Companies implicated in corrupt activities in SA will now have the option to settle matters with law enforcement agencies via alternative dispute resolution mechanisms without facing criminal charges, in a first for the country.
The National Prosecuting Authority (NPA) on Friday released the long-awaited corporate alternative resolution directive (C-ADR), which is meant to guide prosecutors on what to consider when engaging companies looking to escape criminal charges.
The prosecuting authority put forward principles that will guide its decision on whether to prosecute or use C-ADR in relation to groups suspected of committing corruption.
The NPA said one of the principles would be on the legality and rationality of its decisions, and decisions would be made within the confines of the law.
The public interest would also be considered. Among the parameters in deciding whether using the directive would be in the public interest are:
• Whether the company timeously and voluntarily made effective disclosure of evidence and information relating to the alleged unlawful activities;
• Whether a company preserves and provides all material evidence to the NPA or other relevant law enforcement agencies, or indicates the whereabouts of the evidence;
• The company co-operates in any investigation, prosecution, or other proceedings in SA and elsewhere if the NPA considers it appropriate;
• The company pays the cost of a private forensic or similar investigation subject to the control of the NPA or other relevant law enforcement agencies; and
• The company’s willingness to make fair, reasonable and proportionate restitution in the form of its disgorgement of proceeds of unlawful activities.
Considerations
The prosecutors’ discretion will also be guided by considerations that include whether there is voluntary and effective disclosure of wrongdoing and proactive remediation including, where appropriate, compensating victims. Companies must commit to give their full co-operation in current and future investigations.
Another consideration is whether the conviction of a company in a criminal matter “might result in significant adverse effects on the company’s employees, shareholders, creditors or the economy”.
The NPA said a summary of agreements with companies will be published on its website to “ensure transparency and accountability”.
The Asset Forfeiture Unit will be consulted in each case and advise on the amount of financial restitution that must be paid by the offending company.
“The use of alternative dispute resolution mechanisms enables the NPA to effectively address multi-jurisdictional offences committed by multinational companies,” reads the directive. Additional advantages include enhancing corporate accountability.
There are several considerations that will count against companies looking to benefit from the C-ADR.
As a carrot to ensure companies embrace putting international measures in place to rein in graft, one of the conditions put forward for the NPA is that it will count against a company if the corrupt acts were committed at a time when the company had no compliance programme.
“Pervasive wrongdoing” in the company will also weigh “heavily” against it — particularly if it can be proved that corrupt and criminal conduct represents a pattern of co-ordinated conduct within the company and where the culpable individuals are not disciplined or dismissed.
The NPA said the information and evidence gathered through the process might be used to investigate and prosecute directors and other individuals in the company. Engagements with a company “are on the record and with prejudice”.
The cash-strapped NPA was hollowed out at the height of state capture, resulting in the private sector offering to assist the prosecuting authority with funding — a move that has divided public opinion.
The directive shows that the NPA is alive to its constraints in going after white-collar crime, with the availability of resources being one of the factors the authority will consider before making C-ADR decisions.
“The nature and seriousness of the unlawful activities and the complexity of the prosecution’s case ... will be considered in determining whether such a decision would be in the public interest,” reads the directive. “The likely length of trial should prosecution be undertaken, and the availability of resources needed to conduct an effective prosecution within a reasonable time, may also be considered.”
The NPA did not respond to questions, saying it would do so at a media briefing to be addressed by its head, Shamila Batohi, on Wednesday.
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