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Ignorance of the law is no excuse

Louw van der MerweOne of the key risks facing organisations worldwide is the challenge of adhering to relevant laws and regulations. In South Africa with its myriad of sometimes very complex legislation, this is particularly relevant. The recently released King Report on Corporate Governance devotes an entire chapter to this topic.

The report concludes that directors should see to it that a formal and structured process is implemented in organisations to ensure identification of and adherence to applicable legislation. Adherence to laws and regulations should be a regular agenda point, while feedback regarding this process should form part and parcel of every directors meeting.

Without a formal process, it is too easy to fall foul of a piece of legislation which might have been overlooked by the organisation.

As an example of such perhaps less well-known legislation, according to Section 34 of the Prevention and Combating of Corrupt Activities Act (Act 12 of 2004), it is an offence for any person who holds a position of authority, who knows or ought reasonably to have known or suspected of any offence of theft, fraud, extortion or forgery exceeding R100 000, to not report such knowledge or suspicion of knowledge to a police official. This should definitely be taken into consideration the next time a guilty official is offered the choice of a ‘silent’ resignation by a board of directors or senior management!

For more information contact Louw van der Merwe on tel. (021) 882 8140 or e-mail