The Judicial Matters Amendment Act of 2023
The Judicial Matters Amendment Act of 2023 was assented to on April 3, 2024. This amendment creates a new offense under the Prevention and Combatting of Corrupt Activities Act (PRECCA), 2004 (Act No. 12 of 2004). The new offense targets members of the private sector and state-owned entities who fail to prevent corrupt activities
Alignment with the Zondo Commission
PRECCA aligns with recommendations from the Judicial Commission of Inquiry into Allegations of State Capture, Corruption, and Fraud in the Public Sector, commonly known as the Zondo Commission
New Section 34A
Under the new section 34A, a “member of the private sector or incorporated state-owned entity” will be guilty of an offense if a person associated with that member gives, agrees, or offers to give any gratification to another person (as currently prohibited in terms of Chapter 2 of PRECCA) intending to obtain or retain business or an advantage for that member
- Adequate Procedures: No offense will be committed under section 34A if the member had in place “adequate procedures” designed to prevent associated persons from committing corrupt activities. Guidance from the UK Bribery Act outlines six non-prescriptive fundamental principles that organizations should consider when adopting “adequate procedures” to prevent bribery, commonly referred to as the Six Principles
- Proportionate Procedures: Organizations should establish anti-bribery procedures that are proportionate to the bribery risks they face. These procedures should be clear, practical, accessible, effectively implemented, and enforced. Policies play a crucial role in articulating an organization’s anti-bribery stance and creating an anti-bribery culture
- Top-Level Commitment: Senior management must demonstrate a commitment to preventing bribery. Their active involvement sets the tone for the organization’s anti-bribery efforts
- Risk Assessment: Organizations should assess the nature and extent of their exposure to risks of bribery, including potential external and internal risks. The level of risk varies based on factors such as the organization’s size, nature of business, and the types of associated persons
- Due Diligence: Adequate bribery prevention procedures should be designed to mitigate identified risks and prevent unethical conduct by associated persons. Due diligence is essential when dealing with third-party agents or intermediaries
- Communication and Training: Organizations should communicate their anti-bribery policies internally and externally. Training ensures that employees understand their responsibilities and the organization’s commitment to preventing bribery
- Monitoring and Review: Regular monitoring and review of anti-bribery procedures help ensure their effectiveness and identify areas for improvement
Broad Concept of Association
The concept of “association” for purposes of the offense is broadly framed and refers to persons who perform services for or on behalf of that member, irrespective of the capacity in which such person performs services. Section 34A includes not only employees but also independent contractors and other third parties providing services to the entity. While companies may not control the actions of associated persons, particularly when tasks are outsourced, it is a defense if the organization can show adequate procedures were in place to prevent bribery
The introduction of the new offense for failure to prevent corruption constitutes a significant change to South Africa’s anti-corruption legal landscape. Organizations will need to reexamine their compliance programs to ensure they align with the Six Principles approach.
Download the Amendment Act here.
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