Business Ethics: A Contradiction in Terms? Part III

In Part I and Part II we addressed a breed of dangerous delinquents that we term “The Undesirables”. And whilst they may well be undesirable, this hasn’t stopped them from invading our society at whim in their quest to feather their own nests. In an attempt to curb this onslaught, we suggested that enterprises face the challenge head-on, by:

  • Giving serious thought to, and publicly advertising their mission, vision and values statements, clarifying the Company’s guiding principles; and
  • Further exploring and clarifying their ethical compass in the form of a Business Ethics Policy, succinctly setting out the line the Company will not cross in its corporate pursuits.

We now turn our attention to that most alarming calamity, arguably one of the biggest man-made disasters ever to face our beloved country. Corruption.

Corruption, Gifts and Kickbacks

South Africa’s reputation over the years has sadly degenerated given the high incidence of corruption, or “Graft”. Alarmingly, this reputation has been driven to a large degree by the political passengers of our country’s notorious “Gravy Express”. But ministerial offices aren’t their only stations. Many private companies and individuals have joined our infamous leaders on a very slippery slope that, if left unchecked, is unlikely to end well for the general populace.

Corrupt activities may be widespread but that doesn’t make it legal. In keeping with the rest of the world, South Africa has implemented legislation that criminalises corruption. The Prevention and Combating of Corrupt Activities Act, 2004 provides that:

Any person who, directly or indirectly –

a.     accepts or agrees or offers to accept any gratification from any other person, whether for the benefit of himself or herself or for the benefit of another person; or

b.     gives or agrees or offers to give to any other person any gratification, whether for the benefit of that other person or for the benefit of another person,

in order to act, personally or by influencing another person so to act, in a manner –

i.               that amounts to the:

aa. illegal, dishonest, unauthorised, incomplete, or biased; or

bb. misuse or selling of information or material acquired in the course of the,

exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or any other legal obligation;

ii.              that amounts to:

aa. the abuse of a position of authority;

bb. a breach of trust; or

cc. the violation of a legal duty or a set of rules;

iii.            designed to achieve an unjustified result; or

iv.            that amounts to any other unauthorised or improper inducement to do or not to do anything,

is guilty of the offence of corruption

The problem with corruption is that it is not always as cut and dried as, say, accepting cash in exchange for influencing the award of a multi-billion Rand arms deal. Okay, so maybe even that isn’t cut and dried if you have friends in the right places. However, most would agree that there is a mammoth difference between accepting a branded pen versus a brand new car. It’s the steps in between that are, however, cause for concern.

The Undesirable is often possessed of a surprising amount of patience. It knows that the easiest way to achieve its goals is to deal with another Undesirable. And if the person it’s dealing with is not an Undesirable? Then, over a course of carefully planned actions, that person can slowly and cunningly be converted. Take, for example, The Undesirable posing as an office supplies salesman who regularly calls upon the Company’s procurement officer. It starts off innocuously with a bouquet of flowers to show appreciation for the order of a new chair – and a golfing weekend at Sun City is presented soon after the second, slightly larger order is placed. Then a case of Moet & Chandon is gifted to the procurement officer as a Christmas present, following which she awards the salesman with an order to refurbish the reception area. Come Easter, the salesman has a long-weekend at a private game lodge going begging – would the procurement officer care to take it up? It would be a shame for the weekend to go to waste. Soon thereafter, the salesman receives the no-expenses-spared order to kit out the Company’s newly-renovated office block. And a brand-new Range Rover guarantees the salesman the prestige of being the Company’s exclusive nationwide provider of end-to-end office supplies.

The problem with this scenario is: at what point do the gifts cross that ethical and, indeed, legal line? From the very start? Are flowers so wrong? And a golfing weekend is a perfectly acceptable business pastime, is it not? Perhaps it’s the Moet & Chandon? Then again, in some circles that may be considered a normal, perfectly satisfactory gift. Does the answer differ depending on the recipient’s position? Is accepting an offer of a weekend away at a game lodge permissible for a director but not a procurement officer? If so, on what justification? If one applies the Prevention and Combating of Corrupt Activities Act, one would argue that the line is crossed at the point when the gratification being given is improperly influencing the procurement officer’s decision when awarding the sales orders. Okay… so at what point would that be? This simple scenario clearly illustrates the practical difficulties in applying the law. A further observation is that even if the gratification is ultimately viewed as legal, it may still be sullied through a lack of morality – casting all parties concerned in a dim light.

Anti-Corruption Policy

To avoid the practical challenges of interpreting and applying the Prevention and Combating of Corrupt Activities Act, not to mention the reputational risks of being viewed as an unethical enterprise, the prudent Company would be well-advised to consider implementing a policy to address corruption, the appropriateness of gifts, and the Company’s stance on the acceptance of kickbacks. As with the Business Ethics Policy, the implementation of a Corruption, Gifts and Kickbacks Policy provides the means for the Company to raise and discuss issues that may otherwise be awkward to deliberate with its staff and stakeholders. Amongst other things, such a policy can be a useful tool for a Company to discuss such issues as:

  • Anti-corruption legislation
  • Conflicts of interests
  • Gifts and favours
  • Commissions and kickbacks

Disciplinary Steps

As with any formally established policy and procedure in an organisation, the Company should have the requisite teeth to act against those that fail to comply. In addition to establishing its Disciplinary and Grievances procedures, an enterprise should also seek advice if a staff member’s actions conceivably amount to a criminal offence, as separate criminal charges may need to be brought in addition to any internal disciplinary penalties levied against a recalcitrant employee.

Together we CAN fight corruption and claim our country’s rightful place as a leader in ethics and human decency.

Please note that this information is supplied for general information and does not constitute legal advice. It is advisable for you to contact a legal practitioner for guidance in respect of your unique requirements.