(A Bill for) The Corporate Corruption Act

The One-Minute Summary

A company convicted of giving or taking a bribe up to N1 million may be liquidated. In the case of a public company with shareholders who are not involved in management, instead of a liquidation, the employment of the board of directors may be terminated, while the main, controlling shareholders lose their investments. Whistleblowers get a percentage of recovered assets. 37 Attorneys General across Nigeria can independently bring enforcement action against corrupt companies.

The Corporate Corruption Act

An Act to make provision for corporate liability where such Company or its Principal Officers, acting in furtherance of the Company’s purpose, is convicted of a scheduled offence involving the corruption of a Public Officer.

PART I – GENERAL PROVISIONS

1. This Act shall apply to all Companies registered, or liable to be registered, with the Corporate Affairs Commission under the Companies and Allied Matters Act Laws of the Federal Republic of Nigeria 2004 (CAMA), and foreign companies carrying on business within the Federal Republic of Nigeria.
2. From the date of the commencement of this Act, any company which is convicted of a scheduled offence, or any of whose Principal Officers, acting in furtherance of the company’s purpose or for the company’s benefit, is convicted of a scheduled offence, shall be liable to the sanctions provided by this Act.
3. (1) Where the offence involves the offer or payment by the company of a bribe valued N1 million or above, or an inducement of equivalent value, or the receipt by the company of benefits from corruption valued at N1million or above, the company shall be summarily liquidated under the provisions of the Rules.
   (2) A company shall also be liquidated under the powers conferred in this section notwithstanding the fact that the company may not have received any benefits after offering or paying the bribe.
   (3) Provided that separate bribes or inducements may be reckoned as one bribe or inducement for the purpose of this section if they passed between the same parties or representatives of the same parties in the course of one overarching transaction..
   (4) Provided further that no Company shall be punished under the provisions of this Act for offering a bribe, unless such offer was made by a principal officer of the Company within the Sphere of Governance.
4. The provisions of this Act shall apply to Companies and Principal Officers of Companies who are convicted for offences involving the corruption of a public officer in proceedings outside Nigeria, provided that where foreign currency is involved, the value of the inducement or benefit must, at the date of the offence, satisfy the minimum threshold prescribed by the Act.PART II – COMPULSORY LIQUIDATION OF COMPANIES
   
5. In every case in which a company is liquidated pursuant to the provision of this Act, every step shall be taken to ensure that the special liquidation rules contained in the rules shall take effect in priority to the provisions of the CAMA, and that the primary purpose of the liquidation process is:
   (a) To secure the overall public interest
   (b) To secure the interests of the company’s customers,
   (c) To secure the interests of the company’s staff (provided that such staff do not fall within the category of ‘the Sphere of Governance’)
6. No proceedings for the liquidation of a Company under the provisions of this Act shall be commenced unless the following conditions precedent are met:
   (a) There must be a conviction, under Part 1 of the Act, by a Superior Court of Record.
   (b) There must be no pending appeals against the conviction.
   (c) A period of 45 days must have elapsed since the delivery of the judgment, or the most recent appeal.
7. Where there is no manifest public interest (pursuant to section 5) in the continuation of the Company (such as in small firms where most of the staff fall within the Sphere of Governance, or where the principal business of the Company is an unlawful activity), it shall be liquidated and the net assets (if any) after the settlement of creditors and obligations to staff shall be paid into the Treasury. Provided that no staff who is deemed to be in the Sphere of Governance of a Company will receive any settlement after liquidation.
8. Pursuant to section 7 above, in every appropriate case, the liquidator shall ensure that the Company shall continue as a going-concern, and that the business of the Company, as well as the staff of the Company shall continue with minimum interruption.
   (a) Provided that the employment of every director or employee within the Sphere of Governance of the Company must be terminated; and
   (b) The equity or beneficial interest in the share capital of the company belonging to any person (corporate or incorporate) adjudged to be within the Sphere of Governance shall be entirely appropriated for the benefit of the Treasury.
   (c) For the avoidance of doubt, the equity and other interests of shareholders outside the Sphere of Governance, and who are not otherwise involved in the control or management of the Company shall survive in the restructured Company, and they shall in all events be compensated pursuant to the regulations made under this Act.
9. Any Company liquidated pursuant to this Act shall be administered by the liquidator or team of liquidators who shall, in all appropriate cases, hand over to a new board of Directors appointed by the new shareholders of the Company.
10. (1) The Statutory Authorities as well as the Federal Attorney General and the Attorneys General of each state shall have authority to bring proceedings in the Federal High Court under this Act, and shall severally publish in the Official Gazettes, and publicize in the mass media the contact details of responsible officers for the time being who shall receive information supplied by whistleblowers under Part III of this Act.
    (2) Information received by the Statutory Authorities from whistleblowers shall within 24 hours be published and maintained in duplicate electronic databases accessible to all the attorneys general of the federation, detailing the submissions of the said whistleblowers.
    (3) Corporate Corruption Information published by the Statutory Authorities cannot used to found a prosecution under this Act by the Attorneys General of the states until 30 days after the filing of such information by a whistleblower.
11. Any Company may voluntarily file information with any of the Statutory Authorities concerning a corrupt transaction or transactions in which the Company is complicit, either directly or through its employees, consultants, contractors, partners or representatives. Where such filing predates a formal prosecution, and a whistleblower’s filing, such Company shall not, in any proceedings brought under this Act, suffer the penalties prescribed in sections 3 and 8 herein relating to the liquidation penalty and the termination of employment and expropriation of controlling shares in lieu thereto. Instead, the court shall compound the offence, and apply such alternative punishment in fines as may be appropriate either under this Act or any alternative legislation, bearing in mind:
    (a) the proactiveness of the company,
    (b) the seriousness of the facts,
    (c) the extent of restitution effected or possible,
    (d) the state of official investigations into the facts – if any –
    (e) and the viability of a successful prosecution against the company without the information reported by the Company.PART III – WHISTLE-BLOWER PROTECTION AND COMPENSATION

     

12. At the conclusion of proceedings under this Act in respect to the liquidation of a Company, or the limited expropriation of stakeholders therein, the court seised of the matter shall hold a further enquiry to give directions concerning Whistle-blower Protection and Compensation, and shall order Financial Compensation and Reward in favour of whistle-blowers, up to one percent of the net recoveries from the liquidation and or expropriation action and the net recoveries to government treasuries, provided that no whistleblower shall profit from a transaction he instigated or played a decisive role in transacting.
13. No person shall be entitled to whistlebowers compensation under this Act unless a documented report had been made by such person to the statutory authorities or to a scheduled officer in the states and such report had led to a conviction under the Criminal Code or any other law relating to fraud, bribery or corruption. Provided that upon conviction by a Court of Superior Record legal proceedings are brought under this Act against the Company.
14. The provisions of this Act for the protection and compensation of whistlebowers shall extend to proceedings brought under any of the scheduled offences, provided that such offences subsequently ground proceedings under this Act.
15. Any person or group of persons who victimize, persecute, intimidate, harass or prejudice the interest of a whistle-blower as a result of the report made to a scheduled officer will be guilty of an offence.
16. The court can make interlocutory orders to protect whistlebowers from any actions by the Company or any person or group of persons intended to prejudice the interests of a whistle-blower for making a report under the Act.
17. (1) Employees or independent contractors of a Company who are retained to audit or otherwise investigate the Company’s affairs with a view to a potential filing under section 11 of this Act, cannot validly file a whistleblower’s report against the Company under this Act until thirty days after the submission of its report to the Company.
    (2) This section shall apply to any whistleblowers filing for or, on behalf of, or with information supplied by such employees or independent contractors.PART IV – NON-RETROACTIVE EFFECT

     

18. The Act shall not have any retroactive force, and no person or Company shall suffer any sanctions under the provisions of this Act for an offence wholly committed prior to the commencement of this Act, provided that nothing shall prevent the application of this Act, where
    (a) The offence consists of a series of transactions and a significant transaction capable of satisfying the provisions of this Act has taken place after the commencement of this Act,
    (b) The action comprising the offence was taken prior to the commencement of the Act, and the company received the benefit of the action, in contravention of this Act, after the commencement of the Act.PART V – FINES AND OFFENCES

     

19. Subject to the provisions of sections 8 and 11 of this Act, there shall be no alternative of a fine for any penalties provided under Sections 3 of this Act against a Company.
20. The court shall have power to impose unlimited financial penalties (including the tracing and confiscation of assets) to ensure that no persons or companies retain the benefits and proceeds of corruption.
21. Any person who fabricates false information against a company or individual for the purposes of this Act or who maliciously supplies materially false information to the Statutory Authorities under this Act with the intent to profit under the whistleblower compensation provisions is guilty of an offence.
22. Any person who knowingly facilitates the commission of an offence under this Act by holding, transferring or disguising the transfer of funds or benefits from a corporate body to a public officer or his agent, or by acting as an agent, professional services provider, or middleman of the Company for the corrupt transaction, shall be guilty of an offence which shall be punishable upon conviction by Total Assets Forfeiture.
    Provided that any individual who commits a corruption offence involving public funds  up to the threshold stipulated in S. 3 hereof, whether such individual is a public servant or not, may, upon conviction under any law, be punished by Total Assets Forfeiture under this section, whether or not a Company was involved in the offence.
23. Companies may from time to time carry out ‘Section 17 Audits’ of their affairs and it shall be an offence for an employee or consultant recruited specifically to that end to submit a whistleblower’s report to the Statutory Authorities, or supply information obtained from his privileged access to others to do so, before the expiration of 30 days after the report was submitted to the Company.PART VI – MISCELLANEOUS AND SUPPLEMENTAL

     

24. To ensure the efficient execution of the objects of this law, the procedural rules governing the investigation, administration and enforcement of the Act, and the liquidation of the contravening Companies effected pursuant to this Act may be enacted and modified from time to time by the Chief Justice of the Federation. Such Rules shall make provision for any supplemental objects, including:
    (a) Applications to be brought in advance of substantive proceedings under this Act, for the protection, compensation and succour of whistleblowers in appropriate cases, without prejudice to any liabilities that may subsequently lie for penury.
    (b) Applications to be brought for pre-emptive orders to be made or guarantees taken to preserve the res of a Company subject to proceedings under this Act, where dissolution or dissipation is threatened, without inhibiting the commercial operations of the said Company.PART VII- INTERPRETATION
25. In this Act, unless it is otherwise expressly provided, or the context otherwise requires, the following expressions have the meanings hereby assigned to them:“Act” shall include any amendment to The Corporate Corruption Act as well as any rules and subsidiary legislation enacted under the provisions of the Act.

    “Company” refers to any artificial person incorporated under the Companies and Allied Matters Act.

    “Jurisdiction” the Federal High Court shall have jurisdiction over proceedings instituted pursuant to the provisions of this Act.

    “Liquidation” means the compulsory winding up of the company under Companies and Allied Matters Act subject to the provisions of this Act.

    “Offences Involving Corruption” are offences in which corruption is a principal element, especially (but not limited to) offences under chapters 12, 13 and 14 of the Criminal Code.

    “Principal Officers” for the purpose of attaching liability to a company, a person shall be considered a principal officer of a company if such person is a director, trustee, secretary of the company, or if such a person occupies a managerial position in the company, or if that person is within the company’s Sphere of Governance as defined in section 25 of this Act.

    “Public Officer” shall include civil servants working in any tier of government in Nigeria, any political office holder at any tier of government in Nigeria, any parastatal or executive agency of government, any person exercising powers granted by the constitution of Nigeria, and staff of any of the international organs of the United Nations and its affiliates operating in Nigeria.

“The Rules” refers to the Corporate Corruption Act Rules made or amended pursuant to this Act.

“Scheduled Offence” refers to an offence involving corruption which is listed in a schedule to this Act.

“Sphere of Governance” refers to anyone who has the power to set policy, execute strategy, and generally direct the affairs of the company (including but not limited to shadow directors as defined in section 245 (1) of the Companies and Allied Matters Act, shadow or non-registered shareholders, shareholders, employees and part-owners of a company such as Directors or Departmental Managers).

“Statutory Authorities” refers to the Economic and Financial Crimes Commission (established under the Economic and Financial Crimes Commission (Establishment) Act, and the Independent Corrupt Practices and Other Related Offences Commission (established under the Corrupt Practices and Other Related Offences Act).

“The Treasury” refers to The Treasury of the Federal Government of Nigeria or, where the prosecution under this Act is successfully carried out by a State Government, shall refer mutatis mutandis to the Treasury of the relevant State government.

“Total Assets Forfeiture” as it applies to an individual, refers to the forfeiture to the prosecuting government of all Assets, including but not limited to bank deposits, real property, and stock, belonging to such individual or held in trust for such individual, whether or not such assets are connected to the corrupt transaction, but shall not include such basic personal property as may be exempted by a judge to keep the individual from destitution. Provided that the court shall have liberty to waive the forfeiture of assets held in the name of the individual, in legitimate trust for others.

“Whistle-blower” refers to a person, whether company, public officer or private citizen, who makes a documented report to a scheduled officer which is grounds for proceedings under this Act.

V.111

Download the latest Version of the Corporate Corruption Act

v.111

• Section 1 is amended with the addition of ‘or liable to be registered’, and ‘and foreign companies carrying on business within the Federal Republic of Nigeria’.Section 2 is amended with the replacement of ‘whose Principal Officers‘ with ‘any of whose Principal Officers’.
• Section 17(2) is amended with the addition of ‘or with information supplied by’.
• Section 21 is amended with the addition of ‘or individual’.
• Section 22 is amended by the deletion of the definition of Total Assets Forfeiture, and the addition of a proviso.
• Section 23 is amended by the addition of ‘or supply information based on his privileged access to others to do so’.
• A definition of Total Assets Forfeiture is added to Section 25
   

v.110

• sections 3, 4(a) and 4(b) are renumbered as 3(1), 3(2) and 3(3), and subsequent sections are renumbered et seq.
• 10 becomes s.10(1), (2)
• a new section 11, providing for a company to avoid the liquidation penalty by volunteering information about any serious corruption in which it is complicit to the authorities before any such information is filed by a whistleblower.
• Tweaks to the One Minute Summary and to sections, including 12 and 13
• Tweaked section 21 to provide for properties held in trust in Total Assets Forfeiture proceedings.
• New section 17 to protect companies with structures for internal fraud investigations from being sabotaged.
• New section 23, creating an offence for audit staff who prematurely breach fiduciary relations, to encourage ethical corporate behaviour.