Reforming Corporate Criminal Liability in South Africa: Deferred Prosecution Agreements

Although South African law allows corporations to be held criminally liable for the misconduct of their directors and officers, in practice holding companies liable for corruption and other crimes can be a protracted process due to backlogs, delays, and an under-resourced prosecutorial agency. In recognition of this problem, as well as the prominent role corporations have had in facilitating corruption and state capture, South Africa’s Judicial Commission of Inquiry into State Capture has recommended, among other things, reforming South Africa’s corporate criminal liability laws to allow prosecutors to negotiate deferred prosecution agreements (DPAs) to resolve corporate criminal cases. (Currently, South African prosecutors may negotiate and conclude plea and sentencing agreements with corporations, but this prosecutorial authority does not extend to DPAs.) The South African Law Reform Commission (SALRC) has been tasked to consider the introduction of DPAs as part of its review of South Africa’s criminal justice system; the SALRC’s report and recommendations are expected to be finalized by 2024.

This issue has garnered considerable discussion among South African commentators. While many welcome the introduction of DPAs as a much-needed reform, a number of commentators have raised concerns, most prominently the concern that introducing DPAs in South Africa will enable prosecutors and corporations to strike secret deals and fail to hold corporations accountable (see here, and here, and here). Fortunately, there are a number of ways to mitigate this potential problem, which the SALRC can and should include in its report and recommendations. Continue reading

New Podcast Episode, Featuring Andrew Wedeman

A new episode of KickBack: The Global Anticorruption Podcast is now available. In latest episode, host Dan Hough interviews Andrew Wedeman, Professor of Political Science at Georgia State University, about the politics of anticorruption campaigns in China, including the aggressive anticorruption campaign instigated by President Xi Jinping. Professor Wedeman discusses the effects this campaign has had on Chinese society at all levels, and assesses the evidence as to whether the campaign has made meaningful progress in getting corruptino under control. The conversation also touches on some of the challenges in researching these issues in China. You can also find both this episode and an archive of prior episodes at the following locations: KickBack was originally founded as a collaborative effort between GAB and the Interdisciplinary Corruption Research Network (ICRN). It is now hosted and managed by the University of Sussex’s Centre for the Study of Corruption. If you like it, please subscribe/follow, and tell all your friends!

Comments on Sri Lanka Proposed Anticorruption Bill

Sri Lanka is known for the quality of its legal scholarship, and the draft anticorruption bill the government gazetted April 6 leaves little doubt the reputation is warranted. It contains many thoughtful, well drafted provisions other nations looking to reform their laws will want to borrow. Too bad for the drafters they can’t copyright their work.

At 162 pages I did not have time to give it the the intensive review the legislature will want to conduct before approving it. But I did find several provisions that I would urge legislators should examine as part of that review —

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Where Everyone Knows Everyone: The Distinct Anticorruption Challenges of Small Population Countries

Compared to most of the rest of the world, Iceland has a strong reputation as a clean country. In the most recent version of Transparency International’s Corruption Perception Index (CPI), Iceland ranks in 14th place—quite impressive overall, though behind Iceland’s Nordic neighbors Denmark, Finland, Norway, and Sweden. Yet Iceland’s high CPI score obscures a number of incidents over the last several years, where public officials in Iceland were involved in conduct that seems to raise concerns about potential conflicts of interest. Consider a few of the most high-profile examples:

  • In 2017, Iceland’s Minister of Justice was criticized in connection with the appointment of judges to the newly-established Court of Appeals. Notably, at least three of the fifteen judges appointed had personal ties to the Minister: one was a partner at a law firm where the Justice Minister had worked prior to her appointment, another was the spouse of a partner at the same law firm, and a third was the spouse of her fellow party member and colleague in parliament (see here and here).
  • In 2019, after revelations of allegations that a major Icelandic fishing company had been involved in bribing Namibian government officials (the so-called Fishrot scandal), demonstrators called for the resignation of the Minister of Agriculture and Fisheries. The reason was his connections to the company, where he had once served as chairman of the board, and his longtime personal friendship with the company’s CEO. Indeed, the Minister said publicly that his first reaction to the scandal had been to phone his CEO friend to ask him how he was feeling (see here, here and here).
  • In 2022, the Minister of Finance found himself in hot water after it became known that his own father was among a select few allowed to bid for valuable holdings in a state-owned bank (see here and here).
  • In December 2022, the Finance Committee of the Parliament proposed adding to the government’s budget a 100 million ISK grant (approximately US$ 727,000) to a media company, whose CEO was the sister-in-law of one of the committee members. (The proposal was promptly withdrawn when this was disclosed.)

To be clear, none of these incidents necessarily involves corruption. But they all raise concerns about potential conflicts of interest, and the appearance of impropriety. And while each of these incidents arose out of its own distinct set of circumstances, there is a common underlying factor that may have contributed to all of them, and that generally poses challenges to effectively preventing corruption and regulating conflicts of interest: Iceland is very small, with a population of only 370,000 people. Although Iceland is in many ways most similar—culturally and politically—to its larger Nordic neighbors, with respect to population size and the distinct anticorruption challenges it presents, Iceland may turn out to share some common features with other small-population jurisdictions, such as Belize, the Bahamas and Vanuatu. Consider some of the ways in which fighting corruption and conflict of interest may be more challenging—or at least pose different sorts of challenges—in very small countries: Continue reading