Failure to prevent corruption is now a criminal offence as South Africa added the phrase “failure to prevent corrupt activities offence” in section 34A of the Prevention and Combating of Corrupt Activities Act.
The introduction of a failure to prevent corruption offence came into effect on 3 April 2024 after the National Council of Provinces passed the Judicial Matters Amendment Bill on 6 December 2023 and president Cyril Ramaphosa assented to it on 3 April 2024.
The Bill included an amendment to South Africa’s primary anti-corruption legislation, the Prevention and Combating of Corrupt Activities Act in the form of a new clause 34A.
Steven Powell, head of forensics and Adrian Roux, senior associate for forensics at law firm ENS, say the wording of the new offence is closely aligned with the version proposed in the State Capture Report.
“It draws inspiration from the failure to prevent bribery offences contained in section 7 of the United Kingdom Bribery Act. In terms of the new section 34A, a “member of the private sector or incorporated state owned entity” will be guilty of an offence if a person associated with that member gives or agrees or offers to give any gratification to another person (as currently prohibited in terms of Chapter 2 of the Act) intending to obtain or retain business or an advantage for that member,” Powell and Roux say.
Who falls under association?
- The concept of “association” for purposes of the offence is broadly framed and refers to people who perform services for or on behalf of that member irrespective of the capacity in which they perform services for or on behalf of that member, Powell and Roux say.
“Section 34A casts the net of association broadly and would include not only employees but also independent contractors and other third parties providing services to the entity. It will therefore be important to ensure anti-corruption risk mitigation controls are sufficient to cover such third parties.”
Deferred prosecutorial agreements
- Unlike the UK, South Africa does not have a prosecutorial regime which allows for entities to enter into deferred prosecution agreements (DPAs), Powell and Roux say.
“DPAs have been successfully used in the US and the UK as a mechanism to encourage organisations to self-report wrongdoing in exchange for the imposition of a reduced fine and avoiding prosecution.”
They say the introduction of DPAs is not addressed in the amendment but president Ramaphosa previously confirmed that the South African Law Reform Commission is considering DPAs as part of its review of the criminal justice system.
“In the interim, the National Prosecuting Authority is relying on the Corporate Alternative Dispute Resolution Directive to reach similar outcomes.”
The introduction of the new failure to prevent corrupt activities offence constitutes a significant change to South Africa’s anti-corruption legal landscape and will require organisations to reexamine their compliance programmes to ensure they align with the Six Principles approach, Powell and Roux say.
