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How to tackle bribery and corruption risks in Africa

Jocelyne Landu Gombo Jocelyne Landu Gombo

Bribery and corruption can be a costly issue for businesses operating anywhere, but particularly in territories that are full of opportunities but also far less familiar. Sophie Lamont and Jocelyne Landu Gombo suggest some proactive steps firms can take to manage bribery and corruption risks in the fast-growing economies of Africa.

The fight against bribery and corruption has come under increasing regulatory focus in recent years. Implementation of anti-bribery and corruption (ABC) laws worldwide, a rise in enforcement actions and increased international co-operation between anti-corruption agencies all signal greater scrutiny.

To date, the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA) feature among the legislations with the strictest requirements and widest jurisdiction. Both acts allow for the prosecution of firms and individuals for their actions anywhere in the world, as long as there's a US or UK nexus. They also impose corporate criminal liability for acts carried out by associated parties acting on behalf of a company.

Sapin II, the French anti-corruption law, imposes similar requirements, alongside an additional influence-peddling offence. It also mandates the implementation of adequate procedures for certain companies headquartered in France. While not mandatory under UK or US legislation, the implementation of adequate procedures can serve as a defence against corporate liability under s.7(2) of the UKBA, or could be seen as a mitigating factor in FCPA investigations.

Africa's fast-growing population and economy in recent decades have presented new business opportunities. Exploring new ventures on the one hand and heightened regulatory obligations on the other may sound challenging. With the right compliance strategy, this could lead to significant rewards.

What can we learn from recent bribery and corruption cases?

The Serious Fraud Office (SFO) remains the lead UK agency for investigating large and complex bribery and corruption cases. Since introducing deferred prosecution agreements (DPAs) in 2014 for firms willing to co-operate, the SFO has entered into 12 DPAs. Most of these involved international firms settling allegations of engaging in, or failing to prevent, corrupt practices while conducting business in various emerging markets.

When looking closer at Standard Bank Plc (2015), Rolls-Royce Plc (2017), Airbus SE (2020) and Amec Foster Wheeler (2021) – other than the fact that some or all the reported corrupt activities took place in African countries – there are three striking commonalities.

1  The companies were charged with at least one count of failure to prevent bribery under s.7 of the UKBA (among other offences in some cases)

2 Some of the alleged corrupt activities were committed by local intermediaries, who in a few cases were politically exposed persons (or their close relatives or associates)

3 Defence materials provided under s.7(2) of the UKBA were ruled inefficient to show that the companies had implemented adequate procedures to prevent persons associated with their business from committing a bribery offence

In summary, the control failings in these cases were:

  • lack of ABC compliance culture and effective ‘tone from the top’
  • inadequate or poorly implemented ABC policies and procedures
  • inadequate ABC training and communication
  • failure to recognise bribery and corruption risk exposure
  • failure to apply appropriate levels of due diligence to intermediaries
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Financial costs of bribery and corruption offences

Standard Bank Plc, Rolls-Royce Plc, Airbus SE and Amec Foster Wheeler were able to avoid prosecution by collaborating with authorities and entering into DPAs. But allegations of engaging in or failing to prevent bribery still came at a huge cost, in addition to the reputational impact. We’ve outlined these costs here:

Standard Bank Plc – ‘USD 16.8 million financial penalty’
  • USD 6 million plus interest in USD 1.04million - compensation paid to the government of Tanzania under UK DPA
  • USD 8.4 million – disgorgement of profit under UK DPA
  • USD 16.8 million – financial penalty under UK DPA
  • GBP 330,000 - payment of costs incurred by the SFO
  • Commission and submission of an independent review of the firm’s existing internal ABC controls, policies and procedures regarding compliance with the Bribery Act 2010 and other applicable anti-corruption laws; implementation of recommendations for control enhancement (agreed under UK DPA)

Sources: Approved judgment: Sfo V Standard bank (; DPA: Deferred Prosecution Agreement (1).pdf

Rolls-Royce Plc – ‘£258.17 million disgorgement of profit’
  • GBP 258.17 million – disgorgement of profit under UK DPA
  • GBP 239.082 million – financial penalty under UK DPA
  • GBP 13 million- payment of costs incurred by the SFO
  • USD 169.917 million – financial payment under US Department of Justice DPA
  • USD 25.579 million – financial payment under leniency agreement with Brazilian authorities
  • Commission and submission of an independent review of the firm’s ABC compliance programme; submission of an implementation plan to address issued recommendations; implementation of recommendations for control enhancements (agreed under UK DPA)

Sources: Approved judgment: Serious Fraud office -v- Rolls Royce (; DPA: DPA – Rolls Royce – 170117 (3).pdf

Airbus SE – ‘financial payments of EUR 3.592 billion’
  • EUR 3.592 billion – total financial payments under UK DPA, and settlements with the French and US authorities, which significantly exceeded Airbus' annual free cash flow for 2018 (EUR 2.912 billion)
  • EUR 585.939 million – disgorgement of profit under UK DPA
  • EUR 398.034 million – financial Penalty under UK DPA
  • GBP 6.989 million - payment of costs incurred by the SFO
  • Appointment of French anti-corruption agency (AFA) as a compliance monitor for three years – (agreed under French settlement mechanism, Convention Judiciaire d'Intérêt Public 'CJIP')

Sources: Approved judgment: R v Airbus Approved Judgment.pdf; DPA: Deferred Prosecution Agreement Airbus 31.01.20.pdf

Amec Foster Wheeler – ‘USD 177 million – total financial payments’
  • USD 177 million – total financial payments under UK DPA, and settlements with the US and Brazilian authorities
  • GBP 210,610 - compensation paid to the people of Nigeria under UK DPA
  • GBP 47.815 million + USD 3.531 million – disgorgement of profit [the USD amount reflects a crediting arrangement with the US Securities and Exchange Commission regarding conduct in Brazil]
  • GBP 46 million + USD 4.593 million – financial penalty under UK DPA [the USD amount again reflects a crediting arrangement as noted above]
  • £3.4 million for costs incurred by the SFO
  • Continuous review and enhancement of ABC compliance programme; annual reporting to the SFO throughout the term of the DPA on work undertaken to enhance ABC compliance programme (agreed under UK DPA)

Sources: Approved judgment: Amec Foster Wheeler Energy Limited – Deferred Prosecution Agreement Judgment – Serious Fraud Office – Serious Fraud Office (; DPA: DPA Final (1).pdf 

With the threat of corporate criminal liability for non-compliance, firms looking to conduct business in Africa should therefore ask themselves one question:

‘If the regulator knocked on my door tomorrow, would I be able to demonstrate that I have effectively implemented adequate procedures?’

Proactive compliance: implementing adequate procedures

Operating in emerging markets may come with additional regulatory risks and challenges but these risks can be managed through the implementation of proactive compliance measures.

The UKBA guidance sets out six principles for the design and implementation of adequate procedures to prevent, identify and manage bribery and corruption risks. These principles are similar to those found in the FCPA Resource Guide, Sapin II AFA Guidelines and other international guidance, including ISO 37001 anti-bribery management systems.

To avoid corporate liability under s.7 of the UKBA, firms must be able to demonstrate that they had effectively implemented the following procedures at the time the alleged offence occurred:

  • top-level commitment / senior management commitment to ABC compliance
  • ABC risk assessment
  • proportionate ABC policies and procedures
  • due diligence (transaction, third parties and employees)
  • ABC training and communication
  • ongoing monitoring and review of ABC controls

We’ve outlined the key challenges and success factors that your firm may wish to consider when implementing ABC risk assessment and third-party due diligence controls.

Key considerations for ABC risk assessments

If you operate in or are looking to expand operations in an African jurisdiction, it’s crucial to conduct a full enterprise-wide ABC risk assessment to understand your exposure to bribery and corruption risks, and implement adequate mitigating controls. Many firms find themselves in regulatory turmoil because they failed to fully appreciate the bribery and corruption risks inherent to the environment in which they operate, or to their activities, business associates, business model, sector or products.

While your ABC risk assessment should be proportionate to the size and nature of your business, there are three critical factors you should consider: geographic, business partnership and sector risks. These are in addition to customer, product/service/transactional, business opportunity and delivery channel risks, which are key factors that should also be reflected in your assessment.

1 Geographic risk

Bribery and corruption happens worldwide and is certainly not an Africa-centric issue. Each of the 54 countries in the African continent has its own intricacies, socio-economic and political realities, and different levels of governance. Both the Transparency International Corruption Perception Index (TI CPI Index) and the Trace Bribery Risk Matrix provide a good baseline to understand perceived corruption risks in the jurisdictions you operate, or wish to operate, in. But it's essential to keep in mind that each country bears its own specific sets of risks – and you should factor these nuances into your risk assessment.

2 Business partnership risk

Regardless of jurisdiction, entering into business relationships with third parties brings with it bribery and corruption risks. As illustrated in the case studies above, some particular high risk scenarios include:

  • firms that engage the services of third-party intermediaries to obtain or retain business (including politically exposed persons, their relatives and close associates)
  • requirements to use local suppliers for the delivery of projects
  • entering into joint ventures
  • conducting business through subsidiaries
  • lobbying governments
  • firms active in industries that are highly reliant on relationships with public entities and public officials

These risks could potentially be more prevalent and perhaps harder to manage if you operate or are planning to operate in certain African jurisdictions. Depending on the specific countries you are targeting, your geographic risk assessment may flag weaker regulatory frameworks or enforcement, more opaque governance, or challenges in using or developing infrastructure needed to carry your business. All these circumstances can heighten bribery and corruption risks.

Entering into or maintaining a third-party relationship in a jurisdiction with higher bribery and corruption risks should therefore be treated as a red flag. You should review those relationships, assess whether they fall within your firm’s risk appetite and apply enhanced levels of due diligence.

3 Sector risk

Certain sectors may carry higher bribery risks than others, for example:

  • sectors where there is a heavy reliance on government licences and permits
  • sectors where there is a heavy reliance on government contracts (including contract for the provision of debt instruments)
  • sectors that are lightly or poorly regulated

The oil and gas, telecommunication, construction, extractive, transportation and finance industries are commonly known for carrying higher bribery and corruption risk.

Understanding the vulnerabilities of the sector in which you operate is therefore crucial for the implementation of adequate controls.

Overcoming challenges with third-party due diligence

Corruption and a lack of transparency is also not unique to Africa. And yet for investors entering the continent and wishing to understand its business landscape, backgrounds and political influence of third parties, there are a number of challenges.

One factor is the availability and reliability of publicly available information. Records in some jurisdictions may not be well maintained or readily accessible. They may be on paper, requiring manual retrieval, with information that is out of date, incomplete or simply ‘missing’. Access is often not quick or straightforward: it's not unheard of for records to be withheld based on who the shareholder is, for example.

Secondly, the local media landscape is mixed. On one hand, bloggers and civil society increasingly call corrupt politicians to account but, on the other, the traditional press can, in some jurisdictions, be unreliable, thereby providing little insight for the provider.

A third factor to consider is the local business environment, which often features business elites and dominant families with far-reaching links and political influence. While understanding and navigating the potential political exposure of third parties can be onerous, it remains a critical exercise.

So where does this leave provider? And where does this leave the provider trying to conduct due diligence in Africa? While these challenges are real, armed with patience, forethought and the right resources providers can work around these factors to deliver meaningful intelligence.

Investors should consider using providers with a proven track record in the region who understand and adhere to anti-corruption practices. A suitable provider should speak the local language, have an extensive network as well as detailed understanding of the political dynamics. That on-the-ground intelligence from a well networked business community can provide essential context and background, often in far greater detail than you would find in the public domain.

With an investment in time and a refocus of where the information comes from, firms can mitigate these challenges and access hugely detailed insight.

To discuss this topic further, contact Sophie Lamont and Jocelyne Landu Gombo