Corruption is a plague which manifests itself in theft, bribery, extortion and other corrupt activities. Corruption affects every nation and in particular, it has been determined that approximately ZAR700 billion has been lost to corrupt activities over the last 20 years in South Africa. The South African legislator’s answer to the rampant corruption was the Prevention and Combatting of Corrupt Activities Act No. 12 of 2004 (the “Corruption Act”). The purpose of the Corruption Act is to strengthen measures to prevent and combat corruption and corrupt activities. This article shall discuss the duty on specified persons to report corrupt transactions.
The ambit of the Corruption Act is very wide and it criminalises various forms of corrupt activities. The Corruption Act creates the general offence of corruption and elaborates thereon by creating further offences in relation to, inter alia, public officers, foreign public officials, agents, members of the legislative and prosecuting authority and judicial officers. One of its more peculiar and effective mechanisms is the duty on persons holding a position of authority to report corrupt transactions contained in section 34.
Section 34 of the Corruption Act places a duty on any person who holds a position of authority and who knows or ought reasonably to have known or suspected that any person has committed the offence of theft, fraud, extortion, forgery, or uttering a forged document, involving an amount of ZAR100 000 or more to report such knowledge or suspicion or cause such knowledge or suspicion to be reported to any police official. Any person who does not report such knowledge or suspicion is guilty of an offence. Practically, any director who has knowledge of, or ought reasonably to have known or suspected that any person committed an offence in terms of section 34(1) of the Corruption Act, involving an amount of ZAR100 000 or more, must report it to a police official. If the director does not file a section 34 report, he commits an offence be liable in terms of the Corruption Act. The penalty for not complying with section 34 could result in a fine or imprisonment for a period not exceeding 10 years.
Directors and other persons holding a position of authority should thus be vigilant and seek legal advice whenever they have knowledge or reasonably suspect corrupt activities.