U.S. companies are increasingly turning to African markets as desirable places to sell their products and services. However, as international business dealings continue to rise, so too does the risk of Foreign Corrupt Practices Act (FCPA) violations. Companies doing business in Africa need to know how to effectively manage and minimize their corruption risks.
The Foreign Corrupt Practices Act [15 U.S.C. § 78dd-1, 15 U.S.C. §§ 78m(b)(2)(A) and (B)of 1977 is a well-established US law which impacts every US company which does business outside the USA.
The FCPA has an Anti-Bribery provision which makes it a crime for any US individual, business entity or employee of a US business entity to offer or provide, directly or through a 3rd party, anything of value to a foreign government official with corrupt intent to influence an award or continuation of business or to gain an unfair advantage.
The standard of intent and knowledge in the Anti-Bribery cases is minimal – intent and knowledge are usually inferred from that fact that bribery took place. The government does not lose FCPA cases. Below are 5 FCPA basics that companies expanding into Africa need to be aware of to stay compliant.
1. Understand your company’s risk of being involved in bribery.
Companies must assess the risk of FCPA violations in their international business. Understand every way in which your business has contact with government customers or government employees. For most companies 80% of the FCPA risk will come from less than 20% of your business.
Some countries expose US companies to very high risk of corruption. The Transparency International Corruption Perception Index is an accurate, useful tool you should know and use. The Corruption Perceptions Index ranks countries/territories based on how corrupt their public sector is perceived to be. A country/territory’s score indicates the perceived level of public sector corruption on a scale of 0 – 10, where 0 means that a country is perceived as highly corrupt and 10 means that a country is perceived as very clean.
According to the 2011 Index, a good number of African countries scored between 2 and 2.9
2. Have an FCPA Compliance Department Within Your Organisation.
Any company that is doing international business, should enact a standalone FCPA Compliance Policy with a member of the senior management team of the company to oversee it.
3. Train your team.
Train your board, managers and employees on corruption risks in your industry, the countries where you do business and the business model your company is using. Many US companies do not train the third parties who facilitate their international distribution, even though these third parties represent their highest FCPA risk.
4. Conduct due diligence.
The government assumes you have conducted reasonable due diligence background investigations on your intermediaries and have determined they are not involved in corruption. It is important to understand who your intermediaries are, how many you have, why you are using them, and who in your company has authority to enter into a contract with them.
5. Include clear FCPA terms in every international contract.
Your contracts should specifically mention the importance of FCPA compliance and require your partners to represent that they know the elements of the law and will comply with it.
As U.S. companies take advantage of the Rising Africa, they must remain diligent in their FCPA compliance. Due diligence before entering any transaction will reduce problems in any investigation by the Government.
This article originally appeared on goglobalafrica
