companies operating in the US with corrupt practices conducted in other territories where they operate, says Smith.

However, companies resist implementing the necessary compliance regulations because they are difficult to comply with, says Norton Rose Fulbright South Africa MD Rob Otty.

“Regulators have an increasingly important role to play in business and are driving ethical and moral values in the commercial world to reduce corruption and financial collapses that negatively impact on society. Regulators are using ethical behaviour to regulate daily business practices and reduce corruption.”

“Under section 34 of the Prevention and Combating of Corrupt Activities Act, 2004 (PRECCA), it is an offence not to report on known corruption or fraud related offences in South Africa,” says Norton Rose Fulbright South Africa director André Vos.

The US FCPA was dormant since its promulgation in 1977, until the watershed year of 2005, when the US government gained global coope- ration and began the unprecedented prosecution of transgressors, notes Smith.

“The FCPA actively prohibits bribery of foreign officials to attain or retain business and includes anything of value, not only monetary bribes. The FCPA contains stipulations that require companies listed on US stock exchanges to maintain accurate books and records to prevent the occurrences of corrupt practices.

“The fines that can be imposed under the FCPA for false accounting entries to disguise corrupt practices can bankrupt most companies,” he explains.

“The FCPA also prohibits wilful blindness – being aware of corrupt practices but failing to disclose them. We are excited about what such legislation can do globally to govern commercial behaviour and reduce corrupt practices and acts of bribery.”

“The US enforcement environment is transposing to other jurisdictions, specifically the UK, where the Bribery Act (UKBA) was promul- gated in 2010, as existing legislation was not effective and not actively enforced,” says Norton Rose Fulbright business ethics and anticorruption head Sam Eastwood.

It is an offence under the UKBA to fail to provide for adequate procedures to prevent bribery in a commercial organisation. Fines of up to 400% of the profit secured, owing to a bribe, can be levied on the transgressor, he says.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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