Criminal Trial of Corporation in Nigeria – Chidera Nwokeke

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The concept of criminal liability and trial of companies is not novel in Nigeria. It is a settled position of our law that a corporation is a juristic person and a separate entity distinct from its agents or directors and can be held criminally liable for offences other than regulatory offences and can be subjected to trial in our court as an adult. The Court in the case of  DIKKO AND SONS LTD v. CAC (2014) LPELR-CA/A/351/2010 defined corporation to mean thus:

 A Corporation is defined in Blacks Law Dictionary, 9th edition page 391 as: “An entity (usually a business) having authority under law to act as a single person distinct from the shareholders who own it and having rights to issue stock and exist indefinitely; a group or succession of persons established in accordance with legal rules into a legal or juristic person that has a legal personality distinct from the natural persons who make it up, exists indefinitely apart from them, and has the legal powers that its constitution gives it.

By virtue of Section 37 of Companies and Allied Matters Act 2004 (hereinafter referred to as CAMA) provides

As from the date of incorporation mentioned in the certificate of incorporation, the subscriber of the memorandum together with such other persons as may, from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the powers and functions of an incorporated company including the power to hold land, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in this Act.

Section 38 of CAMA provides for the powers of a company and states thus:

  • Except to the extent that the company’s memorandum or any enactment otherwise provides, every company shall, for the furtherance of its authorised business or objects, have all the powers of a natural person of full capacity.

Section 65 of CAMA provides for the acts of directors, managing directors and states thus

Any act of the members in general meeting, the board of directors, or of a managing director while carrying on in the usual way the business of the company, shall be treated as the act of the company itself and the company shall be criminally and civilly liable therefore to the same extent as if it were a natural person:

Provided that‐

(a) The company shall not incur civil liability to any person if that person had actual knowledge at the time of the transaction in question that the general meeting, board of directors, or managing director, as the case may be, had no power to act in the matter or had acted in an irregular manner or if, having regard to his position with or relationship to the company, he ought to have known of the absence of such power or of the irregularity;

(b) If in fact a business is being carried on by the company, the company shall not escape liability for acts undertaken in connection with that business merely because the business in question was not among the business authorised by the company’s memorandum.

It is barefaced that by virtue of Section 38 of CAMA, corporations have same full power like a natural person but the question that crosses the mind is, considering its artificialness, can it act on its own? I answer in the negative and align myself with the position of the law that corporations can only act through its human agents.  The Supreme Court in case of WILLIAMS v LSDPC (1978) LPELR-SC.102/1976 per ANIAGOLU J.S.C. laid to rest that:

A company, although a legal person, is an artificial one which can only act through its human agents and officers. He stated further that a corporation is an abstraction, it has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purpose may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.

The court in another case of STB LTD v INTERDRILL NIG LTD (2007) ALL FWLR (pt 366) 757 @ 771 held that

A company is an abstract body that only exists in the eyes of the law. In many ways, it has always been likened to a human body. The law ascribes to a company the possession of a brain and a nerve centre, which controls what it does. Since it cannot form an intention within its abstract body, to operate, it must act through its agents, its employees or servants, who are often regarded as the hands to do the work of the company. These are not in law, regarded as representing the mind or the will of the company. Another category of employees of the legal fiction is the managers and directors; the law ascribes the right to control the will and mind of the company to this category of higher employees; the state of their mind is treated by the law as that of the company, a mere legal fiction.-IGWEM & CO LTD & ANOR V IGWEBE (2009) LPELR-CA/A/7/08

It is trite principle of our law that to make companies culpable for crimes committed by its directors or principal agents, there is need to lift up the veil that clothes the companies and the court ought to apply the doctrine of alter ego. In the case of ADEJUMO v STATE the court held that where an incorporated body allows itself to be used as an engine or tool for fraud, the veil of incorporation will be lifted and raised so that the actual perpetrators will be held accountable and liable. There is no doubt that the law as established is that an incorporated company has a direct and separate legal personality from its members and officials. The consequence of recognizing the separate personality of a company is to draw a veil of incorporation over the company. One of the instances where the veil of incorporation may be lifted is where the company is liable for fraud. – JUBRIL v FRN (2018) LPELR-CA/L/658c/2017.

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It is a settled principle of our law that a company can be criminally liable by holding the company vicariously liable. The company can only be liable if it can be shown that an alter ego or a principal officer who can bind the company committed the offence in the ordinary course of its business. The principle of corporate liability was fully established in common law in 1944 in the case of DPP v KENT & SUSSEX CONTRACTORS LTD (1944) KB 146, where the court held that a corporation can only have knowledge and form an intention through its human agents due to its nature and this reliance means the review of corporate behaviour must be situated within the acts of natural persons acting on its behalf.

It is obvious that criminal liability or responsibility operates on the twin pillars of mens rea and actus reus. Criminal liability is attached only to those acts in which there is violation of criminal law. To make one liable, it must be shown by the prosecution that the act or omission has been done which was forbidden by law and has been done with a guilty mind. The Supreme Court in the case of ABACHA v AG FEDERATION (2014) 18 NWLR (pt.1438) 21 held that a company can be prosecuted for a crime and it can be prosecuted as if it is a natural person. The court stated that by virtue of Section 65 CAMA, a company may be liable in crime to the same extent as a natural person and it can be prosecuted for the common law offence of conspiracy to defraud, even though mens rea is an important ingredient of that offence.

In Nigeria, the focus in determining corporate criminal liability is hinged on the doctrine of alter ego which is usually the adopted approach to determine actual intentions and corporate mens rea. In the case of ORJI UZOR KALU v FRN (2012) LPELR-CA/A/224c/2009, the court made the above conclusion when called upon to determine corporate liability by stating that the appellant who is the first accused in the case at the Federal High Court is the alter ego of the second accused person Slok Nigeria limited and remained its directing mind even while he was the governor of a state. Through this doctrine of alter ego, mens rea of principal officers of the company is attributed and imputed to the company. However, it is pertinent to determine the status of the officer or agent involved.

Perusing through the provisions of CAMA and other regulatory laws that regulates the affairs of companies, there is need to draw a thin line between regulatory offences and criminal offences. Criminal offences are prosecuted by public prosecutors while regulatory offences are usually prosecuted by administrative authorities like Corporate Affairs Commission. A conviction for a criminal offence requires proof that you intended to commit the offence and proof of guilt beyond a reasonable doubt, a conviction for a regulatory offence does not require proof of intent. Whereas sanctions for criminal offences are imposed by court but regulatory sanctions are imposed by administrative authorities except if appealed, then the court will step in.

In circumstances wherein the prosecution wishes to prosecute a company for a criminal offence under our instant Nigerian laws, are there provisions of the law that ought to be followed? I answer in the affirmative and align myself with the provisions of the Administration of Criminal Justice Act 2015 (hereinafter referred to ACJA) which provides for trial of corporations.

By virtue of Section 479 ACJA, Information may be preferred against a corporation after the preparation of the proofs of evidence relating to the charge. An information under Section 479 may include, either in substitution for or in addition to counts charging the offence for which proofs of evidence have been prepared, counts which may be lawfully joined in the same information and are founded on facts or evidence disclosed in the proofs of evidence.-Section 480 ACJA

Pursuant to Section 481, a representative may, on behalf of a corporation:

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(a) State, whether the corporation is ready to be tried on a charge or information or altered charge or, information to which the corporation has been called on to plead;

(b) Consent to the hearing and determination of a complaint before the return date of a summons;

(c) Express assent to the trial of the corporation on information, notwithstanding that a copy of the information and notice of trial has not been served on (the corporation 3 days or more before the date on which the corporation is to be tried.

Where a representative appears, any requirement of this Act that anything shall be done in the presence of the defendant, or shall be read or said or explained to the defendant, shall be construed as a requirement that, that thing shall be done in the presence of the representative or read or said or explained to the representative –Section 482 ACJA. Section 483 ACJA further provides that, where a representative does not appear, any such requirement as is referred to in Section 478 of this Act, shall not apply.

Section 478 ACJA states that where a corporation is called upon to plead to any charge or information including a new charge or information framed under the provisions of this Act or charge or information added to or altered under the provisions of this Act, it may enter in writing by its representative a plea of guilty or not guilty or any plea which may be entered under this Act and if either the corporation does not appear by a representative or, though it does so appear, fails to enter as aforesaid any plea, the court shall order a plea of not guilty to be entered and the trial shall proceed as though the corporation had duly entered a plea of not guilty.

The community effect of the above section is that;

  • A plea by a corporation may be entered in writing
  • The plea may be made by its representative
  • Where a corporation does not appear by a representative, or where the representative fails to enter any plea, the court shall order a plea of not guilty to be entered and the trial will proceed as though the corporation had duly entered a plea of not guilty.

In this article, “representative” in relation to a corporation means a person duly appointed by the corporation to represent it for the purpose of doing any act or thing which the representative of a corporation is by this Part authorised to do, but a person so appointed shall not, by virtue only of being so appointed, be qualified to act on behalf of the corporation before any court for any other purpose. –Section 477(2) ACJA

However, it is pertinent to state that a representative for the purposes of this Part need not be appointed under the seal of the corporation, and a statement in writing purporting to be signed by a managing director of the corporation, or by any person (by whatever name called) having, or being one of the persons having, the management of the affairs of the corporation, to the effect that the person named in the statement has been appointed as the representative of the corporation for the purposes of this Part, shall be admissible without further proof as prima facie evidence that the person has been so appointed.-Section 477(3) ACJA.

Section 481 (1) ACJA provides thus; subject to the preceding provisions of this part, the provisions of this Act relating to the inquiry into and trial of offences shall apply to a corporation as they apply to an adult. By virtue of this section, in present Nigeria, a company is treated as an adult for any offence they are tried without any exception.

(2) A corporation may be charged jointly and tried with an individual for any offence

 It is pertinent to state that a company charged for a crime has the right to a counsel of its choice and have the right to examine and cross examine a witness because it is their fundamental right to fair hearing as provided in Section 36 of 1999 Constitution of Nigeria. As a reminder, corporations as a juristic person cannot be arrested as a means of compelling their appearance in any court. Rather, they can be served with court summon by virtue of Section 113 and 114 of ACJA. Furthermore, a combine reading of Section 78 of CAMA 2004 and Section 123(b) ACJA, a company can be served with a court process and the person effecting the service of summon shall effect it by delivering it to a director, secretary, chief agent within the jurisdiction, or by leaving it at the principal place of business in Nigeria of the corporation and failure to serve the court process on the corporation, robs the court of its jurisdiction.

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To boot, a court can upon conviction sentence a company appropriately, if and only if the prosecution discharged the burden of proof vested upon them. The criminal trial of corporation demands and requires that the burden of proof and standard proof remains the same as though a natural person is being tried. The court at the end of its trial, after conviction, can sentence the corporation appropriately, if they are found guilty.

 The court in the case of ONAH v FRN (2017) LPELR-CA/L/548C/2016 held that sentencing is the imposition of the punishment prescribed by law on the accused person by the court. In determining the particular sentence to be imposed, the court shall consider the nature and circumstance of the offence and the need for the sentence imposed.  The Court of Appeal in the recent case of ABIODUN v FRN (2019) LPELR-CA/L/1125C/2018 held that the law with regards to sentencing is that sentencing is a matter within the discretion of the trial court provided the discretion is exercised judicially and judiciously within the law.

The court in the case of AYOMITAN v STATE (2018) LPELR-CA/IL/106c/16– held that when a statute provides a statutory minimum for an offence, a trial judge is not permitted to impose a sentence below the statutory minimum. The discretion of a trial judge in sentencing operates only when the statute provides for a statutory maximum in sentencing. In such a case, there is a degree of flexibility in the range of the sentencing pendulum between a discretionary minimum and a maximum that could not be exceeded.- KAYODE v FRN (2017) LPELR-CA/C/72c/2010.

It is apposite to ask at this point, can a court sentence a company to imprisonment? I answer in the negative and strongly contend that a company cannot be sentenced to imprisonment even where the law provides for imprisonment as the punishment of the offence committed because of its artificial nature. That is why, a trial court in sentencing especially imprisonment, must consider the essence of imprisonment. The court in the case of ALI v FRN (2016) LPELR-40472 (CA) held that the essence of imprisonment is to meet the legitimate expectation of society of retribution, where the society strikes back at the offender as to deter potential offenders and make the commission of crime unattractive, protect the public and society by ensuring the dare devil criminals and recalcitrant offenders are taken out of circulation.

In consideration of the above case, it is barefaced and brassy that the essence of imprisonment cannot be achieved if corporations are sentenced to imprisonment. So, following the decision of the court in the case of USHIE v STATE (2012) LPELR-CA/C/72c/2010, the court held that it is desirable that in exercising its discretion over sentencing, a trial court should state in its judgment the factors that influenced its decision. So therefore, the trial court, in trials involving corporations ought to state that the defendant is a corporation and by virtue of its artificial nature, it influenced its decision in sentencing.

In Nigeria, the bromidic and banal type of sentencing imposed on corporations is the payment of fines. The court can make an order of forfeiture as its sentence especially if the offence relates to bribes received by them. The court may also make an order for winding up of the corporation as its sentence.-Section 401(1)(a) CAMA. By virtue of Section 319 and 321 (1) (a) ACJA, the court can order for restitution/compensation to  be paid to any person injured by the offence, irrespective of any other fine or other punishment that may be imposed.

In conclusion, it is now settled position of our law that a company is a legal person, however due to its artificial nature; it acts through its human agents. A company can be held liable for criminal offences committed by them and to hold them liable, the court has adopted the doctrine of alter ego to hold them criminally liable. A company can be arraigned before a court and be duly represented by its representatives and its trial shall take the same method as that of an adult. The criminal trial of corporations in Nigeria is a welcome development to our legal jurisprudence especially the criminal law and company law. It has widened the scope of liability from being personal to a vicarious nature following the doctrine of alter ego. Furthermore, the trial of corporations will help reduce corrupt practices that companies enter into. However, the question of whether a company can be imprisoned has always being a line of argument but I submit that due to its artificial nature, such mode of punishment cannot be actualized.

Chidera Nwokeke can be reached at Nwokekechidera@gmail.com or 08120945787.

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