Anti Corruption

New Anti-Corruption Legal Requirements in South Africa: What Companies Need to Know

In 2024, South Africa introduced a significant legal change aimed at assisting in the fight against corporate corruption. The Judicial Matters Amendment Act has added a new offence under the Prevention and Combating of Corrupt Activities Act (PRECCA), focusing on the “failure to prevent” corruption. This new offence introduces a strict liability regime, meaning companies can be held criminally liable for corrupt activities committed by their associates unless they can demonstrate they had adequate procedures in place to prevent such acts.

This legal reform follows recommendations from the Zondo Commission, which investigated state capture and widespread corruption during Jacob Zuma’s presidency. The commission’s findings highlighted the need for stronger mechanisms to hold companies accountable and prevent corrupt practices.

 

We deal with certain Key Elements of this new legislation below.

Strict Liability for Companies

Companies are now directly accountable for corrupt activities performed by their employees, agents, or subsidiaries. This liability extends to any form of “gratification” given or received to secure business advantages, which includes money, gifts, property, and even non-monetary benefits.

Adequate Procedures Defense

To mitigate the risk of prosecution, companies must prove that they had effective anti-corruption measures in place. This includes comprehensive compliance programs, regular employee training, and robust internal controls designed to prevent bribery and other forms of corruption.

Implications for Businesses

Businesses operating in South Africa must now prioritize the establishment and maintenance of thorough anti-corruption frameworks. This includes conducting risk assessments, implementing strict compliance policies, and ensuring all employees and associates are trained to recognize and avoid corrupt activities. Failure to do so could result in severe penalties, including substantial fines and reputational damage.

 

Compliance and Risk Management

To navigate these new requirements, companies should:

Review and Update Compliance Programs

Ensure that all anti-corruption policies are current and effectively address the risks specific to the company’s operations.

Enhance Training and Awareness.

Regularly train employees and associates on anti-corruption laws and the importance of compliance.

Conduct Regular Audits.

Perform frequent audits and assessments to identify and mitigate potential corruption risks.

 

Conclusion

The introduction of the “failure to prevent” corruption offence marks a significant step in South Africa’s effort to combat corporate corruption. Companies must now proactively strengthen their anti-corruption measures to comply with the new legal requirements and protect themselves from

Share This Post

More To Explore