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Corporate Criminal Liability in South Africa: The Need to Look Beyond Vicarious Liability

Published online by Cambridge University Press:  03 March 2011

Constantine Ntsanyu Nana
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Abstract

Corporate criminal liability is a problematic concept, especially where it is based on an exceptionable principle such as vicarious liability. This is the case with the South African model. This article seeks to demonstrate that this model requires substantial modification because it compels the court to adopt the incoherent exercise of holding a corporation (which is a distinct person) liable for the intentional act (crime) of any of its agents, whether or not there is criminal intention on the corporation's part and whether or not it was aware of, or could have prevented the commission of the offence. It is submitted that it is more appropriate to hold a corporation liable only where it has been established that the course of conduct that resulted in the offence was encouraged or tolerated by persons who embody the corporation (usually sufficiently empowered managers or members of the board of directors).

Information

Type
Research Article
Information
Journal of African Law , Volume 55 , Issue 1 , April 2011, pp. 86 - 104
Copyright
Copyright © School of Oriental and African Studies 2011

INTRODUCTION

The South African legal system, like most systems the world over, is confronted by the phenomenon of corporate offenders. South African law in this regard is a hybrid system that combines principles of English common law and Roman-Dutch law with a number of its own innovations. The Roman law of corporations formed the basis of Roman-Dutch law, given that Dutch institutional legal commentators and practitioners of the 16th, 17th and 18th centuries used Roman law as the foundation of their private law.Footnote 1 It is this system that was initially exported to South Africa by Dutch settlers who had come to colonize this part of Africa.Footnote 2 Thus, the law of Holland as it was in the year 1652 became the bedrock of modern South African law when it was instituted in the Cape of Good Hope. This means that an appreciation of the concept of the corporation within South African law necessarily involves an understanding of the meaning attributed to the concept by early Roman and Dutch legislators and lawyers.

Classical Roman lawyers recognized the legal personality of artificial entities (that may be deemed to be the ancestors of corporations or companies) such as the universitas personarum and the universitas bonorum. Footnote 3 These entities were bodies composed of natural persons who could nominate one of their members or any other natural person to act on their behalf.Footnote 4 Their existence (creation and dissolution) and capacity to carry out transactions depended entirely on the authorization of the state.Footnote 5 By the time of Justin (AD 527–65), charitable artificial entities founded by individuals were also recognized, although they were equally subject to control by a state official. Nonetheless, the right of these artificial entities to sue in their corporate capacity and their obligation to pay compensation when requested by the ordinary courts were recognized. Moreover, the death of members (natural persons) did not result in the dissolution of the institutions.Footnote 6 As such, artificial legal entities in this era enjoyed a number of rights traditionally reserved for natural persons. However, it is doubtful whether some duties, such as the duty not to breach criminal law standards, were equally imposed on these entities under Roman law.Footnote 7 It is difficult to argue to this effect given that, in the Middle Ages, the Church kept the Roman concept of universitas aliveFootnote 8 but did not treat artificial legal entities as persons that could be criminally liable in their individual capacity. Pope Innocent IV is famously noted to have proclaimed in 1245 during the first council in Lyon that a corporation could commit neither sin nor wrong.Footnote 9 However, Pope Innocent IV made this statement against the background of the excommunication of corporate entities by ecclesiastical courts.Footnote 10 Also, some commentators such as Mestre and Valeur have provided many examples of the imposition of criminal sanctions on legal persons under Roman law.Footnote 11 As such, there are good grounds to assume that the corporate entity as recognized under Roman-Dutch law in 1652 (and consequently South African law) was generally amenable to criminal liability.

It must nonetheless be noted that, although the common law of South Africa is Roman-Dutch law, the South African company has similar characteristics to the English company. This is because legislation based upon English companies' legislation was introduced at an early stage in South Africa and, for more than 100 years, South African company legislation closely followed English company law.Footnote 12 However, this is not to say that South African law necessarily followed the same developmental path on the subject of corporate criminal liability. This is because, unlike the English law that was gradually developed by the courtsFootnote 13 during the course of the 20th century,Footnote 14 this issue has been regulated by statute in South Africa since 1917.Footnote 15 Moreover, the law of tort heavily influenced English lawFootnote 16 while South African principles relating to the delictual liability of corporate bodies are based on Roman-Dutch legal principles.Footnote 17 South African companies were even found guilty of a number of offences (not influenced by English company statutes) before the Criminal Procedure and Evidence Act 31 of 1917 (the “1917 Act”). South African courts for example imposed liability upon companies in their capacity as employers. They were held liable for the failure to provide safe working conditions or other benefits to employees.Footnote 18 As a general rule, the liability imposed upon these companies was vicarious, given that they were held liable for the wrongful acts of employees committed in the course of employment. Unfortunately, the 1917 Act adopted this form of liability as the appropriate model to hold corporations criminally liable.

As such, this article seeks to demonstrate that the South African model (although similar to those applicable in some other influential jurisdictions)Footnote 19 was poorly conceived, given that specific consideration was not given to the general principles of corporate criminal liability.Footnote 20 It seems that the basis of the legislative process was the codification of a common practice without an examination of the underlying issues necessary to ascertain the most appropriate way of holding corporations criminally liable. Thus, South African courts have since been compelled to adopt the incoherent exercise of holding corporations (which are distinct persons) liable for the intentional acts (crimes) of their agents. There is a need for change, given that courts do not want to be held to imply that, although the accused corporation is not directly responsible for the offence and/or is not an accessory to the offence, it is nonetheless liable for the personal fault of its agent. After a brief discussion of the applicable statutory provisions and the mandatory use of vicarious criminal liability, the conclusion of this article proposes guidelines for the adoption of a more appropriate model.

THE CURRENT POSITION

Section of 384 of the 1917 Act rendered companies liable for the offences perpetrated by their directors and servants in the course of employment. This section has been replaced by subsequent provisions and the criminal liability of corporations is currently governed by section 332 of the Criminal Procedure Act 51 of 1977 (CPA 1977). According to this section, an act performed by, on the instructions of, or with the express or implied permission of a director or servant of a corporate body is deemed to be an act of that entity, provided that the act was performed in the exercise of his powers, in the performance of his duties as a director or servant, or in furthering or endeavouring to further the interests of that entity.Footnote 21

As such, a South African company can commit both statutory and common law offences, whether intent or not is an element of the particular offence.Footnote 22 Equally, the liability imposed upon corporate bodies is so wide as to cover virtually all types of offences.Footnote 23 A company could therefore be charged and convicted of culpable homicide,Footnote 24 theft,Footnote 25 fraudFootnote 26 and even assault and rape.Footnote 27 There are however limits, because the crime must be such that it should be possible to attribute the culpability of the directors or servants to the company. Also, the offence must be a type of offence that can be committed by a company.Footnote 28 Thus, in R v Sutherland,Footnote 29 it was held that a certain offence under the then Liquor Act could not be committed by a company, since the prohibition was directed at the licence-holder personally, and a company was not allowed to be a licence-holder.Footnote 30

It is also important to note that appearing in “person” in court is not one of those acts that a company is incapable of performing in South Africa. It is able to fulfil this procedural requirement by virtue of section 332(2) of the CPA 1977 which provides that, in any prosecution against a corporate body, a director or servant of that corporate body must be cited in his capacity as the representative of the accused.Footnote 31 The director or servant may then be treated as if he were the accused.Footnote 32 Thus, although only natural persons can be cited on the indictment, a natural person may be held to represent the accused company if it is proved that he is in fact a competent representative of the company.Footnote 33 As such, in the Lesotho case of R v Acres International Limited,Footnote 34 two companies in a consortium were indicted for corruption and the names of the companies were cited on the indictment. The companies challenged this on the ground that only a particular authorized representative of the corporate body should be cited as the accused. After a comprehensive review of the case law, legislative provisions of Lesotho and South Africa and textbooks, the court found support for the defence's proposition but expressed reluctance in following the practice. The court cited KrieglerFootnote 35 to the effect that:

“According to the literal wording of sub-section (2) the corporate body should not be summoned in its own name but rather a director or servant thereof in his capacity as representative of that corporate body… It is however doubtful that this was indeed the intention of the legislature. In practice this seldom if ever happens and there are no known judgments to this effect since the coming into operation of Act 51 of 1977. This practice has furthermore the advantages (a) that the name of the case remains constant irrespective of the identity of the representative; and (b), what is even more important, that a clear distinction is drawn between the citation of the natural person in terms of sub-section (2) qua representative, and his personal citation by reason of sub-section (5). The risk of imperfect citations, as in S v Freeman 1970 (3) SA 700 (N) or irregular substitutions, as in R v Erasmus 1970 (4) SA 378 is thereby diminished.”Footnote 36

Whatever the case, where the court decides to impose a penalty, it is imposed on the corporate body and not on the representative, unless the latter committed the crime in his personal capacity, in which case, he would have been charged in his personal capacity.

In light of this brief overview of section 332, one may logically appreciate the harsh reviews and criticisms directed against this section. In fact, aspects of the section have been trimmed by the Constitutional Court to meet certain constitutional requirements. In terms of section 332(5), directors and servants of a corporate body were deemed guilty of an offence for which the corporate body was convicted, unless they proved on the balance of probability that they did not participate in the commission of the offence and that they could not have prevented it.Footnote 37 Accordingly, directors and servants who failed to prove that they did not prevent the commission of an offence, which they could have prevented by virtue of their positions of authority, could be held criminally liable.Footnote 38 The prosecution only had to prove that the person concerned was a director or servant of the company at the time the offence was committed.Footnote 39 Hence, the fact that any director or employee was at risk of being prosecuted with the corporation, unless he adduced evidence of his non-participation in and inability to prevent the offence,Footnote 40 proved to be very problematic. The Constitutional Court therefore held in S v Coetzee Footnote 41 that sub-section 332(5) was unconstitutional.Footnote 42 That notwithstanding, it is surprising that, since the same reasoning is employed to hold corporations liable, courts have not held that to be equally unconstitutional. Where the director or servant is shown to have committed an offence while acting within the scope of his employment, the corporation is held liable simply because the guilty director or servant was its agent, unless of course it adduces evidence to the effect that the director or servant was furthering his selfish interests and did not in any way seek to further the corporation's interests. Thus, once the offence is proved against a director or servant who acted within the course of his employment, the corporation is presumed guilty until it proves its innocence. The remainder of section 332 of the CPA 1977 that still regulates corporate criminal liability in South Africa therefore raises a number of questions about the legitimacy and coherence of the process. As mentioned above, the problem stems from the model that was adopted by this section (vicarious criminal liability). It is difficult to understand why it was (and still is) considered the most convenient way of holding corporations criminally liable.

THE VICARIOUS LIABILITY MODEL ENSHRINED IN SECTION 332

The principle of vicarious liability developed out of medieval concepts of the master/servant relationship. It was established to protect the rights and welfare of outsiders or third parties that perceived both employer and employees as one, and also to protect employees from being injured by co-employees.Footnote 43 It is therefore proper that an employer should be liable to a third party who is subjected to risk or is injured by an employee acting in the course of his employment. Originally, vicarious liability was restricted to cases where the master expressly commanded the wrong. By the beginning of the 18th century, it was accepted by the English civil courts that the master could be liable for acts done at its implied and/or express command, and such commands could be inferred from the general terms of the servant's employment.Footnote 44 In the 19th century, English courts adopted the rule that liability depended on the nature of the master/servant relationship.Footnote 45 The employer was thus held liable for the civil wrong of his employee, provided the act was done in the course of employmentFootnote 46 or was sufficiently connected with the employment as to be “characterised as doing some authorised work in an unauthorised manner”.Footnote 47 Although the master was liable for industrial incidents caused by his servant's crime in cases where the former participated in the commission of the crime, English courts did not entertain the argument that an employer ought to be held liable in negligence for the harm done by one servant to another in the course of his employment.Footnote 48 However, they extended the liability of the employer to cover cases of his agent's fraud brought under civil law.Footnote 49 Thus, in Lloyd v Grace, Smith and Co,Footnote 50 MacNaghten LJ explained the rule in these terms: “who is to suffer for this man's fraud? The person who relied on [the employer's] accredited representative, or [the employer], who put the rogue in his own place and clothed him with his own authority?”Footnote 51

Section 322(1) of the CPA 1977 imposes similar liability on the corporate employer. Where a director or servant, in committing a crime, acts beyond his powers or duties but endeavours to further the interests of the corporation, the latter is held vicariously liable. This subsection may even be said to have disregarded the ultra vires doctrineFootnote 52 by extending the liability of the corporate employer beyond the limits of vicarious liability which normally rendered the principal or master liable only if the employee acted within the scope of his authority or employment.Footnote 53 This is because the statement “endeavouring to further the interests” of the corporation may be problematic, especially in instances where the employee intentionally committed an act in deviation of their course of duties or was grossly reckless in the mode of carrying out instructions from senior management.Footnote 54 However, it seems that there is a grim will to extend the meaning of the term “in the course of employment” to include such actions in order to stay within the boundaries of the ultra vires doctrine.Footnote 55

In ABSA Bank Ltd v Born Equipment (Pretoria) (Pty) Ltd,Footnote 56 the court held that the employee had acted within the scope of employment when he was “about the affairs, or business, or doing the work” of the employer.Footnote 57 The South African Supreme Court of Appeal in NK v Ministry of Safety and Security Footnote 58 also held that, if the employee was still carrying out some instruction of his employer, any deviation whether intentional or not would be held as being within the course and/or scope of employment.Footnote 59 An employee's deviation from the scope of employment will therefore be established only if the facts of the case under consideration are to the effect that the deviation was so “great in respect of space and time” that a reasonable judge would not hold that the employee was still carrying out some instruction of his employer.Footnote 60 The South African Constitutional Court in NK v Ministry of Safety and Security adopted an even more elastic stance. It ordained that the principles of vicarious liability and the “standard test” applied by South African courtsFootnote 61 ought to be aligned with the Bill of Rights, given that the traditional approach did not provide any remedy that corresponded to victims' alleged constitutional rights.Footnote 62 The Constitutional Court then advised that such “repugnancy” should compel an adaptation of the common lawFootnote 63 and, accordingly, held that the employer ought to be vicariously liable if the actions of the employee were within the “literal” course of his employment. This served as justification for holding the state vicariously liable for the rape of a young woman by three police officers.Footnote 64 It follows that the term “course or scope of employment”, although a legal concept, should be defined literally;Footnote 65 furthermore, where any provision carries two or more possible literal meanings with regard to the employer's vicarious liability, priority should be given to the one that does not (by the court's interpretation) restrict the fundamental rights of the complainant.Footnote 66 As such, considerations by the judge of policy would actually determine whether the employee's act was within the course and/or scope of employment and consequently whether or not the employer would be vicariously liable.Footnote 67

The liability of the corporation under Section 332(1) of the CPA 1977 may therefore be said to cover all acts performed by all directors as well as servantsFootnote 68 of the corporate entity during working hours or at such time that may be deemed to be working hours, in the workplace or in some place that may be deemed to be the workplace.Footnote 69 However, the prosecution must still prove that the director or servant concerned was a director or servant, as the case may be, and was acting in that capacity at the time the offence was committed.Footnote 70 The status of such an individual may be proved by oral evidence or by presentation of an employment contract or a copy of the annual return of directors certified as correct by the Registrar of Companies. Section 332(1) does not only include the acts of such a director or servant but also acts performed on his instructions or with his express or implied permission.Footnote 71

It is nonetheless difficult to ascertain what oral evidence the courts would require in the absence of an employment contract or copy of an annual return of directors. Although it may be submitted that this will depend on the circumstances of each case, legal definitions of the terms “director” and “servant” may be crucial in proving that a person was a director or servant of the accused company. Section 332(10) defines a director as somebody who controls or governs the corporate body or who is a member of a body or group of persons which controls or governs the corporate body or, where there is no such body or group, who is a member of the corporate body.Footnote 72 No definition of a “servant”, or the commonly used terms “employee” and “worker”, is provided by the CPA 1977.Footnote 73 However, there is no indication that these terms should not be given their normal meaning in terms of South African labour law. An employee may therefore be held to be any person, excluding an independent contractor, who works for another person or for the state and who receives, or is entitled to receive, any remuneration.Footnote 74 An even broader definition can be found in section 200A of the Labour Relations Act 66 of 1995: “any other person who in any manner assists in carrying on or conducting the business of an employer”.Footnote 75 This section further provides that, unless the contrary is proved, a person who works for or renders services to any other person is presumed to be an employee “regardless of the form of the contract”.

Although the presumption of employment applies primarily for the purposes of the Labour Relations Act, it may be contended that a person who is deemed to be an employee for the purposes of that act may probably also be regarded as such for the purposes of section 332(1).Footnote 76 This may include members of the board of directors and senior and junior officers (directors and servants) who are already caught by section 332(1).Footnote 77 It would thus suffice that the person cited as representative works for and receives remuneration from the company or in any manner assists the company to carry on or conduct its business.Footnote 78 Although such a natural person may represent the company and be treated as the company for the purposes of prosecuting and convicting the latter, in any prosecution where the natural person pleads guilty, the plea would not be valid unless the corporate body has authorized that plea.Footnote 79

THE LEGITIMACY AND COHERENCE OF THE VICARIOUS LIABILITY MODEL ENSHRINED IN SECTION 332

As noted above, vicarious liability appears to have been accepted naturally as a model of attributing fault to corporate bodies in South Africa.Footnote 80 The 1917 provision enshrined this approach using a model of statutory vicarious criminal liability which renders the corporate principal liable for offences committed by certain parties, even though there is no fault on the part of the corporation.Footnote 81 However, before 1917, the fact that corporations were only liable for statutory offences imposing absolute and strict liability appears to have been the decisive factor in interpreting statutes as intending vicarious liability.Footnote 82 This approach was probably influenced by English decisionsFootnote 83 given that, where an English statute provided for strict liability, thereby avoiding the need to establish negligence or fault on the part of the defendant, English courts conveniently assumed that vicarious liability was intended.Footnote 84 There was however no logical reason compelling such an interpretation.Footnote 85 That is why English courts have sought to avoid encouraging any unwarranted extension of the scope of corporate criminal liability to include vicarious liability of the corporate master, especially for crimes of intent.Footnote 86

However, it may be argued that a corporation's liabilities are all, in a sense, vicarious. This is because a corporation is an artificial person that can only act and form an intention through the agency of its directors and employees.Footnote 87 Thus, Laufer maintains that in theory a company can be said to have delegated powers to all its employees to act in their respective spheres and therefore it should be responsible for their criminal acts.Footnote 88 As such, the issue here is whether the liability of the corporate principal should extend to cover the crime committed by the director and/or servant of the company in any given case.Footnote 89

It may also be argued that vicarious criminal liability is crucial if regard should be given to the equity and objective of statutes as interpreted by the courts. Owing to the fact that statutes seldom state in clear and unambiguous terms that one person is to be liable for another's crimes,Footnote 90 the courts often hold the master liable where the implied intention of the legislator is supposed but not clearly stated,Footnote 91 or where the statute would be rendered nugatory if liability was not imposed on the company.Footnote 92 Thus, the presumption against vicarious liability from these perspectives may logically be seen to be weak.Footnote 93 Moreover, the eventual outcome seems to be the same whether the courts apply another model such as the identification doctrine,Footnote 94 or simply hold the company vicariously liable for the acts of its employees. With regard to the identification model,Footnote 95 it is important to note that it encourages senior management or the board of directors to delegate the management of criminogenic activities to middle or junior level managers in order to escape liability. Hence, given that vicarious liability is not unduly restricted to the acts and states of mind of senior managers, it is difficult for companies to escape liability in jurisdictions where vicarious liability applies, by delegating the management of criminogenic activities to lower level managers.Footnote 96

Nonetheless, it must be noted that the criminal liability of corporations would otherwise be all-encompassing if vicarious criminal liability is strictly observed as the applicable model. In other words, the company would be liable for the acts of all employees, whether senior or junior.Footnote 97 Such wide liability would indeed be ruinous to business.Footnote 98 South African courts have therefore sometimes concluded that the legislature did not intend vicarious liability at all,Footnote 99 while, in other cases, they have held principals liable only where the latter had constructive knowledge of the offenceFootnote 100 or failed to take reasonable steps to avoid its occurrence.Footnote 101 It must be noted that these cases concerned natural persons as principals. With regard to the corporate principal, the legislation in force has left little room for issues relating to knowledge or failure to take reasonable steps to avoid the occurrence of the crimeFootnote 102 to be discounted for the purposes of the imposition of criminal liability. This is because section 332 focuses neither on the way in which the activities of the corporation are managed and organized nor on the acts of persons who may be said to represent the corporation's state of mind.Footnote 103 As a result, the corporation may incur liability on the strength of an act of a junior employee that was committed without actual or constructive corporate knowledge of his act and where the company could not reasonably have prevented the act.Footnote 104 The ambit of the criminal liability of companies is therefore very broad, indeed, it is submitted, unreasonably broad.Footnote 105

Vicarious liability is a problematic basis for corporate criminal liability. In addition to its all-encompassing nature, it renders the principal guilty whether or not there was mens rea [criminal intention] on his part and whether or not he was aware of, or could have prevented the commission of the offence.Footnote 106Mens rea is a prerequisite for liability as a socius criminis [a partner in crime] and it is difficult to find a defensible reason why the position of the principal should be any different in a case of an offence committed within the corporate context.Footnote 107 In fact, the principal is deprived of the basic common law right to a criminal defence based on the absence of fault.Footnote 108 It is therefore quite unfair to hold a corporate person criminally liable for the acts of its employees that were contrary to its policy and that were committed firstly without the knowledge or even the Nelsonian [wilful] ignorance of those who may be said to be the corporate person's mind (senior management or empowered middle-level managers) and secondly in circumstances where they could not reasonably have prevented the commission of the offence.Footnote 109 Such broad liability does not serve the deep-seated sense of justice that normally underpins the concept of vicarious liability. In delict, strict liability is based on the concept of risk creation. The person who creates the risk to others by appointing employees or agents is held liable for the damage that others may suffer as a result of actions by such parties on the principal's behalf. It is however very difficult to sustain a risk creation argument in relation to the criminal liability and punishment of corporate persons under all circumstances. Discussion on this subject is geared more towards risk assessment as proof of negligence.Footnote 110

Also important to note is the fact that vicarious criminal liability does not provide any solution to the main problem faced by the identification doctrine, that is the difficulty of identifying any particular senior officer who has committed or embodies the requisite elements of the crime. Even if the requirement extends to the identification of both junior employees and senior managers, identifying such an individual in large and complex corporate structures remains difficult. In this light, vicarious criminal liability may be seen merely as an exception to the “identification doctrine” where the legislators intend to create an absolute but not strict liability offence and/or where the courts believe the purpose of the statute will be defeated if the company escapes liability.Footnote 111 However, where the offence charged carries an element of mens rea, both models of identification and vicarious liability break down if the accused corporation is a large and complex organization. Thus, it is important to look beyond these mechanical models that rely on the identification of the accused corporation with a guilty agent. The tendency at present should be to seek to hold corporations liable for criminal acts that may be considered acts that are particular to the corporation itself, that is acts in breach of criminal law standards that result from the operation of an existing policy or the way the corporation's activities are managed or organized.Footnote 112

CONCLUSION

The natural course of the development of corporate criminal liability in South Africa was interrupted in 1917 by the introduction of a statutory provision that governed this area of law until the enactment of the present applicable provision, section 332 of the CPA 1977. Thus, whenever a company is prosecuted, the courts refer to this section in order to determine its criminal liability. Unfortunately, as shown above, the principles of corporate criminal liability that underlie this section are problematic.

Section 332 imposes a form of vicarious criminal liability on the corporate master for all types of offences, whether or not there is a mens rea element. This militates against the general legal principle of not imposing liability on one party for a crime committed by another and that any conviction obtained on this ground is unfair and tantamount to a miscarriage of justice. In addition, liability is not only imposed for acts of directors but also for acts of lower level employees of the company. The attribution of lower level employees' acts and state of mind to the company under any circumstances is, with respect, ill-advised. Lower level employees generally act only upon instructions or in pursuance of a policy or course of conduct existing within the corporation unless they have been empowered to act independently. Instructions, practices and policies emanate directly or indirectly from the board of directors and/or senior management of the company. Hence, it may be appropriate to hold the corporation liable only if it can be proved that the practice or course of conduct that resulted in the crime was created or tolerated by the corporation's senior management or board of directors.Footnote 113

It is therefore submitted that the South African system should implement an approach similar to the “corporate culture” model applicable in Australia or the “senior management failure” model recently endorsed in the United Kingdom with regard to the prosecution and conviction of corporate manslaughter or corporate homicide. However, South Africa can improve on these models by clearly stipulating which officers and employees qualify as the senior management of the company for the purposes of a particular offenceFootnote 114 and when their acts would be attributed to the company.Footnote 115 It would also be important to state clearly when an act of a director or a member of the senior management team that renders the company liable, also renders that person criminally liable in his or her personal capacity.Footnote 116 If a lower level employee is sufficiently empowered to act in a particular senior management function, it would be fair to render the company liable for the offence that such a person commits in that capacity. In other cases, such a person's offence should not render the company liable unless senior management knew or ought to have known of his act and encouraged, tolerated or failed to sanction it. The employee should thus be held criminally liable in his personal capacity for acts committed without the knowledge of, or specific instruction from, his superior or senior management.

South Africa is not only in need of statutory redefinition of corporate crime but also of a clear definition of criminal proceedings.Footnote 117 The applicable statutory provisions, coupled with the duties to appoint company secretaries, compliance officers, and health and safety directors,Footnote 118 where appropriate, are important elements of a comprehensive framework to ensure corporate compliance. The increase in the productive capacity of the South African economy will be accompanied by a rapid increase in the number of corporations of different shapes and sizes. Thus, corporations will continue to pose even greater regulatory challenges and it is submitted that South Africa should urgently reconsider its principles of corporate criminal liability. It is possible that the early adoption of a statutory solution may not have done the legal system, or society, a service. It deprived the courts of the opportunity to wrestle with the underlying issues and to formulate a more appropriate and balanced approach to corporate criminal liability. Such an approach, it is submitted, should be fair, should reflect the values enshrined in the Bill of Rights (even for corporate persons) and ensure effective enforcement. In this process, South Africa could benefit from studying developments in other countries.

Footnotes

Ibid

References

1 See Connor CJ in Dunell, Ebden and Co v Swinburne 1876 NLR 8 at 8–10. See also R Zimmermann “Roman-Dutch jurisprudence and its contribution to European private law” (1992) 66 Tulane Law Review 1685 at 1685.

2 See B Glover “The doctrine of duress in the law of contract and unjustified enrichment in South Africa” (unpublished PhD thesis, Rhodes University, 2003) at 37.

3 The universitas personarum was an association of persons and included municipalities, various religious bodies, certain trades unions and associations of financiers (societates publicanorum). The universitas bonorum on the other hand was a complex set of assets and liabilities, including charitable foundations (piae causae) such as hospitals or almshouses. With the reception of Roman law in the Middle Ages, the universitas bonorum became part of the common law of continental Europe. However, some commentators posit that the terms are post-Roman. See Hahlo, HSouth African Company Law Through the Cases (3rd ed, 1977, Juta) at 4Google Scholar. The terms collegium and corpus were also used; see Catholic Encyclopaedia at: <http://www.newadvent.org/cathen/04387a.htm> (last accessed 1 September 2009). These terms now refer to certain voluntary associations formed under the common law. See M Tett and N Chadwick Rhodesian Company Law (1976, Typeset) at 190.

4 Tett and Chadwick Rhodesian Company Law, id at 3. For discussion of the recognition of legal personality under Roman law, see J Pretorius (general ed), Delport, P, Havenga, M and Vermaas, MHahlo's South African Company Law Through the Cases (6th ed, 1991, Juta) at 9–14Google Scholar; Maitland, F “The corporation sole” (1900) 16 Law Quarterly Review 335 at 335Google Scholar.

5 The existence of private business associations was not encouraged because of the fear that they would develop into subversive political organizations. See Tett and Chadwick Rhodesian Company Law, id at 3.

6 Ibid.

7 See Lizée, M “De la capacité organique et des responsabilités délictuelle et pénale des personnes morales” [The capacity, and criminal and tort liability of juristic persons] (1996) 41/1McGill Law Journal 131 at 134–35Google Scholar.

8 Every abbey, cloister or chapel was treated as a separate legal entity. See Hahlo South African Company Law, above at note 3 at 10.

9 See id at 4. See also Burchell, E, Hunt, P, Milton, J and Burchell, JSouth African Criminal Law and Procedure General Principles of Criminal Law (vol 1, 1983, Juta)Google Scholar at 395; R v Oudtshoorn Municipality (1908) 25 SC 257 at 261.

10 See Lizée “De la capacité organique”, above at note 7 at 136; Coffee, LizéeJ “No soul to damn: No body to kick: An unscandalized inquiry into the problem of corporate punishment” (1981) 79/3Michigan Law Review 386 at 386, note 2Google Scholar; Weismann, A and Newman, D “Rethinking criminal corporate liability” (2007) 82/2Indiana Law Journal 411 at 419, note 14Google Scholar.

11 Mestre claims that during this period kings and popes punished municipalities and provinces. See A Mestre Les Personnes Morales et le Problème de Leur Responsabilité Pénale [Juristic persons and the riddle of their criminal liability] (1899, Librairie Nouvelle de Droit et de Jurisprudence) at 34. See also Valeur, RLa Responsabilité Pénale des Personnes Morales dans les Droits Français et Anglo-Américains [The criminal liability of juristic persons in French and Anglo-American law] (1931, Marcel Giard) at 9–10Google Scholar.

12 See Hahlo South African Company Law, above at note 3 at 2; Pretorius et al Hahlo's South African Company Law, above at note 4 at 2; Wandrag, M “The distinction between private and public companies in South African company law” (1997) Transactions of Centre for Business Law 28 at 50–62Google Scholar; Wegger, G, Galcut, O and Keeton, ATopham's Principles of Company Law (3rd ed, 1953, Butterworths) at 1Google Scholar; Barlow, T and Emmett, MPrinciples of South African Company Law (6th ed, 1969, Juta) at 1Google Scholar.

13 See generally, Leigh, LThe Criminal Liability of Corporations in English Law (1969, Weidenfeld and Nicholson)Google Scholar; Wells, CCorporations and Criminal Responsibility (2nd ed, 2001, Oxford University Press)Google Scholar; Clough, J and Mulhern, CThe Prosecution of Corporations (2002, Oxford University Press)Google Scholar; Gobert, J and Punch, MRethinking Corporate Crime (2003, LexisNexis/Butterworths)Google Scholar.

14 It was only in the 1940s that English courts began holding companies liable for crimes of intent. See the cases of Director of Public Prosecutions v Kent and Sussex Contractors Ltd [1944] 1 KB 146; R v ICR Haulage Ltd and Others (1944) 1 KB 551; Moore v I Bresler Ltd (1944) 2 All ER 515.

15 Criminal Procedure and Evidence Act 31 of 1917.

16 Viscount Haldane in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 713 formulated the directing mind and will theory that was later adopted by the criminal law courts to impute liability to companies. See Stessens, “Corporate criminal liability: A comparative perspective” (1994) 43 International and Comparative Law Quarterly 493 at 508–09Google Scholar; Wells, C “Manslaughter and corporate crime” 1989 New Law Journal 931 at 931Google Scholar.

17 See O'Regan, J in NK v Ministry of Safety and Security [2005] JOL 14864 (CC).

18 See Boyd v Stuttaford & Co 1910 AD 101; Mkize v Martens 1914 AD 382.

19 Vicarious liability has also been the applicable model in the United States since 1909, following New York Central and Hudson River Railroad v United States 212 US 481 (1909).

20 For some constructive criticisms, see Burchell et al South African Criminal Law and Procedure, above at note 9 at 395. See also the cases of R v Dundee Coal Mining Co (1904) 25 NLR 357; R v Shaw Patent Chilling Freezing Process Co Ltd 1921 TPD 397; R v Standard Investment Corporation 1921 TPD 415; R v Port Elizabeth Municipality 1928 EDL 49. It is important to note that it was doubtful whether criminal sanctions could be imposed on companies under Roman-Dutch law, although as mentioned earlier corporate entities and municipalities were sometimes criminally sanctioned under Roman law.

21 Some examples of cases that have dealt with acts committed in furthering or endeavouring to further the interests of corporations include: R v Van Heerden 1946 AC 168; R v Booth Road Trading Co (Pty) Ltd 1947 1 SA 34 (N); R v Phillips Dairy (Pty) Ltd 1955 4 SA 120 (T); R v Barney's Super Service Station (Pty) Ltd 1956 4 SA 107 (T); R v Banur Investments (Pty) Ltd 1969 1 SA 231 (T) 233–34.

22 Cilliers, H, Benade, M, Henning, J, Du Plesis, J, Delport, P, De Koker, L and Pretorius, JCorporate Law (2001, Butterworths) at 566Google Scholar.

23 See Tett and Chadwick Rhodesian Company Law, above at note 3 at 191.

24 R v Joseph Mitshumayeli (Pty) Ltd 1971 1 SA 33 (RA).

25 R v Markins Motors 1959 (3) SA 508 (A).

26 R v Wege 1959 (3) SA 268 (C).

27 Following the decision of the Constitutional Court in NK v Ministry of Safety and Security, above at note 17.

28 This is debatable given that acts such as theft, assault and rape are attributable to a company. However, what is important here is whether the applicable law in a given instance would allow acts that constitute the actus reus [elements of an offence] or mens rea [criminal intention] of the offence to be attributed to a corporation.

29 1972 3 SA 385 (N).

30 The courts also held in the following cases that the nature of the crime was such that it could not be committed by a company: R v City Silk Emporium (Pty) Ltd 1950 1 SA 825 (GW); R v RSI (Pty) Ltd 1959 1 SA 414 (O); R v Smith 1960 4 SA 364 (O).

31 See R v Hammersma 1941 OPD 39.

32 Nonetheless, it is not correct to summon the company in its own name. The director or servant must be summoned in his capacity as representative. See Herold NO v Johannesburg City Council 1947 2 SA 1257 (A) at 1266–67.

33 See R v Mucheche Bus Service (Pty) Ltd 1969 (2) RLR 392 (AD); and R v Richardson NO 1951 (4) SA 284 (T).

34 (2002) unreported judgment, High Court of Lesotho held at Maseru, available at: <http://www.odiousdebts.org/odiousdebts/index.cfm?DSP=subcontent&AreaID=157> (last accessed 1 September 2009). It should be noted that the laws of the Kingdom of Lesotho generally follow the laws of the Republic of South Africa. See F Darroch “The Lesotho corruption trials: A case study”, available at: <http://www.ipocafrica.org/cases/highlands/funding/darroch.pdf> (last accessed 1 September 2009).

35 Kriegler, JHiemstra: Suid Afrikaanse Strafproses [Hiemstra: South African criminal procedure] (6th ed, 2001, Butterworths) at 875Google Scholar.

36 (2002) unreported judgment, above at note 34.

37 See Schreiner JA and Steyn JA's contentions in R v Lambada and Others 1958 (2) 481 (A) 484 G–H. See also R v Van den Berg 1955 (2) SA 338 314 A–B; and S v Klopper 1975 (4) SA 773 (A) at 780.

38 Tett and Chadwick Rhodesian Company Law, above at note 3 at 192. See also the cases of R v Milne and Erleigh 1951 1 SA 791 (AD) and S v Avon Bottle Store (Pty) Ltd 1963 (2) SA 389 (AD).

39 Tett and Chadwick, ibid.

40 The presumption of guilt and a ludicrous reverse form of vicarious liability where the servant was called upon to answer the master's case.

41 1997 (4) BCLR 437 (CC).

42 Together with sec 245 of the same act dealing with false representation.

43 Following the abolition of the doctrine of common employment.

44 It was however made clear in the leading case of Huggins (1730) 2 Stra 883 that there was to be no parallel development in English criminal law.

45 See generally: Heaton, RCriminal Law (2004, Oxford University Press)Google Scholar; Hawke, NCorporate Liability (2000, Sweet & Maxwell)Google Scholar.

46 Reedie v London and North West Railway (1849) 4 Exch 244.

47 Heaton Criminal Law, above at note 45 at 18.

48 Vose and Lancs v Yorks Railway (1958) 27 LJ Ex 249 per Pollock CB.

49 See Ranger v Great Western Railway Co (1854) 5 HLC 72 at 86–87 per Lord Cottenham LC.

50 [1912] AC 716 HL.

51 Id at 738. See also Atkins LJ in Griffiths v Studebaker [1927] 1 KB 102. See also T Bernard “The historical development of corporate criminal liability” (1984) 22/1 Criminology 3 at 3.

52 This doctrine has the effect that the actions or deeds of a duly incorporated company may not exceed the substance of the powers granted to it by applicable legislation, that is, the objects as defined in the objects clause of the company's constitution. See the English case of Ashbury Railway Carriage and Iron Company Ltd v Richie (1875) LR 7 HL 653.

53 See the cases of Bezuidenhout NO v Eskom 2003 (3) SA 83 (SCA); Minister of Law and Order v Ngobo 1992 (4) SA 822 (a); Hirsch Appliance Specialists v Shield Security Natal (Pty) 1992 (3) SA 643 (D). See also Neethling, J, Potgieter, J and Visser, PLaw of Delict (4th ed, 2002, Butterworths) at 331 and 357Google Scholar.

54 It must however be noted that the acts of employees or managers may be considered to be within the scope of their authority if they could be said to have been impliedly authorized or are reasonably incidental to matters expressly authorized by applicable legislation. See the English cases of Baroness Wenlock v River Dee Co (1885) 10 App Cas 354 HL; Attorney General v Great Eastern Railway (1880) 5 AC 473 per Lord Selbourne; and Attorney General v Fulham Corporation [1921] 1 Ch 440 per Sargant J.

55 It must also be noted that the importance of the ultra vires doctrine has been significantly lessened in the United Kingdom with the application of sec 9(1) of the European Communities Act 1972, whereby a third person dealing with the company in good faith can enforce an ultra vires contract against the company if he can show that he was acting in good faith and the ultra vires contract was entered into by the directors of the company or upon their instructions. Moreover, sec 38(1) of the Companies Act 2006 (c 46) provides that the validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company's constitution. See also sec 40 of the Companies Act 2006 (c 46).

56 2001 (1) SA 372 (SCA) 378.

57 See also the case of Lister v Hesley Hall Ltd [2001] 2 All ER 769 at para 28 in the United Kingdom where the House of Lords established the correct test to be “whether the employee's acts were so closely connected with their employment that it would be fair and just to find the employer liable”. Equally, the Court of Appeal in Irving and Irving v Post Office [1987] 1 IRLR 289 at 290 advanced that the employer would be liable provided the acts of the employee are so connected with acts which the employer has authorized “that they might rightly be regarded as modes - although improper modes - of doing them”. See also the cases of Chapman v Oakleigh Animal Products Limited (1970) 8 KIR 1063; Mattis v Pollock (t/a Flamingos Nightclub) [2003] 1 WLR 2158.

58 (2005) (3) 179 (SCA).

59 See also Feldman (Pty) Ltd v Mall 1945 AD 733 at 741.

60 See Tindall JA, id at 756–57. See also Minister of Police v Rabie 1986 (1) SA 117 (A) at 130.

61 See the Supreme Court of Appeal in NK v Ministry of Safety and Security, above at note 58 at para 4; Minister of Police v Rabie, ibid.

62 See NK v Ministry of Safety and Security, above at note 17. See also sec 39(2) of the South African Constitution.

63 See also Moseneke J in S v Thebus 2003 (6) SA 505 (CC).

64 See also Media 24 Ltd & Another v Grobler [2005] JOL 14595. These cases are discussed in Nana, C “Sexual harassment in the workplace in South Africa: The unlimited vicarious liability of employers?” (2008) 52/2Journal of African Law 245Google Scholar.

65 See also Minister v Khoza 1966 1 SA 410.

66 See Grogan, J “The elusive employee: New twists in the statutory definition” (2005) Employment Law Journal 1 at 3Google Scholar.

67 This is similar to the imposition of liability for acts that were contra bonos mores [contrary to morals] under Roman law. See Monti, G “A reasonable woman standard in sexual harassment litigation” (1999) 19/4Legal Studies 552 at 555CrossRefGoogle Scholar.

68 Although the CPA 1977 uses the term “servant”, the terms “employee” and “worker” are commonly used by judges and commentators.

69 See also The Employment Appeal Tribunal of the United Kingdom in Chief Constable of Lincolnshire Constabulary v Stubbs [1999] IRLR 81. Compare with Sidhu v Aerospace Composite Technology Ltd [2001] ICR 167.

70 ABSA Bank Ltd v Born Equipment (Pretoria) (Pty) Ltd, above at note 56.

71 See Burchell et al South African Criminal Law and Procedure, above at note 9 at 392. See also R v English (1916) 37 NLR 232; R v Van Schalkwyk 1921 CPD 84; and Hoosain NO v Johannesburg City Council 1948 (1) SA 564 (T) 568. It follows from the above that any record which was made or kept by a director or servant of a corporate body within the scope of his activities as such and any document which was at the time in the possession or control of any such director, servant or agent within the scope of his activities are admissible against the accused corporation. See Tett and Chadwick Rhodesian Company Law, above at note 3 at 192–93.

72 It has been contended that this definition applies only for the purposes of this section. See Cilliers et al Corporate Law, above at note 22 at 567. See the cases of R v Theron 1960 (3) SA 331 (T); S v Marks 1965 (3) SA 834 (W) 842; R v Vandenberg 1979 (1) SA 208 (D); and R v Alex Carriers (Pty) Ltd 1985 (3) SA 79. The Code of Corporate Practices and Conduct of 1994 from the first King Report of 1994 categorizes an executive director as an individual who is involved in the day-to-day management and/or is in full time salaried employment of the company; see paragraph 2.4.3 of the code. Also important is sec 11(1) of the National Occupational Health and Safety Bill 2005 which defines the duty of the “chief executive officer” as the person that is responsible for ensuring that the employer, business or undertaking complies with its obligations in terms of the bill.

73 A number of reasons may be surmised: the legislators intended that focus should be on the acts of the directors, given that they control and manage the affairs of the company and influence its policies; the legislators thought that the terms could be used as synonyms for the purposes of this law, given that a company is liable for the acts of both directors and servants.

74 See the definitions in the Basic Conditions of Employment Act 75 of 1997, the Machinery and Occupational Safety Act 15 of 1992, the Wage Act 19 of 1992 and the Manpower Training Act 32 of 1993.

75 See also sec 83A of the Basic Conditions of Employment Act 75 of 1997. See also the following cases: Woolworths (Pty) Ltd v Whitehead [2000] 6 BLLR 640 (LAC); Wyeth SA (Pty) Ltd v Manqele & Others [2003] 7 BLLR 734 (LC); Khanyile v CCMA & Others [2005] 2 BLLR 138 (LC).

76 Sec 6(1)(b) of the National Occupational Health and Safety Bill 2005 provides a similar definition, to the effect that a worker is any individual who “undertakes working activities for any employer or person who conducts a business or undertaking, regardless of the form of the contractual agreement in terms of which those working activities are performed”. Due to the fact that this bill proposes the creation of an offence of corporate homicide, it is very likely that courts will mostly refer to this section (if the bill is passed into law) for the definition of an employee or worker for the purposes of corporate criminal liability. This is because the bulk of cases on the criminal liability of corporations involve occupational health and safety.

77 It is also quite difficult to ascertain whether a director could be considered an employee or not. In the English case of Re Exchange Banking Co, Flitcroft's Case (1882) 21 ChD 519 (CA), Bacon VC said at 525 that they are trustees and nothing else. However, this description is inappropriate in South African law, given that the trustee is the owner of the trust property. Nonetheless, other legal terms such as quasi-trustee, agent, managing partner and paid servant have been held to be inadequate to cover all the legal relationships to which the director may be a party. Other commentators posit that it is necessary to identify the positions in which a director may find herself. See Cilliers et al Corporate Law, above at note 22 at 116.

78 It may be more appropriate to designate individuals with specific responsibilities such as a “chief executive officer” or “person conducting a business” or “health and safety director.” See, for example, secs 9, 11 and 12 of the National Occupational Health and Safety Bill 2005.

79 CPA 1977, sec 332(2). The exception is cases of minor crimes where a fine may be paid as admission of guilt. See R v Lark Clothing (Pty) Ltd 1973 1 SA 239 (C). It is however unclear who or which organ of the corporation should authorize that plea.

80 The principle of vicarious liability can also be found in South African customary law, where a kraalhead [head of homestead] is liable for all the delictual acts of inhabitants of the kraal [homestead]. See Bennett, AA Sourcebook of African Customary Law for Southern Africa (1991, Juta) at 351Google Scholar; Seymour, BSeymour's Customary Law in Southern Africa (1989, Juta) at 82Google Scholar.

81 Vicarious criminal liability has been the subject of harsh criticism because it presupposes the imposition of liability on a person for a crime committed by another. See Burchell et al South African Criminal Law and Procedure, above at note 9 at 386.

82 See the cases of Cadwell v Inspector of Nuisances, Durban (1903) 24 NLR 181; R v Fish (1904) 21 SC 183; R v Wunderlich 1912 TPD 1118; Goldstein v Johannesburg Municipality 1926 TPD 176; R v Walton 1928 EDL 236; R v Hilder 1930 EDL 45; R v Cronin 1935 TPD 328.

83 Burchell et al South African Criminal Law and Procedure, above at note 9 at 388.

84 The idea was that the absence of the requirement of proof of criminal intent meant liability could be transferred from one person to another.

85 Burchell et al South African Criminal Law and Procedure, above at note 9 at 388. It has also been pointed out that, where statutes impose liability directly on the corporation, whether such liability is strict or requires proof of intent or provides for a defence of due diligence, it is direct liability and not vicarious liability. Thus, vicarious liability and strict liability cannot be bedfellows. See C Clarkson “Corporate culpability” (1998) 2 Web Journal of Current Legal Issues, available at: <http://webjcli.ncl.ac.uk/1998/issue2/clarkson2.html> (last accessed 1 September 2009). See also the case of Seaboard Offshore Ltd v Secretary of State for Transport [1994] 2 All ER 99.

86 See the statement of Channell J in Pearks, Gunston and Tee v Ward (1902) 2 KB 1 at 11: “By the general principles of the criminal law, if a matter is made a criminal offence, it is essential that there should be something in the nature of mens rea, and therefore, in ordinary cases a corporation cannot be guilty of a criminal offence”. See also Raymond CJ in the case of Huggins (1730) 2 Stra 883. See also Brambell B's dictum in R v Stephens (1886) 1 QB 709; and Moussell Brothers Ltd v London and North-Western Railway Company [1917] 2 KB 836 per Viscount Reading CJ and per Atkin J.

87 See the arguments put forward by Todarello, V “Corporations don't kill – people do: Exploring the goals of the United Kingdom's Homicide Bill” (2002) 46/8New York Law School Law Review 851Google Scholar.

88 Laufer, W “Corporate bodies and guilty minds” (1994) 43/2Emroy Law Journal 647 at 654Google Scholar. See also Ragozino, A “Replacing the collective knowledge doctrine with a better theory for establishing corporate mens rea: The duty stratification approach” (1996) 24/2Southwestern University Law Review 423Google Scholar.

89 Given that the alter ego doctrine in civil law [under which the law disregards the limitation on an individual's personal liability, where a corporation is used as a mere conduit for the conduct of personal business] was readily imported into criminal law, vicarious liability could equally have been imported.

90 Vane v Yiannopoullos [1965] AC 486 at 506 per Lord Morris.

91 The decisions in Mackay Brothers and Company v Gibb (1969) JC 26 and Tesco Stores Ltd v Brent London Borough Council [1973] 2 All ER 718 can be interpreted as meaning that, where the statute would be otherwise ineffective, vicarious liability can be implied even where there is a mental element present in the definition of the offence or in the nature of any defence.

92 Coppen v Moore (No 2) [1898] 2 QB 295 per Russell CJ; Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 BCLC 126 per Lord Hoffmann; Re Supply of Ready Mixed Concrete [1995] 1 AC 456 per Lord Templemann. See also Clarkson, C “Kicking corporate bodies and damning their souls” (1996) 59/4Modern Law Review 557 at 564–65Google Scholar; Sullivan, G “The attribution of culpability to limited companies” (1996) 55/3Cambridge Law Journal 551 at 522–23Google Scholar.

93 See Clough and Mulhern The Prosecution of Corporations, above at note 13 at 81.

94 The model that obtains in the United Kingdom for statutory and common law crimes excluding corporate manslaughter or corporate homicide.

95 Bingham LJ distinguished between both models as follows: “[a] company may be vicariously liable for the negligent acts and omissions of its servants and agents, but for a company to be criminally liable for manslaughter it is required that mens rea and actus reus should be established not against those who acted for or in the name of the company but against those who were identified as the embodiment of the company itself”: R v HM Coroner for East Kent ex parte Spooner (1989) 88 Cr App R 10 at 16. See also the distinction made between the two concepts in Hawke Corporate Liability, above at note 45 at 125.

96 See Ragozino “Replacing the collective knowledge doctrine”, above at note 88 at 437; Sullivan “The attribution of culpability”, above at note 92 at 523.

97 Clarkson argues that, if a “maverick employee” decides to “go it alone” in spite of clear policies and express instructions, it hardly seems justifiable to blame the company for those actions or inactions. See Clarkson “Corporate culpability”, above at note 85. See also Laufer “Corporate bodies and guilty minds”, above at note 88 at 659.

98 Even in the United States where vicarious criminal liability equally obtains, courts have a tendency to impose hefty sanctions only where senior officers who influence policy in one way or the other were involved. See Khanna, V “Corporate criminal liability: What purpose does it serve?” (1996) 109/7Harvard Law Review 1477 at 1491CrossRefGoogle Scholar.

99 See R v Meltzer 1946 TPD 597; Hoosain NO v Johannesburg City Council 1948 (1) SA 564 (T); R v Robertson 1948 (1) SA 582; R v Chee 1957 (2) SA 289 (SR).

100 R v Austermulhe 1910 CPD 324; R v Schmitz 1912 CPD 507.

101 R v Bear 1912 TPD 246; R v English (1916) 37 NLR 227; R v Ashton and Taylor (1918) 39 NLR 224. This is also the position adopted by the National Occupational Health and Safety Bill 2005. Nonetheless, sec 124(2) of this bill makes it difficult for employers to prove that they took all reasonable steps to avoid the occurrence of the crime, given that it will not be enough to show that they gave clear instructions prohibiting such act or omission.

102 Sec 332(5) of the CPA 1977 instead provided this defence for directors or servants prosecuted for a crime for which the corporation was charged. The burden of proof was on the directors and servants and not on the prosecution; as noted at note 41 above, the Constitutional Court in S v Coetzee declared the subsection unconstitutional.

103 Sec 124 of the National Occupational Health and Safety Bill 2005 still employs the mechanism of vicarious liability to impute liability to the corporate employer for the purposes of the new crime of corporate homicide, but it provides a due diligence defence to the employer. The latter can thus show that it took all reasonable steps to prevent the act or omission that resulted in the offence. However, as mentioned earlier, it will be difficult for the employer to invoke this defence successfully.

104 The “test” seems to depend on whether the employee acted to “further the interest” of the corporation. However, as shown earlier, the question of what constitutes the “interest” of the company has created ground for much controversy in South Africa and around the world. See generally Dodd, E “For whom are corporate managers trustees?” (1932) 45/7Harvard Law Review 1145CrossRefGoogle Scholar; T Norwitz “‘The metaphysics of time’: A radical corporate vision” 46/2 Business Lawyer 377.

105 See however the decisions in R v Sutherland 1972 3 SA 385 (N); R v City Silk Emporium (Pty) Ltd 1950 1 SA 825 (GW); R v RSI (Pty) Ltd 1959 1 SA 414 (O); R v Smith 1960 4 SA 364 (O).

106 It must be noted that a number of statutory provisions impose duties on the employer. See for example, sec 60(3) of the Employment Equity Act 55 of 1998; secs 14–17 of the National Occupational Health and Safety Bill 2005; and item 6 of the Amendment to the South African Code of Good Practice on the Handling of Sexual Harassment Cases in the Workplace of August 2005. In the event of harm or injury, the employer in such instances is personally liable for breach of duty rather than vicariously liable for the acts of its employees that caused the breach.

107 See Lehohla J in the Lesotho case of R v Acres International, above at note 34. See also Burchell et al South African Criminal Law and Procedure, above at note 9 at 389.

108 See Williams, GTextbook of Criminal Law (1978, Gordon, Stevens & Sons) at 285–86Google Scholar.

109 See Darroch “The Lesotho corruption trials”, above at note 34.

110 There is however much uncertainty regarding the appropriate test to be used to determine whether the defendant corporation's liability for negligent risk assessment should be derived from a particular individual or from the way the corporation's activities were managed. See Wells, C “Corporations: Culture, risk and criminal liability” (1993) Criminal Law Review 551 at 551–55Google Scholar.

111 That is why Archibald, Jull and Roach advance that, if there were to be “no outer limit on the reach of the doctrine, the common law would have established corporate criminal liability by the doctrine of respondeat superior” [let the master answer for his employee's actions]. See Archibald, T, Jull, K and Roach, K “The changed face of corporate criminal liability” (2004) 48/3Criminal Law Quarterly 367 at 371Google Scholar.

112 The UK Corporate Manslaughter and Corporate Homicide Act 2007 (which is designed to capture corporate failings in the management of risk, as well as the gross failings by an organization's senior managers, either individually or collectively) shows the tendency of moving away from the problematic concept of identification. Equally, in enacting the Criminal Code 1995, Australia moved away from vicarious criminal liability and the identification doctrine to the “corporate culture” model which is more tailored to the corporate criminal. See generally, Stuart, D “Punishing corporate criminals with restraint” (1995) 6/2Criminal Law Forum 253 at 253CrossRefGoogle Scholar.

113 See for example sec 12.3 of the Australian Criminal Code 1995 and sec 1 of the UK Corporate Manslaughter and Corporate Homicide Act 2007.

114 The National Occupational Health and Safety Bill 2005 for example designates the persons who have the duty to ensure that the company complies with the rules of the bill. See secs 9, 11 and 12, referenced at note 78 above. However, the bill still imputes the acts of individual employees or managers to the company.

115 Providing for example clear and concise definitions to terms such as “scope of employment”, “company policy”, “practice or course of conduct”, “create” and “tolerated”.

116 See for example sec 125 of the National Occupational Health and Safety Bill 2005.

117 Including for example regarding the admissibility of evidence. See sub-secs 332(3), (4), (6) and (9) of the CPA 1977.

118 See for example, sec 12 of the National Occupational Health and Safety Bill 2005.