What businesses, private citizens must know about anti-bribery law

Kenya’s war on mega corruption moved a notch higher on January 13, 2017 with the coming into force of the Kenya Bribery Act, which moved the war on graft from the focus it has had on public officers to the counter parties in the private sector.

This is arguably the most important development in the fight against rampant bribery and corruption whose full impact on Kenya’s economy has been well documented.

If properly implemented and enforced, the new law should significantly cause change of behaviour and minimise the negative impact of corruption on public policy and provision of public services.

Bribery and corruption are rife in Kenya. In 2016, for instance, Kenya was ranked among the world’s most corrupt countries, finishing at 145th in the list of 168 countries that Transparency International surveyed for its Corruption Perception Index. It was a drop from position 139 in 2015.

While there are no official statistics on the value of bribes paid out annually in Kenya, recent reports on bribery and corruption scandals suggest it amounts to billions of shillings.

The new law not only targets the payment of bribes but also ropes in those “offering or promising to give a financial or other advantage to another person who knows or believes the acceptance of the financial or other advantage would constitute the improper performance of a relevant function”.

Third parties who facilitate the giving or receiving of a bribe are liable under the Act, which also recognises that the receiver of a bribe usually triggers the transaction.

Under the new law, therefore, a person is criminally liable for receiving a bribe in anticipation of or as a consequence of a person requesting, agreeing to receive or accepting a financial or other advantage intending that, a relevant function or activity is performed improperly by that person or another person at the recipient’s request.

It is essential to note that even the promise to give or an anticipation of a financial or non-financial gain is an offence under this law.

Also important is part of the law that speaks to its territorial reach – stating clearly that it applies beyond the national borders so long as the participants are Kenyan citizens, private or public entities.

This means it does not matter in which location or jurisdiction a bribe is given or received because an offence will be deemed to have occurred and participants deemed liable under the Act.

This puts the law at par with the US Foreign Corrupt Practices Act and the UK’s Bribery Act which apply beyond the national borders of the two countries.

There are also significant implications for organisations under the Act.

First, it requires both public and private sector organisations to establish procedures for the prevention of bribery and corruption. These procedures must take into account an organisation’s size and scale as well as the nature of its operations.

That requires organisations to review their approach to fraud risk management. In particular, organisations need to demonstrate that a framework is in place that effectively prevents, detects and responds to bribery and corruption.

That is not all, the new law goes further to make private entities liable for the conduct of persons performing services for or on behalf of the entity whether as an agent, employee, or in any other capacity.

The minefield for managers is the provision that in some cases, directors can be held personally liable if their company or agency fails to establish procedures for the prevention of bribery and corruption.

An obligation has also been placed on every State officer, public officer or any other person holding a position of authority in a public or private entity to report to the Ethics and Anti-Corruption Commission (EACC) any knowledge or suspicion of instances of bribery within 24 hours.

Whistleblower protection

The silver lining on this obligation is that a whistle-blower will be entitled to protection against intimidation or harassment.

The thinking behind the obligation to report is well intended but the challenge lies in investigating and successfully prosecuting.

The point is that if the EACC is perceived to be unable to sufficiently deal with reported cases then an atmosphere of apathy will certainly take root and less and less people will reports cases to the anti-graft czar.

This would ultimately defeat the letter and spirit of this law as bribery will continue to thrive unabated in the absence of the threat of real sanctions.

The law has sufficient penalties as well as other remedies meant to act as deterrents that if properly enforced could make a difference.

A person convicted of an offence under the Act is liable to a fine not exceeding Sh10 million or to imprisonment for a term not exceeding 10 years, or to both.

If convicted, one may be liable to an additional mandatory fine if, as a result of the conduct constituting the offence, the person received a quantifiable benefit or any other person suffered a quantifiable loss.

This is a laudable change as in the previous legislation the penalties imposed were lower than what is stipulated in the Bribery Act.

The Anti-Corruption and Economic Crimes Act, 2003 for example imposes a penalty of not exceeding Sh1 million or to imprisonment for a term not exceeding 10 years or to both if found liable for corruption.

In addition to fines and custodial sentences, the law provides for a range of other enforcement remedies against individuals, including disgorgement of any benefit received in contravention of the Act, asset confiscation, dismissal from office and disqualification from holding a public office or directorship.

In addition, entities convicted under the Act may be disqualified from doing business with the national or a county government for up to 10 years.

While it is not possible to eliminate bribery and corruption, this law should take us along the path to minimising it. With sufficient goodwill and effort to implement the Act’s provisions, Kenya should be en-route to significantly reducing the negative effects of bribery and corruption on its economy.

This should lead to improved business environment, drive down the costs of doing business and encourage more businesses to invest in Kenya.

Ms Ottichilo is an anti-bribery and corruption manager in forensic advisory with KPMG Advisory Services Limited. Email: [email protected].