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JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE
13 August 2003
PREVENTION OF CORRUPTION ACTIVITIES BILL: DELIBERATIONS
Legal Opinion in respect of Blacklisting of Persons who are Found Guilty of Contravening the
Prevention of Corruption Activities Bill
Working Document: Relevant Definitions (12 August 2003)
Prevention of Corruption Bill Working Document No.4 (January 2003)
Prevention of Corruption Bill Working Document No.5 (May 2003) (in current use)
Schedule: Laws Repealed or Amended
Acts Affected by the Prevention of Corruption Bill
English Statutory Approach and Strategy on their Prevention of Corruption Act
(email firstname.lastname@example.org for these documents)
The Committee heard a presentation from the State Law Advisors on the constitutionality of blacklisting people who were involved with the running of a company that has since been blacklisted due to their corrupt acts. It thereafter dealt looked at the revised definitions and relevant clauses Clause 3 - 6 and 11 to 21, 4 and 5 of the working document on relevant definitions.
Adv G Nel (National Prosecuting Authority) noted that State Law Advisers were present in order to shed some light on the constitutionality of blacklisting individuals who were involved in the running of a company that was blacklisted due to corrupt tendering prectices.
The Chair welcomed them and asked them to go through their opinion on this matter. He commented that this document presents a good legal opinion on blacklisting.
Legal Opinion in respect of Blacklisting of Persons who are Found Guilty of Contravening the Prevention of Corruption Bill
Adv K Selokela (Senior State Law Advisor) noted that it is very important to look at the constitutionality of blacklisting. After analysing the law and the Constitution, especially Section 22 of the latter, they had come to the conclusion that blacklisting does not contravene the Constitution. He said that S22 expressly states that every person who is practising a trade is subject to the law applicable to that trade. Therefore everyone who contravenes any law regulating any trade is thus committing corruption and acts in contravention of the law.
The Chair noted that although it is possible to restrict a person's practice in a professional occupation through legislation, however such has to be tested against the Constitution. He requested that the State Law Advisors provide the Committee with a list of all countries that have similar provisions in their legislation. It was important for the Court to identify the individuals who were involved in a blacklisted company that had made a tender and had since been disbanded, whether such persons be its directors or CEO. This was important because after the blacklisted company is disbanded, such persons could form a new company.
Adv M Masutha (ANC) did not see the need of this provision in the Bill. The Companies Act had clearly established rules dealing with the criminal liability of a company and therefore it would not be proper for the Committee to rewrite the law on this matter.
The Chair acknowledged the criminal liability of the company noted in the Act, however this provision goes beyond that, as it seeks to ensure that it is not only the company that is blacklisted but also those individuals who were involved in the corruption. Therefore in order to ensure that those individuals are not be able to form another company and tender again, they should be blacklisted together with the blacklisted company. Hence it becomes necessary to create a provision which would close this loophole. This provision should make it a criminal offence for one applying for a tender not disclose involvement in a company that has been blacklisted.
Ms F Chohan-Khota (ANC) concurred with the Chair. She said that this provision has nothing to do with the provisions of the Companies Act as it simply attaches a crime to someone who represents the company.
Mr Selokela said that they did not have a look at the companies law and their conclusion is based on the common law position on piercing the corporate veil of the company.
The Chair said that it would be important for them to consult the Companies Act, as this would form part of the drafting, especially with regard to the creation of offences and infrastructure.
Adv Masutha asked what is the current legal position in cases where there is no law that specifically sanctions blacklisting. Is the department barred from excluding a bidder from receiving a tender, based on the bidder's previous conduct?
The Chair said that currently there are no laws or regulations governing this, only policies such as Eskom's. These policies require that the requirements of natural justice should be complied with and therefore such person be afforded an opportunity to be heard and to defend him/herself. He suggested that the Public Service Commission should be invited to submit anything on this matter that it would like the Committee to consider. He thanked the State Law Advisors and requested Adv Nel and Ms A Gordon (Department drafter) to write a letter to the Chief State Law Advisor, Mr E Daniels, thanking him on behalf of the Committee for his department's valuable contribution.
Working Document: Relevant Definitions (12 August 2003) as handed out on 13/8
Referring to this document, the Chair pointed out that there are now only two definitions which the Committee would deal with, namely "gratification" and "reward" (see Appendix). The latter has been removed from the definition of "gratification" and has been provided with its own definition. He noted the distinction between these two concepts: the former relates to something done before something wrong is committed, while the latter relates to what happens after a wrong is committed. The Committee worked through Clauses 3 - 6 and 11 from this document.
Clause 3 General Offence of Corruption
The Chair noted that a comma should be inserted after the word "who" and before the word "accepts". There was a discussion on the appropriateness of the use of the word "partiality" in (b)(i). The Chair had meant "partial" as in 'incomplete'. Adv Nel had understood the Chair to mean "partial" as in 'bias'. The Chair noted that bias does not necessarily mean that there is illegality. However where there is "incomplete performance" then it could be said that it is due to that gratification received. This issue was flagged.
Referring to the proposal by Ms S Camerer in the previous meeting, he suggested that a provision relating to inducement be inserted as paragraph (d) of this clause. This provision should be formulated as the catch-all provision so as to cover anything that might have been left out in the other paragraphs. He asked the drafters to refine the following as the catch-all provision: "any other improper inducement to do something or refrain from doing something".
He said he did not necessarily agree with the use of the term "is guilty of corruption" and asked the drafters to add a slash and reinsert the word "offence".
Ms Chohan-Khota concurred with the Chair that a catch-all phrase should be inserted, since the present paragraphs are rather too specific in their formulation. She wondered whether some sort of generality cannot be considered. She also concurred that the term "is guilty of corruption" as in Clause 3 is not acceptable since all the offences relate to corruption. The danger of this is that one may be found guilty of corruption and of corrupt activity on the set of facts. This would not be acceptable and hence it is important that the term "corruption" be clearly defined.
Adv Nel acknowledged the concern raised by Ms Chohan-Khota, but noted that there is a rule that one cannot be found guilty twice on the same similar facts.
The Chair said that a provision to that effect should be created in the Bill, so as to make it clear that a person could only be found guilty of an offence of corruption once on the same similar fact. With regard to the specificity of paragraphs (a) to (c), a remedy could be to expand these provisions by including the wording of the definition of 'improper' noted in footnote 28 (page 8) of Prevention of Corruption Bill Working Document No.5 (May 2003). It was important to note that the commission of these offences requires intention and not negligence. Thus he proposed that the drafters refine these provisions to include the element of intention clearly.
Clause 4 Offence in respect of corrupt activities relating to public officers
The Chair noted that the first option of this clause (see Appendix) amounts to wrongfulness in the general offence, while the second one is partly derived from the UN Convention. He reiterated that the drafters should consider the possibility of inserting the word "intentional" in all the offences under this Chapter. This would make it clear to the Court that these offences are intended to apply to intentional acts and not those of negligence. He also requested the drafters to insert a footnote that would explain to which cases the definition of "reward" is not applicable.
Mr Nel explained that paragraphs (g) and (h) are taken from the SADC Protocol.
Clause 5 Offences iro corrupt activities by and against persons in private sector
The Chair noted that since there is a provision dealing with the public sector in the Bill, the technical committee felt it necessary to also include the private sector. However seeing the similarity of this clause to that applicable to the public sector, he proposed that the drafters should expand the provisions of Clause 3, so as to be applicable to the business of the private sectors. Therefore Clause 5 becomes irrelevant and should be deleted.
Adv Masutha asked whether a parastatal institution that has been corporatised, such as Eskom, is consider to perform a public or private function.
The Chair said that this depends on the powers that each parastatal exercises at that particular moment. Therefore if it is performing a public power, then it would be regarded as a public body and when it is performing a private power, then a private body. The decision of the court in the SARFU case is very important in this regard, since the court held that one should not look at the entity itself, but at the powers that it exercised at that particular time.
Clause 8 Prohibitions iro corrupt activities relating to members of legislative authority
The Chair asked the drafters to redraft the clause along the lines of Clauses 6 and 7. This means that the clause would specify different ways in which the offence could be committed. The issue of a member absenting him/herself from the legislative authority or from any of its committees or joint committees may also be added as another way of committing the offence.
Adv Nel said that one may draft the clause to state that to act for the purposes of the clause includes absenting oneself from the legislative authority, committee or joint committee.
The Chair expressed concern that the clause does not state the purpose for which the member absents him/herself. If the member normally absents him/herself there would be a problem. The offence should only be committed when a member absents him/herself because he/she has been bribed with the consequences that such absence prevents voting or passing of Acts.
Clause 9 Prohibitions iro corrupt activities relating to members of judicial authority
Clause 10 Prohibitions iro corrupt activities relating to members of prosecuting authority
The Chair said that Clauses 9 and 10 should also be drafted along the lines of Clauses 6 and 7.
Clause 11 Prohibitions in respect of corrupt activities relating to witnesses
This clause has been redrafted in the 12 August Working Document (see Appendix). The Chair felt that the redrafted clause was perfect in that it clearly shows the consequences that would follow if a person does any of the prohibited acts in the clause.
Adv Nel said that one needs to have two subclauses in the clause to deal with active and passive corruption. This is necessary since it is difficult to deal in the same clause with situations where the witness himself persuades another person to give him a bribe and situations where it is the witness who is being persuaded.
Clause 12 Prohibitions in respect of corrupt activities relating to foreign public officials
The Chair read the definition of a 'foreign public official' and suggested that the clause should also follow the format of the previous clauses.
Clause 13 Prohibitions iro corrupt activities relating to procuring & withdrawal of tenders
The Chairperson said that this clause should be drafted like Clause 11. The current 13(c) and (d) should be retained as separate offences. Adv Nel was asked to draft a mechanism through which the court, having found a person guilty of the offence, must in its order or sentence identify the individual person, company or officials of a company by name. Such persons should be blacklisted and placed in a register of people who may not tender. It should be made clear that no public body shall allow such persons to tender or be given tenders. It should be made an offence if such people submit their tenders. There should be a duty on those persons to disclose that they have been blacklisted.
Adv Gordon (Drafter) asked why it is necessary to require such persons to disclose their status if they are blacklisted.
The Chair replied that the intention was to have a safety net in case something is overlooked. One may also add that if such persons submit their tenders and are awarded the tenders such contract should be deemed to be void ab initio.
Ms C Johnston (NNP) said that deeming such contract void ab initio would be problematic. This would mean that if a tender is given for the building of a hospital and it is discovered (once the building has already started) that the person awarded the tender is blacklisted, expenditure on the project become unauthorised and this is problematic.
The Chair said that perhaps one needs to clarify what would happen in cases like this.
Imam G Solomon said that there are different ways of blacklisting and that the Tender Board might also have some norms and procedures that members might have to look at.
The Chair said that he has already asked Adv Nel to look at the issue.
Imam Solomon added that he was not happy with calling the process blacklisting.
The Chair said that one might just say that the persons would be placed in a register of people who are not allowed to submit tenders. He continued that the issue of rehabilitation of blacklisted persons also deserves some attentio. It is important to specify whether the persons would be kept on record forever or one would allow the courts to exercise some discretion and remove persons over time. He suggested that when a court sentences an offender, the sentence must be effective for a full five year period or a longer period as the court sees fit depending on the seriousness of the offence. He suggested inserting a subclause stating that a person sentenced for longer than five years may, after the expiry of the five year period, approach the court which may in appropriate circumstances set aside the remainder of the sentence. He stressed the fact that this should happen only after the five-year period has expired.
The Chairperson stressed the importance of a chapter in the Bill on the mechanism of putting people on the register. He said that the Bill should also specify where the registry would be kept.
Clause 14 Prohibitions in respect of corrupt activities relating to auctions
The Chair asked the drafters to redraft the clause to be more specific. He felt that the only way the clause has meaning is with the inclusion of the word 'improperly'.
Clause 15 Prohibitions in respect of corrupt activities relating to contracts
The Chair said that the acts prohibited are quite clear. However, he asked if 15(3) should be included. He did not see the link between the contract and election.
Adv Nel said that it was earlier suggested that it should be moved to Clause 8 but since it deals with contracts they had to put it under Clause 15. It might be the case that if the candidate is out of the legislature, the contract might be terminated.
The Chair said that the legislative authority does not do this. This is the function of the executive authority. The subclause does not show how the act in 15(3) is corruption. The Chair suggested that it should be move to Clause 8 as it did not fit here.
Clause 16 Prohibitions in respect of corrupt activities relating to sporting events
The Chair expressed satisfaction that the clause says that only those who knowingly do any of the prohibited acts will be guilty of an offence. However the fact that other clauses do not specify that intention is necessary, might raise problems of interpretation.
Clause 17 Prohibitions in respect of corrupt activities relating to gambling games or games of chance
The Chair said that subclauses (a) and (b) should form one offence and (c) should remain as a separate offence.
Clause 18 Prohibitions in respect of corrupt activities relating to acquisition of private interest in contract, agreement or investment of public body
The Chair asked why this clause does not form part of Clause 15.
Adv Nel said that problems arise where for instance a secretary of a manager, responsible for catering during a meeting, is asked to get a company to supply catering services and such secretary has an interest in the company.
The Chair said that this should not be a problem if the normal process of submitting tenders was followed. The mere fact that one has an interest is not a problem.
Adv Nel said that it might be that, as a public servant, one is not allowed to have an interest in the company.
The Chair said that if rules and regulations of the department concerned do not allow for the acquisition of such interest even though the normal tendering process was followed, it is an offence for an employee to acquire such interests. He could not understand how a person commits the offence by acquiring interest in a company in cases where the rules of the department do not prohibit it and the normal tendering process has been followed.
Imam Solomon asked what would happen in cases where an employee of the department knows that a tender has been issued and acquires an interest in the company thereafter.
The Chair said that the most important factor to consider is the rules and regulations of the department as well as the issue of whether the normal tendering process was followed.
Clause 19 Prohibitions in respect of corrupt activities relating to improper disclosure of information for gratification
The Chair asked why disclosing information should be criminalised.
Adv Nel said that the clause was inserted following concern by police officers that disclosed information might be abused.
The Chair said that the clause should specify that it is an offence to disclose such information if such disclosure violates a legal duty. There is nothing wrong with leaking information. The problem only arises when the information is leaked for gratification. He said that the clause should be supplemented with more details.
Clause 20 Prohibitions in respect of corrupt activities relating to acceptance and giving of gratification
The Chair said a comma should be inserted after the word 'obtain' in (a) and the sections referred to in (a) should be specified. He asked why the words lend, grant, confer or procure had been repeated in 20(b).
Adv Nel replied that the words are used in relation to the offer or promise to do either or all of those things.
The Chair suggested that 'or' should be inserted before the phrase 'offer or promise'.
Clause 21 Accessory to or after an offence
The Chairperson asked why the drafters want to make a crime of dealing with the property which forms part of the gratification which was the subject of the offence.
Adv Nel said that, for instance in money laundering crimes, a person who deals with the money concerned assists the criminal to make the money legal and this is one of the issues that they seek to prevent.
The Chair said they should draft the clause to refer to a person who deals with the property knowing that it forms part of the gratification.
The meeting was adjourned.