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13 October 2020 | Story Prof John Mubangizi | Photo Sonia du Toit
Prof John C Mubangizi is Dean: Faculty of Law, University of the Free State.
South Africans are sick and tired of corruption. They are angry, frustrated and despondent. And they have every reason to be. South Africa has many problems: crime, unemployment, poverty, gender-based violence, inequality, low economic growth and now – in common with many other countries – COVID-19. The list goes on and on. What makes corruption the biggest threat among all these is that it cuts across all of them and impacts on their gravity in different ways. 

The South African Constitution envisages a society based on democratic values, social justice and fundamental human rights. The way things are going, that society is never likely to happen. That is because corruption has been, and continues to be, the greatest threat to any possibility of realising that constitutional dream. In South Africa, like everywhere else where corruption is rampant, it occurs both in the public and private sectors, where it affects democracy and human rights by deteriorating institutions and diminishing public trust in government. It impairs the ability of government to fulfil its obligations and ensure accountability in the delivery of economic and social services like healthcare, education, clean water, housing, and social security. This is because corruption diverts funds into private pockets – which impedes delivery of services – thereby perpetuating poverty, inequality, injustice and unfairness. The problem is aggravated when government is the main culprit. “Government” here, of course, refers to the dictionary meaning of the term, namely, “the group of people with the authority to govern a country or state”.

Corruption existed in ancient Egypt, China and Greece

There are those who argue that corruption is as old as mankind and, therefore, it is here to stay. Indeed, corruption is known to have existed in ancient Egypt, ancient China and ancient Greece. In Robert Bolt’s 16th Century play A Man for All Seasons, Richard Rich’s opening remark is “But every man has his price.” In the 1836 play The Government Inspector, Nikolai Gogol cleverly satirised the human greed, stupidity and extensive political corruption in Imperial Russia at the time. And in a recent article in The Conversation (28 August 2020), Steven Friedman wonders why South Africans express shock at corruption when “it is perhaps the country’s oldest tradition.” He locates the advent of corruption in South Africa at the arrival of Jan van Riebeeck in 1652, through to the ensuing colonialism and apartheid. He argues that in reality, “corruption has been a constant feature of South African political life for much of the past 350 years. It is deeply embedded and it will take a concerted effort, over years, not days, to defeat it”. 

Agreed, but does it have to be that way? At the time of Jan van Riebeeck and during the 350 years of colonialism and apartheid, we did not have the legal framework that we have now. Here is a brief overview of that framework.

Read full article here

Opinion article by Professor John C Mubangizi, Dean: Faculty of Law, University of the Free State


News Archive

The failure of the law
2004-06-04

 

Written by Lacea Loader

- Call for the protection of consumers’ and tax payers rights against corporate companies

An expert in commercial law has called for reforms to the Companies Act to protect the rights of consumers and investors.

“Consumers and tax payers are lulled into thinking the law protects them when it definitely does not,” said Prof Dines Gihwala this week during his inaugural lecture at the University of the Free State’s (UFS).

Prof Gihwala, vice-chairperson of the UFS Council, was inaugurated as extraordinary professor in commercial law at the UFS’s Faculty of Law.

He said that consumers, tax payers and shareholders think they can look to the law for an effective curb on the enormous power for ill that big business wields.

“Once the public is involved, the activities of big business must be controlled and regulated. It is the responsibility of the law to oversee and supervise such control and regulation,” said Prof Gihwala.

He said that, when undesirable consequences occur despite laws enacted specifically to prevent such results, it must be fair to suggest that the law has failed.

“The actual perpetrators of the undesirable behaviour seldom pay for it in any sense, not even when criminal conduct is involved. If directors of companies are criminally charged and convicted, the penalty is invariably a fine imposed on the company. So, ironically, it is the money of tax payers that is spent on investigating criminal conduct, formulating charges and ultimately prosecuting the culprits involved in corporate malpractice,” said Prof Gihwala.

According to Prof Gihwala the law continuously fails to hold companies meaningfully accountable to good and honest business values.

“Insider trading is a crime and, although legislation was introduced in 1998 to curb it, not a single successful criminal prosecution has taken place. While the law appears to be offering the public protection against unacceptable business behaviour, it does no such thing – the law cannot act as a deterrent if it is inadequate or not being enforced,” he said.

The government believed it was important to facilitate access to the country’s economic resources by those who had been denied it in the past. The Broad Based Economic Empowerment Act of 2003 (BBEE), is legislation to do just that. “We should be asking ourselves whether it is really possible for an individual, handicapped by the inequities of the past, to compete in the real business world even though the BBEE Act is now part of the law?,” said Prof Gihwala.

Prof Gihwala said that judges prefer to follow precedent instead of taking bold initiative. “Following precedent is safe at a personal level. To do so will elicit no outcry of disapproval and one’s professional reputation is protected. The law needs to evolve and it is the responsibility of the judiciary to see that it happens in an orderly fashion. Courts often take the easy way out, and when the opportunity to be bold and creative presents itself, it is ignored,” he said.

“Perhaps we are expecting too much from the courts. If changes are to be made to the level of protection to the investing public by the law, Parliament must play its proper role. It is desirable for Parliament to be proactive. Those tasked with the responsibility of rewriting our Companies Act should be bold and imaginative. They should remove once and for all those parts of our common law which frustrate the ideals of our Constitution, and in particular those which conflict with the principles of the BBEE Act,” said Prof Gihwala.

According to Prof Gihwala, the following reforms are necessary:

• establishing a unit that is part of the office of the Registrar of Companies to bolster a whole inspectorate in regard to companies’ affairs;
• companies who are liable to pay a fine or fines, should have the right to take action to recover that fine from those responsible for the conduct;
• and serious transgression of the law should allow for imprisonment only – there should be no room for the payment of fines.
 

Prof Gihwala ended the lecture by saying: “If the opportunity to re-work the Companies Act is not grabbed with both hands, we will witness yet another failure in the law. Even more people will come to believe that the law is stupid and that it has made fools of them. And that would be the worst possible news in our developing democracy, where we are struggling to ensure that the Rule of Law prevails and that every one of us has respect for the law”.

 

 

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