Multinationals bow to tougher anti-graft laws

BHP Billiton is working to rope in corporate corruption, including any potential skulduggery by its local business associates.

In early January it sent out a notification of its “anti-corruption expectations” to its local business partners.

The document, which requires signed acknowledgement of receipt, summarises the company’s anti-corruption policy, which bans everything from “gifts, travel, entertainment, meals or other things of value” that might improperly influence a government official to “facilitation payments”, defined as “small payments made to government officials to expedite routine actions”.

Although the action is commendable, experts say that moves such as these by large multinationals are because of tougher international legislation, such as the United Kingdom’s Bribery Act, introduced last year, that targets corruption not only domestically but also internationally.

Also, long-existing laws, such as the United States’s Foreign Corrupt Practices Act (FCPA), introduced in the late 1970s, are being enforced more actively.

According to David Loxton, director and specialist in forensic law at Werksmans Attorneys, Britain’s Bribery Act, in particular, had taken a tough line on corporate corruption and went as far as making companies liable of an offence if they did not put measures in place to stamp out corruption.

This was quite unlike the FCPA and South Africa’s Prevention and Combating of Corrupt Activities Act, both of which required intent on the part of company agents to commit bribery.

“The UK Bribery Act goes much, much further,” he said. “If a corporation can’t show that it has measures [in place] to prevent bribery, such as a very tight contract with an agent, or a careful due diligence [investigation of that agent], then the strict liability offence will kick in.”

But it does exclude commercial organisations that can prove they had procedures in place to try to prevent corruption.

Loxton said that governments are heavily criticised for corruption, yet the activities of the private sector are largely ignored.

“Why have governments enacted these pieces of legislation? Simply because the corporates aren’t doing anything themselves to stamp it out,” he said.

“Sadly, in my experience, a lot of corporations will publicly state their aversion to bribery and corruption and, in practice, will do exactly the opposite.”

He said that the steps to address these concerns are a reaction to the tougher legislation and strong lobbying from the accounting and legal professions, in particular, who have advised their clients of the ramification of the laws.

High-profile cases of corporate corruption have plagued the business world in recent years.

In 2010, mining giant Rio-Tinto saw four of its executives jailed for bribing Chinese officials and, in the same year, BHP Billiton began co-operating with American authorities investigating possible violations of anti-corruption laws regarding old minerals projects.

Johnny Dladla, a spokesperson for BHP Billiton SA, said the company’s code of conduct and internal policies prohibit corruption.

“Specifically, our policies specify risk assessment and due diligence requirements for engaging business partners who interact with others on our behalf,” Dladla said in a statement.

“The document described in this article is one of the methods by which we collect due diligence information on prospective business partners.”

The charter, in place for a number of years but revised in 2011, was applicable to all countries in which BHP Billiton operated, he said.

Loxton said that legislation such as the Bribery Act has been criticised for creating an unfair playing field — those companies domiciled or listed in countries that take a tough stance on corruption are at a disadvantage when competing with those from states that turn a blind eye to these crimes, particularly when they happen on alien soil.

“This is the biggest problem that US and UK companies have and presents a perennial problem,” said Loxton.

This was one reason why the FCPA, unlike the Bribery Act, allowed facilitation payments to expedite routine government actions.

“Of course, the difficulty of this is that it does open the way for bribes,” Loxton said, but it was seen as an attempt by the American authorities to ensure that its companies were not put at a disadvantage.

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Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

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