De Ruyter case brings anti-corruption reporting obligations in South Africa into focus

De Ruyter made a series of allegations in a recent media interview, including that a member of the ruling African National Congress (ANC) had been involved in alleged corruption at Eskom. In response, the ANC has urged De Ruyter to substantiate his claims to enable a criminal investigation to take place or face criminal charges of his own under section 34 of the Prevention of Corrupt Activities Act (PRECCA) 2004.

South African police have reportedly now been asked to investigate whether De Ruyter has complied with his perceived reporting obligation under section 34. In this article, we look to demystify section 34 and what it requires.

What is the section 34 reporting obligation?

Section 34 is a specific section in PRECCA, an important piece of anti-corruption legislation in South Africa. The section creates a reporting obligation for specific individuals. The apparent purpose of the section is to ensure that corruption and certain other crimes are not hidden from public view, particularly when such crimes are perpetrated by an organisation. The section seeks to incentivise certain persons to report suspected crimes to the authorities so that the matters can be investigated.

Who does section 34 apply to?

Section 34 does not create any obligations for a company or organisation itself. It creates a personal obligation for “any person who holds a position of authority”. Section 34(4) lists the categories of persons who fall within this definition. The categories include any chief executive but also include the director-general of any national or provisional department, any manager, secretary or director of a company, as defined, and any other person that is “responsible for the overall management and control of the business of an employer”.

When does a reporting obligation arise?

A reporting obligation will arise when someone who falls within the above categories knows, ought reasonably to know, or suspects that corruption, fraud, theft, extortion, forgery or uttering a forged document has occurred involving an amount of R100,000 (~$5,400) or more. In other words, the reporting obligation only applies to specific crimes and not all crimes.

At the lower end of the threshold for reporting is where there is a suspicion. There is no direct case law where the courts have been asked to determine what constitutes a suspicion for purposes of section 34. However, considering how the courts have dealt with what constitutes a “suspicion” in other legislation, it is apparent that the suspicion should be based on solid grounds, and it should not be flighty or arbitrary.

However, a suspicion does not require certainty. What is required is something between a mere hunch that is not based on proper grounds or evidence and actual knowledge, which is the higher threshold that also triggers a reporting obligation.

Is there a prescribed time limit within which a section 34 report must be made?

PRECCA does not contain an express time limit within which a report must be made. This does not mean that a person in a position of authority can simply hold out indefinitely from the moment that they develop the requisite knowledge or suspicion and unless active steps are being taken to test the grounds upon which the knowledge or suspicion is based, a report should be made within a reasonable time.

How are section 34 reports reported?

Section 34 reports are required to be made to the Directorate for Priority Crime Investigation, commonly known as the Hawks. Whilst PRECCA does not prescribe a specific form of the report or channel through which it must be made, the police have provided guidance.

According to the guidance, a report can be made in person, or it can be done via email or sent by fax. There is a link to a page where the Hawks provide a specific email address and fax number that can be used to make reports. The guidance also contains the prescribed form for taking down a report that officers of the Hawks are required to use. In practice, a person making a report can complete the form and submit via email or fax, or they can complete the form and submit in person to the Hawks.

Reports made through the above channels are not typically public as the reports contain communications vis-à-vis a reporter and the Hawks to enable the Hawks to decide whether to investigate the matters reported.

Is filing a report the same as laying a criminal charge?

Filing a report under section 34 is not the same as laying a criminal charge. Section 34 creates a specific statutory duty for certain persons to make a report, as explained above. A failure to do so is itself a criminal offence that can result in imprisonment of up to 10 years for someone who is convicted of having failed to report. As such, reporting is mandatory under section 34 where the thresholds for reporting are met.

Filing a criminal charge is not mandatory and requires a different process to be followed. If a company or individual wishes to lay a criminal charge and request that the police investigate an alleged crime, they are required to do so at the police station that has jurisdiction over the area where the crime is alleged to have taken place. The police will typically take down a formal statement, known as an A1 statement or affidavit. A so-called CAS number is allocated to the case and an investigating officer will be assigned responsibility for investigating the alleged crime. This is quite different to the process whereby the Hawks will consider a section 34 report and decide whether they wish to investigate the matter reported.

Application for business executives

The events of the last week have shown that issues around section 34 can cause quite a stir. The legislation is complicated, can be misunderstood and the consequences of not complying can have very serious consequences.

Executives of major organisations in South Africa should ensure that they receive proper guidance and clear advice on matters that could give rise to reporting obligations. In essence, if you are an executive and believe you may have an obligation to report, seek proper advice from a suitably qualified lawyer.