South Africa: The Role Of The Foreign Corrupt Practices Act In Developing Ethical Business Practices In Border Dealings In Africa

Last Updated: 1 August 2019
Article by Derrick Kaufmann

The Foreign Corrupt Practices Act (FCPA) is a powerful piece of anti-corruption legislation which was adopted by the United States of America (US) in 1977 to dissuade and combat anti-social and corrupt behaviour of US based firms when trading abroad.

Foreign Corrupt Practices Act

In essence, and loosely, it is aimed at ensuring that firms with US links are sanctioned for making gratuitous payments to foreign officials and intermediaries with the purpose of securing an improper advantage in that territory or inducing or influencing a foreign official to assist in obtaining or retaining any business.

Firms that are subject to the provisions of the FCPA can be divided into two categories viz. locals and foreigners:

  • Locals are considered to be firms that are either "issuers" of securities under any exchange regulated by the Securities and Exchange Commission (including subsidiaries who are required to report under the rules of the SEC) or domestic concerns (firms with a principal place of business in the US). The conduct of these firms is subject to the FCPA regardless of where they operate (ie the FCPA acts extra-territorially).

  • Foreigners that fall within the FCPA are those foreign firms and nationals who cause prohibited acts to be done in the US.

The FCPA contains two sections: the first section contains the anti-bribery provisions and the second section contains the accounting provisions. The accounting provisions are there to sanction the whitewash of facilitation payments which fall within the ambit of the FCPA. Penalties are large and far reaching, and can conceivably run into criminal liability for directors and managers, fines and civil claims running into hundreds of millions of Dollars.

Firms which are subject to the FCPA that trade in developing countries are at a much high risk of falling on the wrong side of the FCPA due largely to customary practices that have emerged of paying commissions and facilitation payments for assistance in navigating the challenges they face in the often sticky and unclear regulatory environments in these territories.

Ethics and FCPA

The question of whether the FCPA is having an effect in the development of ethical standards of multinational corporations is a difficult question to answer – largely because it is difficult to establish whether compliance occurs because of the fear of being subjected to sanctions or because of some other noble value held by the firm and its management (to say it more bluntly, do they comply because they have to or because they want to).

In the introduction section fo the Foreign Bribery Report issued by the Organisation for Economic Co-operation and Development (OECD) the point is made that "Corporate leadership is involved, or at least aware, of the practice of foreign bribery in most cases, rebutting perceptions of bribery as the act of rogue employees". In fact, the OECD go to pains to point out that in 41% of cases reviewed by the OECD, management level employees either paid or authorised the bribe!

While many multinational firms seem to pursue FCPA compliance with relentless focus, the truth is that in many cases, it may just be a case of having to "tick the box" and get it out the way, so that they can get on with whatever they need to do in the territories where they operate. It's one thing to say what you do, it's a completely another to do that.

As the well-known FCPA blogger Richard Bistrong puts it "ask if the spoken rules of compliance and the unspoken rules of 'how we do things around here' all carry the same message: 'we don't bribe'?" He further makes the point that "[i]t's becoming harder and harder to downplay the caustic effects of corruption as observers credibly link it to an increased risk of terrorism and civil war and expose it as a driver of poverty and inequality" The link between corruption and human rights violations are not always discussed - largely because there is still a desire to see corruption as potentially beneficial.

There is not enough evidence to suggest that the FCPA is having a positive effect on the ethics of a firm however strict compliance does result in decreased levels of corruption at all levels and helps to foster the correct ethical pathways.

The FCPA remains the international Gold Standard of anti-bribery legislation due not only to scope and ambit of the legislation, but also due to the depth of case law and jurisprudence that has been built off of the back of it. In addition, and what makes this legislation so appealing, is that the this legislation is directed at holding directors accountable. Crimes of corruption and bribery in other states are often silent on this and lack statutory interventions to hold directors accountable for the actions of the firms that they run and operate.

The role of the African Continental Free Trade Agreement

The signature by 22 African countries of the African Continental Free Trade Agreement (ACFTA) ushered in a new (and exciting) era of cross border trade in Africa. This momentous occasion however also raises a number of interesting and demanding questions – including about how the anti-corruption legislative framework of member states needs to be upgraded, homogenised and calibrated.

If two states trading with each other in a free trade area have different legislative frameworks for the combatting of bribery and corruption, it is likely that purveyors of corruption will access the market through the weakest link. Consider for a moment that the illegal (and facilitated) importation of goods into one member country which finds its way into a second member state (which state has tighter anti-corruption and ant-bribery prohibitions and sanctions) effectively render the fabric of the second state porous to the same extent as the first state – regardless of its legislative framework.

The same can be said for the enforcement of the legislative framework. It is one thing to have the legislation; it is another to have the political will and the resources to enforce it.

Homogenous legislative and enforcement standards are an absolute minimum to enable the African continent to successfully fight the scourge of corruption and bribery. Many multinationals trading in Africa are subject to the FCPA and are running and operating sophisticated and well-orchestrated compliance programmes. It makes sense that the FCPA, as the Gold Standard of international anti-bribery and anti-corruption, should therefore form the basis if the framework that the ACFTA nations should look to emulate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions