SIGNIFICANT increases in prosecutions and cases resolved, under the auspices of the US Foreign Corrupt Practices Act (FCPA), is making Africa an increasingly risky place to pay bribes, said advocate and contractor to the Ethics Institute of South Africa, Janette Minnaar-van Veijeren.

South Africa ranks 64th out of 183 countries in Transparency International’s Corruption Index, and has been sliding for five years as business and government corruption continues to plague the economy.

But because the US and UK antibribery legislation applies across borders, their impact is now being felt, while African legislation is fast catching up with improved anticorruption measures.

"Contrary to popular perceptions that African countries aren’t really geared towards prosecuting corruption, the reality is the exact opposite," said Ms Minnaar-van Veijeren on Friday.

"It’s no longer safe, nor worth the risk to pay bribes in Africa," she said.

Ms Minnaar-van Veijeren said there had been significant increases in the number of prosecutions and cases resolved under the auspices of the FCPA, and more than 90% of reported cases involved third-party intermediaries.

When entering new markets, companies may have to engage the support of third-party agents or business partners, but many don’t realise that these relationships can leave them vulnerable to significant bribery and corruption risks.

Ms Minnaar-van Veijeren said there was robust anticorruption legislation present in many African countries she had visited, including Malawi, Zimbabwe, Tanzania, Nigeria and Mozambique.

Investors such as the World Bank are increasingly expecting third-party due diligence when assessing who an organisation is doing business with.

Third parties that will typically be subject to due diligence include contractors, suppliers, sales agents and joint venture partners.

"Corrupt companies or individuals that are caught can pay the price in more ways than one, including receiving multimillion dollar fines," said Ms Minnaar-van Veijeren.

In a recent case a company was fined by the American department of justice and the Securities Exchange Commission for allowing a sales agent to pay bribes to secure licences, and then recording the payment as "special expenses". This amounted to a transgression of the FCPA.

The company was forced to appoint several compliance committees to ensure legal compliance, and the company had to provide its staff with intensive training covering all compliance and anticorruption policies and procedures. Thorough due diligence also had to be performed on all third parties the company did business with.

While South Africa introduced improved anticorruption legislation in 2007, this related to public officers and entities, rather than private business.

The new Companies Act, however, includes a number of anticorruption measures, including the need for company social and ethics committees to actively monitor and report on anticorruption processes within companies.

The UK Bribery Act is also expected to have an impact on South African companies dealing with UK companies.

South African companies are now required to adopt the Organisation for Economic Co-operation and Development’s (OECD’s) recommendations on reducing corruption, which has strong provisions against giving and accepting bribes in business dealings.

The US act predates the UK one by many years, but it also grants extra-territorial jurisdiction to regulators, which means that even if the corruption occurred in South Africa, the provisions could still be enforced.

Penalties can include a maximum of 10 years’ imprisonment and unlimited fines for serious offences.

There has only been one conviction under the UK Act since it came into force in July last year, but it did not involve an African company.

Under the US act, many companies have been investigated over the years, with the latest a high-profile investigation into NewsCorp for allegedly bribing police officials in the hacking scandal that brought down News of the World.

A criminal fine of over $54m was recently paid relating to a contract in Nigeria where government officials were bribed.

According to Ernst & Young’s Africa Attractiveness Survey, the value of foreign investment in Africa is estimated to reach $150bn by 2015, which proves that plenty of business opportunities exist. But, Ms Minnaar-van Veijeren cautions this also means high risks are involved — one of them being corruption and its consequences.