Picture: ISTOCK
Picture: ISTOCK

What are the actual penalties for serious corporate crimes in SA, and should you target the people at the top of the corruption chain or a bit lower down and build a case from there? The latter is starting to happen in light of the Zondo state capture commission of inquiry; people a bit lower down the chain, such as Angelo Agrizzi, are being charged. Others must surely be getting nervous and reading up what the law has to say.

While the popular perception may be that no-one ever gets sent to jail for corruption in SA, it’s not true; there have been several cases but, as we all know, the bigger you are and the worse the crime, the less likely you are to have your day in court or go to jail. Hopefully, now that the state has committed itself to rooting out the rot, this is set to change. It is therefore worth looking at the penalties imposed in what seem to be ‘‘small” cases as an indication of the kind of penalties to come for the bigger.

In Phillips versus the state, a traffic officer arrested a student for allegedly drinking in public, but then told the student that if he paid R2,000 in cash he would let him off. The traffic officer drove the student to an ATM, where the student could only draw R900, which the traffic officer accepted and he let him go. The student opened a case of bribery against the traffic officer, who was proven guilty and given a jail sentence of seven years.

The officer appealed against this, and it was reduced to four years. In hearing the appeal, Judge Dumisani Zondi made reference to the state versus Mahlangu: ‘‘Corruption has plagued the moral fibre of our society to an extent that, to some, it is a way of life. There is a very loud outcry from all corners of society against corruption, which nowadays seems fashionable. Some even go as far as stating that corruption is rendering the state dysfunctional. It is the courts that must implement the penalties imposed by the legislature. It is also the courts that must ensure that justice is not only done, but also seen to be done.”

Considering the four-year sentence for a R900 bribe, what will the penalty be for billions of rand in organised crime? If we are to see things improving in SA, not only must those directly involved in crimes of any kind be prosecuted and severely punished if found guilty, but anyone who does not report even R100,000 in suspicious activities must also be considered guilty of an offence. While people might be frightened about coming forward, this will prove a far better choice than facing the consequences of not coming forward.

The Prevention and Combating of Corrupt Activities Act of 2004 states the following in chapter 7, which is titled “The Duty to Report Corrupt Transactions”: ‘‘(1) Any person who holds a position of authority and who knows or ought reasonably to have known or suspected that any other person has committed (a) an offence under part 1, 2, 3, 4 or section 20 or 21 of chapter 2; or (b) the offence of theft, fraud, extortion, forgery or uttering a forged document involving an amount of R100,000 or more, must report such knowledge or suspicion or cause such knowledge or suspicion to be reported to any police official. (2) Subject to the provisions of section 37 (2), any person who fails to comply with subsection (1), is guilty of an offence.”

The penalties for offences relating to racketeering and the proceeds of unlawful activities, such as money laundering, are severe, and it is worth reading part of what the Prevention of Organised Crime Act states with regard to these offences and penalties. This includes, inter alia, receiving or retaining any property derived, directly or indirectly, from a pattern of racketeering activity. The penalty is potentially eye-watering. Any person convicted of an offence is liable to a fine not exceeding R1bn, or imprisonment up to life.

Insofar as money laundering is concerned, the penalty is a fine not exceeding R100m, or to imprisonment not exceeding 30 years. Faced with this, who would not do anything and everything to wriggle off the proverbial hook? Of course, proving these crimes is another matter altogether, and building a case can take years. Add the corporate veil and it is potentially even more problematic. You can be sure that clever legal technicalities and other tactics will be used exhaustively.

In every sphere there are some directors who will do anything to escape liability if faced with prosecution for compromising their fiduciary responsibility, as was the 2005 case in The Minister of Water Affairs and Forestry versus Stilfontein Gold Mining Company (first respondent) and second to fifth respondents Roger Kebble, Hendrik Buitendag, Brett Kebble and Gordon Miller, for contempt of the Environment Act  over a failure to treat underground water used in mining and thereby creating a risk of pollution of general water resources. The directors simply resigned en masse.

Judge Ismail Hussain stated: “It must be said that what the second to fifth respondents did in resigning as directors is a most unusual occurrence. I have not come across a case in the corporate history of this country where all the directors of a listed company resigned at once. Not surprising, then, that I could find no case law in this country that dealt with this situation, nor was I able to find such a state of affairs in the English case law. This is probably because this is simply not done within the corporate world”.

A fine of R15,000 was imposed. I rest my case.

• Skae is a professor and director of Rhodes Business School.