I INTRODUCTION
“South Africa experiences vast corporate activity and development. An adverse consequence of this is the proliferation of severe corporate criminality. There is rising consensus among corporate criminologists and academics that corporate crime inflicts more damage on society than all street crime combined”.363
This quotation highlights the fact that like other countries, South Africa is faced with the challenge of dealing with crimes committed by corporations, including those that result in people’s deaths. It is therefore in the interest of South Africa to see to it that there are adequate measures in place that are intended to deal with corporations that commit crimes, particularly those that result in the deaths of people.
As already stated, corporate criminal liability in South Africa is regulated by section 332 of the CPA and the punishment for corporate crimes is a fine.364 South Africa does not have separate legislation that deals specifically with fatalities resulting from the conduct of corporate bodies.
Corporations that kill are therefore prosecuted in accordance with section 332 of the CPA, which regulates corporate criminal liability generally.
The problem with the application of the current approach is that even though there have been many occurrences of fatalities caused by corporate activities, there have been very few cases
363 Borg-Jorgensen & Van Der Linde(note 53) 452.
364 CPA (note 16) section 332(2).
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in which corporations have been convicted for such deaths.365 This gives rise to two issues:
(i) The question whether the manner in which corporate criminal liability is currently applied makes it possible for corporations that kill and injure people to be properly held liable for this unlawful conduct with regard to corporations;366 and (ii) The question of the appropriateness of a fine as the sole possible punishment for corporations,367 even where there is death.
It must be noted that it was only during the 20th century that it started to become common practice in South Africa to hold a corporation criminally liable.368 At first the common law played an important role in regulating corporate criminal liability in South Africa.369 However, the legislature gradually developed a legal framework for corporate criminal liability and the current position is that corporate criminal liability is mainly regulated by statute.370 The legislature first addressed the issue by enacting section 384 of the Criminal Procedure and Evidence Act, 1917.371 Section 384 was later amended by section 117 of the Companies Amendment Act, 1939.372 The amended section 384 was later replaced by section 381 of the Criminal Procedure Act, 1955.373 The wording of section 381 remained basically the same as it was under section 384. Section 381 was also later replaced and the current position is found
365 A Rycroft ‘A Corporate Homicide’ (2004) 17 SACJ 141, 141 – 142. “In South Africa about 1400 people are killed yearly in occupational accidents”. (OHS Academy http://www.ohsacademy.co.za/didyouknow.asp (accessed March 2014). With regard to the frequency of prosecutions see discussion in chapter 6 part I below.
366 This will be addressed in this chapter at V below.
367 This will be addressed in this chapter at V(g) below..
368 In answering the question whether a juristic person could be held criminally liable, Pittman in 1940 stated that
“A hundred years ago the answer to this question would have been in the negative, an artificial person not being regarded as doli capax”. (W Pittman Criminal Law in South Africa (1940) 38).
369 S Selikowitz ‘Corporations and their Criminal Liability’ (1964) Responsa Meridiana 21, 21.
370 That is section 332 of the Criminal Procedure Act.
371 The CPEA (note 43).
372 The Companies Amendment Act 23 of 1939, hereinafter referred to as the CAA. “In the course of enacting the Companies Amendment Act in 1939 Parliament took the opportunity of redrafting section 384 of the Criminal Procedure Act and setting out clearly the law relating to the criminal liability of a company, its directors and servants”. (Selikowitz (note 369) 21.
373 The Criminal Procedure Act 56 of 1955, hereinafter referred to as the CPA 1955.
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in section 332 of the CPA.374 As with the previous provision, the wording of section 332 was also retained basically in the same form. Under these statutory provisions case law shows that corporations and members of associations which are not corporate bodies may be held criminally liable for their unlawful actions and some have been convicted.375
In terms of section 332 a corporation may be prosecuted and subsequently convicted for the criminal acts of its officers, as these individuals’ acts are regarded as acts of the corporation itself.376 In addition to that, the current position is that an officer of a corporation may also be held criminally liable for acts of the corporation377 but this will be the case only if he or she took part in the commission of that crime378.
The criminal act of the director or servant is deemed to be an act of the corporation itself, as long as the act was performed in exercising powers or in the performance of duties as a director or servant, or if the director or servant was furthering or endeavouring to further the interests of the corporation.379 The guilt of the director or servant is imputed to the corporation.380 For this reason, in South African law, the basis of liability extends beyond the vicarious liability that natural persons are subject to.381 Corporations may thus be held liable for common-law
374 It has been said that “s. 332 of the Criminal Procedure Act 51 of 1977 aims to avoid the necessity of the development of the common law of criminal liability of legal persons”. (Rycroft (note 365) 150).
375 For instance R v Levy & Others 1929 AD 312 - 1917 Act; R v Bennett & Co. (Pty) Ltd & another (note 32) – 1934 Act; and S v Banur Investment 1969 (1) SA 231 (T) – 1955 Act; S v Deal Enterprises1978 (3) SA 302 (T) – 1977 Act.
376 Snyman (note 22) 254.
377 The Constitutional Court in S v Coetzee (note 56) declared section 332(5) unconstitutional as it provided for a reverse onus whereby the servant or director bore the burden of proving his/her innocence. The Coetzee judgment will be discussed in more detail in this chapter at IV(a)(v)(aa) below.
378 Burchell (note 49) 567.
379 Snyman (note 22) 254.
380 Burchell (note 195) 475.
381 Ibid 476. See discussion below on the basis for liability.
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offences such as theft382 and culpable homicide.383 They may also be held liable for statutory crimes.384 These will usually be in the form of non-compliance with a regulatory statutory provision. Corporations may also be held liable for crimes which require intention,385 crimes which require negligence,386 as well as strict liability offences.387
Despite the statutory regulation of corporate criminal liability, it is submitted that the concept of corporate criminal liability in South Africa has not sufficiently developed to the extent where it can be said that it satisfactorily addresses the problem of corporate crime.388 It is further submitted that there is an urgent need for reform,389 particularly where deaths occur as a result of corporate activities. There ought to be a separate legal framework for corporate homicide.390
In this chapter the concept of corporate criminal liability in the South African context will be examined closely. It will be argued that the law as it stands does not cater adequately for situations involving the loss of life caused by corporations. The need for a separate legal framework of corporate homicide will be highlighted. The appropriateness of a fine as the only penalty for deaths and injuries caused by corporations will also be closely examined. The discussion will include, inter alia, the basis for corporate criminal liability in South Africa,
382 R v Markins Motors (Pty) Ltd 1959 (3) SA 508 (AD).
383 Snyman (note 22) 254 and R v Bennett (note 32).
384 S v International Computer Broking and Leasing (Pty) Ltd 1996 (3) SA 582 (W) - Contravention of section 2(1)(a) of the Usury Act 73 0f 1968.
385 R v Frankfort Motors (Pty) Ltd 1946 OPD 255 - fraud.
386 R v Bennett (note 32) - culpable homicide.
387 “…if, however, regard be had to the embodying statute, the liability is strictly that of the corporate body itself, because the acts of the directors, servants or agents are deemed to be those of the corporate body”. (Delport (note 87) 5). Also see Snyman (note 22) 254. An example would be the holding of the corporation liable for the employee’s negligent killing of another in R v Bennett (note 32).
388 As stated above, Wells defines corporate crime as “corporate activities which are perceived to involve a transgression of some aspect of criminal law”. (Wells (note 15) 1).
389 See discussion on criticisms or shortfalls of section 332 of the CPA in this chapter at V below. For corporate criminal liability to be adequate and efficient in South Africa these need to be remedied.
390 See discussion below on corporate homicide in this chapter at IV(b) below.
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the development of the statutory regulation thereof, the mens rea of the corporation, applicable sanctions and the need to regulate corporate homicide separately. Throughout, the focus will be on criminal conduct that results in the deaths or injuries of people. It is submitted that if more attention is given to this area this may lead to further development of the concept of corporate liability in such a way that it extends to corporate homicide.
II THE HISTORICAL DEVELOPMENT OF CORPORATE CRIMINAL LIABILITY IN SOUTH AFRICA
There is very little evidence of the existence of corporate criminal liability in South Africa prior to the early 20th century.391 In sketching the development of corporate criminal liability in South Africa, the common law392 regulation of corporate criminal liability will be discussed. This will be followed by a discussion of the development of corporate criminal liability as a result of the enactment of statutory regulations thereof. In the discussion of the statutory regulations, similarities and differences between the statutes will be highlighted.
(a) Common law
Corporate criminal liability is a concept that belongs to both company law and criminal law.
Given the hybrid nature393 of South African corporate law and criminal law, when attempting to identify the originality of the concept of corporate criminal liability it is important to establish if this concept existed under Roman law, Roman-Dutch law394 as well as English law.
391 Selikowitz (note 369) 24.
392 Snyman defines common law in the following way: “…those rules of law not contained in an Act of parliament or of legislation enacted by some other subordinate legislature, but which are nevertheless just as binding as any legislation”. (Snyman (note 22) 6).
393 HR Hahlo and E Kahn The South African Legal System and its Background (1973) 330.
394 “The legal system known as Roman-Dutch law resulted from the reception of Roman law in the Netherlands and the fusion of Roman law and local customary law”. (Snyman (note 22) 9). For a full discussion of the historical
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South African company law is derived from English law.395 Criminal law in South Africa began as a hybrid system that was derived from both Roman-Dutch and English law.396 It has since evolved to a point where the current “system of criminal law in South Africa is a truly mixed system, blending Roman-Dutch, English, German and uniquely South African elements”.397
It is thus important to see if there are any traces of entities that are analogous to a modern-day corporation in Roman law, Roman-Dutch law and English law. In addition to that it is important to determine whether those entities were held criminally liable for their unlawful actions. The discussion on the development of the common-law regulation of corporate criminal liability will begin with a discussion of the Roman law position.
(i) Roman law
The earliest traces of a corporation under Roman law are that of a family under the rule of its patriarch398 or paterfamilias. In Maine’s words:
“the family, in fact, was a corporation; and he was its representative or…its public officer.
He enjoyed rights and stood under duties, but the rights and the duties were, in the contemplation of his fellow-citizens and in the eyes of the law, quite as much those of the collective body as his own”.399
development of corporate criminal liability in South Africa see II (b) below in this chapter; England see Chapter Three II (b) and Canada see Chapter Four II (b) and (c) below.
395 JT Pretorius, PA Delport, M Havenga & M Vermaas Hahlo’s South African Company Law through the cases – A source book 6 ed (1999) 1.
396 Burchell (note 195) 9.
397 Ibid.
398 Maine specifically states that “the family had the distinctive characteristic of a corporation”. (HS Maine Ancient Law: Its Connection with the Early History of Society and its Relation to Modern Ideas (1931)153).
399 Ibid.
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The family unit resembles a company, in that it had a particular individual, the patriarch, through whom it acted.400 The patriarch represented the family, publically.401 The rights and duties of the family, as a collective, were borne by the patriarch, on behalf of the family,402 as
“the head of the household”.403
As commercial trading increased, an entity known as a commenda 404 came into being. It was basically a joint venture whereby traders and shipowners made contributions towards trade expeditions with a view to sharing the resulting profits.405 It has been stated that the commenda is probably “the earliest formalized system of commercial joint enterprise”.406 The rules of the commenda made it possible for the liability of an investor in a joint venture to be limited to the financial contribution he had made to the joint venture.407
A further development in Roman law, which led to the coming into being of corporations was the societas408 which was an association of persons that was a separate legal person in its own right.409 Since the societas had legal personality it had its own rights and obligations which were separate from those of its members.410 It has been stated that it is the societas “with legal rights and duties independent from its individual members which laid the foundation of the
400 Ibid.
401 The paterfamilias “had extensive power (patria potestas) over the other members of the family and represented the family in all affairs, political or otherwise”. (B Edwards The History of South African Law – An Outline (1996) 5). 402 Maine (note 398) 153.
403 DH Van Zyl History and Principles of Roman Private Law (1983) 9.
404 Maine (note 398) 8.
405 Ibid.
406 Ibid.
407 Ibid 9.
408 Van Zyl refers to the societas as the contract of partnership. (Van Zyl (note 403) 287).
409 Maine (note 398) 9.
410 Ibid.
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modern idea of the company as a separate legal entity”.411
At this early stage of Roman Law, criminal law was still developing and it was mainly concerned with matters affecting or threatening the security of the state.412According to Selikowitz “when we look to the Roman Law for guidance as to the criminal liability of corporations it appears that there is an absence of such liability or where it exists there is no clear doctrine on which such liability is based”.413 In Roman law a legal entity could not be held criminally responsible.414 This assertion is supported by Kahn, who states that “a corporation cannot commit an unlawful act (actus reus) or have a wrongful state of mind (mens rea). Thus it cannot be saddled with criminal liability. So it was with Roman law and probably in classical Roman-Dutch law”.415 Maine attributes that to the fact that the criminal law at that time was more concerned with matters that posed a threat to state security.416 With regard to civil action the Roman law principle was that a corporation did not have the capacity to commit any offence that required intention as one of the elements.417 This explains the apparent reluctance to hold a corporation criminally liable.
411 Ibid.
412 This is mainly due to the fact that “in the infancy of the commonwealth, every offence vitally touching its security or its interests was punished by a separate enactment of the legislature. And this is the earliest conception of a crimen or crime”. (Ibid 310).
413 Selikowitz (note 369) 22.
414Although South African criminal law is derived from Roman-Dutch law and English law it appears as though in Roman law there was no clear criminal liability of corporations. (JC De Wet & HL Swanepoel Strafreg (1949) 18). Selikowitz is of the opinion that “The Romans seem to have realized the fact that a corporation was not a human being which could be subject to a section of the law which has as its general aim, the prevention of certain kinds of human activity”. (Selikowitz (note 369) 22). Also see Coffee (note 21) 13.
415 E Kahn ‘Can a Company Be Guilty of Murder? The Criminal Liability of a Corporation -I’ (1990) 19 Businessman’s Law 146.
416 Maine (note 398) 310.
417 M De Villiers The Roman and Roman Dutch Law of Injuries: A Translation of Book 47, Title 10 of Voet’s Commentary on the Pandects, with Annotations (1899) 60.
90 (ii) Roman-Dutch law
In Roman-Dutch law a corporation was recognized as a legal persona capable of being a party to a civil suit.418 The development under Roman-Dutch law seems to be in favour of a corporation being held liable for delictual wrongs committed by its servants.419 It is, however, doubtful whether a legal entity was regarded as being capable of committing a crime and of being punishable for criminal conduct under Roman-Dutch law.420 Selikowitz421 and Kahn422 confirm that under Roman-Dutch law there appeared to be a reluctance to accept that a corporation could possibly be criminally liable.
(iii) English law
English law accepted the notion of a corporation as a legal person in the seventeenth century.423 Prior to that, corporations did exist but in a simplistic form and at that point in time they did
418 “A corporation or collective body does seem in some degree identified with the members thereof, though by a fiction of law the acts of the majority acting in their corporate capacity are attributed, not to them, but to the corporation itself in such matters as it is competent to perform”. (Ibid 61).
419 De Villiers’ avers that “it is undoubtedly true that a corporation cannot entertain an animus injuriandi…; but just as by the Roman law regulating the relations between a slave and his owner, the latter (unless he surrenders the slave to the injured party) could be held liable for the act committed animo injuriandi by the slave, so a corporation, where the law relating to corporations is such, may be held liable for the act committed animo injuriandi by the persons for whose acts it is by such law accountable”. (M de Villiers Supplement to Roman and Roman Dutch Law of Injuries: A Translation of Book 47, Title 10 of Voet’s Commentary on the Pandects, with Annotations (1915) 21).
420 De Wet & Swanepoel (note 414) 18.
421 Selikowitz (note 369) 22.
422 Kahn (note 415).
423 Pinto & Evans (note 94) 6.
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not have legal personality in the same form as it is today.424 It took time before the acceptance of the concept of corporate criminal liability.
For corporate criminal liability as we know it today, to be accepted in English law, certain obstacles first had to be overcome.425 These hurdles were eventually overcome and by 1944 corporations were being held criminally liable even for crimes that require mens rea.426 Corporate criminal liability in English law has developed to such an extent that now there is specific legislation aimed at protecting individuals from injuries and deaths caused by corporations or corporate activities.427 It is one of few jurisdictions that has developed this concept to such an extent that it specifically legislates against the negligent killing of people by corporations.
(iv) The South African common law
“The common law of criminal liability of corporations may be described as holding a corporation ‘criminally responsible for its acts and omissions, and in the same way as an ordinary principal or master for its agents or servants acting on behalf of it or in its service’”.428
This statement by Selikowitz summarises the way in which the common-law regulates corporate criminal liability in South Africa. The common law position relies on vicarious
424 “Courts have recognized that corporations have some sort of legal personality since the seventeenth century.
Initially such recognition was limited to certain situations, for example in order to own property”. (Ibid).
425 For a full discussion see The historical development of corporate criminal liability in English law in Chapter Five at IV(b)(i) below. See also the discussion in Chapter Two at III(a) above.
426 See discussion of the 1944 cases in Pinto & Evans (note 94) 39 - 44.
427 The CMCHA (note 36).
428 Selikowitz (note 369) 24.