South Africa

General context, key principles and hot topics

1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.

Currently the highest-profile matter is not a single investigation but rather the judicial commission of inquiry into allegations of state capture, fraud and corruption within organs of state. It is known as the Zondo Commission as it was led by Justice Raymond Zondo.

The Zondo Commission commenced in January 2018 and completed its work in June 2022. During that period, oral evidence was heard from more than 300 witnesses and 1,732,106 pages of documentary evidence were presented to the Commission. It was reported that the Commission gathered far more evidence than this and that, digitally, it amounted to a petabyte of electronic evidence.

The work of the Commission covered a wide array of corruption-related issues that plagued South Africa during the tenure of former president Jacob Zuma. A total of 1,438 individuals and entities were implicated in varying degrees of wrongdoing based on the evidence gathered. The Commission released its report in six volumes (with a total of 5,631 pages) between 4 January 2022 and 22 June 2022.

There have been significant consequences for some of the individuals and companies implicated, including criminal charges having been instituted against some suspected perpetrators, and blacklisting from government work in South Africa. One high-profile multinational management consulting company has been blacklisted in both the United Kingdom and in South Africa as a result of the work of the Commission. The impact of the Commission will be felt for years to come and has been the most seminal event in South Africa’s fight against corruption.

2 Outline the legal framework for corporate liability in your country.

Companies have separate legal personality from their shareholders, directors and employees. Companies can be held criminally liable based on section 332 of the Criminal Procedure Act 1977 (CPA). The provisions in section 332 mean that the conduct of certain categories of persons can be imputed to a company under certain circumstances.

The categories of persons are any director or ‘servant’ of a company. Their acts or omissions (as well as those of persons acting under their instruction or with their permission) can be imputed to a company if done:

• in the exercise of their powers or performance of their duties; or
• to further or endeavour to further the interests of the company.

The wording of section 332 casts the net wide in terms of the conduct that can be imputed to a company and there is limited case law that can be relied on to obtain guidance on how the section will be applied in practice by law enforcement authorities and the courts.

3 Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?

Key law enforcement authorities involved in the investigation and prosecution of corporate crimes include the following:

• South African Police Service (police): The police have the primary mandate to investigate suspected or alleged crimes in South Africa. At the conclusion of an investigation, the police typically provide a docket to the National Prosecuting Authority (NPA) to determine whether the evidence gathered shows that a prima facie case exists against the persons (including companies) under investigation.
• Directorate for Priority Crime Investigations (also known as the Hawks): Formerly known as the Scorpions, the Hawks are a specialist unit within the police that is responsible for investigating national priority crimes such as serious organised crime, serious commercial crime and serious corruption.
• NPA: as indicated above, when the police have completed an investigation, they will typically provide the NPA with a docket containing the evidence gathered. The NPA is responsible for assessing whether there is a prima facie case against any persons. The NPA will regularly direct the police to conduct further investigations into specific matters. It is mandated to decide whether or not to initiate any prosecutions based on the outcome of a police investigation. The processes of the Hawks are largely the same as those of the ordinary police and, in these cases, the NPA remains responsible for assessing the evidence and deciding whether or not to prosecute any persons.
• Specialised Commercial Crime Unit (SCCU): The SCCU is a specialist prosecution unit within the NPA that is mandated to investigate and prosecute cases identified as being a priority by the Director of Public Prosecutions or the Hawks. The SCCU may also be tasked with managing the investigation and prosecution of complex cases referred to it by the special investigating unit (SIU) or the public prosecutor.
• Special investigaing units (SIUs): Established under the Special Investigating Unit and Special Tribunals Act 1996 (the SIU Act), SIUs are mandated to investigate serious allegations of corruption, malpractice and maladministration in the administration of state institutions, state assets and public money, as well as any conduct that may seriously harm the interests of the public. An SIU does not have a general standing mandate to investigate matters of its choosing. In this regard, the SIU may only investigate matters when the President establishes an SIU to investigate a specific matter or refers a matter to an existing SIU, through a proclamation in a Gazette based on the relevant provisions of the SIU Act. An SIU’s mandate is typically limited to conducting investigations and pursuing civil recoveries only. It does not have a mandate to prosecute crimes. However, it can refer evidence of criminal wrongdoing to the NPA.

There are other regulatory bodies in South Africa that regulate companies more generally. For example, the Companies and Intellectual Properties Commission (CIPC) is responsible for the administrative regulation of companies (such as company registration and maintaining certain information about companies such as registered addresses and directors). Another example is the Johannesburg Stock Exchange (JSE), which regulates companies that choose to list on the JSE. Specific sectors such as banking, the investment industry and insurance companies also have their own regulators (such as the Prudential Authority that forms part of the South African Reserve Bank and Financial Sector Conduct Authority). However, these regulators are not considered law enforcement agencies per se.

Although South Africa has various law enforcement authorities in place to regulate companies, the Zondo Commission has recommended the establishment of a new independent anti-corruption agency to be called the Anti-Corruption Authority or the Anti-Corruption Agency of South Africa. The Commission provided guidance on how the new agency should be established, structured and funded, as well as what its mandate should be. It is anticipated that the new agency will be established in due course and that it will play a central role in regulating, investigating and addressing public sector corruption.

4 What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

There are no specific thresholds of suspicion that must be met for an investigation to be opened. The position is different in respect of the threshold that must be met for other steps, such as making an arrest or instituting a prosecution.

The typical process that will result in a criminal investigation being opened is when the victim of a crime files a complaint at a police station or if a police officer attends the scene of a crime and engages with a victim or witnesses. The police officer in attendance will take a statement from the victim or witnesses and register the case in the Crime Administration System (CAS). The investigation will be given a CAS number, a police docket will be opened and the matter will be allocated to an appropriate person to investigate. The person who reported the alleged crime will be provided with the CAS number and details of the investigating officer. Depending on the seriousness and complexity of the matter, it may be moved to the Hawks or the SCCU at an early stage.

There are other means by which an investigation may be initiated by a law enforcement body. For example, the President may mandate the SIU to conduct an investigation into specific matters based on the process described above in terms of which a proclamation is published in a gazette. Another example is that the Hawks may open an inquiry docket into a matter that they wish to investigate. This could transpire based on the receipt of a statutory report submitted to the Hawks under section 34 of the Prevention and Combating of Corrupt Activities Act 2004 (PRECCA).

5 How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?

Whether, when and how the lawfulness and scope of a notice or subpoena can be challenged will depend on various circumstances (including which law enforcement agency has issued the notice or subpoena and the legislation relied on to do so). It is generally recommended that legal advice (and potentially on-site representation) is obtained as soon as possible to avoid potentially adverse consequences that may arise from unlawfully obtained evidence.

Historically, South Africa has not applied a fruit of the poison tree rule to unlawfully obtained evidence and this type of evidence has generally been admissible provided that a court has found it to be relevant. Section 35(5) of the Constitution tempered this position to an extent and provides as follows:

Evidence obtained in a manner that violates any right in the Bill of Rights must be excluded if the admission of that evidence would render the trial unfair or otherwise be detrimental to the administration of justice.

The courts have held that Section 35(5) does not automatically exclude evidence that is obtained unconstitutionally. The application was explained in the judgment in S v. Tandwa and others [2007] ZASCA 34; 2008 (1) SACR 613 (SCA) at Paragraphs 116 and 117, as follows:

[116] . . . Evidence must be excluded only if it (a) renders the trial unfair; or (b) is otherwise detrimental to the administration of justice. This entails that admitting impugned evidence could damage the administration of justice in ways that would leave the fairness of the trial intact: but where admitting the evidence renders the trial itself unfair, the administration of justice is always damaged. Differently put, evidence must be excluded in all cases where its admission is detrimental to the administration of justice, including the subset of cases where it renders the trial unfair. The provision plainly envisages cases where evidence should be excluded for broad public policy reasons beyond fairness to the individual accused.
[117] In determining whether the trial is rendered unfair, Courts must take into account competing social interests. The court’s discretion must be exercised ‘by weighing the competing concerns of society on the one hand to ensure that the guilty are brought to book against the protection of entrenched human rights accorded to accused persons.’ Relevant factors include the severity of the rights violation and the degree of prejudice, weighted against the public policy interest in bringing criminals to book. Rights violations are severe when they stem from the deliberate conduct of the police or are flagrant in nature. There is a high degree of prejudice when there is a close causal connection between the rights violation and the subsequent self-incriminating acts of the accused. Rights violations are not severe, and the resulting trial not unfair, if the police conduct was objectively reasonable and neither deliberate nor flagrant.

In light of the above limited position under the South African law, unlawfully obtained evidence can be admissible provided it does not cross the threshold of being detrimental to the administration of justice (including rendering the trial unfair). This can create a position of high risk for companies and, as indicated above, legal assistance should be procured without delay when a company receives a notice or subpoena or law enforcement agencies arrive at the door.

6 Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?

Yes. Section 204 of the CPA provides a legal mechanism for state witnesses to avoid being prosecuted. The operation of the section is such that the prosecutor must inform the court that the witness is being called to testify on behalf of the prosecution and that they may be required to answer questions that incriminate them. If after the witness has testified the court is satisfied that the witness answered all questions put to them ‘frankly and honestly’, the court can discharge the witness from prosecution for the relevant offence.

7 What are the top priorities for your country’s law enforcement authorities?

Combating corruption is the key priority for the South African government and law enforcement agencies at present. The Zondo Commission unearthed a challenging legacy during the presidency of former president Jacob Zuma and Zondo concluded that the Commission established that the South African state was captured. President Cyril Ramaphosa has taken steps that illustrate the priority of combating corruption, including, among other things:

• confirming the commitment of the government to the National Anti-Corruption Strategy 2020–2030 (and preparing the foreword to the strategy setting the ‘tone from the top’);
• establishing a nine-member National Anti-Corruption Advisory Council (NACAC) in September 2022. The NACAC is tasked with advising the President on matters relating to fighting corruption, in line with the National Anti-Corruption Strategy 2020–2030, and an effective implementation of the anti-corruption strategy by government and civil society. Further, the NACAC has been tasked with advising on matters regarding the government’s response to the recommendations of the Zondo Commission; and
• publicly committing to implement the recommendations of the Zondo Commission.

Faced with significant public pressure to bring the perpetrators of state capture to justice, law enforcement authorities have taken steps to prioritise high-profile corruption cases and multiple high-profile alleged perpetrators have been criminally charged in recent months.

8 To what extent do law enforcement authorities in your jurisdiction place importance on a corporation having an effective compliance programme? What guidance exists (in the form of official guidance, speeches or case law) on what makes an effective compliance programme?

South African law enforcement authorities place some importance on corporations having an effective compliance programme. However, the legal framework is not as well developed as that of jurisdictions such as the United Kingdom and the statutory framework created through section 7 of the UK Bribery Act 2010 (UKBA).

Although the CIPC is not a law enforcement authority, it has published a guideline on corporate compliance programmes (see CIPC, Guideline 1 of 2018) to assist companies to understand what constitutes an effective compliance programme. The guideline is targeted at companies that are required to establish a social and ethics committee based on the provisions of the Companies Regulations 2011 (such as listed companies and state-owned entities). The principles, which are set out as ‘minimum compliance principles’, include top management commitment, policies and procedures, communication and training, periodic reviews, due diligence and auditing and accounting controls. Failure on the part of companies that fall under the guidance to apply the guideline is not an offence. Furthermore, there is currently no statutory defence in South African law that is similar to the ‘adequate procedures’ defence under section 7 of the UKBA.

Notwithstanding the foregoing, the Zondo Commission has recommended that South African law should be amended to include a provision similar to section 7 of the UKBA. If the recommendation is adopted and the law is changed, the government would need to provide guidance on what would constitute ‘adequate procedures’ in line with the guidance provided by the UK Ministry of Justice.

Cyber-related issues

9 Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.

The law that governs data protection in South Africa includes obligations to implement security safeguards that involve cybersecurity obligations at a practical level. The relevant provisions are contained in sections 19 to 22 of the Protection of Personal Information Act 2013 (POPIA). POPIA also established a new regulator called the Information Regulator. Although the first members of the Information Regulator were appointed in December 2016, the regulator remains in its infancy, and it has not yet developed a clear track record of how it will deal with apparent failures by companies to comply with their obligations under sections 19 to 22 of POPIA (or other sections of the Act). Another present challenge in dealing with data breaches and leaks in certain sectors (such as banking) is how older, more established regulators will engage and co-operate with the new Information Regulator (South Africa). Dealing with cybersecurity issues is novel for the police and there is an apparent need for both capacity and capability to be developed by the police to effectively investigate and deal with cyber matters.

10 Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?

South African law regulates cybercrime primarily through the newly enacted Cybercrimes Act 2020. The Act provides for a broad array of cybercrime issues, including creating statutory offences, extending the investigative powers of the police to cater for cybercrime and creating the framework for the South African government to co-operate with other countries in respect of cybercrime. The Act is a very new piece of legislation and, similar to the above, law enforcement authorities (particularly the police) have not yet displayed a clear track record that can be referred to in order to get a good idea of the approach that will be taken in respect of cybercrime.

Cross-border issues and foreign authorities

11 Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.

South African criminal law does not have blanket or general extraterritorial effect but there are exceptions in terms of which some offences have extraterritorial effect. Notable examples include (but are not limited to) the following:

• Prevention and Combating of Corrupt Activities Act 2004 (PRECCA) is the key legislation that defines what constitutes bribery and corruption offences under the South Africa law. Under section 35, acts performed outside South Africa that constitute an offence under PRECCA can be tried by the South African courts in certain circumstances, including where the acts are committed by a South African citizen, by a person ordinarily resident in South Africa or by a South African incorporated company.
• Prevention of Organised Crime Act 1998 is the key legislation that criminalises money laundering, racketeering and related offences in South Africa. Various aspects of the Act apply to conduct that occurs within South Africa or elsewhere. For example, it defines ‘unlawful activity’ as conduct that amounts to a crime or contravenes any law whether performed in South Africa or elsewhere. This is linked to the definition of ‘proceeds of unlawful activity’, which also applies to the acquisition of something in South Africa or elsewhere. Certain offences under the Act are premised on actions that relate to the proceeds of unlawful activity, and actions performed inside or outside South Africa may be caught by these provisions.

12 Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.

South Africa faces the same challenge as most countries when it comes to cross-border investigations. In this regard, law enforcement authorities have no jurisdiction beyond the borders of the country and as such it is difficult to secure evidence located outside the country and to compel witnesses to provide information. There is also the challenge of attempting to secure the attendance of suspects and persons against whom prosecutions are initiated.

To endeavour to overcome the aforementioned challenges, South Africa has implemented the International Co-operation in Criminal Matters Act 1996. This Act provides a legal framework for South Africa to co-operate with other countries to obtain or provide evidence, enforce sentences and criminal matters, and confiscate the proceeds of crimes. The legislation provides for reciprocal mutual co-operation. The Act enables the South African government to enter into mutual legal assistance treaties with other countries and special administrative regions. Notable treaties include those entered into with the United States, the Southern African development community (comprising of South Africa and 13 other African countries), the Hong Kong special administrative region, Argentina and, most recently, the United Arab Emirates. The treaty with the United Arab Emirates can be directly linked to the endeavours to bring alleged perpetrators of alleged state capture to justice. In this regard, key members of those known as the Gupta family who have been placed at the centre of state capture based on their apparent close relationships with former president Jacob Zuma are currently based in Dubai and steps are under way to extradite them to South Africa.

13 Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the ‘anti-piling on’ policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?

South Africa has domestic double jeopardy laws that are entrenched in the Constitution and the Criminal Procedure Act 1977 (CPA). In terms of section 35(3)(m) of the Constitution, every person has the right to a fair trial, which includes the right not to be tried for a crime in respect of which a person previously has been found guilty or has been acquitted. Section 106(1), Paragraphs (c) and (d) of the CPA enables an accused to plead that they have already been convicted or acquitted of an offence. The extent to which these provisions apply to an offence that has been tried outside South Africa is not clear as the courts have not dealt with such a case in a reportable judgment.

Notwithstanding the above lack of clarity in the law, there is no equivalent to the US ‘anti-piling on’ policy in South Africa. South African law enforcement authorities have not historically had to engage in large-scale multi-jurisdictional enforcement settlements, and the need to resolve how the punishment of a company will be apportioned between countries has not arisen. However, certain high-profile cases that emanate from state capture and the wide-scale investigations that have occurred will probably require multi-jurisdictional resolution.

14 Are ‘global’ settlements common in your country? What are the practical considerations?

Global resolutions of enforcement matters against companies are novel to South African law enforcement authorities. We anticipate that global settlements will be sought in the near future in respect of cases that arise out of state capture, particularly those that involve companies subject to US jurisdiction and investigation by both South African and US law enforcement authorities.

Practical considerations for companies to consider are the current shortcomings in the South African legal framework. In this regard, South Africa does not have deferred prosecution agreements. This means that the mechanisms available in other countries, such as the United Kingdom and United States, to resolve enforcement actions are not yet available in South Africa and we anticipate there will be significant developments in this area in the near term. In this regard, the Zondo Commission has specifically recommended that South Africa should adopt a system of deferred prosecution agreements.

15 What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

Historically, decisions of foreign law enforcement authorities have had little bearing on the decisions of South African law enforcement authorities to investigate the same matter in South Africa. For example, the US Securities and Exchange Commission and the US Department of Justice settled an enforcement action with the Japanese conglomerate Hitachi in 2015 in respect of suspected corruption in South Africa. Hitachi was alleged to have engaged in corruption involving the funding arm of the African National Conference called Chancellor House. Although Hitachi did not admit guilt as part of its agreement to pay the US authorities US$19 million, the public statements of the US authorities were damning. To date, we are not aware of any investigation or prosecution against Hitachi in respect of the matter in South Africa.

Notwithstanding the historical approach of South African law enforcement authorities, as part of the current widespread reforms to combat corruption, we may see a change in approach in the future.

Economic sanctions enforcement

16 Describe your country’s sanctions programme and any recent sanctions imposed by your jurisdiction.

South Africa does not have its own sanctions programme per se. Sanctions are regulated under the Protection of Constitutional Democracy Against Terrorist and Related Activities Act 2004 (POCDATARA) and the Financial Intelligence Centre Act 2001 (FICA). Under section 25 of POCDATARA, the President must give notice in a gazette of certain sanctions imposed by the United Nations. This should be read together with the offences created in the Act, which include a prohibition on providing financing and support to any entity published in a notice under section 25.

In addition to the above, section 26A of FICA requires the Minister of Finance to publish notices through gazettes on financial sanctions imposed by the United Nations and section 26B of FICA creates various restrictions that apply to persons listed in such notices.

In light of the above, South Africa has an indirect approach to sanctions in terms of which it largely adopts the sanctions imposed by the United Nations.

17 What is your country’s approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?

South Africa does not adopt a proactive approach to sanctions enforcement but adopts the sanctions imposed by the United Nations through the provisions of POCDATARA and FICA.

18 Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?

South Africa adopts an indirect approach to sanctions. Law enforcement authorities do not typically proactively co-operate with their counterparts in other countries in respect of sanctions and sanctions enforcement.

19 Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.

South Africa has not enacted any blocking legislation. The sanctions regime largely entails adopting sanctions imposed by the United Nations.

20 To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?

South Africa has not enacted any blocking legislation. The sanctions regime largely entails adopting sanctions imposed by the United Nations.

Before an internal investigation

21 How do allegations of misconduct most often come to light in companies in your country?

In our experience, misconduct most often comes to light through whistleblowing channels and anonymous whistleblowing reports. The biggest concern or challenge that arises when misconduct is reported through an anonymous whistleblowing report is that it may be difficult in practice to engage with the whistleblower. This can create a challenge at the outset of the matter if the allegations are vague and it is necessary to obtain further information and clarification to be able to investigate constructively the concerns raised. It could also create challenges at the conclusion of an investigation as it is difficult in practice to give the whistleblower proper feedback about the outcome of an investigation.

Information gathering

22 Does your country have a data protection regime?

South Africa’s data protection regime is contained in the Protection of Personal Information Act 2013 (POPIA). There are many similarities between POPIA and the European Union’s General Data Protection Regulation. However, there are also some key differences. For example, POPIA applies not only to individuals but also to juristic persons, such as companies.

23 To the extent not dealt with above at question 9, how is the data protection regime enforced?

The Information Regulator (South Africa) is a comparatively new regulator that is still finding its place among more established regulators and there is a degree of overlap between the purviews of different regulators in certain instances. As such, it remains to be seen how proactive the Information Regulator will be in taking enforcement action against companies that do not comply with POPIA.

24 Are there any data protection issues that cause particular concern in internal investigations in your country?

POPIA creates a host of protections for data subjects and rules and exemptions that apply to parties that need to collect and process personal information. It is important to understand the protections, rules and exemptions and to comply with the applicable rules when gathering evidence that may contain personal information.

For example, section 12 of POPIA requires that personal information must be collected directly from a data subject unless certain exceptions apply. In practice there are often various reasons why an investigator will not wish or be able to collect evidence (which may include personal information) from a data subject who is an employee. Section 18 of POPIA requires the party that collects the personal information to notify the data subject of various matters unless similar exceptions apply. Complying with these sections requires a careful approach that ensures that actions are carried out within the confines of the exceptions that may apply.

25 Does your country regulate or otherwise restrict the interception of employees’ communications? What are its features and how is the regime enforced?

Communications by an employee may contain personal information. As such, it is generally advisable for companies to have policies in place that ensure that interceptions can be done lawfully. It is also advisable for companies to ensure that employment contracts include appropriate clauses to further enforce the right of a company to monitor and intercept communications of an employee on company infrastructure.

Dawn raids and search warrants

26 Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.

Various laws give various law enforcement authorities the right to enter and search private premises under certain circumstances (including to conduct dawn raids). The wide array of different legal mechanisms is not dealt with here.

From a general criminal law perspective, the most important legal provisions are contained in Chapter 2 of the Criminal Procedure Act 1977 (CPA). The legal limitations that apply will depend on which power and section is being relied on. For example, under section 25 (the main section that applies to search warrants), information must be provided under oath to a magistrate or justice setting out reasonable grounds regarding why it is necessary to enter a premises. The premises cannot be entered for any arbitrary purpose and must be linked to the specific situations and purposes set out in section 25. In practice, a police officer involved in the investigation of an offence will prepare an affidavit explaining the background to an investigation and why it is necessary to enter a specific premises to search for and seize evidence. The police officer must convince the magistrate or justice that it is necessary for the invasive authorisation to be granted and, if so, the police officer (and any other officers involved) must carry out their search in compliance with the provisions of the search warrant granted. A notable feature of section 25 is that the search must be carried out at ‘any reasonable time’. The police have to consider this when carrying out dawn raids.

Where the powers granted to the police have been abused and a police official acts contrary to the authority of a search warrant issued, they may commit an offence under section 28 of the CPA. Furthermore, if a police officer gives false information to obtain a search warrant, a company that suffers damage as a consequence of this can apply to a prosecutor for damages to be awarded to them.

27 How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

In the judgment of Thint (Pty) Ltd v. NDPP [2008], the Constitutional Court held that the claim to privilege is not confined to the time of trial and that it may be claimed when documents are being seized under a search warrant or during the discovery process. The case centred on a search conducted under section 29(11) of the National Prosecuting Authority Act 1998. In terms of that section, if a person claims privilege over an item during the execution of a search warrant, the person executing the warrant can request that the registrar of the high court seize and remove the item for safe custody until a court of law has made a ruling on the question as to whether the information concerned is privileged or not. Similar provisions exist in other legislation (such as the Protection of Personal Information Act 2013).

Although the steps to protect privilege information and records will depend on the law in terms of which a search warrant or subpoena has been obtained, it is important to claim privilege during the search and urgently obtain legal advice and support.

28 Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?

Chapter 23 of the CPA deals with the key provisions relating to witnesses in criminal proceedings and what processes must be followed to secure the attendance of a witness at a criminal trial. Section 179 of the CPA (which forms part of Chapter 23) enables the prosecution or the defence to compel the attendance of a witness at criminal proceedings to testify or provide relevant physical evidence or records. A person who is subpoenaed can rely on a number of privileges set out in Chapter 23 to refuse to answer questions or to provide physical evidence or records. For example, section 203 of the CPA provides for the right against self-incrimination. Under this section a witness can refuse to answer self-incriminating questions.

Whistleblowing and employee rights

29 Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?

South Africa does not have a consolidated and clear legal framework that deals with whistleblowing. However, certain protections apply to whistleblowers who make protected disclosures under the Protected Disclosures Act 2000. These effectively protect whistleblowers against occupational detriment as a result of making a protected disclosure. The Labour Relations Act 1995 (LRA) has provisions that make the dismissal of an employee in respect of a protected disclosure automatically unfair.

At present, South Africa does not have any financial incentive schemes for whistleblowers, such as bounties. However, the Zondo Commission has recommended that such a system should be implemented. The Commission has also made recommendations for reforms not only to protect whistleblowers against occupational detriment but also to protect their safety and security. As such, significant reforms in whistleblower protection and reward are anticipated in due course.

30 What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?

The general rights of employees under employment law apply to employees whose conduct is within the scope of potential wrongdoing that is being investigated. These rights should be respected throughout an investigation process and during any consequence management instituted following an investigation. For example, an employee has a right not to be unfairly dismissed.

There is typically no distinction between the rights of officers and directors employed by a company versus the rights of other employees (albeit non-executive directors are typically not employees). It should also be noted that there are certain processes that must be followed to remove a director from that position. These processes are governed by the Companies Act 2008 and are separate from the processes that must be undertaken should a company wish to terminate the employment of an employee (including a director who is employed by the company).

31 Do employees’ rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?

Employees’ rights do not change if they are deemed to have engaged in misconduct and they remain entitled to the protections afforded to them under employment law. Whether or not a company suspends or disciplines an implicated employee largely remains within the discretion of the company to decide what it wishes to do in the circumstances. Should a company decide to suspend or discipline an employee, it should take careful steps to ensure that it complies with the relevant legal requirements. An employee may only be suspended under specific circumstances, including where their ongoing presence in the workplace may jeopardise the company’s ability to investigate the allegations.

32 Can an employee be dismissed for refusing to participate in an internal investigation?

Whether or not an employee can be disciplined and whether the disciplinary process will result in the dismissal of the employee will depend on a multitude of factors and facts in each case. If the employer instructs the employee to participate in the investigation and the employee unreasonably refuses, this may amount to insubordination. Depending on the severity of the insubordination and the ramifications relating to the employee’s refusal to participate, the misconduct may warrant dismissal. Any dismissal must follow a fair process as identified in the LRA.

Commencing an internal investigation

33 Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

It is common practice in South Africa to prepare terms of reference, an investigation plan or an investigation scope before commencing an investigation. The issues typically covered would include what has given rise to an internal investigation (such as a whistleblowing report and the salient aspects of that report), who is responsible for conducting the investigation, the governance process in terms of which the investigation has been commissioned and the planned investigative procedures that would be undertaken.

34 If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

It is important to bear in mind that allegations may or may not be merited. As such, it is incumbent on companies to have appropriate processes and frameworks in place to ensure that potential issues are properly investigated to determine whether or not issues are merited and require further steps to be taken. Although there is no legal requirement that prescribes the internal processes that must be taken in terms of the investigation of issues and manner in which internal reporting and decision-making must be done in respect of investigations, typically companies will have structures in place in terms of which investigation functions report to a forum such as a whistleblowing committee. This forum will typically be responsible for deciding how issues are investigated, monitoring the progress of investigations, considering the outcomes of investigations and deciding whether further steps need to be taken. The forums will usually report to a subcommittee of the board of directors, such as the social and ethics committee.

35 What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

A company should initiate steps to establish whether it does actually hold documents or data that fall within the ambit of a subpoena and, if so, it should take steps to preserve the documents and data. Concurrent to this, it is advisable for a company to obtain appropriate legal advice on the validity of the subpoena and obligations that arise as a result thereof. Based on these parallel steps, a company will be well placed to determine whether it is able to comply with the subpoena (based on whether it does or does not have the documents or records in its possession) and whether it is required to do so. Even if the subpoena is legally defective, a company may nevertheless wish to adopt a co-operative approach with the authorities by engaging constructively to address the legal defects in the subpoena and thereafter provide as much information and as many records as it can.

36 At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?

Companies are generally not required to disclose the existence of internal investigations or the fact that they have been contacted by a law enforcement authority in respect of an investigation.

Notwithstanding the above, a company that is listed on the Johannesburg Stock Exchange (JSE) must comply with the JSE listing requirements. These requirements include obligations in respect of ‘price sensitive information’, which is defined as ‘unpublished information that is specific or precise, which if it were made public, would have a material effect on the price of the issuer’s securities’. A situation could arise where the provisional findings of an investigation or matters raised by a law enforcement authority are so serious that they could have a material effect on the share price if made public. Under these circumstances, a listed company could be under an obligation to make a public announcement through a Stock Exchange News Service announcement (depending on the circumstances).

37 How are internal investigations viewed by local enforcement bodies in your country?

Internal investigations are typically viewed favourably by local law enforcement bodies, particularly where investigations give rise to clear evidence of wrongdoing that may assist law enforcement bodies (as companies are often the victims of crimes, and the evidence gathered may be integral to the police and the National Prosecuting Authority being able to successfully prosecute a perpetrator). There are no legal requirements that specifically address the conduct or format of an internal investigation. However, some laws may have indirect application. For example, employment laws should guide the manner in which employees are treated during investigations.

Attorney–client privilege

38 Can the attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

The judgment in Tiso Blackstar Group (Pty) Ltd v. Steinhoff International Holdings NV [2022] Case No. 18706/2019 (WCC) (10 May 2022) has made the position in South Africa more tenuous. In the case, Steinhoff commissioned a forensic investigation by PwC through its lawyers (Werksmans). The investigation focused largely on widespread accounting irregularities in respect of the well-publicised Steinhoff scandal. The applicants in the case wanted the court to compel Steinhoff to disclose PwC’s report. Steinhoff resisted this on the basis that the report was subject to litigation privilege (a specific form of legal privilege). A key argument put forward by the applicants was as follows:

The criticism in this regard is that the mere fact that a law firm has been interposed between PwC and Steinhoff is not enough to establish privilege. Nor is the mere inclusion of a ‘privileged’ header. This is because in order for the report to be privileged, the purpose for which it was commissioned must have been the preparation and defence of litigation – regardless of whether the formal engagement was done by Werksmans, or what the header on the letter of engagement says. The submission goes further that to focus on the header and the signatories to the engagement letter and conclude that the report is privileged, is to elevate form over substance.

In ruling in favour of the applicants, the judge found that a party that wants to rely on litigation privilege has to set out ‘objective facts on the basis of which the court can assess whether it can be said that, objectively, litigation was in contemplation’.

The judgment was difficult to reconcile with a former position held by the same division of the High Court and the judge did not distinguish the former case (Peter Jacobus Viljoen Du Toit v. Stellenbosch University [2015] Case No. 10332/2014). In that case, the university engaged KPMG (as opposed to PwC) through the same firm of lawyers (Werksmans). The judge adopted a more generous approach to when litigation is contemplated and accepted that KPMG’s report was privileged.

The Tiso Blackstar judgment has been taken on appeal. Although it is hoped that the position will be clarified through the appeal judgment, in the interim, companies should adopt a conservative approach when seeking to protect an internal investigation with privilege. Simply engaging an audit firm to carry out an investigation through a law firm may not be enough to claim privilege. Similarly, vague claims of contemplated litigation may also not be enough. Companies should seek appropriate legal advice at the outset of contentious investigations if they wish to implement appropriate privilege protections.

39 Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

A company can typically rely on legal privilege in respect of communications that are made between representatives of a company and their lawyer provided that the communications are made in confidence for the purposes of obtaining legal advice and that the privilege is claimed. The privilege belongs to the company. The same rules apply to privilege claimed by individuals.

A separate category of privilege that is also recognised is litigation privilege. Litigation privilege applies to communications between a lawyer and the company that relate to actual or contemplated litigation. Unlike legal privilege, it may also apply to communications with third parties (such as experts) that are made for the purpose of the actual or contemplated litigation.

40 Does the attorney–client privilege apply equally to in-house and external counsel in your country?

Provided that the elements of privilege detailed above are met, the rules of privilege apply equally to external lawyers and in-house lawyers.

41 Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to investigations in your country?

Although this issue has not been dealt with directly in a reported judgment in South Africa, it is anticipated that, provided the elements of privilege detailed above are met, the rules of privilege will apply to foreign lawyers. However, the above guidance in respect of when privilege may apply to investigations should be taken into account.

42 To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

South Africa does not have a deferred prosecution agreement (DPA) framework that creates challenges in reaching a clear and binding negotiated outcome with the National Prosecuting Authority. However, the Zondo Commission has recommended that such a framework should be put in place. As part of the recommendation, the Commission has advised that a condition to entering into a DPA should be that a company self-reports and that it co-operates fully. If the recommendation is implemented, it is difficult to contemplate a situation in which a company that wishes to achieve a DPA could do so without waiving privilege where required to be fully co-operative.

43 Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

Limited waiver of privilege is not a concept that has yet been developed in South African law. Generally the position has been that a company either enforces privilege or waives privilege (without there being a grey area in between). Furthermore, case law has confirmed that where confidentiality of privileged information is lost, a company cannot use privilege to try to stop third parties from publishing the information. This emanated from the judgment in South African Airways SOC v. BDFM Publishers (Pty) Ltd 2016 (2) SA 561 (GJ) [2016] 1 ALL SA 860 (GJ). The case suggests that if there is a limited waiver to a third party (including law enforcement), and the information was to then get into the public domain, a company would not be able to use privilege to try to stop third parties from perpetuating the publication of the information further.

44 If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

The same applies in this instance as in question 43.

45 Do common interest privileges exist as concepts in your country? What are the requirements and scope?

Common interest privilege may find application in South Africa (albeit there has not been a hallmark case where this has been tested before the courts). For common interest potentially to be invoked, the parties would have to have a common or joint interest. For example, a company and its shareholder may have a common or joint interest in defending an action against the company. A prudent step to take would be for the parties to enter into an appropriate agreement through their lawyers to endeavour to protect the confidentiality and privilege of what is shared (and to create warranties, undertakings and indemnities between the parties).

46 Can privilege be claimed over the assistance given by third parties to lawyers?

Yes – see the information in question 39 about litigation privilege, which can apply to assistance given by third parties to lawyers.

Witness interviews

47 Does your country permit the interviewing of witnesses as part of an internal investigation?

Yes, a company can instruct employees to participate in an investigation and to provide information to the persons conducting the interview. There is no formal legislative or regulatory prohibition or set of guidelines regarding how the interview should be conducted. However, the rights of employees should be respected during any interview. For example, employees cannot be forced to incriminate themselves (as they have a constitutional right against self-incrimination). They may nevertheless choose to be open and candid and, if lawfully instructed to do so, they should answer all questions put to them that do not infringe on their rights.

48 Can a company claim the attorney–client privilege over internal witness interviews or attorney reports?

The position in respect of the application of legal privilege (and specifically the subset of litigation privilege) is currently subject to a degree of uncertainty given the judgment in Tiso Blackstar Group (Pty) Ltd v. Steinhoff International Holdings NV [2022] Case No. 18706/2019, which is currently under review. It is anticipated that the review judgment will provide some clarity in respect of investigation reports. However, the case is focused on a forensic report prepared by an audit firm (PwC). It is not clear whether the court of first instance would have come to the same assessment if the forensic report was prepared by lawyers and contained direct legal advice. In our assessment, such a report would be subject to better protection than a report prepared by a third-party audit firm or forensic investigation firm.

The position in respect of internal witness interviews and the notes generated as a result thereof has not been dealt with in granular detail in the two leading cases that have addressed the application of litigation privilege to forensic investigations (being Tiso Blackstar and Peter Jacobus Viljoen Du Toit v. Stellenbosch University [2015] Case No. 10332/2014). However, it is anticipated that if litigation privilege can rightly be claimed over an investigation process, the privilege will cover the core communications that form part of the process and records that relate to these communications.

49 When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

The type of warning that may be appropriate in an investigation conducted in South Africa will depend on the reason why an employee is being interviewed. If the witness is a factual witness (and not suspected to have been involved in wrongdoing), an Upjohn-type warning would be appropriate (particularly when the investigation is being carried out by an external lawyer and to inform the witness that the lawyer acts for the company and not the individual). It is usually important in practice also to advise witnesses that they are required to maintain confidentiality in respect of the process and for this to come as a formal instruction from the company.

When the witness being interviewed is suspected of wrongdoing, something similar to a Miranda-type warning may be appropriate. In this regard, it is typically recommended that employees are told that they need not answer a question if the answer may incriminate them. Employees do not necessarily have a right to have a lawyer present and this need not form part of the warning.

The approach to third-party witnesses would be much the same as with employees. The one difference is that the company generally cannot give binding instructions to third parties. As such, there will be a degree of risk in respect of maintaining confidentiality and it would be prudent to get a third party to agree in writing to maintain the confidentiality of the process through some form of non-disclosure agreement.

50 How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

As stated elsewhere, there is no formal South African legislation or regulations that deal specifically with the content, nature and format of witness interviews during internal investigations. The persons who conduct the internal investigation largely determine the structure of the interviews and may choose to put documents to a witness (if appropriate) (see question 47).

As indicated in question 49, an employee does not necessarily have a right to have a lawyer present at an internal investigation interview.

Reporting to the authorities

51 Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

In terms of section 34 of the Prevention and Combating of Corrupt Activities Act 2004 (PRECCA), any person in a position of authority must report any knowledge or suspicion of corruption, theft, fraud, extortion, forgery or utterance of a forged document involving an amount of 100,000 rand or more. For companies, this would typically apply to directors. The obligation falls on the individual officer and not on the company itself. The reports must be made to the Directorate for Priority Crime Investigations.

52 In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

Typically the types of scenarios in which one would advise a company to self-report are those when a personal reporting obligation would arise under section 34 of PRECCA. Although this is not an obligation on the company, it is generally advisable for the company to be proactive in the reporting as the company acts through its directors (and the directors have to balance their fiduciary duties with their reporting obligations).

Potential reporting obligations or voluntary self-reporting in other countries may need to be considered if a company forms part of a multinational group of companies or if the particular issue touches on multiple jurisdictions. Advice should be obtained from appropriately qualified and competent lawyers in the various jurisdictions that may be relevant based on the group structure or the affected jurisdictions.

53 What are the practical steps needed to self-report to law enforcement in your country?

Situations in which self-reporting would typically be advisable overlap with situations when a personal reporting obligation arises under section 34 of PRECCA. In practice, a single report is usually prepared to be submitted on behalf of all the directors. The report is usually prepared with input from a lawyer to assist the company and directors. Before submission, the report will typically be distributed to all the directors or discussed at a board meeting and approved by the directors. Thereafter, the report would typically be submitted by a single director or by someone on behalf of all the directors.

Responding to the authorities

54 In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

It is advisable for companies to obtain legal advice if they receive a subpoena from law enforcement authorities. The manner in which a company will respond will depend on the facts of the matter and should be based on legal advice given in respect of those facts.

The process of how best to respond to a notice or subpoena is different from how to deal with actual or potential criminal charges against a company. Typically, companies are not charged without cause and there will be some process of engagement with the company by the relevant agency conducting the investigation. It is generally possible (and advisable) for the lawyers of the company to proactively engage with the investigators to keep track of the progress of the investigation and if and when the matter is referred to the National Prosecuting Authority (NPA). If the matter is referred to the NPA for a decision on whether to prosecute the company, it is generally possible to constructively engage with the NPA (including making representations on behalf of the company).

55 Are ongoing authority investigations subject to challenge before the courts?

Whether or not any particular aspect of an ongoing investigation by law enforcement authorities can be legally challenged before the courts will depend on a multitude of facts specific to the relevant case and legal advice should be sought in each case.

56 In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

Companies should comply with the specific requirements of each notice and subpoena received (wherever received). Pursuant thereto, companies should obtain legal advice from their lawyers in the relevant jurisdictions and take steps based on the advice. As part of the advice sought, a company should determine whether it would be prudent to endeavour to agree a consistent disclosure package in the circumstances (and, if so, how to pursue the consistent disclosure package with the relevant law enforcement authorities of the jurisdictions involved).

57 If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for and produce material in other countries to satisfy the request? What are the difficulties in that regard?

This will depend on the specific circumstances of the case, including whether the law enforcement authorities have jurisdiction to demand production of the records that are not located in South Africa and whether the company that is subpoenaed is actually in possession of the records and information requested. A practical difficulty is that a company located in South Africa may not actually be in possession of the records or information requested under a subpoena as the records and information may sit with another company that the South African company does not control. Furthermore, even if a company is in possession of the records and information in another country, the laws of that country may prohibit the company from taking the records or information out of that country.

58 Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

To seek to co-operate with other international efforts to combat crime, South Africa actively engages with the International Criminal Police Organization (Interpol) through its National Central Bureau that sits within the Crime Intelligence Division of the South African Police Service.

59 Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?

Section 70 of the South African Police Service Act 1995 makes it a criminal offence for any member of the police to wilfully disclose information in circumstances in which they know, or could reasonably be expected to know, that such a disclosure will or may prejudicially affect the exercise or performance of the powers and functions of the police. The police must also comply with the provisions of the Protection of Personal Information Act 2013.

60 How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

Companies should typically not break the laws of one country to satisfy a demand from law enforcement authorities in another. If such a situation were to arise, a company should (through its lawyers) engage with the relevant law enforcement authority in South Africa to explain the situation and seek to resolve it.

61 Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?

For almost a decade, attempts have been made to progress the Protection of State Information Bill (also called the Secrecy Bill) in South Africa. The draft legislation has been subject to extensive controversy and challenge and has not been finalised or implemented to date. As such, South Africa does not have a current comprehensive regime of secrecy or blocking statutes.

There may be certain laws that have some blocking effect. For example, section 67(1)(a) of the Tax Administration Act 2011 (Tax Act) requires officials from the South African Revenue Service to withhold taxpayer information, which includes any information provided by the taxpayer or obtained by the Revenue Service in respect of the taxpayer, including biometric information. Section 67(1)(a) is an example of a type of secrecy provision in South African law. However, it is subject to certain limitations; for example, if a court order requires disclosure of the information or where another Act expressly overrides the confidentiality provisions (such as section 70 of the Prevention of Organised Crime Act 1998).

62 What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

Disclosing records and information voluntarily (in the absence of a subpoena) may result in the rights of a third party being impugned, which could expose a company to legal risk. As such, it is generally more appropriate to make disclosures under legal compulsion (depending on the circumstances).

Prosecution and penalties

63 What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Companies are juristic persons (or legal fictions) and, as such, they cannot be imprisoned. However, they can be fined if convicted of a crime in South Africa. Companies can also be debarred or blacklisted from government work under various legislative frameworks. Directors, officers and employees may face the same penalties, as well as potential imprisonment if convicted of committing a crime. However, it should be noted that they can only face these consequences in respect of their own actions. A director, officer or employee cannot be convicted for the actions of the company (or someone else). Directors may also face delinquency applications in certain circumstances (which could bar them from being appointed as a director in the future).

64 Where there is a risk of a corporate’s suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?

The risks that a company may face in South Africa based on an enforcement settlement in another country will largely depend on the particular facts (and what the settlement entails). Companies with a significant presence in South Africa should obtain South African legal advice on the risks in the particular circumstances before finalising the settlement.

65 What do the authorities in your country take into account when fixing penalties?

The penalties that can be imposed will depend on what the penalties relate to. Certain legislation prescribes limits to the penalties and fines that may be imposed for contraventions and legislative crimes, whereas other crimes have no prescribed limits. There are also limited case precedents that can be used as guidance to determine what penalties will be imposed on companies that are convicted of corporate crimes in South Africa.

Resolution and settlements short of trial

66 Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

South Africa does not currently have a deferred prosecution agreement (DPA) framework (or non-prosecution framework) in place. However, the implementation of such a framework has been recommended by the Zondo Commission. Furthermore, at the beginning of December 2022, the National Prosecuting Authority entered into an agreement with Swiss engineering firm ABB under the terms of which the company agreed to pay punitive reparations to South Africa. The hallmark agreement may pave the way for DPA-type agreements to be entered into in practice.

67 Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?

Since there is currently no framework in place for DPAs or non-prosecution agreements, this is not applicable in South Africa.

68 Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

Companies should be aware that there is no DPA framework currently in place. Although a company can endeavour to reach an agreement with the National Prosecuting Authority (NPA) in terms of which the NPA will refrain from prosecuting, the legal framework currently in place does not create the kind of legal certainty that could be derived through a DPA framework. Companies should be aware of this risk.

69 To what extent do law enforcement authorities in your country use external corporate compliance monitors as an enforcement tool?

Law enforcement authorities in South Africa do not use corporate compliance monitors as an enforcement tool.

70 Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?

Criminal investigations and prosecutions do not preclude affected persons from pursuing civil litigation against the suspected perpetrators to endeavour to recover losses through the civil courts. Plaintiffs typically cannot gain access to evidence gathered through mechanisms meant for the criminal investigation of matters. However, civil litigation does have discovery processes in terms of which parties are required to disclose records relevant to the issues in dispute.

Publicity and reputational issues

71 Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

Although the existence of a criminal investigation into a particular matter is typically not subject to publicity restrictions, certain aspects of the investigation may be kept confidential by the police and other law enforcement bodies. Criminal trials are typically held in open court and the public are typically able to access the courts and observe criminal trials.

72 What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

There is an active independent media sector in South Africa. It would thus be advisable that trained communications specialists and crisis advisers are engaged to handle media requests and work alongside legal counsel and the company to develop an appropriate media strategy if and when a company faces an investigation or prosecution. However, companies should ensure that the highest degree of ethical and legal standards are maintained by any such advisers. The Bell Pottinger scandal showed what could happen when a global public relations firm does not act appropriately. The London-headquartered firm collapsed following a well-publicised scandal in terms of which it embarked on a racially divisive campaign to try to detract attention away from its client, the Guptas.

73 How is publicity managed when there are ongoing related proceedings?

It should be borne in mind that most legal proceedings are generally accessible to the public, and cases may attract the attention of the media and other interested parties when the dispute concerns high-profile litigants. Although the media strategy will depend on the circumstances, it is typically advisable for a consolidated and comprehensive media strategy to be adopted that caters for all the ongoing related proceedings.

Duty to the market

74 Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

Market disclosure requirements typically only apply to listed companies. Whether or not a settlement must be disclosed based on the Johannesburg Stock Exchange listing requirements will depend on the facts of the case.

Environmental, social and corporate governance (ESG)

75 Does your country regulate ESG matters?

ESG is not regulated holistically in South Africa. Although environmental issues are well regulated by way of the National Environmental Management Act 1998 and various other pieces of legislation, these Acts regulate activities that will affect the environment but do not regulate the reporting standards. Bearing this in mind, companies tend to report on environmental matters that they believe to be pertinent (for example, financial consequences or non-compliance with regulatory standards), which has resulted in a lack of uniformity on environmental reporting. Regarding reporting on the other aspects of ESG – namely governance and social aspects – there is currently a ‘patchwork’ system in which there are various guidelines and codes that may regulate or guide reporting on select issues. For example, the King IV Code provides a framework for financial and governance reporting in South Africa. Additionally, the Johannesburg Stock Exchange (JSE) released two sets of guidelines in 2022, namely the JSE Sustainability Disclosure Guidance and the JSE Climate Disclosure Guidance. However, these are not mandatory and implementing the principles contained therein is voluntary.

76 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address ESG matters?

It is anticipated that the private sector will drive ESG initiatives and reporting in South Africa. Bearing this in mind, we do not anticipate any key regulatory or legislative changes to be implemented by the government in the next year. Rather, we anticipate seeing movements in the private sector to bolster ESG reporting to raise standards to be in line with international standards and best practices.

77 Has there been an increase in ESG-related litigation, investigations or enforcement activity in recent years in your country?

There has been a marked increase in environmental litigation, but only insofar as challenging the implementation of high-profile and contentious energy projects. As there is currently no comprehensive regulatory framework, compliance with ESG reporting standards remains voluntary.

Anticipated developments

78 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?

The most anticipated developments for the coming year will undoubtedly be what is done in response to the Zondo Commission. The President formally responded to the recommendations at the end of October 2022. Based on his response, it is anticipated that many of the legislative changes recommended by the Zondo Commission will be implemented. The practical implementation of the changes will undoubtedly shape the future anti-corruption landscape in South Africa.

Footnotes