1. C – Statutory Offences
2019 Certificate in Forensic Investigation Techniques,
Wednesday 27 March 2019

2. Statutory Crimes generally associated with Forensic Investigation
Prevention and Combating of Corrupt Activities Act 12 of (PACOCA)
General crime of corruption / Specific forms of corruption within the public & private sectors.
Prevention of Organised Crime Act 121 of 1998 (POCA)
Crimes relating to racketeering / money laundering / criminal gang activity;
Asset forfeiture provisions.

3. Statutory Crimes generally associated with Forensic Investigation
Public Finance Management Act 1 of 1999 (PFMA)
Maladministration: Disciplinary Action / Offences
Municipal Finance Management Act, 56 of 2003 (MFMA)
Companies Act 71 of 2008
Duties of Directors / Breach of confidence / Reporting Duties / Offences

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5. Part 1: Prevention and Combating of Corrupt Activities Act 12 of 2004 (Precca)

6. Introduction to PRECCA
To provide for the strengthening of measures to prevent and combat corruption and corrupt activities;
to provide for the offence of corruption and offences relating to corrupt activities;
to provide for investigative measures in respect of corruption and related corrupt activities;
to place a duty on certain persons holding a position of authority to report certain corrupt transactions;

7. Introduction to PRECCA
to provide for the establishment and endorsement of a Register in order to place certain restrictions on persons and enterprises convicted of corrupt activities relating to tenders and contracts;
to provide for extraterritorial jurisdiction in respect of the offence of corruption and offences relating to corrupt activities;

8. Introduction to PRECCA
PRECCA sets out reasons why corruption must be addressed:
Corruption and related corrupt activities:
undermine the rights in the Bill of Rights (and governments ability to provide and enforce these right),
endanger the stability and security of societies,
undermine the institutions and values of democracy / ethical values / morality,
jeopardise sustainable development / rule of law / credibility of governments,
and provide a breeding ground for organised crime;

9. Introduction to PRECCA
In broad terms the PRECCA makes provision for 3 types of offences:
General offences of corruption – Section 3
Corruption offences related to specific persons – Sections 4-9
Corruption offences related to specific events – Section 11-16

10. Introduction to PRECCA
Read section 3 - General offence of corruption:
Any person who, directly or indirectly-
(a) accepts or agrees or offers to accept a 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,

11. Introduction to PRECCA
General offence of corruption:
in order to act personally or by influencing another person so to act in a manner-
that amounts to the-
(aa) illegal, dishonest, unauthorised, incomplete, or biased; or
(bb) misuse or selling of information or material acquired in the course exercise, carrying out or performance of any powers, duties or functions arising out of a constitutional, statutory, contractual or another legal obligation;

12. Introduction to PRECCA
General offence of corruption:
that amounts to-
(aaa) the abuse of a position of authority /
(bbb) a breach of trust; /
(ccc) the violation of a legal duty or a set of rules;
designed to achieve an unjustified result: or that amounts to any other unauthorised or improper inducement to do or not to do anything is guilty of the offence of corruption

13. Introduction to PRECCA
Corruption offences related to specific persons – Sections 4-9
Public Officers; Foreign Public Officials; Agents; Members of the Legislative Authority; Judicial Officers; Members of the Legislative Authority; Judicial Officers & Members of the Prosecuting Authority.
Corruption offences related to specific events – Section 11-16
Witness & Evidential Materials; Contracts (NB with Procurement); Procuring or withdrawal of Tenders; Auctions; Sporting Events & Gambling Games

14. Introduction to PRECCA
Also:
Conflict of Interest;
Interference, hindering or obstruction of investigation;
Accessory to or after the offence

15. Introduction to PRECCA
Section 34 requires all people in positions of authority in both public and private sector to report corruption to the police if it involves more than R Failure by people in positions of authority to report corruption is an offence!
Who are people in positions of authority?
The director-general/ head of national or provincial government;
The municipal manager of the municipality;
The principal or head of a tertiary institution;
The director of a company; the CEO; a Partner in a partnership
The executive manager of a bank etc

16. Introduction to PRECCA
Penalties – Sections 26
The Act imposes penalties for people who are convicted of corrupt activities. Hefty prison sentences can be imposed, as well as fines.
If convicted in the High Court, one can receive up to life imprisonment.
If convicted in the regional magistrates’ court, one can receive a sentence of up to 18 years in prison.
If convicted in the district magistrates’ court, one can receive up to five years in prison.

17. Introduction to PRECCA
Penalties – Sections 26
Fines up to R
PLUS
In addition to any fine a court may impose the court may impose a fine equal to five times the value of the gratification involved in the offence.

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19. PART 2: Public Finance Management Act 1 of 1999 (PFMA)

20. Introduction to Pfma
To regulate financial management in the national government and provincial governments;
to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively;
to provide for the responsibilities of persons entrusted with financial management in those governments;
and to provide for matters connected therewith.

21. Introduction to Pfma
The Act aims to secure transparency, accountability and sound financial management in government and public institutions.
The Act clarifies the laws in relation to the National and Provincial Treasuries, the National and Provincial Revenue Funds, and the National Budgets.
It also governs the management of finances in departments, public entities (like ESKOM and TELKOM), Parliament and the provincial legislatures, and constitutional institutions (like the Human Rights Commission, the Commission on Gender Equality and the Independent Broadcasting Authority).

22. Introduction to Pfma Chapter 5 & 6: Accounting Officers
All departments and constitutional institutions (plus public entities) must appoint an accounting officer to ensure that money is managed effectively, efficiently and transparently.
Must ensure that resources are used economically and that assets are looked after.
Must maintain internal audit system and a system for evaluating projects.
Must keep full and proper records of the financial affairs + required to prepare and submit detailed financial statements to the Auditor-General and comprehensive annual reports and statements to the relevant treasury.

23. Introduction to Pfma Chapter 7: Executive Authorities
S 63. Executive Authorities MUST:
perform their statutory functions within the limits of the funds authorised for the relevant vote.
consider the monthly reports submitted to them.
exercise that executive’s ownership control powers to ensure that that public entity complies with this Act and the financial policies of that executive.

24. Introduction to Pfma
Chapter 10 - Financial Misconduct (Part 1 Disciplinary Proceedings):
An accounting officer for a department or a constitutional institution commits an act of financial misconduct if that accounting officer wilfully or negligently—
(a) fails to comply with a requirement of various sections or
(b) makes or permits an unauthorised expenditure, an irregular expenditure or a fruitless and wasteful expenditure.

25. Introduction to Pfma
Chapter 10 - Financial Misconduct (Part 1 Disciplinary Proceedings):
unauthorised expenditure
(a) overspending of a vote or a main division within a vote (“allocation of funds”);
(b) expenditure not in accordance with the purpose of a vote;
irregular expenditure
expenditure, other than unauthorised expenditure, incurred in contravention of (a) this Act; or (b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made

26. Introduction to Pfma
Chapter 10 - Financial Misconduct (Part 1 Disciplinary Proceedings):
fruitless and wasteful expenditure
expenditure which was made in vain and would have been avoided had reasonable care been exercised;
Fruitless and wasteful expenditure will always emanate from an action or lack of action instigated by an official that resulted in a financial loss to the institution..

27. Introduction to Pfma
Chapter 10 - Financial Misconduct (Part 1 Disciplinary Proceedings):
A charge of financial misconduct against an accounting officer or official referred to in section 81 or 83, or an accounting authority or a member of an accounting authority or an official referred to in section 82, must be investigated, heard and disposed of in terms of the statutory or other conditions of appointment or employment applicable to that accounting officer or authority, or member or official, and any regulations prescribed by the Minister in terms of section 85.

28. Introduction to Pfma
Chapter 10 - Financial Misconduct (Part 2 Criminal Proceedings):
S86 - Criminal offences include the following:
wilful or gross negligence on the part of an accounting officer;
wilful or gross negligence on the part of an accounting authority; and
unauthorised loans or entering into a binding financial contract without permission on behalf of a department, public entity or constitutional institution.
If a person is found guilty, they will be liable to a fine or imprisonment for a period of up to five years.

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30. PART 3: Municipal Finance Management Act, 56 of 2003 (MFMA)

31. Introduction to MFMA
To secure sound and sustainable management of the financial affairs of municipalities and other institutions in the local sphere of government;
To establish treasury norms and standards for the local sphere of government;
and to provide for matters connected therewith.

32. Introduction to MFMA
The MFMA must be read together with three other critical pieces of legislation: the Municipal Structures Act, the Municipal Systems Act and the Property Rates Act.
All four of these Acts have been designed to give effect to the 1998 White Paper on Local Government, which aims to transform municipalities to become more participatory, transparent and accountable.
The principles behind the reforms aim to improve financial affairs in local government and develop a more strategic approach to local service delivery.
Effective service delivery is possible only with good-quality + timely management information - proactive, identifying and solving problems as they arise

33. Introduction to MFMA
The Act also differentiates between the role of executive councillors and their officials by making the executive mayor or committee responsible for policy and outcomes and the municipal manager and other senior managers for implementation and outputs.

34. Introduction to MFMA
The key policy theme is to enable managers to manage, but to make them more accountable. The long-term vision is: –
sound financial systems and processes, producing the necessary information for managers;
transparent budgeting processes;
effective management of revenue, expenditure, assets and liabilities;
unqualified financial statements, prepared on the accrual basis and on time.

35. Introduction to MFMA The five underlying principles in the MFMA:
Promoting sound financial governance by clarifying roles
A more strategic approach to budgeting and financial management
Modernisation of financial management
Promoting co-operative government
Promoting sustainability
S 69. Code of Conduct for municipal staff members.—Code of Conduct contained in Schedule 2 of MFMA applies to every staff member.

36. Introduction to MFMA
Chapter 8 – Responsibilities of Municipal Officials (Part 1: Accounting officers)
S 60. Municipal managers are the accounting officer of the municipality for the purposes of this Act, and, as accounting officer, must—
exercise the functions and powers assigned to an accounting officer in terms of this Act; and
provide guidance and advice on compliance with this Act to the political structures, political office bearers and officials of the municipality; and any municipal entity under the sole or shared control of the municipality.

37. Introduction to MFMA S 83. Competitive bidding.—
(1) If a municipality decides to provide a municipal service through a service delivery agreement with a person referred to in section 80 (1) (b), it must select the service provider through selection processes which—
comply with Chapter 11 of the Municipal Finance Management Act;
allow all prospective service providers to have equal and simultaneous access to information relevant to the bidding process;
minimise the possibility of fraud and corruption;

38. Introduction to MFMA S 83. Competitive bidding.—
make the municipality accountable to the local community about progress with selecting a service provider, and the reasons for any decision in this regard; and
takes into account the need to promote the empowerment of small and emerging enterprises.

39. Introduction to MFMA
Subject to the provisions of the Preferential Procurement Policy Framework Act, (Act No. 5 of 2000), a municipality may determine a preference for categories of service providers in order to advance the interest of persons disadvantaged by unfair discrimination, as long as the manner in which such preference is exercised does not compromise or limit the quality, coverage, cost and developmental impact of the services.
The selection process referred to in subsection (1), must be fair, equitable, transparent, cost effective and competitive, and as may be provided for in other applicable national legislation.

40. Introduction to MFMA
Chapter 15 – Financial Misconduct (Part 1: Disciplinary proceedings 1)
S171 – An accounting officer of a municipality commits an act of financial misconduct if that accounting officer deliberately or negligently—
contravenes a provision of this Act;
fails to comply with a duty imposed by a provision of this Act on the accounting officer of a municipality;
makes or permits, or instructs another official of the municipality to make, an unauthorised, irregular or fruitless and wasteful expenditure; or
provides incorrect or misleading information in any document

41. Introduction to MFMA
Chapter 15 – Financial Misconduct (Part 2: Criminal proceedings)
S173 – The accounting officer of a municipality is guilty of an offence if that accounting officer—
(i) deliberately or in a grossly negligent way contravenes or fails to comply with a provision of this act
(ii) or fails to take reasonable steps to implement the municipality’s supply chain management policy referred to in section 111;
(iii) fails to take all reasonable steps to prevent unauthorised, irregular or fruitless and wasteful expenditure; or

42. Introduction to MFMA
Chapter 15 – Financial Misconduct (Part 2: Criminal proceedings)
S173 – The accounting officer of a municipality is guilty of an offence if that accounting officer—
(iv) fails to take all reasonable steps to prevent corruptive practices in the management of the municipality’s assets or receipt of money; or in the implementation of the municipality’s supply chain management policy;

43. Introduction to MFMA
Chapter 15 – Financial Misconduct (Part 2: Criminal proceedings)
S173 – The accounting officer of a municipality is guilty of an offence if that accounting officer—
deliberately misleads or withholds information from the Auditor General on any bank accounts of the municipality or on money received or spent by the municipality; or
deliberately provides false or misleading information in any document.

44. Introduction to MFMA
Chapter 15 – Financial Misconduct (Part 2: Criminal proceedings)
S174 – Penalties—
A person is liable on conviction of an offence in terms of section 173 to imprisonment for a period not exceeding five years or to an appropriate fine determined in terms of applicable legislation.

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46. PART 4: Companies Act 71 of 2008

47. Introduction to Companies Act, 2008
The Companies Act, 2008 aims to provide a flexible regime that balances accountability and transparency, with less of a regulatory burden. To that end, it sets certain common requirements for all companies. Differentiated requirements depend on the company’s wider responsibility to the public and the social and economic impact that the company’s operations have.

48. Introduction to Companies Act, 2008
DUTIES OF DIRECTORS
Directors need to know their rights and must be aware of what is expected of them. They are subject to the common law as found in court rulings and judgments.
The Companies Act, 2008 introduces a partial codification of directors’ duties. These duties include both a fiduciary duty and a duty of reasonable care, which operate in addition to the existing common law duties.

49. Introduction to Companies Act, 2008
DUTIES OF DIRECTORS
Section 76, in particular, requires a director to act in good faith and for a proper purpose in the best interests of the company. A director should furthermore act with the degree of care, skill and diligence that may reasonably be expected of a person carrying out such functions and having the same skill and experience of that director – the reasonable man/woman test.

50. Introduction to Companies Act, 2008
DUTIES OF DIRECTORS
“Good faith and for a proper purpose”
“Duty to act in the best interests of the company”
“Duty to avoid conflicts of interest”
“The Duty to Exercise care, skill and diligence”

51. Remedies for DIRECTOR’S breach of fiduciary duties

52. Section 77(2) (a) and (b): Liability of directors and prescribed officers”
A director may be held liable ito common law relating to breach of a fiduciary duty, for any loss, damages or costs sustained by the Co as a consequence of any breach by him of his statutory duties, namely to:
disclose his personal financial interests,
the duty regarding information,
the duty to act in good faith and for a proper purpose or…

53. Section 77(2) (a) and (b): “Liability of directors and prescribed officers”
….the duty to act in the best interests of the Co; and for delict for any loss, damages or costs sustained by the Co as a consequence of any breach by him of his statutory duty of care and skill, a breach of any other provision of the Act not mentioned in S77 or a breach of any provision of the Co’s MOI

54. Section 77(3) (a) - (e): “Liability of directors and prescribed officers”
Further, the Act provides that a director is liable for any loss, damages or costs suffered by the Co following –
undertaken unauthorised acts on behalf of the Co;
taken part in reckless trading by the Co;
been a party to acts or omissions by the Co to defraud the creditors, employees or shareholders of the Co, or had another fraudulent purpose;
knowingly signed, consented to or authorised the publication of false or misleading financial statements or prospectuses;

55. Section 77(3) (a) - (e): “Liability of directors and prescribed officers”
And …. been present at a meeting or participated in the making of a decision (i.e. signed a round robin resolution) and despite knowing that certain acts were prohibited, failing to vote against such prohibited acts, namely prohibited acts relating to:
the issuing of shares and securities;
the granting of options for the allotment or subscription of authorised shares or other securities in the Co;
the provision of financial assistance etc…

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57. Reckless Trading – Sec 22
prohibits a company from trading under insolvent circumstances.
Imposes a statutory duty on the directors of a company to avoid insolvent trading.
The object of this section is to deter directors from abusing the privilege of limited liability at the expense of creditors. Provides that directors that ignore this section run the risk of being declared delinquent directors and of being held personally liable for loss or damage suffered by some other person

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59. Introduction to Companies Act, 2008
Chapter 9 – Offences & penalties Section :
S 213. Breach of confidence
S 214. False statements, reckless conduct and non-compliance
S 215. Hindering administration of Act
S 216. Penalties
S 217. Magistrate‟s Court jurisdiction to impose penalties

60. Introduction to Companies Act, 2008
Chapter 9 – Offences & penalties Section :
S 213. Breach of confidence
It is an offence to disclose any confidential information concerning the affairs of any person obtained in carrying out the functions of this act.
S 214. False statements, reckless conduct and non-compliance
A person is guilty of an offence if the person is a party to the falsification of any accounting records of a company or with a fraudulent purpose, knowingly provided false or misleading information

61. Introduction to Companies Act, 2008
Chapter 9 – Offences & penalties Section :
S 215. Hindering administration of Act
It is an offence to hinder, obstruct or improperly attempt to influence the Commission, the Panel, the Companies Tribunal, an inspector or investigator, or a court when any of them is exercising a power or performing a duty delegated, conferred or imposed by this Act.

62. Introduction to Companies Act, 2008
Chapter 9 – Offences & penalties Section :
S 216. Penalties
Any person convicted of an offence in terms of this Act, is liable-
(a) in the case of a contravention of section 213(1) or 214(1), to a fine or to imprisonment for a period not exceeding 10 years, or to both a fine and imprisonment; or
(b) in any other case, to a fine or to imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment.

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64. THE END