Policies to manage bribery and corruption risks need to be more than formalities

08 August 2017: Recent corruption scandals involving corporate entities, both in South Africa and internationally, are driving home the notion that private companies are not immune to the risk of becoming involved in allegations of bribery and dishonest dealings.

Keeran Madhav, Director of Forensics at Mazars

So says Keeran Madhav, Director of Forensic Services at Mazars, who adds that companies’ risk of facing massive fines and prosecution by local authorities, as well as the Foreign Corrupt Practices Act (FCPA), US Department of Justice (DoJ), UK Serious Fraud Office (SFO) and US Securities and Exchange Commission (SEC) is on the rise.  “Organisations like the FCPA, DoJ, SFO and SEC have especially taken a hard line against international companies that engage in bribery in recent years. A recently published list of the top ten FCPA enforcement actions since 2008, show fines of up to $800 million having been handed down. Corporates in every sector need to treat bribery and corruption and any other financial crimes very seriously,” he says.

Companies that operate across multiple jurisdictions are at increased risk of both being implicated in corrupt dealings, and being prosecuted under the FCPA, DoJ and SFO he says. “As a result, large corporates will need to start making sure that their anti-bribery and corruption policies are more than mere formalities to attain compliance.”

The need to build more robust anti-corruption measures into one’s business is also vital to ensure future business. “Even if a company’s guilt or innocence had not yet been proven, the reputational damage of being connected to corruption, is potentially devastating. Transparent anti-bribery and corruption measures are paramount in helping to assure stakeholders and investors of a company’s integrity,” he notes.

“As part of this, a company needs to be able to show that it conducts due diligence regarding its partners and third parties. Research shows that third parties often pose the biggest risk. Many of the cases that we have seen where facilitation fees and bribes were paid to officials, third parties were involved setting up the deals,” Madhav continues.

Madhav points out that one challenge for many companies is the fact that building adequate anti-corruption measures into a business costs both time and money. “Attaining compliance with international standards is also becoming more onerous, which is why many companies only put the anti-corruption measures in place that are stipulated by existing regulations.”

He argues however that the additional cost of implementing a robust, company-wide programme can be justified, as it mitigates the risks of future reputational damage and possible declines in company value or share price in the case of listed entities.

“Lastly, the most important part of any anti-corruption policy, is to involve a reputable advisor to assess the organisation’s existing procedures, create adequate anti-corruption programs and conduct due diligence where necessary. In addition to these services, Mazars conducts both internal and external investigations concerning allegations of bribery and corruption within a company. We also assist in finding the facts, rooting out the perpetrators and conducting reports for legal cases,” Madhav says.

“Being proactive and closing the gaps for possible corruption and bribery within one’s company is becoming increasingly important. Corrupt businesses will come up against much harsher penalties in the coming years, and the reputational risk of being associated with bribery and corruption will be far more detrimental to the company” concludes Madhav.

About Mazars:

Mazars is an international, integrated and independent organisation, specialising in audit, accounting, tax and advisory services across a range of markets and sectors. In South Africa, Mazars employs over 1000 staff in 12 offices nationally. With the skills of 18 000 staff operating in 79 countries, Mazars is large enough to service international listed clients, yet small enough to assist small companies grow and prosper in their own environments. Mazars is present on six continents and represented in 26 African countries.

To find out more about Mazars visit the website, facebook page, twitter or linkedin.

Share Button

About southcapenet

Adding value to my domain hosting and online advertising services.
View all posts by southcapenet →