In recent years, South Africa has reportedly suffered economic loss exceeding ZAR 20 billion as a result of fraud. This has been accompanied by an estimated 44.47% increase in reported cases across various categories of fraudulent activity in 2024. Together, these trends have intensified pressure on lawmakers and regulators to strengthen accountability mechanisms and preventative compliance frameworks.
Globally, jurisdictions have shifted toward imposing "failure to prevent" corporate offences, recognising that economic crimes are often enabled by systemic compliance failures within organisations. South Africa has followed this trend through the introduction of section 34A into the Prevention and Combatting of Corrupt Activities Act 12 of 2004 (PRECCA), which creates a corporate offence for the failure to prevent corrupt activities. This provision was modelled on section 7 of the United Kingdoms’ (UK) Bribery Act 2010, which imposes similar liability on commercial organisations. However, the UK went a step further by enacting section 199 of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which introduced a more targeted offence for the failure to prevent fraud, which came into effect on 1 September 2025.
Although both provisions aim to enhance corporate accountability, they differ in scope, structure and conceptual focus. This article analyses section 34A of South Africa's PRECCA, considers the legal framework governing the treatment of fraud under South African law and analyses the UK’s section 199 of the ECCTA as a comparative model.
Section 34A of PRECCA came into force in April 2024 and introduces the offence of failure to prevent corruption. It imposes criminal liability on a private sector entity or incorporated state-owned entity where a person associated with it, commits a corrupt activity prohibited under PRECCA. Importantly, section 34A refers expressly to the giving or offering of "gratification" intending to obtain or retain business, or an advantage in the conduct of business. The provision does not mention fraud but focuses solely on bribery. Under South African law, fraud remains a separate common law offence and is prosecuted under the Criminal Procedure Act, 51 of 1977 (Criminal Procedure Act) as a serious economic offence and can result in substantial fines or imprisonment. Corporate entities are prosecuted under section 332 of the Criminal Procedure Act, which allows for the attribution of criminal liability to juristic persons. Because section 34A is tied to corrupt activities under PRECCA, its application is confined to corruption-based misconduct typically involving bribery and therefore, does not create a failure to prevent fraud offence.
Fraud and corruption are treated as distinct crimes in South Africa. Corruption involves gratification given or received to influence conduct while fraud involves a misrepresentation that causes actual or potential prejudice. Unless the fraudulent conduct simultaneously constitutes corrupt activity under PRECCA, section 34A would not apply. Assection 34A is relatively new, there is currently no judicial precedent interpreting it. As such, it is unknown whether courts might interpret its scope broadly to cover fraud.
By contrast, with the introduction of section 199 of the ECCTA, the UK legislature sought to effectively strengthen its response to economic crime, particularly in light of the relatively limited number of prosecutions under the Bribery Act. Section 199 creates a specific offence where a large organisation fails to prevent an associated person from committing fraud intended to benefit the organisation or, any other person. The provision mirrors the defence as section 7 Bribery Act and section 34A of PRECCA, namely that liability is mitigated if the organisation had reasonable prevention procedures in place. However, unlike section 34A, the UK provision expressly covers fraud and incorporates the definition found in the UK Fraud Act 2006, which defines fraud under three categories being fraud by false representation, fraud by failing to disclose information and fraud by abuse of position. It therefore addresses a gap that South African law currently has, that there is no targeted failure to prevent fraud offence.
Section 34A deals only with corruption-related conduct, meaning that economic crime involving deception, but no bribery or elements of corruption, remains outside South Africa’s "failure to prevent" framework. This regulatory gap is increasingly concerning at a time when fraud is rapidly rising. Introducing a dedicated failure to prevent fraud offence would encourage organisations to strengthen compliance frameworks through enhanced internal controls, more effective anti-fraud systems and enhanced risk management practices. As fraud becomes more prevalent and as technological advancements enable more sophisticated forms of financial crimes, particularly cyber enabled fraud, South Africa’s regulatory framework must evolve to address these emerging risks. This mandates the development of improved regulatory frameworks which specifically tackle fraud as a growing threat to economic financial security.
