Taking an associate or business partner to lunch, a hunting trip or even a rugby match, has been a long-standing tradition amongst businesspersons in South Africa, even more so for new business owners irrespective of their choosen Corporate Structure.
The dark side of business entertainment
These activities have, unfortunately for an unscrupulous few, became more than a mere attempt to foster a healthy business relationship but rather to influence key individuals within an organisation or even the government to determine important business decisions or the outcomes of important transactions in their favour.
Tread lightly with business entertainment and benefits
Recent scandals such as the state-capture saga highlighted the fact that the receipt or giving of gifts, benefits and entertainment could very quickly end up in the local tabloids, causing irreparable harm or even destroying the corporate reputation of an organisation with the mere stroke of a keyboard.
The thin line between business entertainment and corruption or bribery
The legislature, to protect both the public and shareholders against the unethical behaviour of officials or employees of an organisation, introduced the statutory requirement for the formation of a Social and Ethics committee for companies with a Public Interest score above 500 points. The mandate of these Social and Ethics Committees included monitoring and reporting possible bribery and corruption within an organisation.
Small and medium enterprises are, however, far from immune against these dangers and although not obliged to form Social and Ethics committees, most of these organisations voluntarily established similar functions within their operations to mitigate its risks and to comply with the “Good Corporate Citizen” benchmark set by, amongst other, the King Reports.
The “Gift, Benefits and Entertainment Policy” and “Anti-Corruption and Bribery Policy” became the favourite tools in the Corporate Governance arsenal for most small to medium enterprises. Those that neglected or refused to frame and adopt such policies will, in all probability, suffer the consequences of their actions in due course.
Most of these enterprises suffer under time constraints and do not possess the required skillsets or experience to frame these policies. They are left with no other option but to mitigate their risk at the hands of mere chance and belief that they will not fall victim to these incidents.
We identified the need for small to medium enterprises to not only protect themselves against these risks but also to be good corporate citizens and subsequently designed easy implementable, low-maintenance and affordable solutions for our clients. All stationary, including a benefits register, is included. Contact our team for assistance and advice.