South Africa has recently enacted a new anti-corruption legislation, introducing a criminal offense of ‘failure to prevent corruption’. This law, which came into effect in April, mirrors similar legislation in the UK and places significant responsibilities on stakeholders to prevent corrupt activities. The enforcement and implementation of this law will pose a significant challenge for South Africa.
The new legislation, known as the ‘Judicial Matters Amendment Act 2023’, amends the Prevention and Combating of Corrupt Activities Act (PRECCA) by including a section on the failure by private sector members or incorporated state-owned entities to prevent corrupt activities. This development can be linked back to the outcomes of the Zondo Commission, which recommended legal reforms to tackle corruption in the country.
According to Transparency International’s Corruption Perceptions Index, South Africa’s ranking has dropped, indicating a pressing need for stronger anti-corruption measures. The new law is designed to hold not only organizations but also their associated persons accountable for preventing corrupt activities.
Drawing parallels with the UK Bribery Act 2010, the new legislation in South Africa shifts the focus from prosecuting the actual perpetration of corrupt acts to preventing such conduct. The law extends its reach to contractors and entities down the supply chain, emphasizing the need for robust compliance measures.
Although the law does provide a defense for entities that can demonstrate ‘adequate procedures’ to prevent corrupt conduct, the lack of a clear definition of what constitutes adequate procedures poses a challenge. However, guidance from the UK’s Ministry of Justice on this matter can be valuable for corporates operating in South Africa.
As the new law is still in its early stages, it remains to be seen how effective it will be in combating corruption in South Africa. Challenges in prosecuting corporate bribery, as highlighted by the National Prosecuting Authority’s past struggles, indicate that a concerted effort is required to ensure the law’s successful implementation.
While the new legislation holds promise in combating corruption, its true impact will depend on how effectively it is enforced. Companies operating in South Africa are advised to exercise caution in their business dealings and ensure compliance with the stringent anti-corruption measures. Ultimately, the success of the new law will depend on a combination of effective enforcement and corporate diligence to prevent corrupt activities.
