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[2024] ZAFSHC 83
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National Director of Public Prosecutions v Maine Management & Chartered Accountant (Pty) Ltd (4395/2023; 4647/2023) [2024] ZAFSHC 83 (19 March 2024)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN THE HIGH COURT
OF SOUTH AFRICA,
FREE STATE
DIVISION, BLOEMFONTEIN
Reportable:
YES/ NO
Of Interest to other
Judges: YES/ NO
Circulate to
Magistrates: YES/ NO
Case No: 4395/2023
4647/2023
In
the matter between:
THE
NATIONAL DIRECTOR OF
PUBLIC
PROSECUTIONS
Applicant
and
MAINE
MANAGEMENT & CHARTERED
Respondent
ACCOUNTANT
(PTY) LTD
HEARD
ON:
25 JANUARY
2024
CORAM:
NAIDOO,
J
DELIVERED
ON:
19 MARCH 2024
[1]
Two Applications for Reconsideration of preservation orders bearing
the case numbers cited above, serve before
me. Each matter started
out as an urgent
ex parte
application brought before this court for a preservation of property
order (the preservation order) in terms of section 38(1) of
the
Prevention of Organised Crime Act 121 of 1998 (POCA). For
convenience, I shall refer to the applicant in the main applications
as the NDPP and Maine Management and Chartered Accountant (Pty) Ltd
as the respondent. The NDPP was represented by Adv (Ms) S Khumalo,
while the respondent was represented by Adv SJ Reinders.
[2] The application under
case number 4395/2023 was issued on 21 August 2023 and the
preservation order was granted by this court
on the same day. In that
matter, the applicant (the NDPP) sought to freeze an amount of One
Million Nine Hundred and Seventy One
Thousand Six Hundred and Fifty
Seven Rand and Seventy Five Cents (R1 971 657.75), together
with interest thereon (the
property), held at the First National Bank
(FNB), under account number 6[…].
[3] The
application under case number 4647/2023 was issued on 5 September
2023, and the preservation order was
granted on the same day. In this
matter, the applicant sought to freeze an amount of Two Million Two
Hundred and Fifteen Thousand
and Eighty Four Rand (R2 215 084.00),
together with interest thereon (the property) held at First National
Bank (FNB), under
account number 6[…]. I mention that in the
application for reconsideration in respect of both matters, the
respondent asked
to be joined as a party as it has a substantial
interest in the matter. It rendered the services to the municipality
and has therefore
earned the money, which is payable to it. The
applicant’s response is that the respondent is recognised as an
interested
party so there is no need for joinder. When it files its
affidavit in terms of section 39(5) it will be a respondent
[4] The
Mangaung Metropolitan Municipality (the municipality) awarded a
tender to the respondent to verify municipal
customers who qualified
as indigent customers in accordance with the municipality’s
indigent policy (the policy). The tender
was awarded on 3 March 2022.
The contract was to commence on 7 March 2022 and end on 6 March 2023,
but was extended to 31 August
2023.The policy set out the detailed
qualification criteria for indigent customers/households, the manner
of verification and the
process to be followed, vis-à-vis the
interaction with the municipality after verification, to obtain
approval of such verification.
In essence, the respondent would
conduct the verification of the relevant customers and submit
applications to the responsible
municipal official, who would in turn
ensure that all information regarding the applications is verified.
[5]
The municipal official would then submit the application and
recommendation to the relevant supervisor for review and submission
to the relevant committee or body for approval. The municipal
supervisor designated to deal with indigent applications in this
case
was Salome Mamakhoa Makhooa (Makhooa), who was employed by the
municipality as Customer Service Manager. Her role was to compile
all
pre-approved and rejected applications and hand them to the relevant
manager indicating which were pre-approved and which were
rejected.
The respondent was instructed to contact Makhooa to obtain
information about the full scope of work. The respondent was
also
obliged to provide Makhooa with an estimate of hours to be worked and
its costs associated with such work. Its performance
was subject to
monthly monitoring, the results of which were to have been
communicated to Makhooa.
[6] On
15 June 2023 the respondent rendered two invoices to the
municipality, for R1 587 327.75 and
R384 330.00
respectively, totalling an amount of R1 971 657.75. This
latter amount is the subject matter of the
preservation order that
was granted on 21 August 2023. A payment requisition was signed on 27
June 2023, by the Acting Chief Financial
Officer (ACFO), approving
payment of the amount of R1 971 657.75 to “
Maine
Management and CA Inc”
, for “
Indigent
Verifications Vol 12 15 May to 15 June 2023”
The ACFO
certified “
I hereby certify: (1) That the allocations above
are correct; (2) the prices are reasonable or according to contract;
(3) The estimated
provision is sufficient to meet the requested
payment; and (4) That the necessary authority for the payment has
been obtained”
. The payment requisition also
indicates that Makhooa requested the payment, and bears a signature,
certifying as follows:
“
I hereby certify that the
abovementioned amount is due to the payee specified and that all
goods/services have been rendered”
.
[7] On
7 August 2023, the municipal official responsible for capturing
municipal payments brought the payment
requisition to Makhooa’s
attention. The latter denied any knowledge of the payment
requisition, that she had made such a
request, or that she had signed
the document. She denied that the signature on the document was hers.
The respondent confirms that
such payment was made into its bank
account, which fact was verified, during the investigation of this
matter, by Christian Sebue
Ralekoa, a senior analyst employed by the
Financial Intelligence Centre. He found that the said amount was
transferred from a Nedbank
Account held by the Municipality to the
respondent’s bank account held at FNB, under the account number
I mentioned earlier.
[8]
Ralekoa established further that on 8 August 2023, the amount of
R1 971 657.75 was credited to the
respondent’s bank
account, and that the day before, on 7 August 2023, there was a
negative balance in the amount of R327
968.62 in the respondent’s
bank account. On the same day that its account was credited with the
abovementioned amount, three
debit transactions totalling R85 440.24
and 39 transfers into the names of various individuals in the amount
of R316 081.33
were made, leaving the account with a positive
balance of R2 946 973.06. The latter amount included an
overdraft facility
of R1 400 000.00. Ralekoa indicated that
were no further credit transactions on the respondent’s account
after
receipt of the amount from the municipality.
[9] The
proceedings under case number 4647/2023 arise from the same tender
and contract mentioned in respect of
case 4395/2023. The same
procedures for submission and verification of Indigent Applications,
as I have set out earlier, were also
applicable in this matter. On
17 August 2023, Makhooa had access to a requisition cheque in the
amount of R2 215 084.00.
She requested further
documentation to determine what the payment was for and received two
invoices that were issued by the respondent
totalling the amount I
mentioned, for the period 1 May to 15 May 2023. The requisition was
very similar to the one I described
earlier. In the space for person
requesting the payment, was indicated Makhooa’s name, which was
struck out and above it
was written the name BL Moiloa (Moiloa),
purporting to be the finance manager, which she apparently was not.
Investigations revealed
that Moiloa was employed by the municipality
as a Data Analyst manager. At the time the application was issued,
she was acting
in the position of General Manager Revenue, and was
not authorised to sign requisitions for payment. The requisition came
from
a cheque requisition book which was issued exclusively to
Makhooa’s department, namely the Customer Service Department,
of
which Makhooa is the Manager.
[10] Makhooa
had, a few months earlier, spoken to Molioa, expressing her concern
about invoices being issued by the
respondent without submitting
proof of work being done. Makhooa informed Moiloa that she (Makhooa)
will not sign or approve invoices
if proof of the work having been
done is not submitted. Moiloa then informed Makhooa that she (Moiloa)
will sign and approve such
invoices herself. Makhooa alleges that
from then Moila approved and signed for services allegedly rendered
by the respondent, without
Makhooa’s knowledge. She alleges
that after she refused to sign invoices without proof of work done
being submitted, the
requisition book went missing from her office
and was still not located at the time of deposing to her confirmatory
affidavit in
the application under case number 4647/2023.
[11] This in
essence, was the information before the two judges who granted the
preservation orders on 21 August 2023
and 5 September 2023
respectively. In the applications for reconsideration in both
matters, the respondent denies that it was involved
in any fraud or
unlawful activities in respect of the work it rendered in terms of
the tender awarded to it. The respondent alleges
that it is a
reputable company registered in South Africa and provides assurance
and advisory services to clients in the private
and public sectors.
It has offices in various provinces of South Africa. The property
which is the subject matter of the two applications
for preservation
orders are not proceeds of unlawful activities or fraud, forgery
and/or uttering. There was, therefore, no need
for the preservation
orders to be granted.
[12]
The parties agreed that the respondent would furnish the NDPP with
information to show that the services, for which it
issued invoices
to the municipality, were rendered. To this end, the respondent
compiled extensive spreadsheets with information
of all the work it
alleges it has undertaken in terms of the tender for verification of
Indigent Applications. By the time the
application for
reconsideration in case 4647/2023 was issued, the respondent had not
finalised the collection and compilation of
the outstanding
information. Correspondence was addressed to the NDPP by the
respondent’s legal representatives indicating
that in the event
that the applicant could furnish the NDPP with the information they
required, there would be no basis for the
preservation orders. The
NDPP holds a different view.
[13]
In its Reply to the Reconsideration Application, the NDPP dealt with
issues relevant to both applications. With
regard to the furnishing
of the information by the respondent representing work the respondent
alleges it has done, the NDPP admits
that the spreadsheets were
furnished to it, but denies that these prove that the respondent did
the work for which it issued invoices.
The NDDP elaborates that the
invoices relevant to both applications list the number of recommended
and rejected applications, without
attaching any of the applications
and supporting documents which were specified in the indigent policy,
namely the prescribed application
form accompanied by the latest
municipal account, proof of identity, proof of household income and 3
-months’ bank statements.
The respondent also did not furnish
proof that these applications were submitted to Makhooa, as it was
required to do.
[14]
The NDPP further alleges that the item descriptions and dates on the
invoices relevant to the property under
case number 4647/2023 do not
match the information contained in Annexure A in respect of
recommended and rejected applications.
The NDPP also asserts that it
is not clear what Annexure A purports to be, as it does not reflect
the names of the indigent applicants.
The respondent invoiced for
5048 recommended applications, yet Annexure A contains a list of only
4530 file names, without any
explanation from the respondent for this
discrepancy. The NDPP argues that the respondent relies on Annexure A
to prove that it
has rendered the services for which it was paid, and
therefore bears an evidentiary burden to explain how Annexure A
correlates
with the invoices it issued.
[15] I
pause to note that the parties filed further affidavits without
seeking the leave of the court to do so.
The respondent filed a
Supplementary Affidavit to explain the process it adopted to deal
with indigent applications. The
NDPP filed an affidavit in
terms of Rule 6(5)(e), in which it dealt with the additional
information furnished to it by the respondent,
purporting to be proof
of work done and attached to its affidavit a further affidavit by
Makhooa regarding the challenges in respect
of verifying the
information supplied by the respondent. The respondent then filed a
Further Supplementary Affidavit to deal with
Makhooa’s
evidence. Both parties simply flouted the Rules of Court, without
seeking condonation therefor or the leave of
the court to file such
further documents. In any event this additional information does not
appear to be intended for this court
to take into account in
reconsidering the preservation orders. Even if that was the
intention, then the proper course to place
such information before
this court has not been followed, and this court is not obliged to
consider such evidence.
[16] I
have dealt with the information that was before the two judges who
granted the two preservation orders
in this matter. The respondent
alleges that if those courts had before them the information it now
furnishes, neither of the preservation
orders would have been
granted. Uniform Rule 6(12)(c) provides that:
(
c) A
person against whom an order was granted in such person’s
absence in an urgent application may by notice set down
the matter
for reconsideration of the order.
This
subrule affords the court hearing the application for reconsideration
a wide discretion in respect of hearing additional facts
and
circumstances raised by the applicant for reconsideration.
“
The
dominant purpose of the subrule is to afford an aggrieved party a
mechanism designed to redress imbalances in, and injustices
and
oppression flowing from an order granted as a matter of urgency in
his absence. The rationale is to address the actual
or potential
prejudice because of an absence of
audi
alteram partem
when
the order was made”.
[
See
Erasmus Superior Court Practice,
RS 22, 2023, D1 Rule 6-60 and the cases
cited therein.
]
[17]
In this matter it is not in dispute that:
17.1
Makhooa was the authorised official to receive the recommended and
rejected indigent applications, which she would
process, after
verification, and submit for approval;
17.2
proof of the work done and the invoices in respect thereof were to be
submitted to her;
17.3
Makhooa was the only authorised official who could requisition
payment on the invoices issued;
17.4
Makhooa would only approve invoices and requisition payment thereon,
if proof of the work done by the respondent
was submitted with the
invoices;
17.5
proof of work done by the respondent was not submitted to Mokhooa
17.6
Mookhooa did not sign either of the requisitions relevant to the two
applications before me, nor did she have knowledge
of the two
requisitions;
17.7
both requisitions appear to have been signed by Moiloa, without any
evidence that proof of the work done by the
respondent having been
submitted to the municipality
17.8
Moiloa was not authorised to deal with indigent applications, nor was
she authorised to approve and sign requisitions
for payment in
respect of such invoices.
[18] The respondent
has not in the two applications before this court denied that the
indigent applications and invoices were
not submitted to Makhooa, and
that Moiloa was not authorised to sign the requisitions mentioned
earlier. The respondent has also
not dealt with the allegation that
Makhooa did not receive the proof of work it had done, nor is there
any indication by the respondent
that such proof was submitted at
all. This was a necessary step in the process, stipulated in the
indigent policy, of submitting
recommended and rejected applications,
as this would be the basis for making payment to the respondent.
Moiloa’s lack of
authority to approve the invoices issued by
the respondent and much less to requisition payment on those
invoices, in itself speaks
of unlawful activities, as the unlawful
and irregular requests for payment directly resulted in such payment
being made to the
respondent.
[19] In
reconsidering the matter, and taking account of all the additional
facts, circumstances and information
placed before me, it appears to
me that the NDPP has made out a case for the strong belief that the
property preserved in terms
of the preservation orders of 21 August
2023 and 5 September 2023, were indeed the proceeds of unlawful
activities. This belief
was further strengthened by Makhooa’s
evidence that she personally observed a municipal official handing to
personnel from
the respondent’s office, indigent applications
which were already approved and captured on the municipality’s
system.
She sent an email internally enquiring about this and why
this was done without her knowledge or authority. She further asserts
that that the respondent has never provided the municipality with
physical indigent applications as proof of work done in order
for
such to be verified.
[20]
I am consequently of the view that even if the additional information
that the respondent has placed before this court
were to have been in
front of the judges who granted the preservation orders, such orders
would still have been granted, as there
is
prima facie
evidence of unlawful activities, which led to the respondents being
paid the monies that are the subject of the preservation orders
[21]
In the circumstances, I make the following orders:
21.1
Case
4395/2023
The application for
Reconsideration is dismissed with costs.
21.2
Case
4647/2023
The Application for
Reconsideration is dismissed with costs
NAIDOO. J
On
behalf of the applicant:
Adv
(Ms) S Khumalo
Instructed
by:
The
State Attorney
11
th
Floor, Fedsure Building
49
Charlotte Maxeke Street
Bloemfontein
(Ref:
619/202300842P3M)
On
behalf of the respondents:
Adv
SJ Reinders
Instructed
by:
Matlho
Attorneys
2
nd
Floor Metropolitan Building
96
Henry Street
Bloemfontein
(Ref:
D Matlho)