Concerns over FCPA & bribery issues prevent African expansion

Ms. Hruby’s key insight shared in the interview is – while perhaps not surprising at all – certainly worth sharing with our AAF readership: Companies subject to the Foreign Corrupt Practices Act (FCPA) perceive themselves as limited in their investment opportunities in the 54 African countries, thereby reducing their overseas competitiveness.  Says Hruby: “General counsels tend to play more of a role in market decisions when it comes to Africa than in other places, and there still is a general stereotype that African countries are very corrupt, though if you look at the Transparency International rankings, many other countries rank higher than African countries in terms of their level of corruption.”

Concerns include the extended families of government employees or leaders, which may create FCPA pitfalls even where there is no intentional bribe or other law-breaking on the horizon — the mere hiring of a consultant with family ties to a government official may be enough to prompt an investigation and incur potential liability.

Her advice to U.S.-based companies is that they should not let the perceived FCPA risk “dominate how they look at the markets” in Africa, and that they “pick partnerships with people who can thoroughly assess the risks. Maybe it’s partnering with an African bank or a local consulting firm or a firm that’s been there for a very long time. They can help you do due diligence on partners, help you identify the right partners and help you overcome concerns with being FCPA compliant.”

In her estimation, “Ninety percent of business in Africa is done cleanly. They really need to know it can be done with serious partners and done in a clean and compliant fashion.”  Her key advice — shared by us at AAF, of course — is to “pick[] the right partners” and to commit to your strategy.