In part 1 of this article, we provided a background to the Preferential Procurement Policy Framework Act (PPPFA) in the construction industry. While the PPPFA arguably created an unintended foothold for the construction mafia, we, fortunately, have the benefit of other legislation (including foreign frameworks), which (if enforced and/or adopted) can provide a strong foundation for combatting extortion, corruption and organised crimes.
The Prevention of Organised Crime Act (POCA) aims to address and dismantle organised crime, money laundering and gang activities. POCA enables asset forfeiture, allowing authorities to seize property linked to organised crime. For businesses, this can disrupt the financial means of construction mafia groups, making it harder for them to operate. When businesses co-operate with authorities under POCA, they can contribute to weakening these criminal networks. If a United States-based company or subsidiary engages with the construction mafia in South Africa through bribery or facilitation payments, it can be held accountable under the US Foreign Corrupt Practices Act (FCPA). This broad jurisdiction empowers businesses to report bribes, extortion, or coercive demands by organised crime groups to US authorities, which can provide additional international support in tackling the issue. The FCPA mandates companies to implement and maintain robust internal accounting controls to prevent corrupt payments. For businesses in the construction industry, strong financial controls and regular audits make it easier to identify, deter and document attempted extortion or bribery demands. This is particularly helpful for businesses at risk of construction mafia influence, as internal controls can assist with avoiding being unwittingly involved in corrupt practices. If a United Kingdom-based company or firm with a presence in the UK indirectly contributes to third-party entities associated with the construction mafia, it could face sanctions for failing to prevent bribery under the UK Bribery Act. This Act has international reach, enabling businesses to seek support and co-operation from UK authorities when dealing with cross-border issues. The Act also empowers businesses to refuse bribes or ‘protection payments’ demanded by the construction mafia under the risk of severe penalties. Similar to the FCPA, businesses impacted by the construction mafia can adopt anti-bribery policies compliant with the UK Bribery Act, which is beneficial in light of the UK Economic Crime and Corporate Transparency Act (2023). This Act states that companies will need to have reasonable procedures in place to prevent fraud being committed by their associated persons (such as employees, agents, subsidiaries and other persons that perform services for or on their behalf) by 1 September 2025, so that they have the best chance of raising a defence if prosecuted for failing to prevent such wrongdoing. In April 2024, the National Prosecuting Authority took matters a step further by publishing the Corporate Alternative Dispute Resolution (C-ADR) policy. The provisions of C-ADR enable companies affected by the likes of the construction mafia to make voluntary disclosures to the authorities. By doing so, the disclosing company protects themselves against the risk of actions or fines being initiated against them (in instances for example where they have succumbed to the demands of the construction mafia). The construction mafia typically relies on intimidation and violence to exert control over construction projects. C-ADR provides a formal, non-confrontational way to manage these disputes with the support of the authorities.Companies affected by the construction mafia accordingly have, notionally at least, several potential options. Collaboration with law enforcement agencies, particularly forums such as the South African Police Service’s ‘Infrastructure Built Anti-Corruption Forum’ and the ‘National Priority Committee on Extortion and Violence at Economic Sites’. Companies can also engage with bodies such as the South African Forum of Civil Engineering Contractors of South Africa. We have noted and are encouraged by the increased levels of collaboration between government, civil society, and business.
Having engaged multiple businesses about how best to manage their exposure and the practical realities they face, particularly given the limited intervention (at least until very recently) on the part of law enforcement agencies, we have focused on advising them on how to “get ahead of the game“. What do we mean by this? While it is beyond the remit of this article to engage in all the details, getting ahead entails amongst other strategies the following:- Ensuring that staff are appropriately trained to deal with both legitimate and illegitimate community forums.
- Conducting thorough due diligence of the project site and stakeholders involved, to understand which community forums, other organised groups or businesses control the area and assess the feasibility of negotiating with them.
- Assuming that the forums and persons in question can be meaningfully negotiated with, establish which firms could provide the required services and establish which, for public tenders, are either listed as providers by the state-owned entity issuing the tender or whether they could be included in the list.
- Structuring downstream procurement in a manner that is fair, transparent and accessible.
- Agreeing with the community forum on what services will be provided by the community and what compensation will be paid in exchange.
- Ensuring (where possible) that the state-owned entity that issues the tender also participates in the negotiations with and is accountable to the local community forum.
- Ensuring appropriate measures to protect on-site equipment and employees. This should go beyond well-trained security staff and should include visible cameras and recording devices.
