The Sunday Mail
Tichawana Nyahuma Legal Matters
No doubt, fraud is one of the most prevalent crimes in our country. It is, therefore, not surprising that the Zimbabwe Republic Police has a department that is solely dedicated to dealing with matters involving that offence and others of their ilk.
The reason is that fraud normally involves a measure of careful planning and execution on the part of the fraudster such that it is difficult to detect and investigate. Accordingly, the authorities rightly set up that department which is manned by specially trained personnel in matters that involve crimes of fraud, forgery and the like. But what exactly is this animal called fraud? Is fraud the same as forgery? Further, can a corporate body such as a company commit that offence and if so, can it also be prosecuted as happens to a natural person?
The objective of this contribution is to supply the meat that binds the bones that make up the crime of fraud and its cousin known as forgery. I shall also pay particular attention to that aspect of the crimes that relate to companies and other corporate bodies. For starters, it is easy to think that fraud and forgery are one and the same thing. They are not. They are nonetheless closely related. I will deal first with the crime of forgery.
Forgery involves documents that tell lies about themselves the author of whom will be possessed with the intention to defraud another person. However, it is not always that the other person to whom the forged document is presented then suffers a loss even though he would, in fact, have been defrauded.
The nearest example is that of a person who forges his educational qualifications thereby enabling him to get a job which otherwise he would not on account of his real results which would obviously be less than impressive. If such a person then goes on to perform his duties as expected, it does not mean that he is not guilty of forgery. He remains guilty even though the employer was not prejudiced. It has to be said, however, that under civil law, the employer in such a circumstance may not have a claim against that employee for the simple but good reason that there were no damages incurred.
Another example is that of an athlete who forges his birth certificate and travel document to the effect that his age is reduced, at least according to the forged documents. If, on the strength of those forged documents, he later signs a lucrative contract with a professional club and goes on to perform to or beyond the expectations of that club, the athlete would nonetheless have committed the offence of forgery.
In those cases where a forged document causes a loss or prejudice to the person to whom it is presented such as where a person forges a signature on a cheque or bank withdrawal slip and successfully presents it to the bank by obtaining the value stated on it, that person commits the offence known as fraud and forgery. However, this is if, and only if, the person who forged the document is the same who then presents it for value. If the forged document is presented by another person not being the one who forged it, that person commits the offence of fraud only.
Prior to the coming into effect of the Criminal Law (Codification & Reform) Act, “the Code”, forgery as it is known today was called forgery and uttering. What was meant by that was that first, the culprit had to forge the document in the manner already explained and second, the culprit had to present it to someone else with the intention of obtaining the value thereof. The act of presenting the forged document was what was referred to as “uttering”. In other words, he had to attempt to get the benefit of the forged document in order to complete the crime.
Although the Code was crafted and enacted into law without carrying the word “uttering”, the shape of the offence has, by that fact, not necessarily altered. The Code says that if a person who has forged a document presents it for payment, that person is guilty of the offence of fraud and forgery as already said. So, despite the omission of the word “uttering” from the Code, the position remains pretty much the same from the days before the Code became law.
Today, just like in the old days, a person who has not presented a forged document is not guilty of the offence unless and until he attempts to present it for value. In other words, he had no intention to commit any offence arising from that forged document. If, for example, someone forges a cheque but keeps it in his drawer, he cannot be said to have intended to gain the value thereof unless he presented or attempted to present it to another person for value.
If such a person was brought before a court of law, he can easily dare the prosecution to prove beyond any reasonable doubt that he had the intention to defraud another person. That a person forged a cheque but did not present or attempt to present it for value may only cause adverse inferences to be drawn but those inferences do not meet the minimum threshold required to prove criminal intent. They remain only that, bare inferences.
However, a distinction must be made between documents that carry a value such as a cheque and some other documents that do not carry any value on their faces even though they are nevertheless, valuable. For instance, for forged documents such as birth and death certificates, passports and the like, the question of presenting them for value does not arise. A person who forges any such documents is liable to be convicted even if he does not present them anywhere. That he was found in possession of such forged documents is enough for that person to be put down by the law.
I now turn to the crime of fraud. The foundation of this crime is misrepresentation that is coupled with the intention to defraud another person. It occurs when a person, I will call him A, makes a misrepresentation to another, being B and because of that misrepresentation, B acts to his or her own prejudice.
In other words, B would have been induced to act in a certain way that then results in him or her parting with money or any other property which otherwise he would not but for A’s misrepresentations. The crime is still committed even if the person to whom the misrepresentation is made does not suffer actual prejudice but only potential prejudice.
What is significant is that misrepresentation can take many forms. It can be by conduct or omission. It can also be by spoken or written words and does not always involve documents as is the case with forgery.
With respect to corporate bodies such as companies, clubs, associations and the like, these are what the law calls juristic bodies. They have rights, duties and obligations just as natural persons do. But because of their juristic nature, they themselves cannot do anything. Therefore, whatever they do, they do so through their officials who may be directors, shareholders, employees, trustees and so on.
If the organisation should be charged with either of the crimes under examination or any other for that matter, it is the company, association et cetera that must normally be prosecuted. But because a company is not a natural person, it cannot be jailed in the event that it is convicted. The directors and or officials of the company cannot also be jailed for the unlawful acts of the company because they are protected by the limited liability status of companies or what is colloquially referred to as the corporate veil.
Accordingly, the normal punishment that will visit such an organisation is the restoration of the prejudice incurred by the other person and or the payment of a fine. But the matter does not end there. Section 277 of the Code and Section 318 of the Companies Act deal with directors and or officials of companies that commit fraud or any other offence under the guise that it was the company and not the directors, shareholders or the employees who committed the unlawful act. The long and short of these sections is to separate the company from its officials and thereby making the directors/officials personally liable for any crimes committed by the organisation.
Accordingly, it is not always that errant directors and other officials of companies can hide behind the so-called corporate veil. They can still themselves be held personally liable for any unlawful deeds perpetrated by their companies.
A director of a company may also commit an offence if he fails to disclose certain information where there is a legal duty cast upon him to divulge. For instance, Section 186 of the Companies Act compels directors of companies to disclose any direct or indirect interest they may have in any contract or proposed contract with their company. Failure to inform the company or other directors of such interest can result in such a director being prosecuted.
So there is the distinction between the crimes of fraud and forgery and how directors and other company officials can find themselves crocheted in that web if they conduct the affairs of their companies recklessly resulting in prejudice to innocent third parties.
- Tichawana Nyahuma is a researcher and a lawyer. He writes in his personal capacity. For feedback, [email protected]
