Responding to Anti-Bribery & Corruption Regulatory Challenges

Responding to ABC Regulatory Challenges

For the first time in South Africa, we are experiencing enforcement actions by both the US Department of Justice the US Securities and Exchange Commission against South African companies, headquartered and operating in South Africa and listed in the US.

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Anti-Bribery & Corruption

Continued high levels of US enforcement of the Foreign Corrupt Practices Act (FCPA) have been enhanced by heightened anti-corruption initiatives and awareness globally, including the enactment of the UK Bribery Act (UKBA). Companies doing business or hoping to expand outside the United States must mitigate anti-bribery and corruption (ABC) risk. A key component of understanding the risk of expanding into new territories is conducting an assessment of the associated political and bribery risks. Lapses in ABC Compliance have the potential of resulting in substantial fines and penalties, reputational harm, diversion of management’s attention, economic cost from investigations and criminal prosecutions. A comprehensive ABC Compliance solution will address potential exposure to enforcement action.

The five biggest ABC challenges

The five biggest challenges, identified in the management of the ABC risks relate to the following:

  • Facilitation payments
  • Due diligence
  • Procurement
  • Licenses and permits
  • Community projects

This compliance wheel represents the ideal or “to be” state of ABC Compliance that a company should aim for.

Potential Benefits

ABC compliance-related services help organisations mitigate the risks of non-compliance with laws and regulations related to bribery and corruption by:

  • Reducing the likelihood of government fines, penalties, sanctions, and civil liability
  • Identifying and remediating gaps in ABC policies, procedures, and controls
  • Mitigating ABC risk by conducting compliance due diligence pre- and post-acquisition
  • Providing customised training
  • Managing third-party risk with background checking and compliance testing
  • Supporting internal audit in testing compliance policies and procedures and performing data analysis to identify potentially problematic activities

We are of the opinion that ABC Compliance is an ongoing journey and that each company may have different requirements, based on the level of maturity of their ABC Compliance environment. We assist companies on this journey with a suite of tools designed to promote ABC Compliance.

ABC Gap analysis

We measure the company’s ABC “as is” position, against the ideal ABC “to be” state. We then work with the company to prioritise the gaps to be addressed to develop a roadmap to ABC Compliance. In developing such a road map, the following are considered:

  • Quick wins: Compliance components that can be implemented fast, at a reasonable cost and with minimum impact on business
  • Medium term solutions: Components of the Compliance Programme that can be implemented over a period of time to enhance the company’s “defendable position”
  • Long term considerations which may be implemented once the ABC Compliance position at the company reaches a certain level of maturity.

We will be able to assist the company to develop a comprehensive ABC Compliance Programme in line with relevant legislation and available guidelines. We can also tailor-make this service to focus on certain elements as identified by means of a gap analysis or other procedures performed at the company.

Our Value Proposition

KPMG helps clients mitigate the risks of non- compliance with bribery and corruption laws by identifying and remediating gaps in ABC policies, procedures and controls as well as managing third party risk through background checking and compliance testing.

Our Services include:

  • ABC risk and compliance program gap assessments
  • Controls and program testing
  • Pre-acquisition compliance due diligence
  • Post-acquisition assistance related to compliance integration
  • Training
  • Support to Internal Audit with development or execution of work plans
  • Assessing compliance by agents, distributors, suppliers and other third parties
  • Due diligence and background checks on third parties.

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