SIPHOKAZI KAYANA: Beating organised crime requires speed, agility and planning

Anyone who has paid attention to the headlines over the past few years will know that organised crime costs the country billions of rand every year. Headline watchers will also have noted that corporates are often among the victims of organised crime, with the effects ranging from lost revenue to severe reputational damage and even closure.

While organisations should obviously do all they can to prevent becoming victims, that is not always possible. Criminal syndicates are increasingly sophisticated and able to operate undetected until the crime has been committed. That means it is it critical that organisations know and understand the legal tools at their disposal should they suspect infiltration and what legal steps to take once they have uncovered evidence of criminal activity.

Planning is essential

Time is of the essence in dealing with crime, and having a ready-made plan can go a long way to ensuring the response is co-ordinated and effective.

The obvious starting point is to launch an investigation to determine the full scale of the incident, who is involved, and whether the crime was that of a third party or whether employees were involved (in the case of organised crime, it is frequently a combination of the two).

The organisation will also want to uncover as much evidence as possible to help it decide whether to launch civil recovery proceedings or to secure assets that have been taken. That evidence is also crucial if the organisation intends to lay criminal charges because it assist the police in their investigations and improve the chances of a successful prosecution.

Pillars of success  

One of the most important legal remedies at organisations’ disposal for gathering and securing evidence is Anton Piller orders. Named after the most prominent case on the subject, Anton Piller KG vs Manufacturing Processes, they enable applicants to attach and safeguard evidence in the possession of the respondent, especially if the applicant is concerned that the respondent may destroy the evidence when they are notified of proceedings.

So, for instance, if you suspect an employee has been colluding with a criminal syndicate you might want to seize their phone and laptop or search their residence for evidence of the collusion. However, Anton Piller orders are a unique remedy and several strict conditions have to be met for them to be granted.

First, their must be a strong prima facie case against the respondent. Second, it must also be clear that the potential or actual damage is serious. Third, there has to be clear indications that the respondent has the evidence and that there is a danger they will  destroy it. If the order is granted, the court will appoint an independent attorney, who, together  with a sheriff will  investigate the respondent’s premises and seize the items listed in the order. Bear in mind that Anton Piller orders are strictly for the preservation of evidence and are not designed to be prejudicial.

Organisations can also look at securing an anti-dissipation order, which is useful if the organisation suspects the respondent is still in possession of any goods or funds that may have been stolen from it. If the order is granted it would prevent the respondent from disposing of those assets. 

Another possible remedy is to secure an interdict, either for the purposes of gathering evidence or recovering stolen goods. There are two types that are helpful in this regard: a prohibitory interdict, which means you’re asking the court to instruct the respondent not to do something; and a mandatory interdict, which means you’re asking the court to instruct the respondent to do something.

Speed is of the essence

Regardless which of these remedies the organisation seeks, the action must be co-ordinated manner and be in line with its overall strategy. The organisation needs to think about the outcomes it is hoping to achieve. If the ultimate goal is to recover funds, the Anton Piller order could help secure evidence, the anti-dissipation order can secure any misappropriated funds, and the interdicts could help secure relief. Depending on the case, one or all these remedies could be applicable.

Whatever the desired remedy it must be sought on an urgent basis to be effective. And because courts are extremely strict about what constitutes an urgent application, the organisation must ensure it has everything in order as quickly as possible or face a far more difficult path.

Fiduciary responsibility 

While seeking the remedies is obviously important in terms of recovering funds and rooting out corruption, it is  also critical from a fiduciary responsibility perspective. As a member of a board of directors you may be neglecting your fiduciary duties if, after dealing with an incident of commercial crime, you decide not to follow through with some other type of investigation, or at least consider whether you would want to try to recover the funds.

Of course, if the amount stolen is small it may cost more to try to recover it, some of the remedies discussed do not apply. In those instances the organisation might decide to cut its losses, but then it obviously needs to look at its internal control systems, strengthen them and see what can be done to avoid a repetition.

Whichever approach an organisation chooses to take it the importance of being prepared so as to be able to act swiftly cannot be overemphasised. Criminal syndicates are sophisticated and agile; you need to be too.

• Kayana is partner and head of dispute resolution at law firm CMS. This is the second in a series of three articles marking International Fraud Week (November 13-21)