Prosecuting and Sentencing Companies for Corruption in South Africa.
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Date
2024
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University of the Western Cape
Abstract
In 2015, the Member States (including South Africa) of the United Nations adopted the 2030 Agenda for Sustainable Development. The Agenda sets out 17 Sustainable Development Goals, with 169 targets aimed at realising economic, social and environmental development. With corruption being a major obstacle to sustainable development, it is among these targets. Corruption undermines the realisation of human rights and results in poverty, crime and a lack of service delivery. This essentially impacts on the realisation of socio-economic rights and thus, the Sustainable Development Goals. Notably, despite anti-bribery and corruption laws aimed at regulating behaviour and criminalising corruption, it continues to be a scourge, with companies being the major players. The compelling need for profit maximisation means companies continue to engage in corrupt activities, further increasing vulnerabilities and socio-economic inequalities among already marginalised groups of people.
Drawing from South Africa’s regional and international obligations to deter and prevent corruption through an efficient criminal justice system, that does not only criminalise corruption in its broadest sense, but that also effectively prosecutes and punishes those who engage in corruption; this research aims to investigate whether the South African legal framework provides for the effective prosecution and punishment of companies. More precisely, the research aims to demonstrate that in light of the growing need to halt the devastating effects of corporate corruption, the prevailing criminal legal framework requires reform. Though South Africa has an extensive system of criminal law enforcement, the question of whether the system is effective in addressing corporate corruption remains. Seemingly, the prosecution, conviction, and punishment of companies for corruption is a rare occurrence in South Africa. Where there might have been a successful prosecution, the penalties leveraged against companies are either ineffective or provably impractical because they cannot be enforced.
In terms of South African law, a company is only liable for an offence, if such offence is committed by its agents within the scope of their official duties or in order to further the interests of the company. On conviction, a court’s sentencing discretion is limited to the imposition of a monetary fine. With that, the research provides an overview of the South African approach to the prosecution and punishment of companies. The discussion will include, inter alia, the analysis of the offence of corruption and the extent to which a company is capable of committing the offence; the basis for corporate criminal liability in South Africa; the consequential prosecutions of companies; and the limited means of punishing a company
within the South African legal framework.
With developments in corporate criminal liability witnessed elsewhere, the research adopts a comparative analysis in order to draw lessons for South Africa. Focusing on the United Kingdom, United States of America and Australia, the research shows that there is a growing departure from the traditional understanding that a company is only guilty by virtue of its agents. The result is that a company is to some extent obligated to define standards of good practice for the prevention of corruption and the avoidance of hefty monetary fines. These standards may translate into a company’s culture, policies, procedures or institutionalised practices. This then gives rise to an obligation to self-police, with the result of good internal and external controls, accountability and good corporate governance. Evidenced from this ‘new’ model is that the liability of a company will ordinarily arise if it cannot prove that it exercised due diligence or it had reasonable procedures implemented to prevent the commission of the offence. For sentencing, this approach reflects a discernible shift from a deterrent and retributive approach, to a more preventative and reformative approach, giving rise to extra-judicial measures in enforcing corporate sanctions. As part of the research, the
discussion extends on this model of liability and demonstrates how it may fit into the South African context.
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Keywords
Corporate criminal liability, Corporate corruption, Alternative Dispute Resolutions, Criminal Procedure Act, Criminal Law Amendment Act