A proposal made by the Chief Justice in his State Capture report is that companies should be criminally charged for failing to stop corruption. This has introduced new corruption laws for South African businesses.
Zondo proposes amendments to PRECCA which will require businesses to prevent corruption from happening in the first instance, holding companies criminally liable should they fail to do so.
Bowmans stated that Zondo’s proposed amendments create a defence in which the company may claim that it has “adequate procedures” to prevent corruption, even when corruption has occurred. This begs the question: What amounts to ‘adequate procedures’ according to the PRECCA?
The amendments being proposed by the Chief Justice are similar to the UK Bribery Act, Bowmans has identified six principles that should guide courts in determining what counts as adequate procedures based on the UK Bribery Act.
These principles could guide the definition of adequate procedures concerning the proposed new offence.
These are the six principles as stipulated by Bowmans:
- Principle 1: Proportionate procedures – Companies should have clear procedures to prevent bribery. The procedures should be tailored to the particular company’s activities and its size and should take into account the risk involved.
- Principle 2: Top-level commitment – The highest level of management of a company should commit to preventing bribery.
- Principle 3: Risk assessment – The company must analyze the nature and extent of internal and external risks of bribery.
- Principle 4: Due diligence – The company must apply due diligence procedures for the individuals who perform services on its behalf.
- Principle 5: Communication – The company must have protocols in place that ensure that staff members within the company understand their anti-bribery obligations. They need to have a training programme on the various policies.
- Principle 6: Monitoring and review – The company must monitor and revise procedures developed to prevent bribery to improve those procedures.
These principles provide direction for companies looking to formulate and implement adequate corruption prevention procedures in line with PRECCA’s requirements.