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[2016] ZAGPJHC 179
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S v Van Der Linde (12331/12) [2016] ZAGPJHC 179; [2016] 3 All SA 898 (GJ); 2016 (2) SACR 377 (GJ) (27 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
number: 12331/12
DATE:
27 MAY 2016
In
the matter between:
THE STATE
Versus
VAN
DER LINDE: IVAN
DON
..................................................................................................
Accused
Coram
:
NICHOLLS J
Heard
: 18 April
–
23 May 2016
Delivered
: 26 & 27 May 2016
Summary:
Fraudulent VAT refunds
–
Fraud
–
Forgery
–
Money
laundering
–
Uttering
ORDER
Accused
is found guilty of 255 counts of fraud, 1 count of forgery and 1
count of uttering.
JUDGMENT
NICHOLLS
J:
[1]
The accused, Mr Ivan Don van der Linde, was arrested on 30 August
2005 and tried in the Regional Court Germiston on 255 charges
of
fraud. After a protracted trial characterized by ordinate
delays, the accused was discharged and acquitted at the end
of the
state’s case in terms of section 174 of the Criminal Procedure
Act.
[2]
The State appealed this matter to the High Court in terms of section
310 of the Criminal Procedure Act and on 12 December 2013
the appeal
was upheld. It was ordered that the trial start
de
novo
before a different Magistrate.
On 12 December 2014 the matter was
transferred to the High Court for trial. On 18 April 2016, the
first day of this trial,
the defence raised a point
in
limine
. Essentially three points
were argued: firstly that the order of the Appeal Court was not
competent; secondly, that
the undue delays rendered the
trial unfair; and, thirdly that the State was not entitled to charge
the accused with additional
charges of money laundering.
[3]
The point
in limine
was dismissed on 18
April
2016 and the trial proceeded forthwith.
[4]
The accused is charged now with the following counts:
Counts
1 to 255 fraud, read with the provisions of section 51(2)
(a)
of Act 105 of 1997.
Count
256 forgery, read with the provisions of section 51(2)
(a)
of
Act 105 of 1997.
Count
257 uttering, read with the provisions of section 51(2)
(a)
of
Act 105 of 1997.
Counts
258 to 262 and count 273 were withdrawn.
Counts
263 to 326 (with the exception of count 273) money laundering,
in terms of Section 4(1), 4
(b)
(i) read with the provisions of
sections 1 and 8 of the Prevention of Organized Crime Act 121 of 1998
(‘POCA’).
Counts
327 to 381 acquisition of the proceeds of unlawful activities in
terms of section 6
(a)
read with the provisions of sections 1 and 8 of POCA.
[5]
The accused tendered a written plea explanation in which he
challenges the constitutionality and the fairness of the trial but
states that despite severe prejudice to him he will nonetheless
subject himself to this trial. Although in his plea explanation
the accused categorically stated that he would not make any
admissions, during the testimony of the first witness Mr du Toit, a
SARS investigator, the accused did indeed make certain admissions in
terms of section 220 of Act 51 of 1997, which form part of
the
record.
[6]
The State’s case is that the accused in this matter, Mr van der
Linde, acted as the accounting officer or representative
of an
accounting firm Ivan van der Linde and Associates, and acting with
common purpose with Mr John Mmemo Nkosi (‘Nkosi’)
who is
now deceased, Mr Antonio Carlos Olim (‘Olim’) and Ms
Fabienne Anne Francillon (‘Francillon’), operated
a
fraudulent VAT scheme. The accused was the mastermind behind the
scheme to defraud SARS by claiming fraudulent tax refunds in
respect
of four entities during the period June 1997 to March 2005. The
accused’s accounting firm was itself not registered
for VAT and
was used as a vessel to perpetrate the fraudulent VAT scheme against
SARS.
[7]
The first of the four entities is Andeltru CC trading as Trans
Lebombo Exports (‘Andeltru’), of which Mr Nkosi was
the
sole member. According to Schedule A of the indictment, 86 VAT
refunds were claimed in respect of Andeltru.
The
second entity is Siani Trade (Pty) Limited trading as Johnny Paulos
Liquor Merchants (‘Siani Trade’), of which a
Mr ADM De
Gouveia (’De Gouveia’) was the sole director.
According to Schedule B of the indictment, 17 VAT refunds
were
claimed in respect of Siani Trade.
The
third entity is Limoges Impex Trading CC (‘Limoges’), of
which Ms Francillon was the sole member. This close
corporation
was previously known as Ivan Prop 10 CC and changed its name to
Limoges shortly before registering for VAT. According
to
Schedule C of the indictment, 56 VAT returns were claimed in respect
of Limoges. The fourth entity is Allied Charcoal CC trading
as Cambia
Commodity (‘Allied Charcoal’), of which Laura Olim, Mr
Olim’s elderly mother was the sole member. According
to
Schedule D of the indictment, 94 VAT returns were claimed on behalf
of Allied Charcoal.
[8]
It is further alleged that SARS conducted several audits on the
respective entities from which it became apparent that the supplier’s
invoices substantiating the VAT refund claims were false. This is the
basis for the forgery and uttering charges levelled against
the
accused.
[9]
The accused, it is then alleged, laundered the proceeds of the
fraudulent VAT refunds relating to Andeltru, Siani Trade and
Allied
Charcoal. The accused entered into agreement, relating to the
acquisition of proceeds, with Mr Olim and Ms Francillon
whereby the
accused was to share in the proceeds of all the fraudulent refund
payments paid out to the four entities.
[10]
The primary witness for the State was Mr Morné du Toit (‘du
Toit’), a criminal investigator employed by
SARS and stationed
at the SARS office in Alberton. He commenced his testimony with
an explanation of the VAT system, which
he described as an indirect
self-assessment system. The registration of a company as a VAT
vendor occurs when its turnover
exceeds a certain amount. At the time
when the four entities were registered this threshold was R150 000
per annum. The registration
document for VAT which is submitted
to SARS is the VAT101. The VAT registration documents for the
four entities are Exhibits
A1 to A4.
[11]
Mr du Toit explained that most entities submit VAT returns every
second month but if an entity has a turnover, which at the
time was
over R1 million, it submits VAT returns on a monthly basis. At
the request of the accused’s accounting firm,
the VAT period
for all four of the entities was changed to once a month instead of
the bi-monthly returns.
[12]
Once an entity has been registered it will be allocated a VAT number
and will have to submit VAT returns completed according
to the VAT201
form. If sales are made within the Republic of South Africa
these attract VAT of 14%, but if goods are exported
they will attract
no VAT, the purpose being to incentivise exports to neighbouring
countries. Where the input amount for VAT is
higher than the output
amount a VAT refund can be claimed. On the other hand when the
VAT output amount is higher, a payment
is then due to SARS. No
supporting documents are attached to the VAT201 form and it is based
upon the honesty of the VAT vendor.
However, the VAT vendor is
required by Section 11 to keep a record of all the supporting
documents when a VAT refund is claimed.
[13]
The veracity of the VAT refund can be checked by an audit done by
SARS. According to Mr du Toit, SARS does five types
of audits.
The first is a telephone audit; the second is a routine audit of
verification; the third is a routine visit where
the vendors’
premises are visited. The fourth is a refund audit where the SARS
auditor looks at all sales documents, purchase
documents and bank
statements. If a transaction is zero-rated a request is made for
export documents CCA1 as proof of payment.
The fifth audit is an
in-depth audit done on site.
[14]
A refund paid into a vendor’s bank account in terms of a VAT201
form reflects as “BIN-INK” together with
the VAT number
of the entity concerned. An irregularity in VAT returns is
detected by the computer when it runs through the
returns. When
a risk is detected an auditor will then be allocated to that
particular entity. During the capturing
of a VAT201 return a
hard copy and a soft copy are generated. According to section
55 of the VAT Act 89 of 1991 all documents
must be retained by SARS
as well as the vendor for five years, although SARS still keeps a
soft copy after five years.
[15]
Mr du Toit said the investigation of all four entities was triggered
when he investigated another company. He found the VAT201
returns for
all the four entities stapled together. He checked the original
VAT101 files and found that previous audits had been
conducted at the
business premises of the accused. He then requested Mr Andrew
van der Merwe (‘van der Merwe’),
a VAT auditor employed
by SARS, to have a look at these returns. He and Mr van der Merwe
verified the invoices by contacting and
visiting the suppliers, who
told them the tax invoices had been falsified. The accused was
contacted as the accounting or public
officer of the four entities
and was requested to submit all supporting documents for that tax
period.
[16]
Other possible suspects were investigated and it was found that Mr
Nkosi, the sole member of Andeltru, had passed away on 3
June 2002. Mr de Gouveia of Siani
Trade had disappeared and a very old lady, Ms Laura Olim was the
director of Allied Charcoal.
Ms Francillon of Limoges became a
section 204 witness after the accused was arrested. Mr Olim
entered into a plea bargain
with the State and also became a section
204 witness.
[17]
Mr du Toit spent a significant amount of time explaining the
exhibits. He testified that the four entities claimed the
VAT
refunds as per Schedules A to D. SARS then paid out the refunds
as per column 5 of the aforementioned schedules.
His evidence
was that he certified all the exhibits in the three court files which
contain the original documents for the four
entities. Where the
original documents were not available, he made use of section 15(4)
of The Electronic Communications
and Transactions Act 25 of 2002
duplicate originals that were printed from the SARS computer system.
[18]
Although the admissibility of the section 15(4) documents was
initially challenged on the basis that they amounted to inadmissible
hearsay evidence, after the evidence of two witnesses from SARS on
the procedure that is followed when capturing these documents,
the defence admitted the section 15(4) documents. Mr Roets, on
behalf of the accused confirmed during argument that the reliability
of these documents was no longer in question. This being the
case, it is unnecessary for me to deal with the argument on
the
admissibility of these documents.
[19]
Schedules A to H were handed in during Mr du Toit’s testimony.
Schedules A to D each reflect the name of one of
the four entities
and eight columns appear on each Schedule. Mr du Toit testified
that Column 1 is the count that the accused
is charged with.
Column 2 indicates the relevant tax period. Column 3 reflects
the VAT amount claimed in the VAT201.
Column 4 reflects
the exhibit number filed as proof of the VAT returns. Column 5
reflects the amount of VAT paid out to the
entity. Column 6
reflects the date on which the VAT refund amount was paid. Column 7
reflects the specific bank statement/document
into which the VAT
refund amount was deposited. Column 8 reflects whether the
exhibit is an original or a Section 15(4) duplicate
original.
Exhibits A1 to A4 contain the VAT101 registration documents as well
as the CK documents relating to the registration
of the close
corporation or company and setting out the members or shareholders in
the relevant entity.
[20]
During the course of Mr du Toit’s evidence the accused made the
following Section 220 admissions:
The
information captured on the computer system of SARS as reflected in
column 8 of Schedules A to D of the indictment is correct.
Column
5, payments as reflected in Schedules A to D of the indictment were
made into the respective bank accounts of the four
entities namely
Andeltru CC trading as Trans Lebombo Transport, Siani Trade (Pty)
Ltd, Limoges Impex Trading CC and Allied Charcoal
CC.
Column
6 as reflected in Schedules A to D of the indictment is the dates
that these payments were made.
The
registered names of the four entities are reflected in Exhibits
A1(9), A2(3) and (7). That the entities were registered for
VAT as
per Exhibit A3.
The
accused was the sole member of SPI Brokers CC (‘SPI Brokers’)
since September 2000 (Exhibit E). He was also the
account holder of
SPI Brokers’ bank account and Andeltru issued cheques to SPI
Brokers in terms of Exhibits J87 to J94.
That
the following entities: Andeltru CC (Exhibit C1), Siani Trade (Pty)
Ltd (Exhibit C2), and Limoges Impex Trading CC
(Exhibit C3)
held the bank accounts as reflected in the aforementioned exhibits.
That
his accounting firm Ivan van Der Linde and Associates, was the
accounting firm that rendered accounting services to all four
entities. In this regard see Exhibits A1(4), A2(3) and A4(4).
The
letterhead of his accounting firm was used to confirm to SARS the
bank accounts of Andeltru CC (Exhibits A1(9)), Siani Trade
(Pty) Ltd
(Exhibit A2(7)), and Limoges Impex Trading CC (Exhibit A3(15)).
[21]
Mr du Toit’s evidence on the documents is set out hereunder.
Schedule A deals with counts 1 to 86 relating to the entity
Andeltru. Exhibits B1 to B86 reflect the VAT201 refunds which
amount to 86 in total. The accused admitted that Mr Nkosi
was a
member of the entity Andeltru (Exhibits A1(3) as well as A1(a)) and
that Mr Nkosi passed away on 3
June
2002 (Exhibit D). He further admits that a chequebook (Exhibit P) was
seized at his residence, 4 Kurt Street, Glenvista after
his arrest
and that this chequebook contained blank signed cheques, signed by
the late Mr Nkosi. The accused admits that
three loose cheques
(Exhibits P9 and P10) were found in this chequebook, Exhibit P.
Exhibit J reflects payments made in cash
and payments made to SPI
Brokers from this chequebook.
[22]
Schedule B deals with counts 87 to 103, relating to the entity Siani
Trade for which 17 VAT returns were claimed. The
accused
admitted that the registered shareholder is GabyDom Family Trust
(Exhibit A2(5)) and further that this company traded under
the name
of Johnny Paulos Merchants (Exhibit A2(3)(7)).
[23]
Schedule C deals with counts 104 to 160, relating to the entity
Limoges for which 56 VAT returns were claimed. The accused
admitted that Ms Francillon was the registered member (Exhibit
A3(3)).
[24]
Schedule D relates to the entity Allied Charcoal, for which 94 VAT
returns were claimed. The accused was a founding member
of this
entity, (see Exhibit A2(7)) and he admitted that this entity was sold
to Mr Olim (Exhibit A4(14) – (20)). The
conclusion Mr du
Toit reached after comparing the computer printout with the original
VAT returns was that the printouts were an
accurate reflection of the
original VAT returns. The bank documents in Exhibits C1 to C4 reflect
the bank statements and the bank
account numbers as well as the
amounts refunded. The original documents were verified against
the duplicate originals and
from that Mr du Toit concluded that the
duplicate originals were accurate.
[25]
Schedule F read with Exhibits C1 to C4 reflect the deposits excluding
the VAT refunds of the four entities. The fraudulent
refunds
were deposited into these bank accounts. Only copies exist for
the following VAT201 returns: B49, B77 and B89 to
B94. All the
other VAT201 returns are original and were signed by the accused for
all four entities.
[26]
The accused’s signature on the VAT documents was compared with
his signature in Exhibit H1(12), which is his affidavit
when he
applied for bail and a letter written by the accused to Mr Edward
Kieswetter of SARS. This letter (Exhibit L) is
admitted by the
accused. The accused’s signature appears at the end
of this letter, Exhibit L1(3).
[27]
In summary Mr du Toit testified that the accused committed fraud by
submitting fraudulent claims to SARS. SARS then deposited
the
amounts claimed in column 5 of Schedules A to D into the bank
accounts as reflected in column 7 of Schedules A to D.
The
accused acted in his capacity as a representative of Siani Trade and
Allied Charcoal. Mr du Toit said the accused had access
to the
fraudulent VAT refund amounts deposited into the bank accounts of the
four entities.
[28]
In respect of Andeltru, he had access to the account by virtue of
being in possession of the blank chequebook signed by the
deceased Mr
Nkosi, which was seized at the accused’s residence. Exhibit J
reflects the signed cheques and Exhibits J87 to
J94 show that these
cheques were paid into an account of SPI Brokers, of which the
accused was the account holder. The accused
admitted that the
signed cheques by Mr Nkosi, number 94 to 97 were paid into his SPI
Brokers account. According to Mr du Toit the
fraudulent VAT refunds
continued after the death of Mr Nkosi in 2002, up to 2005 when the
accused was arrested.
[29]
The accused had access to the proceeds of the fraudulent VAT refunds
in the bank account of Limoges (Exhibit C3) by virtue
of an agreement
between himself and the sole member Ms Francillon, according to a
statement that Mr du Toit had obtained from Ms
Francillon. The
accused also had access to the proceeds of the fraudulent VAT refunds
in the bank account of Allied Charcoal (Exhibit
C4), as he was the
registered contact person of this bank account. (Exhibit C4(159)).
Exhibit M reflects that the accounting
firm of the accused, Ivan van
der Linde and Associates, was never registered for VAT.
[30]
Exhibit O reflects the false input and output amounts, which showed
that there was no capital amount on which the VAT refunds
could be
claimed. Exhibit N is a VAT consolidation of the capital amount
and total purchases.
[31]
Mr du Toit testified that several audits were conducted by SARS at
the accused’s accounting firm’s premises in
respect of
the various entities. During the course of these audits the
fraudulent suppliers’ invoices (Exhibits F1
to F37) used to
substantiate the VAT refund claims came to light. When he and
Mr van der Merwe personally visited the suppliers,
they were informed
that the invoices were false. The accused was unable to supply the
original tax invoices on request.
[32]
The suppliers involved were Springbok Distributors CC (Exhibits F1 to
F3), Paradise Liquor Market (Exhibits F4 to F17), West
End Liquor
Market (Exhibits F18 to F31) and Supascore Cash and Carry 2 CC
(Exhibits F32 to F37).
[33]
Exhibit K6 is a statement of the accused’s assets and
liabilities. It reflects his interests as 50% in Andeltru
CC,
33% in Limoges Import and Export CC, 50% in Allied Charcoal CC and
45% in Exeter Trading No 10 CC trading as Keysers Meat (‘Keysers
Meat’). Exhibit R relates to the fraud counts 161 to 255
during the period 1997 to 2005. This shows cheques signed
by Mr
Olim in the name of Cambia Commodity Brokers.
[34]
Schedule G reflects all the payments made to the accused from VAT
refunds by Andeltru. According to Mr du Toit, after
the accused
was arrested on 30 August 2005, all the VAT returns came to a
standstill. When SPI Brokers’s bank account was
frozen, only
R2,4 million was recovered. Although these four entities are
currently dormant, an assessment has been raised,
including a 200%
additional tax penalty payment.
[35]
Mr du Toit said there had been in excess of 20 field audits, most of
which seemed to have been signed off by Susan du Toit
from SARS.
Exhibit Q contains a SARS audit report done by Ms du Toit. She
noted tax invoices, customs and excise documents,
customs and road
freight manifest documents and exchange control documents. On the
face of it, it seems that Ms du Toit herself
committed fraud when she
signed these audits as the bank statements clearly show that with the
exception of Siani Trade trading
as Johnny Paulus Liquor Merchants,
there was clearly no trading by these entities. Apart from a small
number of minor deposits
there were no deposits into the three
entities except the VAT refunds. These were then generally
withdrawn within 24 hours.
[36]
Mr van der Merwe, who conducted the VAT refund audits on the four
entities on behalf of SARS, corroborated Mr du Toit’s
evidence
that the supplier invoices in Exhibit F were all falsified. He
testified that he was unable to get hold of any of the
entities as
the business addresses of all four did not exist as reflected on the
VAT101 registration forms. Nor could he get hold
of the accused, who
was listed as the contact person of Siani Trade. Mr van der
Merwe examined the bank statements of all
four entities and found
that although the VAT refunds were deposited into the bank accounts,
no other trade was reflected therein.
In effect these bank statements
were opened for the sole purpose of receiving the fraudulent VAT
refunds.
[37]
The proprietors of the business entities in whose names the false
invoices had been produced were also called to verify that
the
invoices, although bearing the names of their businesses, were indeed
false. Mr Antonio Mala, the owner for the past
25 years of the
West End Liquor Market Krugersdorp confirmed that invoices F18 to F31
were fraudulent. Exhibit G2 reflects the
format of what he said was
his original invoice at the time. The names Canbia Commodity
Brokers and Trans Lebombo Exports
were unknown to him, nor did he
know the accused or Ms Francillon. He did say that he has known
Mr Olim for the past 20 years
but last saw him in Madeira some years
ago.
[38]
Mr Alberto Quintal testified that he was the owner of Springbok
Distributors CC which was liquidated in June 2000. He
also
stated that Exhibits F1 to F3 were false invoices. The accused
and Ms Francillon were unknown to him but he had met
Mr Olim once or
twice at Portuguese festivals.
[39]
Mr Jose de Gouveia testified that he had owned Paradise Liquor Market
since 1987 - it is currently called Paradise Liquor City.
He
said that the invoices F4 to F16 were not those of his company.
He said that Mr Olim was an old friend that he last saw
over a year
ago. It should be noted that Mr Jose de Gouveia is not one and
the same person or in any way related to the Mr
A de Gouveia who is
listed as the sole member and/or director of Siani Trade.
[40]
Similarly Mr Carlos Cardosa testified that he used to be the director
of Supascore Cash and Carry situated at 12 South Road
Midrand.
This business closed down in 2012. The invoices Exhibits F32 to
F37 were not issued by his company.
He said that he does not
know the accused but that his brother is a friend of Mr Olim.
[41]
It seems that all the traders who testified were Portuguese and knew
Mr Olim, as he was part of that community. Apart
from
confirming the falsity of the invoices issued in their names they
stated that the amounts reflected therein were far too large
to have
emanated from their particular businesses.
[42]
Mr Basie Flemming (‘Flemming’), an employee of ABSA Bank
and the Relationship Manager of the accused at the time,
also
testified. He confirmed that Exhibit K6, a statement of the
accused’s assets and liabilities, was given to him
by the
accused. This was in support of an application for a bank
loan. According to the information reflected therein
the
accused stated that he had the following assets or interests:
100% in SPI Construction, 50% in Allied Charcoal CC, 33%
in Limoges
Import and Export CC, 50% in Andeltru CC and 45% in Exeter Trading No
10 CC trading as Keysers Meat.
[43]
Mr Flemming also testified that Exhibit K30 is a facsimile on the
letterhead of the accused’s accounting firm dated 25
August 2005 regarding Andeltru, where
the accused confirmed the identity document and the notice of
registration with SARS of Mr
Nkosi. He said that the bank was
never informed that Mr Nkosi had passed away on 3
June 2002.
[44]
Ms Francillon and Mr Olim testified as to how the VAT scheme
operated. As previously stated Ms Francillon became a section
204 witness and provided information that led to the arrest of the
accused, whom she described as the mastermind behind the scheme.
Mr Olim entered into a section 105(A) plea agreement and was fined
R100 000. He too, was warned in terms of section 204 of
the
Criminal Procedure Act.
[45]
Ms Francillon testified that she was born in Limoges in France, which
is why the entity in which she had an interest was named
Limoges
Impex Trading CC. She testified that she started working for Mr Olim
as his administrative assistant in late 1995 or early
1996. At
the time Mr Olim was involved in exports and imports and had a
warehouse at City Deep. Even at that time,
according to Ms
Francillon, he was involved in underhand and dishonest schemes and
she assisted him in what was known as “round
tripping”.
This is a scheme whereby goods would be bought at the export price
(without VAT), taken to the border and
then brought back into South
Africa and sold on the local market with the VAT added. Ms Francillon
stated that as time went by
she and Mr Olim merely submitted false
claims to customs and excise by using forged documentation without
purchasing any goods
at all.
[46]
When she first started her employment with Mr Olim, Ms Francillon was
paid a salary. The source of revenue as a result
of round
tripping dried up when the goods were seized in the warehouse by
customs and excise. After this she left Mr Olim’s
employ
for a few months only to be re-employed by Mr Olim a little later.
The business then relocated to 1 Kramer Street,
Bedfordview where Mr
Olim shared offices with Mr De Gouveia, who had an interest in Siani
Trade.
[47]
According to Ms Francillon they all were involved in underhand
schemes to defraud customs and excise. There was no legitimate
business. She continued forging different types of documents required
for the export and import purposes. It is apparent
from Ms
Francillon’s evidence that Mr Olim had a very serious drinking
problem as well as various other psychological difficulties.
Ms
Francillon, who is clearly a highly capable and intelligent woman,
took over his affairs. Mr Olim himself confirmed that
Ms
Francillon had taken him to the psychiatric ward on several occasions
and that in 2000 he suffered a mental breakdown. He equated
her role
in his life as being like “eyes for a blind man”.
At the time he was going on drinking binges lasting
for five days or
more and he became increasingly dependent on Ms Francillon.
[48]
In about 1998 Ms Francillon met the accused at Presley’s Night
Club which was situated at City Deep. Later the
same year the
four entities were registered and soon thereafter registered for
VAT. She said that she, Mr Olim and the accused
had discussed
the fraudulent VAT scheme at a meeting in his office. Mr Olim
said that the scheme was hatched over a few whiskeys
at Presley’s.
[49]
According to Ms Francillon the scam operated in the following
manner. Apart from Siani Trade with which she had no dealings,
the other three entities were set up with the sole purpose of
claiming fraudulent VAT refunds. These refunds would be
deposited
into the bank accounts of the entities and then would be
divided as agreed between her, Mr Olim and the accused. In
respect
of Limoges she, Mr Olim and the accused each took a third of
the proceeds. In respect of Andeltru and Allied Charcoal the
accused and Mr Olim shared 50% each.
[50]
Her role was to supply the false supplier invoices as and when they
were required for a VAT audit. When an audit was
to take place
she would be contacted by the accused to supply documents. She
would then go to his office and would produce
the false documents for
whatever entity they were required. She added that the
fraudulent documentation was produced at the
accused’s office
and was also signed by Darryl van der Linde, the accused’s
brother. Other than this she said that
the accused did the rest by
himself. She commented that she was surprised to find that the
VAT scheme was much easier than
the customs and excise scam as far
fewer fraudulent documents were required. During the course of
her testimony the State
warned Ms Francillon that she had only been
offered indemnity relating to the current matter and not relating to
any defrauding
of customs and excise. She replied that she wanted to
answer the questions in order to ‘marry’ the skills she
had obtained
from forging customs documents with the falsified
supplier invoices that she produced for the VAT scam.
[51]
Ms Francillon, although she prepared the false invoices for all
entities, had a financial interest only in one, namely Limoges.
She confirmed the VAT registration documents A3, the VAT101
registration form that reflects her as the registered owner of
Limoges
and that this entity applied for VAT registration on 8
June 1998. She confirmed that
the address reflected thereon is that of her sister, where she
resided. After the registration
of Limoges for VAT she opened a
bank account with Lisbon Mercantile Bank. She was the only
person who had signing powers
on this account.
[52]
Into this account VAT refund payments from SARS in the sum of R9.1
million were received. These are counts 104 to 160 of Schedule
C. The
fraudulent refunds relating to this entity were drawn on a monthly
basis and split between herself, the accused and Mr Olim
as agreed.
Ms Francillon testified that she has nothing left of her share of the
proceeds which she spent on various luxuries.
She also has no
assets.
[53]
When the original chequebook of Limoges was presented to her in court
she admitted that all the stubs in this chequebook were
written by
her (Exhibits Y1 to Y17). She also confirmed that either cash
cheques were drawn or payments were made to the
accused into the
account of SPI Brokers.
[54]
In respect of Andeltru, Ms Francillon said that the sole member was
Mr Nkosi. She said that Mr Nkosi was a driver employed
by Mr
Olim. He was an uneducated man and it appeared that he was also
a sickly man. She said that she compiled the
false invoices for
Andeltru at the accused’s office when an audit was called by
SARS. She was told that Andeltru received
R10.3 million in VAT
refunds but stated that she herself did not receive any of this as
the proceeds were split between the accused
and Mr Olim.
[55]
Ms Francillon was aware that Mr Nkosi passed away in 2002 and that a
chequebook with blank cheques signed by Mr Nkosi had been
found at
the accused’s residence many years later when he was arrested.
She admitted that Exhibit P26, a chequebook stub
for cheque number 32
dated 16
April
1999 was completed in her handwriting for the amount of R127 000.
She explained that the “Ivy” that appeared
in the cheque
stub was a reference to Ivan, the accused.
[56]
Ms Francillon testified that she produced all the invoices in Exhibit
F, other than F1 to F3, the invoices of Springbok Distributors.
The last VAT refund claim paid by SARS in respect of Limoges was
received in January 2002. Ms Francillon said that she would
be
called by the accused’s office, or on occasion by the accused
personally, when the VAT refunds had been deposited into
any of the
accounts. She would then go to the bank and cash the cheques.
If Mr Olim was away she would either leave
the cash at the accused’s
office or with an old friend of his in Kensington.
[57]
Ms Francillon admitted that after she was informed of the accused’s
arrest in 2005 she fled to Brazil. She was joined
by Mr Olim in
Brazil, who was in Madeira with his mother at the time. Mr Olim
advised her that she was a soft target and that she
would be arrested
in South Africa. After five weeks in Brazil she decided to
return to South Africa where she appointed an
attorney to assist
her. She eventually became a Section 204 witness and not only
testified in this trial but also in the
Regional Court trial.
[58]
Ms Francillon’s version was largely corroborated by Mr Olim.
He stated that he was frequently out of Johannesburg
over the
relevant period, either in rehabilitation centres or to visit his
mother in Madeira. Initially the State indicated
that he could
not be located and called Colonel Uekermann to verify this. An
adjournment was granted at the request of the
accused who indicated
that Mr Olim can be found in Komatiepoort. Apparently Mr Olim
himself telephoned the State Prosecutor
and made himself available
before any search for him by the accused could commence.
[59]
Mr Olim testified that although he was meant to receive a share in
all three entities, after the first few payments they then
dried up.
He said that Allied Charcoal was initially set up in order to do
legitimate business. Because the income from his
import and export
business was substantially higher than the threshold required for VAT
registration, he bought a shelf entity
Allied Charcoal CC from the
accused in 1997.
[60]
The accused was the accounting officer and registered this entity for
VAT (see Exhibit A4(6)). The bank account was in
the name of
his mother and she was the sole member of the close corporation.
The reason for this he stated was that he was
in the middle of an
acrimonious divorce and did not want any assets in his name.
Although the bank account was in the name
of his mother, he had
signing powers on this account.
[61]
Mr Olim testified that he did not complete or sign any of the VAT
returns of Allied Charcoal and that these returns were completed
and
submitted by the accused’s office. He admitted that he
left signed cheques in the name of Canbia Commodity Brokers
at the
accused’s office and was aware that some of these cheques were
found in a chequebook that contained blank cheques
signed by Mr
Nkosi.
[62]
As regards Andeltru and Limoges, Mr Olim confirmed that both did not
trade or conduct any business whatsoever. He was
to receive 50%
of the VAT refunds from Allied and Andeltru with the accused getting
the other 50% and one third of the VAT refunds
from Limoges with the
accused and Ms Francillon getting the other one third each. Mr Olim
claims to have only received his share
of the VAT refunds in Allied
Charcoal for approximately three to four months. He testified
that he had no knowledge of the
entity Siani Trade.
[63]
Mr Olim denied that Mr Nkosi was his driver, but said he was a
Mozambican citizen who repaired radios. Mr Nkosi was paid
to
drive his mother from the White River area to Johannesburg from time
to time. Mr Nkosi was an uneducated Mozambican citizen
who had
obtained a South African ID document illegally. He was the sole
member of Andeltru. When asked why Mr Nkosi
was chosen for this
position Mr Olim said that they had no other volunteers and Mr Nkosi
was paid for this service. He also
confirmed that Mr Nkosi was
very ill at the time and would be taken to hospital by Ms Francillon
from time to time.
[64]
Exhibit AB is an undated affidavit in which Mr Olim admitted he was
part of the fraudulent VAT refund scheme introduced by
the accused.
In Exhibit Z, a Section 105(A) plea agreement dated 18 November 2014,
he stated that he made the proceeds available
to the accused and that
he issued thirteen cheques to be cashed to share the fraudulent VAT
refunds relating to Allied Charcoal.
Although in his plea agreement
he stated that Allied Charcoal was registered in 1993 he said this
was an error and the correct
date was 1997. He confirmed that
Allied Charcoal received fraudulent VAT refunds but did not think the
amount was as high
as R10 million and estimated it rather at
approximately R5 million.
[65]
Mr Olim confirmed that he did not receive any bank statements at his
address and that the bank statements were sent to the
accused, who
also administered the account. Mr Olim continued to receive
payments from the illegitimate VAT scheme up until
a few months
before the accused was arrested in 2005. Thereafter all
payments stopped. He said that after Limoges had stopped
submitting
VAT claims, Ms Francillon received no money from the VAT scam so he
and the accused gave her R20 000 a month to keep
her quiet. He
indicated that he believed this to be a form of blackmail as she was
aware that he and the accused were still
benefitting from the VAT
scheme. He later began to doubt her loyalty and even started to
believe that she had taken advantage
of him. This was
particularly when she turned State witness after her return from
Brazil.
[66]
Mr Olim corroborated Ms Francillon’s testimony that liquor in
the warehouse was seized by customs and excise. He
also
confirmed their involvement in round tripping. He confirmed
that Ms Francillon was in possession of signed cheques and
she would
withdraw cash when he was out of Johannesburg to leave with friends
in Bedfordview.
[67]
At the end of the evidence for the State, the defence sought a
discharge in terms of section 174, in respect of the money laundering
counts, excluding counts 258 to 236. After hearing argument the court
dismissed the application for discharge on these counts.
[68]
The accused gave evidence in his own defence and called one witness,
a former employee. Mr van der Linde testified that
he was
arrested on 30 August 2005 at the offices of SARS in Alberton and
released on bail of R500 000. He ran an accounting
firm under
the name and style of Ivan van der Linde and Associates; it was not
registered for VAT. He has a BComm Degree
and an Honours Degree
from UNISA, practised as an accountant and is registered with the SA
Institute of Professional Accountants.
[69]
The first address of his practise was 6 Vernon Drive Mulbarton.
After one year it moved to 99A Garden Street Turffontein
and when his
practise expanded he moved to 21 Exeter Street. His postal
address is Private Bag 1647 Houghton and his business
renders
accounting services to individuals, CC’s and private companies.
[70]
Essentially the accused admits that his office registered the four
entities for VAT and submitted their VAT returns.
He admits
that all four operated fraudulent VAT schemes but states that he was
not involved in these schemes and knew nothing whatsoever
about
them. He admits the documents produced by the State including
the deposits into his other businesses, SPI Brokers and
Keysers
Meats.
[71]
The accused’s version is that he merely submitted the VAT
returns on behalf of the entities based on schedules drawn
up and
provided to him by his client. When a SARS VAT audit was to take
place he called for the original supplier invoices which
were duly
supplied to him by the relevant client. He denies knowing of,
or being involved with, the production of any falsified
invoices.
[72]
His explanation for the sums of money deposited into SPI Brokers and
Keysers Meats is that these were predominantly cash businesses
and in
order to avoid the exorbitant bank charges for cash deposits he gave
his clients cash and in return they would deposit cheques.
[73]
It was confirmed during argument that the accused admits the
documentary evidence. The only issue in dispute is the evidence
of Ms
Francillon and Mr Olim as to his involvement in the VAT scheme.
The accused says he was introduced to Mr Carlos Olim
by Mr Chris da
Silva of Presley’s Night Club. They became friends and
even went on a cruise to Maputo together. On
their return Mr Olim
asked him to be the bookkeeper of Mr Olim’s business. Mr Olim’s
business at the time was an unregistered
entity trading as Canbia
Commodity Brokers. The accused sold a shelf company Allied
Charcoal CC to Mr Olim for R800.
Through the accused’s
office, Mr Olim’s mother Laura Olim was registered as the
member of the close corporation because
Mr Olim had told him that he
previously experienced problems with SARS and with customs.
[74]
The accused does not dispute that he advised Mr Olim to open a trust
bank account for this entity and he registered Allied
Charcoal for
VAT. He does not dispute that the claims were submitted
initially every two months by himself, then they were
changed to a
one month VAT period because of the income that the close corporation
was generating. The accused says that he did
not suspect that these
entities were not trading and merely acted on information given to
him by Mr Olim and Ms Francillon.
He was not involved in the
operation of Allied Charcoal and did not know how the business
generated income.
[75]
The accused also registered another two entities, Andeltru for Mr
Olim and Limoges for Ms Francillon. Mr Nkosi, a man
he knew as
Spiros, was the sole member of Andeltru. As he understood it Andeltru
– trading as Trans Lebombo – traded
in the same
commodities across border as did Allied Charcoal. He was aware
that Mr Nkosi had a fraudulent South African identity
document and
that Mr Nkosi did not reside at 90A Garden Street Turfontein.
Nonetheless he signed as an accounting officer.
Exhibit B9 is a
refund return dated 25
January
1999 containing this false information which he verified was true and
correct.
[76]
Ms Francillon, Mr Olim’s personal assistant, provided the
documentation for the registration of Andeltru and later the
invoices
for the SARS VAT audits of Andeltru. She would drop these
documents off at the reception of his office. He
had a good
relationship with Ms Francillon and Mr Olim and they would meet once
a month or so to discuss business activities.
Ms Francillon was
also very friendly with one of his employees, Ms Shirley Meintjies.
[77]
The accused admitted that the Andeltru chequebook which contained
blank cheques signed by Mr Nkosi was seized at his residence
in
2005. His explanation for this was that when Mr Olim left for
Cape Town during 1999 or 2000 he was requested to draw cash
for Mr
Olim and pay Mr Olim’s creditors. Although the accused
said that this was not a regular function which his company
performed, he agreed to do this for Mr Olim as he was a friend.
Once the cash was drawn it would be given to Ms Francillon
or a
friend Mr Figuera who resided in Kensington, to be kept in safe
keeping for Mr Olim.
[78]
The accused was unable to explain any of the entries on the cheque
stubs in Exhibit P – the Andeltru chequebook that
was seized
shortly after his arrest. Even where these entries reflected
his name Ivan, ‘cash’, SPI Brokers, or
Keysers Meats he
was unable to explain. Exhibit P46 is a cheque that was
withdrawn after the death of Mr Nkosi. He
stated that he only
became aware that Mr Nkosi had died after his arrest. He
explained that SPI Brokers was a labour broking
firm in which he had
100% interest. Keysers Meats was a meat retailer where he had a
45% interest with Keyser, who had since
passed away.
[79]
The accused said he also rendered accounting services to Siani Trade,
which was an already established entity trading as Johnny
Paulos
Liquor Merchants. Although he dealt with Mr Ollie De Gouveia,
the director of this entity was his brother Albert De
Gouveia.
The accused said he believed that Siani Trade was exporting liquor.
Siani Trade’s place of business
according to Exhibit A2(3) was
21 Exeter Street, Robertson, the accused’s premises. Ivan Prop
4 CC was the letting agent
according to Exhibit A2(4). Ivan
Prop is one of the accused’s assets, which is listed in Exhibit
K6.
[80]
SARS conducted more than twenty audits relating to these three
entities and audits were done in the presence of two or more
SARS
officials. When documents were requested from clients for an audit
the client would deliver the documents a day before to
his office and
after the work was completed the client was contacted and asked to
collect the files, boxes or envelopes as they
did not supply any
storage facility at his office. He denied any knowledge of the
falsified invoices in Exhibit F. He said
that he had never met
Carlos Cardosa or Mr Jose De Gouveia, who were the owners of some of
the businesses for which fraudulent
supplier invoices were
fabricated. It was only after his arrest that he became aware that
the invoices were fraudulent.
[81]
The accused admitted that he had an ABSA banking account and had
approached Mr Basie Flemming of ABSA for a loan. He
needed a
loan because Keysers Meat, a wholesale distributor of meat, had
problems with the consistency of beef supply. He was interested
in
purchasing a farm in Delmas for between R15- and R17 million to
ensure a regular meat supply. To do this he required a
loan and
he drew up the document in Exhibit K6, the statements of his assets
and liabilities, for this specific purpose. He admitted
that his
signature appears on Exhibit K6 but says that the information
contained therein is not accurate and that he lied to the
bank in
order to inflate his income. In truth and reality he says that
he did not have the 50% interest in Allied Charcoal,
nor did he have
a 33% interest in Limoges and nor did he have a 50% interest in
Andeltru, as is stated in this exhibit. The accused
explained that
Ivan Props 4 CC and Ivan Props 5 CC are property holding companies.
[82]
The accused admitted that he addressed the letter, Exhibit L, to Mr
Kieswetter at SARS. He was given Mr Kieswetter’s
name by
an acquaintance at church. He agrees that in the letter he
asked that the matter be settled. This was not an
admission of
guilt – he explained – but rather a request for a speedy
resolution of the case and the charges levelled
against him. The
accused agreed that he had interaction with Mr Olim after his arrest
in 2005 when Mr Olim returned from Brazil
but he cannot recall having
any interaction with Ms Francillon since her return.
[83]
The defence called one witness apart from the accused. This was
a former employee of his accounting firm, Gillian Venter.
She
was employed by the accused during May 1998 at his accounting firm
Ivan van der Linde and Associates at 21 Exeter Street, Turffontein.
She did administrative work and registered companies and close
corporations.
[84]
Ms Venter confirmed that more than twenty SARS audits were done
relating to the three entities Andeltru, Allied Charcoal and
Limoges.
She recalled receiving documents from Ms Francillon and from Mr Olim
when audits were going to be conducted. These
documents were
received at the reception area of the office. Ms Venter said that she
never saw any invoices being created or manufactured
at the offices
of the accused and she only heard of the fraudulent VAT scheme after
the accused had been arrested.
[85]
Taking into consideration the documentation and the admissions the
undisputed common cause evidence is as follows:
1.
Andeltru, Limoges, Siani Trade and Allied
Charcoal were all registered for VAT by the offices of the accused as
per Exhibits A1
to A4. The accused was the accounting officer
for all four entities.
2.
The four entities fraudulently claimed VAT
refunds as per Schedules A to D.
3.
The supporting documents for the VAT
refunds are all false.
4.
These entities did not trade.
5.
SARS paid out the refunds claimed as
reflected in Schedule A.
6.
The total VAT refunds were with withdrawn
from the entities’ respective account within a day or two of
being deposited by
SARS into their bank accounts.
7.
The accused received payments in respect of
the VAT refunds as per Exhibit J.
[86]
The only real factual question to be determined is whether the
version of the accomplice witnesses, Mr Olim and Ms Francillon,
should be believed, namely that the accused was integrally involved
in the VAT scam.
[87]
It is trite that the evidence of an accomplice should be treated with
caution and can be accepted only if there is independent
corroboration of the evidence.
[1]
The test in assessing the evidence of an accomplice was set out by
Leon J in
S
v Masuku
1969 (2) SA 375
(N). At page 376-377 he said the following:
“
(2)
An accomplice is a witness with a possible motive to tell lies about
an innocent accused; for example, to shield some other
person, or to
obtain immunity for himself. (3) Corroboration, not implicating
the accused but merely in regard to the details
of the crime, not
implicating the accused, is not conclusive of the truthfulness of the
accomplice. The very fact of his
being an accomplice enables
him to furnish the court with details of the crime which is apt to
give the court the impression that
he is in all respects a
satisfactory witness or has been described to convince the unwary
that his lies are the truth. (4) Accordingly,
to satisfy the
cautionary rule, if corroboration is sought it must be corroboration
directly implicating the accused in the commission
of the offence.
(5) Such corroboration may, however, be found in the evidence of
another accomplice provided that the latter is
a reliable witness.
(6) Where there is no such corroboration, there must be some other
assurance that the evidence of the accomplice
is reliable. (7)
That assurance may be found where the accused is a lying witness, or
where he does not give evidence.
(8) The risk of false
incrimination will also, I think, be reduced in a proper case where
the accomplice is a friend of the accused.
(9) In the absence of any
of the aforementioned features, it is competent for a court to
convict on the evidence of an accomplice
only where the court
understands the peculiar danger inherent in accomplice evidence and
appreciates that acceptance of the accomplice
and rejection of the
accused is only permissible where the merits of the accomplice as a
witness and the demerits of the accused
as a witness, are beyond
question.”
[88]
It was submitted on behalf of the defence that both witnesses were
unreliable, untruthful and evasive and contradicted each
other in
material respects. It is quite correct that both were involved
in various dishonest and underhand schemes.
Ms Francillon had
been forging documents for years to defraud the fiscus. She
concealed her conduct from her fiancé
and fled to Brazil once
the accused was arrested.
[89]
It is quite probable that had this avenue not being closed off with
the arrest of the accused she would still be involved in
some
dishonest activities today. Even Mr Olim thought she was
blackmailing him. She is not a stranger to fraudulent
activity
and is clearly highly intelligent. However, her evidence
did have a ring of truth to it. She did not
minimize her role.
Even when she was warned by the prosecution that she had not received
indemnity for the fraudulent customs and
excise scam, she continued
to incriminate herself. This she said was so as to put the
forging of the falsified invoices in
perspective and marry the skills
she had acquired in forging the customs and excise documents with
fraudulent invoices. She was
subjected to protracted and lengthy
cross-examination by able counsel and confronted with numerous
exhibits. Her testimony
remained relatively consistent.
When the accused’s version was put to her she denied it
confidently and coherently.
[90]
Mr Olim on the other hand was a poor witness, as was conceded by Mr
Oosthuizen for the state. He was forgetful, especially
of certain
dates and seemed to underplay his role, complaining in particular
that he only received his share of the proceeds of
the scheme at the
initial stages and not thereafter. This contradicted his
evidence that he was surprised to receive money
right up to the
arrest of the accused.
[91]
There are contradictions between his oral evidence, his affidavit
(Exhibit AB) and his plea agreement (Exhibit Z). It
is
generally accepted that oral testimony carries more evidentiary
weight than written statements. He did not understand what money
laundering entailed although he pleaded guilty to it in his plea
agreement. It should also be borne in mind that the undisputed
evidence of both Mr Olim and Ms Francillon is that Mr Olim was very
vulnerable at the time, with a serious drinking problem.
He
suffers from psychiatric disorders. In his affidavit it was stated
that he was bipolar.
[92]
Notwithstanding the above, there are consistencies in the versions of
Mr Olim and Ms Francillon. Both attributed a major role
to the
accused. Both said that the proceeds from the fraudulent VAT
funds were divided as follows: 50% to the accused and
50% for Mr Olim
in Andeltru and Allied Charcoal and 33% each in Limoges. It is
no coincidence that this shareholding
is reflected
in the statement of assets and liabilities
(Exhibit K6) that the accused presented to
ABSA when he applied
for a bank loan. In addition, the evidence of the suppliers
that the invoices were false provides
independent
corroboration for the versions of Mr Olim and
Ms Francillon.
[93]
The existence of the scam and its
modus
operandi
is further corroborated by the
admitted documents, which are evidence that the accused registered
the entities, submitted the VAT
returns and that the VAT refunds that
were fraudulently claimed were paid out. The bank statements are
objective evidence that
the entities did not trade and existed solely
to submit false VAT claims, as testified to by Mr Olim and
Ms Francillon.
[94]
Not every error, inconsistency or contradiction made by a witness
will affect his or her credibility. A court is enjoined
to
weigh up the evidence of the witness as against the totality of the
evidence produced by the state.
[2]
The evidence of an accomplice, although subject to the cautionary
rule, needs not be wholly reliable, or wholly truthful.
The
ultimate test is whether after treating the evidence with the due
circumspection, the court is satisfied beyond a reasonable
doubt that
the story told is essentially true.
[95]
The state submitted that there was no need to rely on the evidence of
Mr Olim and Ms Francillon at all, as there is sufficient
evidence to convict the accused in the absence of their evidence.
There is merit in this proposition, but nonetheless I am satisfied
that there is sufficient independent oral and documentary evidence to
corroborate the versions of Mr Olim and Ms Francillon.
I
accept the overall thrust of their evidence – that they
conspired with the accused to operate the VAT scam. I accordingly
reject the exculpatory version given by the accused.
[96]
It is trite that the onus rests upon the state to prove the guilt of
the accused beyond reasonable doubt, after weighing up
all the
evidence before court and in a holistic manner. This has been stated
in a long line of cases and needs no further elaboration.
[3]
[97]
It may be, that even if an accused's version is improbable, he is
entitled to an acquittal if it is reasonably possibly true.
In
Monageng
v S
[4]
the court described proof beyond reasonable doubt as:
"…
evidence with such a high degree of probability that the ordinary
man, after mature consideration, comes to the conclusion
that there
exists no reasonable doubt that the accused has committed the crime
charged
[5]
."
[98]
In addition to the evidence of Mr Olim and Ms Francillon that
the accused was the mastermind behind the scam, the
following
undisputed facts point to the guilt of the accused.
1.
The entities were not registered for VAT
until the accused registered them.
2.
It was through his office that the VAT
refunds were claimed.
3.
The accused received and responded to all
correspondence from SARS on behalf of the entities.
4.
The bank statements of all four entities
were sent to either one of the accused’s postal addresses being
Private Bag 1647,
Houghton, or PO Box 75279 Garden
View. (Ms Francillon said she collected the Limoges bank
statements from this post
box and took them to the accused’s
office for him to file away.)
5.
The accused, therefore, had access to all
the bank statements from which it would have been immediately
apparent that the entities
received no income other than the VAT
refunds.
6.
Mr du Toit, in Exhibit N
calculated that a total of R249 486 719 in purchases would
have had to go through in
respect of the four entities to justify the
VAT that was claimed on their behalf. A cursory glance at the
bank statements,
whose contents are not disputed and which were sent
to the accused’s address, would have revealed that these
entities do
not trade and never had these amounts, or anything
vaguely resembling these amounts, in their bank statements. It would
have been
immediaitely apparent that refunds in the amounts claimed,
or at all, were fraudulent.
7.
The accused received large sums of money in
respect of the VAT refunds into his SPI Brokers bank account, which
also had the address
Private Bag 1647, Houghton.
8.
No further refunds were claimed after the
accused was arrested.
[99]
Another improbality in the accused’s version was that the
exculpatory version given when the accused testified, was withheld
from SARS and the police for 11 years, although he said he became
aware that his clients had perpetuated a fraud soon after his
arrest.
While fully acknowledging an accused's right to remain silent, the
probability of the accused never providing this version
to the
authorities if he were indeed an innocent party in the VAT scam, is
in my view remote.
[100]
It is common cause that the following amounts were fraudulently
obtained by submitting fraudulent VAT statements. For Andeltru
the
amount claimed was R10 619 275.84 and the VAT paid was
R10 388 394.86; for Siani the VAT claimed was R2 259 771.29
and the VAT paid out was R1 996 379.53; for Limoges the VAT
claimed was R6 090 121.63 and the VAT paid out
was
R4 996 128.72; for Allied the VAT claimed was
R11 699 554.20 and the VAT paid out was R10 814 336.74.
That means the total VAT claimed was R30 538 719 and the total VAT
paid out was R28 195 239.
[101]
In view of the above and taking the evidence into account in its
totality, it is my view that the state has indeed discharged
its onus
and the accused's involvement in the VAT scam has been proven beyond
reasonable doubt. Any inferences to be drawn from
the documents are
consistent with the proven facts and exclude any other reasonable
inference, save that the accused is guilty
of fraud as per counts 1
to 255. Certain of the fraud counts, 29 in total, are the
so-called "potential prejudice counts",
where fraudulent
VAT claims were submitted, but not paid out.
[102]
Snyman
[6]
defines
fraud as:
"The
unlawful and intentional making of a misrepresentation which causes
actual prejudices, or which is potentially prejudicial
to another."
I accept the state's argument that the 29 VAT claims were potentially
prejudicial to SARS, and therefore amount to completed acts
of
fraud. The accused should, accordingly be found guilty of fraud
on these 29 counts as well.
[103]
What remains to determine is whether the accused is guilty of the
other counts, namely uttering (count 257), forgery (count
256), money
laundering (counts 263 to 326 excluding count 273) and acquisition of
the proceeds of unlawful activies in terms of
POCA (counts 327 to
381).
[104]
Snyman's definition of forgery is that it “
consists
in unlawfully and intentionally making a false document to the actual
or potential prejudice of another."
[7]
It
is common cause that the supplier's invoices in Exhibit F were false
and were submitted to SARS with the intention of defrauding
SARS by
securing VAT refund claims.
[105]
The evidence of Ms Francillon is that she and the accused forged the
invoices at the office of the accused on the accused's
computer and
using his Dot Matrix Printer. The evidence is therefore that
the accused was aware of, and played a role in
the forging of these
documents and must be accordingly be found guilty of forgery.
[106]
Snyman defines uttering as consisting in “
unlawfully
and intentionally passing off a false document to the actual or
potential prejudice of another."
[8]
It is common cause that the false invoices were handed to SARS when
the audits took place at the accused's office. The accused
personally
assisted the auditors when the more than twenty SARS audits were
conducted on the four entities. It is Ms
Francillon's evidence
that she was always asked to stay away during the audits, which were
handled solely by the accused in his
office. Exhibit O is a
letter of the accused's firm Ivan van der Linde & Associates
where various of the false
invoices, F26, F37, F35 and F36 were
forwarded to SARS under cover of his letter.
[107]
The only conclusion to be drawn, is that the accused uttered and
presented forged documents to SARS well knowing that they
were false
and in the knowledge that they would result in actual or potential
prejudice to SARS. As a result of the submission
of these false
documents, VAT refunds which were not owing were paid out as a result
of the uttering. The state has, therefore
shown beyond reasonable
doubt that the accused is guilty of forgery and uttering as per
counts 256 and 257.
[108]
Counts 263 to 326 are charges of money laundering in terms of section
4
(b)
(i) of
POCA. Money laundering is the process by which the proceeds of crime
are converted into assets which appear to have a legitimate
origin so
that they can be retained permanently, or recycled into further
criminal enterprises. Because money laundering
was linked with
the funding of cross-border terrorism, the flow of money from the
proceeds of crime became of a crucial importance
to international
authorities in the 1990's. This led to financial institutions the
world over, including South Africa, being urged
to introduce
stringent measures to control money laundering and the flow of the
proceeds of crime in general.
[109]
South Africa's response to this was the enactment of POCA and the
Financial Intelligence Centre Act 38 of 2001
, commonly known as FICA.
FICA, which members of the public know very well from the FICA
processes demanded by their respective
banks from time to time,
defines money laundering in
Section 1
of FICA as:
"Any
activity which has or is likely to have the effect of concealing or
disguising the nature, source, location, disposition
or movement of
the proceeds of unlawful activities or any interest which anyone has
in such proceeds, and this includes any activity
which constitutes an
offence in terms of
section 64
of this Act or section 4, 5 or 6
of the Prevention Act."
[110]
The main motivation for the laundering of the proceeds of crime is to
avoid detection. It is an activity conducted with
the intention
to disguise the illegal source of money. The funds are thus made to
appear legal through a series of transactions,
or a single
transaction. A money laundering scheme is designed to avoid raising
suspicion and is often backed by authentic documentation
for it to
appear legitimate. It must be difficult to unravel, so sophisticated,
complex and often transnational schemes are devised
to make it
difficult and expensive for investigative authorities to detect and
trace the proceeds.
[9]
[111]
Money laundering is said to take place in three stages namely
placement, layering or integration.
[10]
Placement takes place when the proceeds of crime enter the banking
system. Typically, the criminal with a large sum
of cash moves
it to another country or location so that placement can take place
with greater safety. Frequently a large
sum is split up into
smaller amounts which can then be deposited into different bank
accounts without raising suspicion.
[112]
The second stage is known as layering, which is the process of
separating the funds from their illegal source. The source
of
money is disguised by moving the funds through accounts of financial
institutions, thereby, blurring the trail of the money.
De Koker
[11]
gives the following examples of layering:
1.
Drawing money from an account at one bank,
splitting the amount and depositing it into three banks in three
different accounts.
2.
Purchasing property to be sold immediately
thereafter.
3.
Depositing money into an attorney's trust
account and from there requesting it to be repaid, or paid into other
person’s personal
accounts.
[113]
Integration occurs when the illegitimate funds, now laundered, are
placed under the control of the criminal.
[114]
Although de Koker cautions against expecting all three stages to
be present in the South African context, where often
only the
placement takes place, the above description is useful to understand
the intention behind any money laundering scheme
and the harm that
the legislator wished to combat when the necessary legislation was
enacted.
[115]
The accused in this matter has been specifically charged in terms of
Section 4
(b)
(i) of POCA. Section 1 of POCA defines the
proceeds of unlawful activity as:
"…any
property or any service, advantage, benefit or reward which was
derived, received or retained directly or indirectly,
in the Republic
or elsewhere, at any time before or after the commencement of this
Act, in connection with or as a result of any
unlawful activity
carried on by any person, and includes any property representing
property so derived."
Section
4 of POCA reads as follows
:
"4.
Any person who knows or ought reasonably to have known that property
is or forms part of the proceeds of unlawful activities
and-
(a)
enters into any agreement or engages in any agreement or transaction
with anyone in connection with that property, whether such
agreement,
arrangement or transaction is legally enforceable or not, or
(b)
Performs any other act in connection with such property, whether it
is performed independently or in concert with another person,
which
has, or is likely to have the effect-
(I)
of concealing or disguising the nature, source, location, disposition
or movement of the said property or the ownership thereof
or any
interest which anyone may have in respect thereof; or
(ii)
of enabling or assisting any person who has committed or commits an
offence, whether in the Republic or elsewhere-
(aa) To
avoid prosecution; or
(bb) To
remove or diminish any property acquired directly, or directly as a
result of the commission of an offence,
shall
be guilty of an offence."
[116]
The accused is charged with section 4
(b)
(1)
- concealing or disguising the nature and source of the funds which
he knew to be from the proceeds of unlawful activities.
Firstly
it must be shown that he knew or ought to have known that the
property formed the proceeds of unlawful acivities. The accused
was
the mastermind of the VAT fraud scheme and had such knowledge as
required by section 4. It is common cause that the VAT
refunds
were the proceeds of crime. The accused initiated and managed
the scheme, and as such, knew the refunds represented
the proceeds of
unlawful activities, namely fraud. In terms of section 4
(b)
he must perform “
any other act in
connection with such property, whether it is performed independently
or in concert with another person
”.
The accused performed the following actions in connection with the
proceeds of unlawful activities: he received
26 cheques in
respect of the laundering counts 277, 278, 279, 280, 283, 288, 300 to
222. These proceeds were deposited into
the accused’s SPI
Brokers bank account, of which he was the sole member. The
cheque stubs in Exhibit P reflected the
name of the accused as the
beneficiary. All cheques drawn after June 2002 were issued
after the death of the accused
holder Mr Nkosi. The
accused had access to all the proceeds for Andeltru, as he had
Andeltru's blank, signed cheque
book under his control. The state
submits that the possession of the said cheque book warrants the
inference of the accused having
laundered the remaining funds and is
thus guilty of counts 263 to 326.
[117]
The final and crucial requirement of Section 4
(b)
(i)
is whether the accused’s actions had the affect of concealing
or disguising the nature, source, location or disposition
of the
funds. The state alleges that the cash cheques issued in
respect of money laundering counts 267 to 272, 274
to 278, 281 to
288, 290 to 295 and 300 to 301 once cashed, have the inherent effect
of concealing property.
[118]
It was submitted in the State’s heads of argument that a
cash cheque, once cashed, has an inherent affect of concealing
the
source, nature, property or location of the property. It is
impossible to trace, or follow, or investigate. This submission
is in
direct contradiction to what was stated in argument that money drawn
directly from the bank statements of the four entities
would not
constitute money laundering, and neither would cash cheques from that
bank account.
[119]
As far as disguising is concerned, the state submitted that the
drawing of the cash cheques disguised the origin of the money.
Similarly the cheques deposited into the SPI Brokers bank account
were likely to disguise the origin. The reasoning is that
once
deposited into the SPI Brokers bank account, the proceeds co-mingled
with other legitimate funds and became difficult to trace.
It was
further contended by the state that the cheques represented unlawful
proceeds which, once deposited into an active account
that ordinarily
receives deposits from lawful business, has the effect of
legitimising these proceeds. Such conduct is said to
be money
laundering.
[120]
In
S
v de Vries & Others
[12]
the court dealt with a situation where the British American Tobacco
Company of South Africa (‘BATCSA’) was a victim
of a
series of armed robberies, carried out by an armed gang which
hijacked BATCSA trucks and stole consignments of cigarettes.
The appellants in that matter were charged with racketeering in terms
of Section 2 of POCA, as well as money laundering in terms
of Section
4. The court found, in respect of one of the appellants, that
by receiving the cigarettes, knowing that they were
stolen, the
appellant made himself guilty of theft by proceeding to use the
cigarettes as part of his stock and trade as a wholesaler,
as if they
were goods lawfully acquired. This conduct had the affect of
concealing the source, movement and ownership of the cigarettes
thereby enabling and assisting the robbers to avoid a prosecution, or
to remove the property acquired in the robberies. In so doing,
said
the Supreme Court of Appeal, the appellant had made himself guilty of
a contravention of Section 4.
[13]
[121]
In
Prinsloo
& Others v The State
[14]
,
the SCA dealt with a so-called Ponzi Scheme in the Vaal Triangle, a
scheme into which investors invested over a billion rand.
The
appellants were charged with an excess of 213 000 charges,
including some in terms of POCA, such as racketeering and money
laundering. The money laundering charges in respect of one appellant
dealt with a situaltion where approximately 11 properties
were
purchased in the name of the Trust with monies deposited by
investors. It was alleged that the source of the money derived
from the racketeering activities was concealed by purchasing the
properties through the Trust. This particular appellant
argued
that she had not attempted to conceal or disguise the nature, source,
location, disposition or movement of these properties,
or the
ownership thereof. The court found that this argument had no
merit, as the monies pertained to the disguising and
concealing of
the proceeds of the unlawful scheme through its various identities,
and not to the ownership of the property.
[122]
Another of the appellants was also convicted in terms of section 4
of POCA after purchasing fixed properties in the name
of three
Trusts. There was no documentation such as loan agreements disclosing
the source of the funds utilised to purchase the
properties. In
addition, in court papers in another matter, she falsely stated that
her income of R2 million, together with
her husband's farming
income had been utilised to pay for the properties, failing to
disclose that the income she had received
through the illegal scheme,
amounted to more than R27 million that year.
[123]
In the unreported case of
S
v Moosagie & Another
[15]
,
the accused was found guilty of money laundering after depositing a
VAT refund cheque in the amount of R797 000 into an estate
agent's trust account. The proceeds of the VAT fraud were
withdrawn from the trust account in many small amounts, some as
little as R5 000, and deposited into various disparate bank
accounts.
[124]
What is apparent from the above cases is that in order to be found
guilty of money laundering, there must be a clear intention
to hide
or conceal what is often referred to as 'hot’ money. This
entails the laundering of the illegal funds to convert
them into
‘clean’ money, which the criminal can safely spend.
As stated in de Koker, money laundering is by its
very nature a
secretive practice. I am not persuaded that by spending the proceeds
of fraud, a conviction of money laundering should
follow
axiomatically. Instead, there has to be an element of concealment
which must be proven or inferred.
[125]
In this matter, the monies were merely divided and spent by the
parties. On occasion, cheques were deposited into the SPI
Brokers
bank account. This was an entity wholly owned by the accused and no
extensive investigation would have been required to
trace the money.
That this was a business belonging to the accused seemed to be
well-known by his staff at the accounting offices
– Ms Gillian
Venter certainly did not hesitate to explain that it was a
labour broking business of the accused,
when asked if she knew
anything about SPI Brokers. It seems that one of the weaknesses
of the fraudulent VAT scheme was the
ease with which the money trail
could be followed. Almost immediately after the VAT refund was
deposited into one of the
bank accounts of the four entities, it was
withdrawn in full and cashed, or deposited into the SPI Brokers bank
account.
There was no attempt whatsoever at concealment. There
was no interruption in the flow of money, which may make it difficult
for
the authorities to investigate or trace. It is therefore my view,
that the accused cannot be found guilty of the money laundering
counts.
[126]
Counts 327 to 381 are 55 counts relating to the acquisition of
proceeds of unlawful activities in terms of section 6
of POCA,
read in conjunction with sections 4 and 5. Section 5
provides:
"5.
Assisting another to benefit from the proceeds of unlawful
activities.
Any
person who knows or ought reasonably to have known that another
person has obtained the proceeds of unlawful activities and
who
enters into any agreement with anyone or engages in any agreement or
transaction, whereby-
(a) the
retention or the control by or on behalf of the said other person of
the proceeds of unlawful activities
is facilitated; or
(b) the
said proceeds of unlawful activities are used to make funds available
to the said other person or to acquire
property on his or her behalf
or to benefit him or her in any other way, shall be guilty of an
offence."
[127]
Section 5 self-evidently deals with the situation where a third party
assists a person to benefit from the proceeds of his
or her criminal
activities, by entering into an agreement with that person. This is
not applicable but should be differentiated
from Section 6 of POCA,
which reads as follows:
"6.
Acquisition, possession or use of proceeds of unlawful activities
Any
person who-
(a)
acquires,
(b)
uses, or
(c)
has possession of property and who knows or ought reasonably
to have known that it is or forms part of the proceeds of
the
unlawful activities of another person, shall be guilty of an
offence.”
[128]
Section 6 is therefore aimed, not at the agreement as provided for in
section 5, but the use or possession of the property
from the
proceeds of crime by a third party. It is clear that it refers
to the conduct of the third party and not to the
person or persons
who actually perpetrated the money laundering. It criminalises the
rendering of assistance to the criminal to
enable him or her to
benefit from crime. This section is self-evidently not applicable to
the accused in these circumstances.
[129]
On the state's own version, the accused was the mastermind behind the
unlawful VAT scheme, together with Ms Francillon
and Mr Olim.
The fact that the accused was neither a member nor a director of the
four entities is neither here nor there.
The purpose of this section
is to criminalise the acquisition and possession of the proceeds of
the crime of another. In any event
this section cannot be read in
isolation and must be read in conjunction with sections 4 and 5. Once
the finding is made
that there was no money laundering in terms
of section 4, there can be no acquisition in terms of section 6.
The accused must
therefore be acquitted on counts 327 to 381.
[130]
In conclusion I am satisfied that the section 204 witnesses
Ms Francillon and Mr Olim answered frankly and honestly
to
the questions put to them. The said witnesses are hereby
granted indemnity for the stipulated offences relating to the
period
1 June 1997 to 31 December 2005 in respect of the
four relevant entities.
[131]
I am also satisfied that the state has discharged the onus resting
upon it of proving beyond reasonable doubt that the accused,
Mr Ivan Don van der Linde, is guilty of fraud as
set out in counts 1 to 255, of forgery as per count 256 and
of
uttering as per count 257. On counts 263 to 336, money laundering, he
is found not guilty and on counts 327 to 381 – the
acquisition
of the proceeds of unlawful activities – he is found not
guilty. Counts 258 to 262 and count 273 were withdrawn.
In
summary the accused is found guilty of counts 1 – 257 and
acquitted on the remaining charges.
C
H Nicholls
Judge
of the High Court
Gauteng
Local Division, Johanneburg
APPEARANCES
THE
STATE : Adv. M Oosthuizen
Instructed
by Director of Public Prosecutions, Johannesburg
DEFENSE
: Adv. F Roets
Instructed
by Botha Attorneys
[1]
R
v Gumede
1949
(3) SA 749
(A),
S
v Hlapezula and Others
1965
(4) SA 439
(A)
[2]
S
v Sithole
[2006] SCA 126 (RSA),
S
v Francis
1991 (1) SACR 198
(A),
S
v Gentle
2005 (1) SACR 420 (SCA).
[3]
S
v Trainor
2003 (1) SACR 35 (SCA),
S
v van der Meyden
1999 (2) SA 79 (W),
S v van
Aswegen
2001
(2) SACR 97 (SCA).
[4]
[2009]
1 All SA 237 (SCA).
[5]
See
also
R
v Mlambo
1957 (4) SA 727
(A) at 738 and
S v Phallo
& Others
1999 (2) SACR 558 (SCA) para 10 and 11.
[6]
C R Snyman
Criminal
Law
6 ed (2014)
[7]
Snyman (supra) at 532
[8]
Snyman (supra) at 535
[9]
Albert
Kruger
Organised
Crime and Proceeds of Crime Law in South Africa
2
ed (2008)
.
[10]
De Koker
South
African Money Laundering and Terror Financing Law
(2014)
[11]
Supra.
[12]
2012
(1) SACR 186
(SCA)
[13]
S
v de Vries & Others (
supra)
para 56
[14]
(827/2011)
[2015] ZASCA 207
(4 December 2015)
[15]
(CC
29/2010) [2012] ZAECPEHC 31 (17 May 2012)