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NPA gets new weapon that brings companies on board in fight against corruption

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Advocate Ouma Rabaji-Rasethaba is the Deputy National Director of Public Prosecutions and the Head of the Asset Forfeiture Unit at the NPA.

A new NPA policy directive represents a more sophisticated form of law enforcement that enlists business as a partner to increase corporate accountability in a country bled dry by corporate collusion during the State Capture era.

The National Prosecuting Authority (NPA) recently enhanced its approach to alternative dispute resolution through the development of a cutting-edge new policy directive aimed at corporations. This approach will significantly strengthen the NPA’s corruption-fighting arsenal and better position it to hold corrupt actors to account.

In a country ravaged by corruption that has caused untold socioeconomic harm, this approach will assist in speedily recovering money derived from corruption, so that it can be used for the benefit of our people, especially the poor and vulnerable. Economic recovery is a pressing priority for South Africa and all its people. 

In adopting this approach, South Africa joins the global movement towards resolving complex corruption cases involving corporations, often in collaboration with authorities from other countries.

One advantage that such resolutions have over trials is that international cases can be resolved between several authorities simultaneously. 

In the recent SAP case, South Africa has benefited from its cooperation with the United States Department of Justice (US DOJ). The US played the leading role in investigating and litigating against SAP, a global financial services giant. This led to SAP entering into a three-year deferred prosecution agreement (DPA) with the US DOJ in a US federal court for conspiracy to violate the Foreign Corrupt Practices Act (FCPA), involving bribes paid in South Africa.

Good conduct

A DPA is a contract between the US authorities and a company implicated in criminal conduct. The US DOJ files charges with the court, but simultaneously requests that the prosecution be postponed to allow the company to demonstrate its good conduct. 

The DPA prescribes that the company will pay a fine, hand over information and improve its anti-corruption compliance programme. If, over the next three years, the company complies with the terms of the DPA, the DOJ will move to dismiss the filed charges. If the company breaches the agreement, the DPA allows prosecutors to enter a guilty plea. This three-year time period gives significant teeth to resolutions and enforces compliance by companies.

The Zondo Commission recommended that South Africa promulgate legislation providing for DPAs. While waiting for legislative reform, the NPA has been proactive and, with technical support from the Organisation for Economic Co-operation and Development (OECD) and other local and international experts, the NPA developed a corporate alternative dispute resolution policy directive to provide for a limited form of non-trial resolution.

For companies to be eligible for a corporate alternative dispute resolution with the NPA, they must voluntarily disclose all facts and information related to corruption and related offences, admit full responsibility, return all funds gained from the offences and pay reparations. The corporation must also undertake a robust corporate compliance enhancement programme to prevent such criminality from recurring. 

Importantly, the resolution is only a decision not to prosecute a corporate entity. Individual persons may still be prosecuted and will no longer be able to hide behind corporations to escape personal liability and prosecution. The resolution provides a framework for corporations to take responsibility without necessarily jeopardising the operations of the entire business and its employees. 

In terms of such resolutions, companies will be obliged to name responsible individuals, cooperate with investigations by providing evidence and commit to actions to improve corporate governance and the ethical conduct of employees. 

A strong incentive

The decision not to prosecute the company may be reversed at any stage where there is non-compliance with the terms of a resolution. There is therefore a strong incentive for a company to comply with the resolution and fulfil its undertakings.

Corporate alternative dispute resolutions, or non-trial resolutions (NTRs), are used extensively to combat complex multi-jurisdictional corruption cases. They are one type of public-private cooperation, an approach to combating corruption recommended in the UN Convention against Corruption (Uncac). 

This approach is endorsed by the OECD and has become the predominant method of enforcement in foreign bribery cases among all 44 Uncac signatories. It offers companies an opportunity to rehabilitate themselves without causing further damage to the countries in which those offences were committed. 

Corporate alternative dispute resolutions put the onus on companies to self-police the actions of their staff to avoid being barred from operating or compromised by prosecution. Research conducted by the OECD demonstrates that corporations that entered into NTRs significantly enhanced their governance and accountability systems. These approaches serve as both the carrot and the stick.

One of the most effective uses of a non-trial resolution took place in Malaysia, after the plundering of huge sums of money from 1Malaysia Development Berhad (1MDB), a strategic development agency. A total of $4.5-billion was raised in a corrupt scheme involving a former head of state, local businessmen, Goldman Sachs, KPMG and Deloitte. The funds needed to be repaid, with interest, threatening the country’s credit rating.

The country entered into NTRs with the three companies for the repayment of all the money. The former prime minister was sentenced to 12 years in prison. His cronies were also prosecuted. The head of Goldman Sachs Malaysia was fined $45-million and sentenced to 10 years in prison. Malaysia is still pursuing additional compensation for the damage done to its economy.

The NPA’s corporate alternative dispute resolution policy directive takes into account our obligations under the Constitution and the powers granted to the NPA. It is also in line with global best practice. 

In terms of the recently concluded landmark resolution by the NPA with SAP, the global financial services giant will return more than R2-billion to South Africa for the criminal roles of its former directors and employees of its SA subsidiary in corruption and related offences to secure work in South Africa. In arriving at this resolution, the NPA strongly collaborated with the DPCI (the Hawks), which is conducting investigations into SAP.

The company provided the NPA with vital information to pursue investigations and possible prosecution of the implicated individuals and, as part of the resolution, will continue to do so. The information is currently being analysed. 

Without the resolution, we may never have known how the South African employees and directors of this global firm, with operations in more than 130 countries, had conspired with corrupt individuals and companies to pay kickbacks in exchange for contracts. We may not have recovered the money that was lost. Now some of those funds will be returned to SOEs like Transnet and Eskom, and our big metros which are desperately trying to fund their turnaround plans to recover from the debilitating effects of State Capture.

The corporate alternative dispute resolution policy directive is a significant leap forward in South Africa’s crime-fighting strategies.

It represents a more sophisticated form of law enforcement that enlists business as a partner to increase corporate accountability in a country that has been bled dry by corporate collusion during the State Capture era. 

It enhances the rule of law, and as more companies come forward, it will encourage a corporate culture of zero tolerance for corruption and increased self-reporting. 

It will also ensure money is returned. The lives of all South Africans will be improved, especially the poor and vulnerable, who are disproportionately affected by the ravages of corruption, as we rebuild our economy. Finally, it will contribute to restoring trust and confidence in our law enforcement agencies. DM

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Comments - Please in order to comment.

  • Colin Braude says:

    Is NPA’s new weapon a cure for Human African trypanosomiasis, (sleeping sickness)?

  • Sullivan O ‘ Carroll says:

    Unfortunately this sounds wonderful but it’s another list of blah blah ! When ar3 w3 go7ng to see some action ? More pepper and less paper ! Najib is in jail in Malaysia. Zuma is starting a new party. This is our lived reality Deputy Ouma !

  • virginia crawford says:

    All very good; but are they going to be as ineffective as the regular weapons? Probably. If you can’t shoot straight then a new gun doesn’t change that. Change or “update ” the people working there.

  • Allauddin Thobani Thobani says:

    Unfortunately NPA is full of corrupt prosecutors.
    Since February 2019, Adv Shamila Batohi appointed NDPP only one Director of Public Prosecutions Adv M Noko resigned, his deputy Sello Maema still there.
    the DPPs and DDPPs at North Gauteng and South Gauteng are responsible for protecting Bosasa, Watsons confirmed by Zondo Commission, who are the prosecutors provided Dudu Myeni docket against Gavin Watson? why there is no action against the corrupt prosecutors.
    Adv Shamila still has time to clean NPA from these DPPs and DDPPs.

  • Geoff Coles says:

    Reads like an excuse as to why the cadres by and large are not prosecuted, let alone imprisoned.
    Clearly the top management in the NPA are not altogether serious and one wonders why….threats, bribes, or what.
    Suits the Government and ANC but the people want procecutions

  • Rae Earl says:

    Sounds great. But, what are the chances of it being instituted in the next 100 years or so? And who will administer it and at what price to the taxpayer? A good short-cut would be to reinstate the Scorpions who were superb at attacking crooks and recovering stolen goods. Ramaphosa and his cabinet are too heavily implicated in corruption to ever allow this to happen so the only solution is to vote them out. If that happens, money in the bank!

  • Richard Robinson says:

    Nice paperwork, but the same inept crew mans the Titanic.

  • Gled Shonta says:

    Looking at the comments I wonder about almost every commentators levels of comprehension, yet again.
    I understand the national cynicsym but here we have a mechanism that has firstly got billions of rands back into the fiscus, and will get more. And as part of the deal cutting those guilty must be turned over and face the music.
    Would the moaners prefer to have complex legal trials that could go on for years, opposed by corporations with bottomless budgets, only to have an uncertain outcome at the end? Or to have a meaningful deal cut which frees up resources and cuts to the chase?
    The mechanism set out above, which the whingers can’t bother to grasp, is modelled on international best practice. Lets give it a chance rather than the continuous chirping from the monkey gallery, where the monkeys provide not a single meaningful implementable suggestion or solution.
    Stop bloody moaning and provide some workable, concrete proposals: or just be labelled as more whinging whiteys.

    • Karl Sittlinger says:

      It is unreasonable to expect commentators here to be able to make suggestions how the NPA is supposed do their job, just as it would be to expect a patient to tell a surgeon how to operate on them. But when you as a layman hear that a certain procedure doesn’t work properly and is ineffective, you would still question the use of it without making a suggestion how to do it better.
      The successes of the NPA are few and far between. They seem to be directly related to the level of connectivity of the individual or group to the ANC. The higher the position of the accused, the larger the ineptitude seems to become.
      Yes cutting deals is part of the process, but only if the deal helps the state recover more costs and implicate higher ups. Pretty standard stuff even for us “moaners” to comprehend even if you don’t seem to think so.
      Considering the serial failures of the NPA especially for the ANC connected, and the very high likelihood that the NPA is not free of influence by the ANC, it is more than reasonable to question suggestions by them and has absolutely nothing to do with whining.

      To end your comment with this sentence: “or just be labelled as more whinging whiteys” just shows that you are racially prejudiced and it really only detracts from what little logic your comment had to begin with. Clearly something is not functioning properly in the NPA and it cannot be ruled out that these deals will be misused to let cadres and comrades off the hook.

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