In sync with greater enforcement: Firms’ compliance budgets grow


CCOs say that with more investigations comes (slightly) more money

According to a recent survey, the budgets allocated to compliance have grown over the last year, including those of African participants in the study.  Consulting giant Deloitte has released its 2015 Compliance Trends report, the result of its survey in which 20 large corporations across Africa (out of 364 total qualified respondents) participated.

Below, we summarise some its key conclusions on…

The Role of the Chief Compliance Officer

Taken together, these statistics … suggest that most CCOs, especially those at larger corporations, now have an opportunity to participate in high-level discussions about corporate strategy, values, and culture.

The key items under the CCO’s responsibility were:

  1. compliance training,
  2. code of conduct, and
  3. whistleblower hotline.

Primerio director John Oxenham observes that, “unfortunately, the assessment of culture was perceived as the least important among the CCOs’ responsibilities.  This is a serious problem, as pointed out in prior articles emphasising the importance of a culture of compliance, rather than sterile top-down pronouncements that often go unheeded by mid-level management.”

African Companies

While firms from the continent have increased their compliance budgets (about 16% by 10 to 19%, and many more by 1 to 9% over the past year) along with their U.S. and European counterparts, they are perceived to be dilatory in their evaluation of their own compliance efforts and results, and lacking in their ability to make full use of their compliance efforts.  In short, many still (wrongly) view dollars spent compliance as a “grudge cost.”

Significant enforcement in Africa (both in the anti-corruption and competition-law domains) across various sectors of the economy (food, technology, construction, to name a few) have awakened many corporate boardrooms across Africa to the reality of effective home-grown government enforcement.

Information Technology and Compliance

IT Systems have not fared well in the latest report:

One possible disconnect emerges when asking CCOs about the IT systems they use to fulfill their missions: Most are not terribly confident in their IT systems’ ability to do the job. Only 32 percent of respondents were confident or very confident in their IT systems, down from 41 percent in 2014

Interestingly, smaller organisations with less than $5 billion in annual revenues showed higher levels of confidence in their IT systems when juxtaposed to their larger peers.


Perceived Corruption Hampers Asian Investment in Kenya


Chinese Investors See East African Corruption As Hurdle to further Investments

Welcome to 2015, AAF readers.  Our editors and staff are looking forward to a great New Year of providing you with news and insights into anti-corruption and fraud-prevention on the African continent.

Our first story of the year hails from East Africa, when CNBCafrica‘s Elayne Wangalwa reports on the dampening effect of Asian investment into the Kenyan economy due to the high degree of perceived corruption in the state.

In her article, Wangalwa writes that the primary alleged culprits are the Nairobi City Council and the Kenya Revenue Authority.  These figures are based on statistics resulting from a Business Perceptions Index (BPI) survey requested by the Sino-Africa Centre of Excellence Foundation.  The study surveyed approximately 400 Chinese state and privately-owned firms active in East Africa (75 in Kenya).

Interestingly, the foreign investors were partially at fault when the bribery-allegation triggers occurred: “Most of [the Asian companies] were asked for bribery when the officials found misconduct in their business practices, like the absence of some business certificate display,” according to the survey, resulting in the BPI suggestion that “Chinese companies learn more about Kenyan laws and regulations.”

According to CNBCafrica, the Chinese presence has been augmented significantly since the last visit of Chinese Premier Li Keqiang to the country in 2014, with the number of Chinese expatriates in Kenya more than doubling.

Survey shows perception gap and increased corruption

Survey shows that perception of corruption & bribery on the rise

As also reported by BDLive’s Evan Pickworth, a recent Ernst & Young survey shows that the perception of widespread bribery and corruption by South African executives has increased climbed by 16% to an overall 78% response.

The article mentions the “high-profile regulatory enforcement [that] has been taking place since the 2009 crisis highlighted gaping holes in the system, but most of this action has centred on banks and insurers. The challenge remains closing loopholes across all business sectors before they lead to another crisis.”

The EY survey – entitled “Navigating today’s complex business risks Europe, Middle East, India and Africa Fraud Survey 2013” – placed South Africa third on the overall perceptions of bribery and corruption, behind Nigeria (88%) and Kenya (87%) and just before Greece at 72%. Namibia closed the top five with a reading of 72%.

While approximately 7% of global executives were reported to have been asked to pay bribes, the South African figure is 43% higher, at 10%.

The report also shows a “perception gap” of dramatic proportions in Kenya, where 94% of respondents said they feel that corrupt practices are commonplace in their country, yet only 26% perceived it was common to use bribes to win contracts in their particular industry sector.

Finally, there is the question of discriminatory application of anti-bribery laws: 3 African nations made the top-10 list in this category, including South Africa (29% agreed that their authorities regulated foreign companies more heavily than local businesses), Nigeria (26%) and the 4th-ranked overall, Kenya (36%).