Reform void ‘aided institutional failure’

There has been a shocking history of corporate and institutional failure in Fiji because there has not been any fundamental reform in the area of corruption law says former Fiji High Court judge Nazhat Shameem.

Addressing the Fiji Institute of Accountants Congress in Sigatoka this weekend, Shameem put across a strong case for the creation of the Fiji Independent Commission Against Corruption (FICAC) in 2007 and this year’s Crimes Decree as milestones in Fiji’s fight against corruption.

She noted that despite corporate and institutional failures such as the National Bank of Fiji collapse and the agriculture scam, there were no new laws enacted in the past 20 years, up to 2007, and no new institutions created either under the Companies Act or in relation to corporate bodies, to investigate corruption.

“So people stopped believing in the justice system as something that will deliver,” she said.

“And I’m not just talking about the changing of the laws. I’m talking about the changing of the institutions to make sure that they work, that they are properly resourced, that the people who are in the institutions and who run them, are appointed on merit and not because they are the brother-in-law of the CEO.”

She also pointed out that “in all the political talk about FICAC, we don’t hear any analysis of the promulgations themselves”. “If we look past the way the promulgations were passed and all the political history, what does FICAC mean, what does it do? I don’t hear much discussion about those things.”

She said that as in Hong Kong, where it has taken 15 years to call their Independent Commission Against Corruption successful, so too it “probably is too early” to talk about how effective FICAC is. “So we don’t yet know. Nevertheless, it’s an institution that specialises in the investigation and the prosecution of corruption.”

The Crimes Decree 2010 creates “a whole lot of offences and in particular it targets corruption”, said the former High Court judge. She said under the decree enacted in February, companies that have failed or who allow their employees to have failed, will be found liable under criminal law.

“We also know that where employees or officers of companies or directors of companies commit criminal offences, corporate bodies are going to be liable under criminal law and will be prosecuted unless they can show that they have corporate culture in place ion their corporate bodies which discouraged criminal offending of this nature.” So it’s not enough to say in your corporate policy, ‘we don’t like you to break the law’, you’ve got to actually target particular offences. “So the Crimes Decree is an attempt to force corporate bodies to obey the law and create criminal sanctions if they do not.”

Shameem said the decree also attempts to force directors to control the CEO’s actions.

“In the NBF case, the CEO’s story is ‘I told the directors. They didn’t tell me to stop lending money’. And the directors said, ‘we believed the CEO. He said the bank is fine’. And we carried on lending. And of course all this time, the bank is insolvent.”

She said the crimes decree also has a provision that where a high managerial agent of a corporate body commits an offence, the corporate body is also liable in criminal law and will be prosecuted unless they have exercised due diligence in controlling the conduct of the CEO. “So now the law requires control over the actions of the CEO.”

Shameem said overall, the new laws were quite different from the old laws on corruption and are much easier to prosecute while the penalties have increased to ten years imprisonment.

“Also interesting are the fraud provisions.  Not only are there new theft provisions (taken from the English Theft Act 1968) which create new offences of fraud and deception, but there are also general offences of conspiracy to cause a loss or a gain, and acts done to influence a public official. Some offences will catch directors of companies who act dishonestly, far more readily that the Australian Corporations Act.”