The little-known laws that could galvanise South Africa’s fight against corruption

Early in the morning you receive a call from an unknown number. Someone your boss once introduced you to, in passing, is calling and insists you meet with them immediately. Your boss is in the loop, they say, and expects you to attend. Drop everything and come now. The meeting is going to take place at a nearby swanky restaurant.

Confused, you arrive at the restaurant to find a man you don’t know waiting impatiently. He briskly takes you to a table where you see two colleagues from work and some people you don’t recognise.

No one orders anything. The man, whose name you didn’t catch, launches into a diatribe against the company you work for. An upcoming tender must go to one of his companies, he says. It’s all been arranged already by higher-ups. He talks non-stop for 20 minutes. Then he leaves.

Later you receive a call from the man your boss reports to – a higher-up who has never spoken to you before. He tells you to look into the company the man at the restaurant mentioned. There is no discussion.

The above is a lightly fictionalised version of what has repeatedly been described in testimony before the long-running judicial commission of inquiry into state capture.

Sometimes the meeting place is at an airport or a fast-food joint. But, with some notable exceptions, the response to follow-up questions for the inquiry’s chairperson, Deputy Chief Justice Raymond Zondo, is the same. When he asks the witnesses what they did next and who they alerted, their response is… nothing and no-one.

After more than 300 days and 2 000 hours of testimony, one of the clearest takeaways from the ongoing state capture inquiry is a repeated failure to report corruption.

Zondo himself noted back in April that, for many of the witnesses appearing before him, law enforcement had “lost credibility” and would not take action if they reported what happened to them. Others feared for their jobs and safety.

But according to lawyer Nick Alp of Webber Wentzel, South Africa‘s laws are clear and strict. Not reporting knowledge of, or even a reasonable suspicion of corruption is itself a crime for which “heavy sanctions and penalties are provided”.

“I think there’s a great deal of ignorance as to duties, responsibilities and obligations on people who are aware of corruption, potential for corruption or suspect corruption,” says Alp.

“If one in a position of authority has actual knowledge, or a reason to suspect that corruption has taken place, then you’re obliged to report it.”

“Not only where they’ve got actual knowledge of the commission of the crime of corruption, but also where they have a reasonable basis to suspect that a crime, or a corrupt activity, is taking place.”

Section 34 of the Prevention and Combating of Corrupt Activities Act of 2004 places a statutory obligation on “people in authority in a company” – such as directors, managers, and C-suite leaders – to report their knowledge of or suspicion of possible corruption or fraud to the Hawks for amounts over R100 000.

This also includes all senior managers of public bodies, such as state-owned enterprises.

Hawks spokesperson Captain Lloyd Ramovha said in response to queries from Fin24 that the onus to report corruption lies “squarely with those in position of authority” who may or ought to have known that corruption took place.

“If brought to our attention that someone has failed to report as expected, we will invoke the Act as encapsulated in the DPCI mandate,” he said.

“This is but an unambiguous reminder for those in position of authority to report corruption activities as and when they occur otherwise there’s consequences.”

The Hawks did not say if anyone had been found guilty of failure to report.

Failing to report can lead to a fine or up to a decade in prison, but it is unclear if any case has even been brought to trial.

Alp says the second piece of legislation is even more comprehensive. Section 29 of the Financial Centre Intelligence Act places an obligation on any person who’s employed by a business – that could be anyone from a low-level employee to the CEO – to report suspicious or “unusual” transactions to the Financial Intelligence Centre.

The centre says it received about 290 000 of these reports per year. Failure to report can incur a financial penalty of up to R50 million.

But to date it has not instituted any criminal charges against any person as in “those particular circumstances where there has been insufficient information/evidence to support a prima facie criminal case”.

For Stefanie Fick, head of legal affairs for the Organisation Undoing Tax Abuse, Section 34 of the Prevention and Combating of Corrupt Activities Act should be “very effective” as it creates an obligation on leadership to “take action against the corrupt because if they don’t, they are just as guilty.”

But she says law enforcement has, to date, been largely toothless in using the provision due to a history of state capture.

“However, in the state capture era… there was just no accountability

“Persons were placed in positions of authority to ensure that the corrupt could get away with it. It is a matter of ethical leadership in key position to ensure that laws are implemented. You can have brilliant legislation, if it is not enforced, it is toothless.”

Source: | BY: NEWS24WIRE