CHAMBERS WHITE COLLAR CRIME 2020 (Q&A): SOUTH AFRICA

LAW AND PRACTICE 

Legal Framework

1.1 Classification of Criminal Offences

South Africa's criminal legal framework consists of a mixture of common law and statutory offences, and does not consist of a formal framework of categories of offences – however, offences can be categorised in terms of severity, by way of the sentence or sanction ascribed in connection with the offence, whether in terms of minimum sentences prescribed under legislation or in terms of precedent through case law. In most offences in South Africa, the following elements must be proved beyond a reasonable doubt by the state against the accused: voluntary conduct which is unlawful, criminal capacity and fault (in the form of intention or negligence).

In terms of white-collar offences, South Africa has a matrix of domestic legislation that caters for the particular offences that are associated with white-collar crime, which stands alongside common law offences such as fraud. The Prevention and Combatting of Corrupt Activities Act 12 of 2004 (PRECCA), the Financial Intelligence Centre Act 38 of 2011 (FICA) and the Prevention of Organised Crime Act 121 of 1998 (POCA) are the primary statutes that form part of the matrix of statutes dealing with white-collar crime in South Africa.

PRECCA is South Africa's principal piece of corruption legislation and creates the general offence of corruption. It also makes provision for a number of specific corruption offences as well as ancillary offences, such as being an accessory to corruption and attempting or conspiring to commit an offence under PRECCA.

POCA creates statutory offences that are encountered in the organised crime environment, such as racketeering, money laundering and offences relating to the proceeds of unlawful activities. The offences of racketeering and money laundering are cast widely, and address conduct relating to a pattern of racketeering activity and conduct concerning arrangements or transactions that involve the proceeds of unlawful activity.

FICA also plays a central role in the combatting of white-collar crime in South Africa. It established the Financial Intelligence Centre, a state agency tasked with the identification and combatting of money laundering and terrorist financing and the implementation of financial sanctions pursuant to resolutions of the Security Council of the United Nations. In addition to the monitoring of money-related activity, FICA creates reporting and monitoring obligations for accountable institutions (including institutions such as banks), and powers of monitoring, inspection and investigation for the Financial Intelligence Centre and in relation to suspected offences such as money laundering or terrorist financing. In addition, FICA creates offences relating to non-compliance with its provisions, and offences for interfering in the investigations of the Financial Intelligence Centre.

Motive is not required to prove liability for the commission of a crime, nor for an offence to be punishable. However, fault is generally a requirement that must be proven, whether in the form of intention or negligence.

1.2 Statute of Limitations

The Criminal Procedure Act 51 of 1977 (CPA) governs procedures and related matters in criminal proceedings. Section 18 of the CPA provides that the right to prosecute any offence will lapse after the expiry of a period of 20 years from the time when the offence was committed, except for certain specific offences such as murder, rape or treason. White-collar crimes would not fall within the list of offences that can exceed the 20-year period for prosecution. In this regard, the CPA defines an offence as an act or omission that is punishable by law.

1.3 Extraterritorial Reach

Section 35 of PRECCA specifically provides that a South African court may have jurisdiction to prosecute a corruption offence outside of South Africa in the following circumstances:

• if the alleged offender is a South African citizen or a company incorporated or registered in South Africa;
• if the person to be charged is ordinarily resident in South Africa; and
• if the person was arrested in the territory, in territorial waters or on board a ship or aircraft registered in South Africa.

POCA's ambit extends beyond the borders of South Africa – any conduct that meets the definition of racketeering in POCA, whether occurring in South Africa or elsewhere, is also an offence in South Africa. Furthermore, the definition of "unlawful activities" that features in many of the offences in POCA includes unlawful conduct that constitutes a crime whether before or after the commencement of POCA, and whether it occurred in South Africa or elsewhere.

South Africa has also enacted legislation with the specific purpose of facilitating co-operation with foreign enforcement authorities; see 2.5 Mutual Legal Assistance Treaties and Cross-Border Co-operation.

1.4 Corporate Liability and Personal Liability

Corporate entities may face criminal liability in South Africa for a wide range of offences. They can be prosecuted for any crime unless the law specifically limits liability for a particular offence to natural persons.

Section 332 of the CPA contains express provisions deeming certain acts and omissions of the directors and “servants” of the company to be the acts and omissions of the company itself. In general, the acts and omissions of a company’s directors or “servants” when exercising their powers or performing their duties, or when undertaken in furtherance of the company’s interests, are attributed to the company for the purposes of imposing criminal liability on the company for any statutory or common law offence.

While there is no definition of “servant”, the term is understood to encompass not only employees, but anyone whose work falls under the company’s control. In general, a degree of supervision and control by the company over the relevant individual is required in order for a company to incur criminal liability.

In South Africa, however, a company may face criminal liability if an individual commits a crime while acting to further the company’s interests, regardless of whether such conduct was within the scope of that individual’s duties.

Both a company and the individuals involved may be prosecuted for the same crime. A company is a legal person without any physical existence and has no mind or will of its own. For this reason, the acts, omissions, intentions, purposes and knowledge of certain individuals within the company are regarded as being the acts, omissions, intentions, purposes and knowledge of the company. However, even if the individuals who committed an offence are not prosecuted in their personal capacities, a company may be prosecuted for the offence. Company representatives will face criminal liability only if they were complicit in wrongdoing.

As separate legal entities, parent companies are unlikely to face criminal liability for the conduct of their subsidiaries unless they are complicit in the unlawful conduct, or knowingly condone it. Furthermore, if a company is acquired after the occurrence of the offending conduct, the entity cannot be held liable for the prior conduct of the target, nor will any newly appointed board members or employees face liability as they were not directors and/or employees (as the case may be) at the time of the commission of the offence.

Click here to read the full Chambers White Collar Crime 2020 (Q&A): South Africa chapter published by Chambers and Partners.

The above article was first published by Chambers and Partners on 20 October 2020. 

For more information, please contact Cameron Dunstan-Smith or Jonathan Ripley-Evans or your usual Herbert Smith Freehills contact: