Member login
Apply for Membership
Become a Friend of the ICFP

Financial Crimes

Section 39 of the Constitution states that when the Bill of Rights is interpreted it must be applied internationally.  However, the laws in South Africa must be applied.

The most important sources of criminal law in South Africa are legislation, common law and case law.  South Africa is one of the few countries in the world where criminal law has not been set out in one Act or code. One must accordingly turn to various pieces of legislation when seeking guidance on the legal framework in South Africa. The common law of South Africa is Roman-Dutch Law which has, over the years, been adopted and set out in our case law. It is important to note that the principle of judicial precedent is followed in South Africa.

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.  In terms of commercial crimes, South Africa has an array of domestic legislation that caters for the particular offences that are associated with commercial 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 statutes dealing with commercial crimes in South Africa.

The Constitution of the Republic of South Africa is the supreme law of the land, and all laws must be compatible with the Bill of Rights set out in the Constitution. If the rule of law is incompatible with the Bill of Rights it may be struck down by a court as null and void. This also applies to the rules governing criminal law. The Criminal Procedure Act of 1977 governs all procedures and related matters in criminal proceedings.

Concepts: Fraud Examiner

Fraud in South Africa differs from fraud in other countries/jurisdictions.  South Africa inherited its laws from Roman-Dutch laws and fraud changed throughout the years, but not in the same way as in other jurisdictions such as in the USA.  In South Africa, fraud is a common law crime.

Financial crime in South Africa includes offences such as money laundering, terrorist financing, fraud, bribery and corruption, market abuse and insider trading.  This is why using the terminology fraud examiner is misleading

South Africa is a party to a number of international agreements and conventions aimed at combating corruption.

Fraud

Fraud is a common law offence and is defined as:
The unlawful and intentional making of a misrepresentation that causes actual or potential prejudice to another.
This means, therefore, that there is no distinction drawn between corporate or business fraud.
The following elements must be proven to sustain a case of fraud under the common law:
  • Misrepresentation
  • Unlawfulness
  • Actual or potential prejudice
  • Intention

The element of Misrepresentation

Misrepresentation is the deliberate distortion or falsification of the truth.  Without the required misrepresentation, we are not dealing with fraud but most likely with theft.  When property was taken without permission, it is theft and not fraud.

Commercial crime of fraud always starts with a misrepresentation of some kind.

The different forms of misrepresentation in fraud

The misrepresentation can take really any form. It mostly takes the form of the written or spoken word.

  • It can be something that was said verbally.
  • It can be in the form of a document, which in fraud it often is.
  • It can be in the form of electronic communication.
  • It can be implied through conduct.

 

 

Corruption and bribery

Section 3 of the Prevention and Combatting of Corrupt Activities Act 12 of 2004 (PRECCA) contains the formulation of the general crime of corruption.

Any person who, directly or indirectly –

(a) accepts or agrees or offers to accept* any gratification* from any other person, whether for the benefit of himself or herself or for the benefit of another person; or

(b) gives* or agrees or offers to give to any other person any gratification, whether for the benefit of that other person or for the benefit of another person in order to act, personally or by influencing another person so to act, in a manner –

(i) that amounts to the –

(aa) illegal, dishonest, unauthorised, incomplete, or biased; or

(bb) misuse or selling of information or material acquired in the course of the,

exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or any other legal obligation;

(ii) that amounts to –

(aa) the abuse of a position of authority;

(bb) a breach of trust; or

(cc) the violation of a legal duty or a set of rules,

(iii) designed to achieve an unjustified result; or

(iv) that amounts to any other unauthorised or improper inducement to do or not to do anything,

is guilty of the offence of corruption.

Facilitation payments

Facilitation payments constitute gratification and would qualify as corruption under PRECCA

International anti-corruption conventions

South Africa is a party to the following international anti-corruption conventions:

  1. the United Nations Convention Against Corruption;
  2. the AU Convention Against Corruption;
  3. the OECD Anti-Bribery Convention; and
  4. the SADC Protocol Against Corruption.

How is bribery defined?

South African legislation does not specifically define bribery per se, it does however define corruption in such a way that it includes bribery as a form of corruption.  South African legislation does not specifically distinguish between corruption involving public officials and corruption involving private persons. Bribery involving a public or private person/entity is therefore criminalised in South Africa.  Both active and passive bribery are encapsulated by the South African legislative understanding of corruption and therefore both the act of offering a bribe and accepting a bribe are criminal offences.

 

Forgery and uttering

 


The crime of forgery in South Africa is a common law crime, meaning it does not come from a statutory background but instead, is derived from the courts and case law and historical legal influences.

Forgery and uttering are two separate crimes and can be committed by different people.

Definition of forgery: Unlawfully making a false document, causing actual or potential prejudice to another person, with the intention to do so and the intention to defraud.

Elements of Forgery

Unlawfully making
A false document
Causing actual or potential prejudice
To another person
With the intention to defraud
When the term forgery is used, one immediately thinks about fraud but it is so important to understand the difference between forgery and fraud. In South Africa, fraud occurs when a person makes a misrepresentation which can cause prejudice or potential prejudice, forgery however takes a step further by actually producing false documentation of that fact.

UTTERING

Definition of uttering: Unlawfully presenting a false document, causing actual or potential prejudice to another person, with the intention to do so and the intention to defraud.

Elements of uttering

Unlawfully presenting/communicating (to another person)
A false document
Causing actual or potential prejudice to another person
With the intention to defraud
As an example, one could forge a signature on a document, create a false identity document or forge an artwork to sell for money.

When a forged document is presented, one would be guilty of the crime of uttering of a forged document. Therefore creating a false document is forgery, and presenting or using that forged document is uttering. Both actions are a crime in South Africa.

Theft

Theft is the unlawful appropriation of moveable corporeal property belonging to another with the intent to deprive the owner permanently of the property.

Snyman Criminal Law (2002)

Snyman defines theft as: “A person commits theft if he unlawfully and intentionally appropriates movable, corporeal property which (a) belongs to, and is in the possession of, another (b) belongs to another but is in the perpetrator’s own possession; or (c) belongs to the perpetrator but is in another’s possession and such other person has a right to possess it which legally prevails against the perpetrator’s own right of possession provided that the intention to appropriate the property includes an intention permanently to deprive the person entitled to the possession of the property, of such property”.

The elements of theft consist of:

an act of appropriation;
a certain type of property;
unlawfulness;
intention, including an intention to appropriate.