CIPC’s net should catch other big fish

On Wednesday (17 Jan 2018) it was revealed that, as far back as November 2017, the Companies and Intellectual Property Commission (CIPC) had laid criminal charges against consulting firm McKinsey, accounting firm KPMG South Africa and global software company SAP for alleged contraventions of the Companies Act, uncovered by the #GuptaLeaks emails.

In each case the criminal complaint laid by the CIPC was based on a contravention of section 214(1)(c) of the Companies Act, which relates to false statements, reckless conduct and non-compliance.

Section 214(1) reads as follows: “(1)    A person is guilty of an offence if the person- 
(c) “was knowingly a party to an act or omission by a company calculated to defraud a creditor or employee of the company, or a holder of the company’s securities, or with another fraudulent purpose;”

Any person convicted of an offence in terms of this section of the Companies Act can be fined or jailed for up to 10 years, or both. By way of comparison, contraventions of every other section (except one) of the Act hold a lesser liability of a fine or 12 months in prison, or both.

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