SA law should provide for deferred prosecution agreements for companies that divulge the wrongdoing that takes place within them.
This is one of the recommendations of the first part of the Zondo commission report into state capture, which said that such agreements could offer a solution to the acute problems faced by a weak and inadequately resourced National Prosecuting Authority (NPA).
A deferred prosecution agreement involves a deal between a company and prosecutors in which the firm admits facts from which criminal liability could be inferred and agrees to engage in specific conduct in the near future in exchange for the prosecutor deferring the criminal charges provided the company adheres to the terms and conditions of the agreement. If the company complies with these terms and conditions, the charges are dropped, but if it fails to comply, the prosecution would proceed.
“The aim of a deferred prosecution agreement is to incentivise self-reporting by and ensure future compliance from the misbehaving corporation and to detect and punish serious crimes committed by the natural people, employees, directors and officers through which the corporation acted. As such, deferred prosecution agreements may provide a useful alternative to prosecution,” said acting chief justice Raymond Zondo, who led the commission.
This is in line with a recommendation by the head of the NPA’s investigating directorate, Hermione Cronje, that SA adopt legislation to provide for the non-trial resolution of cases that she said were especially useful in dealing with complex foreign bribery cases.
The agreements could require the company to make full disclosure, disgorge all the benefits derived from the corrupt activities and pay a penalty. In return it would avoid the harsh consequences of an indictment. The implicated individuals should, however, face prosecution.
Such agreements have been used for many years in the UK and the US and Zondo said their adoption in SA could offer a solution to the acute problems facing the NPA in the context of pervasive corruption in the public and private sectors. SA law makes it possible for a company to be prosecuted for the criminal acts of its employees, directors and officers.
“Though our legal system clearly has the means to hold companies criminally liable for their part in endemic corruption, given the evidence presented to the commission and public statements made by the NPA, the combating of corrupt activities and money laundering is being hampered by the onerous burden of proof upon prosecutors whose tasks are frustrated by inadequate resources. The NPA has been criticised for the dearth of prosecutions despite the corruption uncovered by the Zondo commission.
“It is well known that for many years the NPA has failed to prosecute cases of corruption. As alarming as the absence of prosecution is the absence of civil litigation aimed at the recovery of damages or monies misappropriated”, except the cases initiated by the Special Investigating Unit.
Zondo said a thorough investigation of the NPA’s structure is required to understand the nature and causes of its institutional weaknesses so these can be addressed.
Corruption Watch has said the absence of deferred prosecution agreements has hindered the ability of law enforcement authorities to detect foreign bribery and severely limited the scope of voluntary disclosure by companies.
The introduction of the agreements was also proposed by the SA Law Reform Commission in 2002.
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