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South Africa just added the phrase “failure to prevent corrupt activities offence” in section 34A of the Prevention and Combating of Corrupt Activities Act.

The enactment of a new offence aimed at curbing corruption took effect on April 3, following the National Council of Provinces’ approval of the Judicial Matters Amendment Bill on December 6, 2023, and President Cyril Ramaphosa’s assent to it on the same day, April 3, 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, the forensics head, and Adrian Roux, a senior associate specialising in forensics at the law firm ENS, note that the language of the new offence closely mirrors the version outlined in the State Capture Report, per The Citizen:

“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.

Roux and Powell point out that the key takeaways are that no offence will be committed in terms of section 34A if the member had in place “adequate procedures” designed to prevent associated persons from committing corrupt activities.

The UK Guidance outlines six foundational principles that commercial organisations should take into account when implementing “adequate procedures” to prevent bribery on their behalf, often referred to as the “Six Principles.”

The Six Principles require procedures which are proportionate to the extent of the corruption risks facing the organisation. Therefore, an important first step will be to conduct a risk assessment to assess the extent of the corruption risks so that procedures can be tailored accordingly, they say.

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.”

Powell and Roux say that while “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,” the introduction of DPAs is not addressed in the amendment. However, 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 meantime, the National Prosecuting Authority will rely on the Corporate Alternative Dispute Resolution Directive to reach similar outcomes.

Powell and Roux point out that the new corruption offence shakes up South Africa’s anti-corruption laws in a big way. They mention that organisations will need to take a fresh look at their compliance programs to make sure they match up with the Six Principles approach.

[source:citizen]