Ever read an insurance contract from beginning to end? How, then, could you possibly understand all the terms, conditions and exclusions that apply to your insurance cover? Since most of us are unlikely to ever study the contracts attached to our various insurance policies, advice from a professional is crucial.

We all know that we should never sign a contract before we have read and understood every word. Yet very few people apply this advice – especially when it comes to technical and complicated insurance contracts. The result is often grave disappointment when a claim is repudiated.

Good advice
“Insurance is about asking questions and getting good advice,” says Gari Dombo, Managing Director Alexander Forbes Insurance. “There is no shame in not understanding an insurance policy wording. As a consumer, you have the right to ask as many questions as you want until you fully understand everything you are agreeing to before signing.”

But since very few of us understand the jargon, the complex rules and the peculiarities between different products from various insurance companies, would we even know which questions to ask? Professional advice from a reputable, experienced and independent financial advisor is essential.

A relationship built on trust
Similar to your relationship with your doctor, a relationship with a trusted financial advisor is the only viable alternative to thoroughly studying every insurance policy to ensure you understand the terms and conditions of your cover. 

While it ultimately remains your responsibility to read the contracts, ask the relevant questions and disclose all the material details on an ongoing basis, a trusted financial advisor will provide the guidance and insight about what is relevant, what is material and what your options are. This knowledge can ensure that your cover is tailored to meet your unique individual needs.

Event-driven advice
Essentially, a professional advisor provides the personal touch and the relevant advice as your circumstances change.

For example, if there is new addition to your family, a professional advisor will update your medical cover to cater for the birth and to cover the baby after birth, increase your household contents insurance to cover all those expensive new baby gadgets and update the list of all risks items to include cover from prams, car seats and other baby items that are taken outside the home. In addition, a professional advisor will update your will and perhaps increase your life cover to cater for this life-changing event.

Your broker would also be able to alert you to the potential insurance problems if you take up skydiving, let your teenage son drive your car or decide to leave your home unoccupied for two months while you travel. But for your broker to provide this event-driven advice, he or she needs to be kept informed.

“Once you have formed a good relationship with an advisor, you have someone who understands you personal circumstances and can therefore help you ask the right questions, point out the pitfalls, terms and conditions you are not aware of and ensure you disclose the correct information,” says Dombo. “This is an invaluable service that will ensure your have the right insurance that will pay out when you need it most.”

We all have the capacity for greatness within us.
We just have to take all the opportunities
  – and sometimes the risks –
to reach the next step of the journey
towards being the very best we can be.

Frank Furness, ‘Walking with Tigers"

In recent months, I have been privileged to have been involved in the development of anti-corruption training programmes for both the public service and business. During this period, I have been confronted with the causes of the scourge of corruption. Various powerful groups, such as the World Bank and Transparency International, regularly publish authoritative studies on corruption, with excellent suggestions. Yet, despite so much good work in this field, it is common knowledge that the battle against corruption is very far from won.

While visiting South Africa, a friend and colleague from Namibia asked me whether I was concerned about the current state of affairs in South Africa. She was referring to the high levels of violent crime, corruption, unemployment, poor service delivery, etc. I replied that my major concern was the lack of morality in our society and that I believed this to be the root of all evil.

As you probably know, South Africa’s legal system is rooted in our common law, which is mainly of Roman-Dutch origin. This system was uncodified, and the status of the law was based on the rulings of our senior courts and what society regarded as generally acceptable behaviour. Let me give an example: there is no single law in South Africa that says fraud or theft is a crime, but fraud and theft are punishable as crimes because society demanded it.

1. INTRODUCTION
Many companies find it difficult to decide when an act constitutes an act of corruption and whether the payment of a small facilitation fee (grease fee) is allowed. Extortion of or by employees is also problematic. The aim of this short article is to provide some information on these crimes and a few practical guidelines to businesses in determining whether a business practice is allowed in South Africa.

2. DEFINITION OF CORRUPTION
The general business definition of corruption, as stipulated by Transparency International, is: “The abuse of entrusted power for private gain.” Corruption involves bribery, nepotism, abuse or misuse of power and favouritism.

A more extensive definition of corruption in terms of the South African Prevention and Combating of Corrupt Activities Act of 2004 (hereinafter referred to as the Anti-corruption Act) is: The act of unfairly or illegally influencing a decision-making process through the giving or receiving of a benefit for the person making the decision or a third party connected to the decision maker. The act of influencing the decision maker may require the decision maker to perform an act or an omission that results in a benefit accruing to the person providing the benefit or to a third party connected to such person. Corruption occurs at all levels of society, both in the private and public sector. Both the person giving the benefit and the person receiving it will be guilty of entering into a corrupt relationship, as will any third parties who knowingly were part of such a relationship. (My own informal interpretation.)

2.1 SOME GUIDELINES TO DETERMINE WHETHER AN ACT IS CORRUPT

• Evaluate the corrupt relationship between the parties – what are the surrounding circumstances in each case?
• The problem lies not so much in the definition of corruption, but in proving the corrupt act (law of evidence).
• What was the intent of the giver – did the individual have the intent to do wrong, in other words to participate in a corrupt act?
• Is the behaviour part of a “pattern of conduct” or a once-off incident?
• Does it involve an unlawful benefit – is the corruptor demanding a benefit that is not legally due?
• For example, an administrative officer demands money to fulfil his/her duties – this is over and above being paid a salary.
• Evaluate the gratification given – was it nominal or sufficient to constitute an “illegal benefit”, as defined in the Anti-corruption Act?

3. DEFINITION OF EXTORTION
The crime of extortion is committed when a person unlawfully and intentionally obtains some advantage, material or immaterial, from another person by placing illegitimate pressure in the form of threats or intimidation to induce the other person to hand over a benefit.
The threat may even be that some third party will suffer injury. The accused (X) must intend his words in order for them to operate as a threat while also intending that Y will see the threat as such.
The person must also intend to gain some advantage as a result of the threat while knowing that the threat is illegal.
An example of extortion is when a person is intimidated into paying a monetary benefit to a border official in order to enter a country.

3.1 DIFFERENCE BETWEEN CORRUPTION AND EXTORTION
Extortion is committed if a benefit is handed over as a result of illegitimate pressure in the form of threats or intimidation, or if a person/company is simply compelled to pay over a benefit to persuade an official to perform his/her normal duties because he/she refuses to do so. Only the extorter is guilty of a crime and the extorted should report the offence.
It will be an act of corruption, however, when a benefit is handed over voluntarily and there is no pressure on the corruptee to perform an unlawful act. In cases of corruption, both parties (the giver and the receiver) will be guilty of an offence. The crime will most likely never be reported and, in extreme cases, corruption may even become entrenched in the organisational culture.

4. DEFINITION OF FACILITATION PAYMENTS
A facilitation payment (or a grease payment) is a small payment made for the purpose of expediting an administrative process where the making of a decision is not involved.
A “small” payment is often defined as the value of a McDonald’s hamburger or as much change as one can carry in one’s pocket, etc.
Many companies are confronted with an ethical dilemma when a facilitation payment is demanded to do business. This often occurs in countries where minor government employees, whose duties are essentially administrative or clerical in nature, demand small "facilitating" payments to perform or expedite the routine functions that they are in any event required to perform. Examples might include requests for “processing fees” not required by law with regard to visa, customs and other routine approvals. In these locations, such conduct, even though unlawful or of doubtful legality, may be not only customary, but part of the locally understood and accepted compensation arrangements for minor posts.1
1 With thanks to Ms Farzana Lorgat, member of the Business Anti-Corruption Working Group.
The United States Foreign Corrupt Practices Act also allows the payment of facilitation fees. This creates further uncertainty for South African businesses whether a facilitation payment may be made.
The answer lies in the ambit of the Anti-corruption Act, which includes facilitation payments as an illegal act. In addition, the Anti-corruption Act also has extraterritorial jurisdiction, which means that a South African who pays any form of a bribe to a foreign public official may be prosecuted for corruption in South Africa. Where a person is extorted, the situation is different and the surrounding circumstances in each case will determine if the payment of the bribe was in fact as a result of a treat. If so, the person or company who paid the bribe will not be guilty of committing a crime because he/she did not have criminal intent. Although the extorter is the only criminally liable party, the extorted has a moral duty to be transparent and report the incident. Failing this obligation, it would be difficult for the extorted person to plead his/her innocence.

5. CONCLUSION
It is probably wise for South African companies and citizens to act with great caution when considering whether to pay a bribe or make a facilitation payment, because making of such payment is a criminal act in terms of South African law. If an employee’s safety, however, is threatened unless he/she pays a bribe, or if an official simply refuses to perform his/her duties unless a bribe is paid, it may amount to an act of extortion in which the victim holds no guilt.
Africa is already seen as the “corrupt continent”. Therefore, we do not have a choice but to take the moral high ground in order not to lose foreign investment opportunities.

By Dr Janette Minnaar-van Veijeren
Contractor to the Ethics Institute of South Africa, member of the Business Anti-Corruption Working Group: Business Unity South Africa (BUSA) and member of the South African National Anti-corruption Forum
E-mail: janette@ethicsa.org
September 2009