SA Business Affected By US Laws Preventing Corruption

South African businesses with links to American organisations need to be aware of the potential risks associated with US-enacted legislation that makes it illegal for facilitation payments to be paid to third party agents for facilitating a 'corrupt act'.

The legislation in question is the Foreign Corrupt Practices Act (FCPA), which is pertinent to organisations such as US corporations doing business in South Africa or who are trading with South African counterparts. The Act does not apply to South African businesses with no links with the US.  

The FPCA legislation specifically provides that payment to third parties to facilitate corrupt acts is a violation.

David Loxton, director in the Forensics Department of Werksmans Attorneys, cites below a typical case study that illustrates the extent to which companies could be put at risk of violating the Act and the onerous penalties they would be in line to incur.