SA a high corruption risk jurisdiction: ENSafrica

Director of Forensics at ENSafrica, Steven Powell said South Africa is seen by other countries as a high corruption risk jurisdiction.

Powell said in the last 24 months more and more companies have been asked to pay bribes and that 80 percent of the respondents are based in South Africa. 

He said corruption is especially prominent in countries where there are high levels of inequality.

"The UK, for example, they've classified us as a high corruption risk jurisdiction, which means that British companies doing business here have to have stronger than normal anti-corruption processes," Powell said.

Powell added that more and more South Africans are starting to speak out against corruption and that when prominent business people like Sipho Pityana speaks out, it encourages others to do the same.

ENSafrica’s third annual anti-bribery and corruption (“ABC”) survey has revealed that 39 percent of respondents have experienced incidents of bribery or corruption in the last 24 months. The key question addressed in the survey was whether or not companies are putting proportionate measures in place to deal with the rising risks of bribery and corruption.

During the survey, information was collated from 132 respondents.

The vast majority of respondents indicated that they do business in Africa (83 percent), and 26 percent of respondents indicated that they do business in the United States and in the United Kingdom. 

"The respondents came from a broad range of industries, with financial services comprising the biggest sector (25 percent), followed by manufacturing, retail and wholesale (24 percent). Respondents also indicated that they worked in the oil, gas and energy; consulting; telecommunications; mining; transport; IT and electronics; and tourism sectors," ENSafrica said.

"At first glance, the results may suggest that companies are committed to combating the risks of bribery and corruption, with 92 percent of respondents believing that their companies demonstrated a culture of compliance and 90 percent indicating that their companies had an ABC policy in place. However, these positive findings were contradicted by the absence of certain important ABC measures," ENSafrica said.

Key concerning findings include the following:

- 15 percent of respondents indicated that their companies did not conduct due diligence on merger and acquisition transactions 

- 28 percent of respondents said that due diligence screening was not done on new employees 

- 30 percent of respondents indicated that their companies did not have an ABC compliance programme in place (although certain respondents indicated that such programmes were in the process of being put in place) 

- 34 percent of respondents indicated that they did not believe sufficient resources and funding were dedicated to the compliance function 

- 35 percent of respondents indicated that no due diligence screening was done on third parties 

- 44 percent of respondents said that there was no dedicated ABC training at their companies 

- 47 percent of respondents said that no ABC risk assessment had yet been done at their companies (although certain respondents indicated that such risk assessments were planned for the future) 

- 79 percent of respondents indicated that their companies did not provide ABC training to third parties, despite the fact that 76% of respondents indicated that the most significant ABC risk faced by their companies was the use of third parties.

ENSafrica said the key findings suggest that a regulator may perceive the commitment of certain companies to ABC as being superficial and unable to pass muster if placed under scrutiny. 

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

Video by Samkelo Maseko