In many other countries, the reporting of corruption or suspected corruption is at one’s own will.
In South Africa, it is a crime not to report it.
The potential reputational damage when a company gets an investigation into corruption wrong, can be brutal.
A case in point is the investigation by law firm Hogan Lovells into suspicious transactions by a senior South African Revenue Service (Sars) official.
Despite several recent examples, insufficient attention is still being given to the important starting point of any investigation, namely determining the scope and mandate of an investigation, according to Matthew Purchase, partner at law firm Bowmans.
“We have seen in SA that when there is criticism about an investigation, it is often as a result of the mandate and the scoping of the investigation being too narrow or excluding matters that should have been investigated,” Purchase said at a recent Pan-African anti-corruption compliance summit in Johannesburg.
The conference looked at best practices for anti-corruption investigations, as well as the rights of employees during the investigation.
Besides having a robust mandate, it is key to be able to collect and preserve evidence expeditiously, says Ahmed Mokdad, associate in law firm Covington’s compliance and investigations practice in Johannesburg.
First and foremost, though, companies should have a policy in place that will address issues around the reporting of corruption, and guidelines in terms of evidence preservation, witness statements and dealing with privacy and confidentiality.
Issues such as privileged and confidential information, as well as privacy, should be considered carefully, especially in terms of employees' communication (emails, messages and WhatsApp’s) on their private devices.
Purchase says some information – such as corporate emails – is more easily obtained. However, there is a “natural tension” when it comes to personal devices and what the company is allowed to obtain to be reviewed.
In SA many people use their personal devices for work purposes. Mark Finucane, partner at Covington, says the US department of justice has issued some guidance about how this should be approached, but it is not “particularly specific”.
One “risk-based” answer is to prohibit employees from discussing work on personal emails or messages on their personal devices that are entirely outside of the company’s communication platforms.
“The question is how do you figure out what employees are actually doing on their personal devices. If it is company-owned, the company is allowed to confiscate and get access to it, but when you confiscate a phone that belongs to an employee … that can raise legal issues in a lot of jurisdictions,” says Finucane.
Covington has had success in obtaining consent from employees to review the contents of private devices by explaining that it is a standard practice in investigations and that only work-related emails or work-related communications will be reviewed.
However, in SA it is not that clear-cut.
Mokdad points out that privacy is one of the rights enshrined in the Constitution and must be protected.
He refers to the legislation that regulates the monitoring and accessing of personal information, namely the Regulation of Interception of Communication and Provision of Communication-related Information Act (Rica).
The constitutionality of this act has been challenged by the investigative journalists at amaBhungane and Sam Sole, its co-managing director, in the North Gauteng High Court.
The court found in their favour.
Certain legal principles in terms of dealing with the interception and access to information have been laid down in the case lead by Dario Milo from Webber Wentzel.
However, Mokdad points out that Rica does not prohibit an employer “entirely” from accessing information.
There has to be a “business need” or a “reasonable business need” for doing so.
In SA – which scored 43 out of 100 in Transparency International’s 2018 Corruption Perception Index – the role of whistleblowers is critical to uncover corruption.
finweek has previously referred to the limited protection that our current legislation (the Protected Disclosures Act) offers whistleblowers.
Purchase says that there is often a misunderstanding about the reporting of corruption – the obligation is not on the company, but on the individual.
Investigators will have to ensure the protection of whistleblowers, but they will also have to deal with “uncooperative employees” – in many instances because of fear of retribution.
The employee’s rights and obligations
SA’s common law provides that employees have a duty of utmost loyalty owed to the employer, and our labour legislation goes as far as to say that an employee-witness’ failure to cooperate may be seen as insubordination.
This could lead to disciplinary proceedings being instituted against the “uncooperative employee”.Mokdad says this highlights the imbalance between labour legislation and the obligation owed by the employee to the company.
“Disciplining an employee may not necessarily reveal the results you are looking for and may even lead to a more obstructive witness.”
This also begs the question of the right to legal representation during an investigation.
According to Finucane, separate counsel is often “proactively” offered to certain individuals when there is an investigation at the company.
“The general reason for separate counsel is conflicts of interest.”
The company may need to argue that an individual acted outside of company policies and an individual may be incentivised, depending on the circumstances, to pursue a more lenient deal by providing information about the company or other executives at the company.
But the presence of conflict and whether to have separate or joint counsel is not always that clear-cut.
“It is an important decision because if you make a wrong decision, it is possible that the counsel is compromised and is disqualified from representing anybody,” says Finucane.
He says the fees are typically paid for by the company, but if it becomes clear that an employee has stepped outside of their employment responsibilities, or deliberately engaged in misconduct, the obligation to pay the fees may end.
Mokdad says one aspect that needs to be considered with great sensitivity during an investigation is cultural differences. SA has 11 official languages and several different ethnic groups, and trying to apply a single standard in assessing someone’s trustworthiness may jeopardise an investigation.