Inside the Precca Amendment Bill, part 1: Harsher sentences, lower thresholds

Image source: Andriy Popov from Magnific.com

The law was there. The convictions, historically, were not. That is rapidly changing.

The Precca Amendment Bill of 2026 (Bill 19-2026), introduced to the National Assembly in March 2026 and tabled in Parliament (during the week of 13 July), proposes two deceptively simple but far-reaching changes: mandatory minimum sentences for corruption convictions and a dramatically lower threshold for the obligation to report suspected fraud and corruption.

Together, these amendments signal a new era of accountability, one that will be felt across boardrooms, audit committees, insurance towers and professional practices throughout South Africa.

The two amendments in plain language

Mandatory minimum sentences: The era of discretion is over

Currently, Precca prescribes maximum sentences but leaves sentencing largely to judicial discretion. Courts have frequently imposed sentences well below what the gravity of the offence warrants.

The Amendment Bill changes that, with sentences now as follows:

• High Court - a minimum of 18 years’ imprisonment up to life, plus a fine.
  
• Regional Court - a minimum of 15 years, not exceeding 18 years, plus a fine.
  
• Magistrates’ Court - a minimum of five years, not exceeding 10 years, plus a fine.
  
• Failure-to-report offences (section 28(6)(b)) - fine doubled from R250,000 to R500,000 and imprisonment raised to five years.

A court may still deviate from the minimum sentence, but only if it records substantial and compelling circumstances on the record. This is the same framework applied under the Criminal Law Amendment Act 105 of 1997 for serious violent crimes.

The message is unambiguous: corruption is now categorised alongside the most serious offences in our criminal justice system.

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The reporting threshold slashed: From R100,000 to R30,000

This is the amendment that will catch most people by surprise. Section 34 of Precca already places a mandatory reporting obligation on persons in positions of authority: if they know or reasonably suspect that an employee or colleague has committed corruption or certain other offences, they must report it to the Directorate for Priority Crime Investigation (the Hawks). Failure to do so is itself a criminal offence.

Currently, the threshold triggering this obligation is fraud, theft, extortion, forgery or uttering a forged document involving R100,000 or more.

The Amendment Bill slashes that threshold to R30,000. To put that in context, a fraudulent supplier invoice of R30,000, a payroll manipulation of R30,000, a petty cash misappropriation discovered during an internal audit, all of these now trigger a mandatory obligation to report to the Hawks.

Not an internal disciplinary process. Not a quiet settlement. A formal report to law enforcement.

Who should be paying attention?

Corporates and their boards: The combination of the 2026 amendment and the already-enacted section 34A (introduced by the Judicial Matters Amendment Act 15 of 2023, operational from 3 April 2024) creates a compliance landscape that no corporate can afford to treat casually.

Section 34A already makes a company criminally liable if a person associated with it commits a corrupt act for the company's benefit, unless the company can demonstrate it had adequate procedures in place to prevent that conduct.

The prosecution does not need to prove the company knew. The burden falls on the company to prove it has controls.

Now add mandatory minimum sentences. The individuals who sat on audit committees and failed to act. The executives who received the whistle-blower report and chose to "manage it internally." The directors who approved the procurement process without asking uncomfortable questions.

Individuals in these positions may now face the very real prospect of a minimum 15 to 18-year sentence - not a suspended sentence, not a fine - if they are convicted.

Board-level governance of anti-corruption compliance is no longer a box-ticking exercise. It is a personal liberty issue.

Directors and senior executives: Directors occupy positions of authority within the meaning of Precca. The mandatory reporting obligation at the R30,000 threshold applies directly to them.

A director who knows or reasonably suspects that the CFO has approved a fraudulent payment of R40,000 and does nothing commits a criminal offence. This is not hypothetical. It is the plain wording of the amended statute.

The personal stakes could not be higher. A conviction under Precca, even one that results in a suspended sentence, triggers disqualification from serving as a director under the Companies Act 71 of 2008.

The new mandatory minimum sentences mean that for the most serious offences, a suspended sentence may not even be available. Directors in public entities face the additional consequence of being barred from public office.

Any director who does not have a documented, board-approved anti-corruption policy and a clear reporting protocol operates at personal risk.

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Audit firms and independent auditors: The recent legislative developments serve as a stark warning to the audit profession.

Audit committees and auditors can be exposed to information that could constitute knowledge or reasonable suspicion of fraud or corrupt activities. They should seek legal advice where appropriate in respect of their reporting obligations.

Insurers and the directors’ and officers’ (D&O) market: Directors' and officers' liability insurers should expect the mandatory minimum sentencing regime to trigger a significant re-assessment of risk. The prospect of an executive facing an 18-year minimum sentence, rather than a suspended sentence, a fine or a brief correctional order, changes the risk calculus fundamentally.

Criminal fines and penalties are uninsurable as a matter of South African public policy. D&O cover responds to defence costs and civil claims; it does not absorb criminal sentences.

Insurers underwriting D&O cover in the South African market need to be asking harder questions about the anti-corruption compliance infrastructure of their insureds. Companies with no documented adequate procedures under section 34A are materially higher-risk propositions than those with robust programmes.

Expect underwriters to incorporate Precca compliance assessments into their renewal questionnaires. Expect premiums to reflect the answer.

SMEs and owner-managed businesses: The R30,000 threshold is not aimed only at large corporates. A small business owner who discovers that a bookkeeper has been submitting fraudulent invoices totalling R35,000 is now legally obliged to report this to the Hawks, regardless of whether they prefer to deal with it quietly, recover the money or simply dismiss the employee. That option is no longer available without criminal risk.

This is a profound shift in the obligations of the small business community, most of whom have no awareness of it whatsoever.

Part 2 of this series will cover the use of AI in both committing and detecting fraud.