Public anger over cartel abuses underpins SA’s move towards criminalisation

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Article by: Esmarie Swanepoel

Published: 02 Nov 2009

Public anger over cartel abuses underpins SA’s move towards criminalisation

The Competition Amendment Bill, which was recently signed into law but was still awaiting promulgation, could change how companies regarded compliance regulation, the Competition Commission, Shan Ramburuth, told a gathering of business people on Friday.

Speaking at Business Unity South Africa's (Busa's) forum on anticorruption, the commissioner said that South African companies had a tendency to resist public policy regulations, and to leave their compliance in the hands of lawyers. However, with the amendment, executives would have to bear personal responsibility for certain categories of transgressions.

"Within the introduction of the Competition Amendment Bill, executives will bear personal responsibility for their participation in a cartel, and if they are successfully prosecuted, they could face a jail sentence of up to ten years."

The changes to the Competition Act came as the public awareness around cartel and collusion activities was arguably peaking, with the authorities having made high-profile inroads in breaking up catels in a diversity of sectors, from bakeries and medical devices through to chemicals and fertiliser production.

But with public anger growing over such transgression, the Department of Trade and Industry, which oversees competition policy, proposed amendments to criminalise such abuses.

"South Africans are becoming increasingly more sophisticated and aware. And as is the trend in many developing countries, they are demanding high levels of accountability, transparency and disclosure by companies on their practices, products and pricing," Ramburuth said.

He added that it would now be more difficult for cartels to rely on the ignorance of consumers, and it with the advent of the proposed amendments to the Competition Act, it would also be unacceptable to cheat consumers, and then attempt to make up for such abuse simply through corporate social responsibility efforts.

The National Prosecuting Authority's (NPA's) acting national director, Mokotedi Mpshe noted that, in recent years, government had put various anticorruption measures in place, and had stepped up its activities in this regard. He argued that such measures had become more systematic, with greater emphasis on instituting appropriate policy measures to prevent corruption.

"We all know and acknowledge the fact that corruption in the country represents a serious challenge. Hardly a month goes by without reports of new incidents of alleged corruption coming to the fore. When it comes to corruption, such behaviour does not stop at bribery, but extends to offences such as fraud and theft committed in breach of a trust, most typically, in breach of the employer/employee trust relationship," Mpshe noted.

The number and extent of qualified audits and reports of public finance management irregularities could also not be ignored.

"Very disturbing are ongoing reports of procurement fraud, bribery and extortion associated with State tenders and contracts, and cyber criminals with the assistance with corrupt officials, hacking into State department computer systems and stealing considerable sums of money. The level of the sophistication of these activities is sobering."

Mpshe noted that although the various endeavours by both the private and public sectors havd laid the foundation for the fight against corruption and bribery, the country was still an anticorruption construction site, and would remain so for as long as corruption continued to plague the global community.

"Clearly, there is a daunting duty on every generation of citizen to play their part in combating and suppressing corrupt activities during the time of their influence and authority. How efficient and effectively this is done, will play a significant role in the nature of the quality of life of that generation, and it will have an influence on the quality of life that is attainable by the next generation."