South Africa's world-class anti-corruption and good governance institutions are what maintain the country's reputation, preserve its credit rating, prevent capital flight and avert destructive outcomes for the economy and society, Executive Director of Corruption Watch, David Lewis, told a recent Gordon Institute of Business Science (GIBS) forum.
However, Lewis argued that there are simply not enough of these organisations, which is one of the reasons why the country has a corruption problem. Speaking at the launch of Corruption Watch's Transparency in Corporate Reporting, Lewis said the aim of the research report was to promote active citizenship and encourage public participation: "By engaging with firms we hope to encourage business to become an active corporate citizen, rather than just complying with the law," Lewis said.
The report details the anti-corruption activities of the top 36 companies listed on the JSE based on their market capitalisation, as well as 14 unlisted companies. It follows a review of the public documents available on the firms' corporate websites. The best performing listed companies came mainly from the mining sector, including Gold Fields, BHP Billiton and Anglo American Platinum. Those with the worst scores were Mr Price Group, Standard Bank Group and Imperial Holdings.
Public reporting by companies on their anticorruption programmes allows for increased monitoring by stakeholders and the public at large‚ thereby making companies more accountable: "It is important for companies to communicate their stance on corruption with public stakeholders, as well as what they are doing to eradicate it," Lewis said. Companies were assessed on three areas of public reporting:
Reporting on anti-corruption programmes
With a company average of 76%, South African business scored very highly compared to similar global studies, Head of Research at Corruption Watch Liezemarie Johannes said. Most disclosed was company commitment to comply with laws, while the lease disclosed was the prohibition of facilitation payments.
This category measured the level of disclosure of a company's fully and non-fully consolidated entities. While most disclosed the activities of their main subsidiaries and joint ventures, Johannes said the better scores of companies in the mining and extractive industry was reflective of the more stringent regulatory environment of the sector.
While the South African regulatory environment did not currently require disclosure of activities on a country-by-country basis, Johannes said there was a global move to regulate this. A number of local companies still report by region and are not country specific, which was one reason for the low 15% group average in this category.
In summing up the report, Johannes said accountability for all stakeholders, whether employees or directors, was essential in order to foster an understanding of commitment to anti-corruption. Johannes explained: "Companies should be active citizens who want to do more than just meet minimum regulatory compliance standards."
South Africa's regulatory burden
Company Secretary and Executive President of Advisory and Assurance Sasol Vuyo Kahla said the disclosure of anti- bribery and corruption programmes sends a strong message to investors regarding the quality of other disclosures that companies make and is "important information with which to assess the credibility of the company and it culture."
Improved reporting would provide understanding of company activities and appropriate disclosure around all material issues: "It isn't sufficient to just look at what is required," he said. Rather, it was necessary to move beyond the sources that companies were obliged to publish according to regulations, so as to improve the extent and depth of disclosure.
Director of Commodity Derivatives at the JSE Chris Sturgess said while the regulatory disclosure burden on listed companies globally was ever increasing "additional requirements are just something we have to get used to." More effort must be put into communicating and disclosing activities on corporate websites he argued.
Regulation must be well thought out and sure of what it wanted achieve, against what its likely burden would be, Kahla said. "Regulation must be fit for purpose, and have also create the necessary capacity for enforcement." Always, the focus should be on enabling and supporting sound business leadership: "The tone at the top is critical as it determines the ethical health of the company," he concluded.