Private sector is not untainted
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Dear Corruption Watch
I’m confused about what constitutes corruption in the private sector. The definition of corruption normally cites the abuse of public money or political power. I understand that when a private citizen or firm bribes a public official to secure a contract, both are involved in corrupt conduct and are subject to the anticorruption act. But what if a private sector supplier bribes a procurement officer in a private firm? And can conduct that only involves private sector actors, such as cartels, fall under the same anticorruption legislation? — The Goose or the Gander
Dear Goose,
It is true that the definition of corruption makes reference to “dishonest acts by those in power” (Oxford English Dictionary). It is also correct that bribery between the government and the private sector would be subject to the Prevention and Combating of Corrupt Activities Act, 2004.
Your question is whether private sector parties can be guilty of corruption in their dealings with each other.
It is a common misconception that private sector corruption is not subject to the act. This may be because the impact “government corruption” or corruption between the government and representatives of the private sector have on the public purse — and service delivery — means that this type of corruption is perceived to be more egregious.
However, the act neither exempts “private sector corruption” from its ambit, nor renders “private sector corruption” any less reprehensible.
To descend into legal speak momentarily, the act outlaws the general offence of corruption and specific offences:
Put simply, the general offence proscribes the giving to and receiving by any person of virtually any benefit in order to act in an illegal, dishonest or unauthorised way. The act spe- cifically states that any reference to the word “person” includes the private sector; and
Corruption relating to contracts is specifically outlawed. This renders illegal the giving or receiving of practically any benefit to improperly influence, for example, winning a contract, or the fixing of a price for such a contract.
It is clear that the legislature did not seek to place the private sector beyond its reach.
In this context, the short answer to your question is that a private sector supplier that bribes someone in a private firm could well be criminally liable.
And regarding your query on cartels: this conduct is also governed by the Competition Act, 1998. A cartel is an agreement between competitors to fix prices, divide markets or manipulate the outcome of a tender. Once found guilty of cartel conduct by the competition authorities, the firm concerned — and not the individuals who struck the collusive deal — would be penalised under the Competition Act.
Although the Competition Amendment Act, 2009, introduces criminal liability for certain individuals, this is not in force. So, individuals who create or participate in cartels do not face any criminal liability.
But cartel conduct could well be shoehorned into either or both of the general or specific offences mentioned above.
On this basis, it is not legally outrageous that the National Prosecuting Authority has begun investigating the construction industry cartel and the individuals involved, because collusive dealings between private sector actors could well be equally corrupt under the anticorruption act.