#BizTrends2025: Expect more corporate corruption crackdowns in 2025
It is becoming increasingly clear that, in 2025 and beyond, the best course of action for companies seeking to manage their liability will be to elevate their corporate cultures to highest standards of ethics globally.
There is ample evidence that prosecutors have struggled to hold companies criminally liable for bribery and corruption on their watch. Their conviction rates demonstrate this. For example, over the past 25 years of Australia’s anti-bribery and corruption regime, a grand total of 17 individuals and three corporates have been convicted of bribery in a foreign territory. In the UK, prosecutors have tried and failed many times to prosecute individuals and corporations for underlying offences under the Bribery Act of 2010, which is also a quarter of a century old.
That said, the UK authorities have had some success in acting against corporates for failing to prevent bribery. Rolls-Royce was the first to enter into a deferred prosecution agreement over bribes paid in China, India and Nigeria, among others, resulting in a £671m settlement agreement.
In South Africa, the authorities’ preferred route has been civil recovery of the proceeds of corruption, spearheaded by the Asset Forfeiture Unit of the National Prosecuting Authority.
Meanwhile, in Kenya, the Capital Markets Authority has been robust in pursuing errant directors, several of whom have been personally fined and banned from holding directorships – one for life.
Not content with this, these jurisdictions are turning up the heat in the arena of corporate criminal liability as we settle in to the new year.
Upping the ante
Both Australia and the UK have made it clear that they intend to dramatically increase the number of successful prosecutions by removing some of the trip hazards prosecutors have previously encountered.
For both, a key change has been to extend corporate criminal liability to bribery and certain specific fraud offences by associated persons of a company, meaning anyone who performs services for it, including contractors and service providers.
Accordingly, there has been a broadening of the ‘failure to prevent’ injunction in Australia and the UK. Companies whose service providers or agents have been implicated in bribery in a foreign jurisdiction have to work much harder to show they have taken adequate measures to prevent this.
As a result, there has been a huge push, especially in Australia, to create a ‘speak-up’ culture in companies and to strengthen whistleblower protection.
Getting off the grey list
South Africa and Kenya are also signalling that it is not business as usual in their efforts to combat corporate corruption. Both jurisdictions are currently on the grey list of the Financial Action Task Force (FATF), which has been highly effective in holding member states to account in combatting corruption, money laundering and terrorism financing.
Kenya currently does not have a codified law to deal with corporate corruption, but draws on the penal code, the Bribery Act of 2016 and common law principles. Given the country’s greylisting, though, it could be just a matter of time before specific legislation is put in place.
In April 2024, South Africa, acting on recommendations of the Zondo Commission of Inquiry into State Capture, introduced a new section, 34A, in the Prevention and Combatting of Corrupt Activities Act, 2004 (Precca).
The new section, which creates a new corporate offence based on corrupt conduct of an associated person, applies to state-owned entities and the private sector in South Africa. It is a welcome development that provides some certainty for corporates, whose priority is always predictability and stability.
As in Australia and the UK, section 34A of Precca extends corporate liability to corrupt actions by association. There is now a very wide casting of liability to anyone acting on a company’s behalf. It means the end of the defence that an agent or service provider acted without the knowledge of the company, its board or its directors.
The new section makes it clear that no offence is committed where an entity had in place adequate procedures to prevent anyone acting for it from offering any gratification prohibited by Precca. The question is: what processes or procedures would be considered adequate? It is a question that can be expected to generate plenty of debate in 2025.
New Year priorities for corporates
There are several practical measures that corporates should take proactively to fortify their policies, structures and processes to prevent corruption by association.
Based on their risk assessments, they should identify where they are exposed and use a top-down approach towards implementing control measures. There should be sound mechanisms to ensure that the board is properly informed about risks and issues and that board agendas and papers contain sufficient detail.
It is also important to pay close attention to building and maintaining a speak-up culture and strengthening the organisation’s ethics processes, including whistleblowing.
Companies, especially those operating in multiple jurisdictions, would be well advised to focus on best-in-class practices, regardless of how onerous these may be. The best protection against liability comes from implementing the highest standards.
That said, companies should be aware of the nuances in laws and approaches from one jurisdiction to the next and should be careful about generalising.
Organisations should be alive to changing conversations around the world and continuously refresh their anti-corruption practices. Corruption is constantly evolving, and organisations must ensure they operate to the highest possible global standards as we head into a new era of corporate corruption crackdowns in 2025 and beyond.
