Reconsidering criminal law-based liability for corporations and directors in South Africa. An economic criminology perspective
| Pages | 1085-1094 |
| DOI | https://doi.org/10.1108/JFC-07-2018-0070 |
| Date | 07 October 2019 |
| Published date | 07 October 2019 |
| Author | Herbert Kawadza |
Reconsidering criminal law-based
liability for corporations and
directors in South Africa
An economic criminology perspective
Herbert Kawadza
School of law, University of the Witwatersrand, Johannesburg, South Africa
Abstract
Purpose –It is recognised that the mere proscription of corporate offences is not adequate to deter
misconduct or engender compliance.There is a need for the enforcement of the rules through robust culture-
changing sanctions.The purpose of this paper is to demonstrate the inadequacies of criminal law liabilityin
ensuringcompliance with ethical corporate conduct in SouthAfrica.
Design/methodology/approach –This paper is purely qualitative. Forexpository purposes, it draws
from the Criminal Procedure Act, 51 of 1977 as well the corporate criminality enforcement trends and data
from the National Prosecutions Agency’s annual reports to demonstrate that much as criminal liability is
enshrined in a statute it has, however, not yielded the expected results. It situates the debate within the
broadereconomic criminological scholarship.
Findings –This paper argues thateven though the option of prosecuting corporations and directorsis part
of South African law,many corporate offences are not brought into the criminal justicesystem. Judging by its
erratic imposition,criminal liability has failed to express the indignation and condemnationthat are normally
attached to criminal sanctions. Several reasons account for this. These include evidentiary, legal, technical
and definitional complexities of some corporate offences, which lead to them being regarded as
“unprosecutablecrimes”. This has a negative impact on enforcement.
Originality/value –This paper is novel because it approaches the debate from a fresh perspective,
economics and criminology. Not much scholarly attention has been devoted to analysing the efficacy of
criminalsanctions in the South African context. This paper attempts to fill that gap.
Keywords Criminal law sanctions, Deterrence, Directors, Companies, Offences, Companies act
Paper type Research paper
Introduction
Recent times have witnessed a global drift towards more confrontational and
combative enforcement styles for corporate and financial crimes (Ferran et al., 2012). In
South Africa emphasis on punitive styles is traceable to populist political statements
and emotive media commentary advocating for a departure from what are deemed to
“soft touch”regulatory and enforcement strategies (Khumalo, 2019). Globally, similar
calls have translated into a review of the adequacy of sanctions regimes with a view to
creating more stringent deterrence devices. Corporate scandals attributed to hubris,
negligence and herd behaviour of those who are charged with such organisations’
activities have underscored the need to carve out robust preventative and enforcement
responses to tame the corrosive effect of such misconduct. In its sweeping Companies
Act, 71 of 2008 (“the new Companies Act”), South Africa has made attempts towards the
de-criminalisation of company law, which previously formed the core of its forerunner,
the Companies Act 61 of 1973 (“the old Companies Act”).
Reconsidering
criminal law-
based liability
1085
Journalof Financial Crime
Vol.26 No. 4, 2019
pp. 1085-1094
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-07-2018-0070
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