How Does the New Corruption Reporting Law Affect Your Business?

“In defence of Madiba's legacy, we will continue to wage a relentless war on corruption...” (President Cyril Ramaphosa)

You may have seen mention of the new amendment to the Prevention and Combatting of Corrupt Activities (POCCA) Act that imposes severe penalties for any failure to report corruption. If you did see it, you quite possibly thought “Doesn’t apply to me, I’m just a small business”.

Wrong! Let’s have a look at who the new law applies to, what it requires of you, the risk you run if you don’t pay it due attention, and how you should manage this new risk.


Who does the new reporting requirement apply to?

Not just big companies and multinational businesses. It applies not only to all members of “incorporated state-owned entities” but also to all persons and entities in the private sector. The definition here is very broad indeed, and it includes all types and sizes of businesses from sole trader up, all types of entity large and small, all companies, every “body of persons” and every “other legal person”.

In short, it applies to you!


What does it require of you?

Simply put, you must report any corruption or attempt at corruption. Of course, we all know what the common-sense definition of “corruption” is. If you need an exhaustive legal definition, we can certainly help you with that.

But in practice just be aware that it applies to any agreement or offer by an “associated” person (including employees, independent contractors and the like) to give anyone else any unlawful “gratification”. What’s more, “gratification” is so widely defined as to include every possible form of monetary or non-monetary advantage (or avoidance of disadvantage) you can think of. Naturally the agreement or offer in question must relate to an attempt to either obtain or retain a business advantage of some sort.

On another warning note, POCCA penalises not just active knowledge of corruption and wrongdoing, but also brings in concepts of “should have known” and “turned a blind eye”.

Put simply, you must report any form of “corruption”. Full stop.


What penalties apply?

In theory, the sky’s the limit here – unlimited fines and life imprisonment! In practice, courts will of course tailor the punishment to fit the crime. The bottom line: there are very clear indications that the authorities mean business, so beware.  


How should you protect yourself?

The new law pulls no punches. But fortunately there’s a solid defence included in the new provision: to escape liability you only need to show that you “had in place adequate procedures designed to prevent” the corruption. There’s no definition of what this might entail, so it’s up to you to use common sense based on your particular business and circumstances. Local experts suggest that to be safe we follow the UK’s “Six Principles” – proportionality (procedures tailored to the level of your risk), top-level commitment, risk assessment, due diligence, communication, and monitoring and review.

Need help with drafting a corruption prevention protocol? Shout if we can help.