Back in 2012 I wrote the Mean Streets Police Books, I was exceedingly bored and then I wrote Tricks of Trade – Memories of a Rogue Lawyer and I warned that the new legal buzz word in Africa is called “compliance.” What it comes down to is simply this, comply with the local laws and rules and you will be good, don’t, and you will live to regret your shenanigans in life. This is not the Wild West, hear my words, we have laws, strict ones and we will implement them.
I find that many large multinational companies have a very arrogant way of doing business behind their facade of being the “good guys” and let me explain how they work in Africa. First they ring fence themselves, yes, that means the real money and shareholding is always offshore in a tax haven, say Switzerland or the Cayman Islands. Cyprus, because of dishonest Russian money, is being watched too closely these days to be popular. Hence they make it virtually impossible to get to the real owners or even to easily sue them. Ironically, it is very easy to ring-fence yourself and I advise all clients to do so via Trusts and Companies held a fair distance from each other but CONTROLLED by you. There are many tricks of the trade - the best known with a Trust is to make the Trustee (the guy who serve to control the Trust with others, in South Africa three of which one may not be family) sign a resignation letter, but you leave the date clean. Once you enter the date, bye bye Trustee. Yeah, it is all in the book.
Now the other method they use, also advised by me, is to invest nothing physically. You rent, yes, your entire fleet of trucks and whatever else are rented and you pay the monthly installment, you would have done so anyway if you bought them but look at the advantages. First you get the same brand new vehicles as if you bought new, so there is no difference. And then, the chief reason if honest, the servicing of them, the vehicles and other equipment is left to whoever owns the vehicles. Your car or truck breaks down, they must replace it. Not your problem and with repairing being a major problem here (except in South Africa), that saves you tremendous grief and stress and keep your business running. And then also, tax deductions and write offs on rental equipment, that makes financial sense but the main reason, if dishonest (or just prudent as we say), is you can pack up and leave. You are leaving nothing behind and yes it is a locust principle in business but that is the accepted way. Since you own nothing, you are leaving nothing, you get? Simple ways to protect yourself! There are many more.
There is excellent money in Africa, really, you can make big bucks which is why you find the companies here but there is also resentment. In the book I mentioned jealously. Many African Nations simply dislike South Africans (others too, especially the former colonial masters) as arrogant and breakers of rules and laws. They come in, they flash money, they make good money, billions, and then they play the game with tax and other laws like pensions for the local worker. There is great resentment for whatever reason and that makes you a nice fat juicy target. I have seen this with my own eyes, large international companies not complying with even the most basic auditing rules and laws and the outside auditors, supposed to report this by law, after Enron, failing with a capital F. How they do this, especially in Nigeria, where I worked for two years, is to confuse the issues so much than no one really get what took place. You, as legal adviser walking into the crap, have to listen to two school of thoughts here and the truth is somewhere in the middle.
The company tells you they are victimized by corrupt officials working for commissions in what they can collect. Most certainly, in Nigeria, they will arrest, yes grab at gunpoint, the CEO (the president of the company) over December and hold him until the fines are settled. Some CEOs are so afraid of this that they won’t come back after leave and refuse to enter the country again. And it must be said, at times this is all just so much bullsht to get a bribe but be warned, if you start paying bribes, you will be targeted and hammered for more bribes. I found the Brits are the easiest to crack, the Americans second in the easy list, the Israelis not at all and the South Africans somewhere in the middle depending on the man. Perhaps the crackers are a bit more pragmatic, I don’t know. I advise never pay bribes.
Then the State officials will tell you there is a case to be answered and they will come up with obscure laws and “evidence” and in some cases there are indeed transgressions from the company and very serious ones going on for years. For instance, and I speak of experience, pension fund contributions are not paid and the money so “saved” is declared as profit and guess what, the Financial Director and CEO (called an MD, managing director, in Nigeria) is awarded massive bonuses for their “record” profits. Yes, it is fraud and moreover, after a few years you have a most terrible mess to sort out. The officials are now “fighting” for their own against the arrogant capitalist and mostly such offences carry heavy fines and or jail time. It is serious besides being skelm (dishonest).
Any idiot, you don’t need law degrees or law school behind your name can tell you, don’t break the rules in your own country or in a foreign country. Pay what needs to be paid, do what the law requires you to do and stop being stupid when doing business. This is what is known as “compliance” in law and you have NO CHOICE in it. You have to be compliant to be safe or risk free and whatever money you spent to get compliant is worth it. It takes away the risk and if that eats your profits, you know, then it does. When you make billions, what does a few million less matters unless you are greedy, foolish or just plain stupid. The only people who win from a compliance issue is lawyers and all lawyers in Africa will charge utterly ridiculous fees in US Dollars to “help” you. And they will stretch it out (yes I am cynical) to make even more money and the bigger the law firm involved, the bigger chance of you being done in – read the book, it is free of charge – and see the techniques lawyers use to make more money. Once you understand that, you can defend yourself.
I write this as a big South African telecommunications company, MTN, got slapped with a 5.2 BILLION US dollar fine in Nigeria. It affected their share price and they had to suspend trading for a morning to prevent panic sales of shares. I don’t act for MTN and I don’t know or care what went wrong but I can tell you, the above is most probably what led to this. What will happen now? Well, many thousands of hours will be billed to negotiate a settlement, fines may be paid (less than what is asked, it is just to show them the State is serious) and some lawyers are going to make retirement type of money here. And guess what, and I am not pointing fingers at MTN (Nigeria) Directors, I am speaking in general, this could have been prevented by good management and good legal advice with somewhat less arrogance. For now, the best advice as starters, is to buy a bottle of Vaseline, you are going to need it before this is over.
Koos Kotze is a former member of the South African Police Force. He served between 1985 and 1991 primarily as a sergeant in the Pretoria Flying Squad. During his police years, he was awarded the South African Police Medal for Combating Terrorism twice besides lesser awards. After leaving the Police Force he obtained the law degrees B Iuris & LLB at the University of the Free State (Bloemfontein, South Africa) and was a commercial law attorney for eight years. These days he is the owner of JKLS Africa and Associates, a specialist legal consultancy which specializes in reducing legal risk in sub Saharan Africa. He wrote several books on business, law, counter-terrorism and security issues. At times he is asked to participate on the Voice of America regarding legal forensic matters.