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[2021] ZAKZPHC 1
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Thales South Africa (Pty) Ltd v National Director of Public Prosecutions N.O and Others (3957/2020) [2021] ZAKZPHC 1; [2021] 2 All SA 274 (KZP); 2021 (2) SACR 400 (KZP) (22 January 2021)
REPORTABLE
IN THE HIGH COURT
OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case No:
3957/2020
In the matter
between:
THALES
SOUTH AFRICA (PTY)
LTD
Applicant
(Registration No.
1996/006180/07)
and
THE NATIONAL
DIRECTOR OF PUBLIC
PROSECUTIONS
N.O.
First Respondent
MOKOTEDI JOSEPH
MPSHE SC IN HIS CAPACITY
AS ACTING
NATIONAL DIRECTOR OF PUBLIC
PROSECUTION
AT THE
TIME
Second Respondent
SHAUN KELVIN
ABRAHAMS IN HIS CAPACITY
AS NATIONAL
DIRECTOR OF PUBLIC
PROSECUTION
AT THE
TIME
Third Respondent
ADV WILLIAM JOHN
DOWNER SC IN HIS
CAPACITY
AS THE LEAD STATE PROSECUTOR
Fourth Respondent
ORDER
The following order
is granted:
The application is
dismissed with costs, such costs to include those consequent upon the
employment of two counsel.
JUDGMENT
Bezuidenhout AJ
(Van Zyl and Chetty JJ concurring):
Introduction
[1]
The applicant, Thales
South Africa (Pty) Ltd (‘TSA’), seeks, inter alia, an
order that the decision by the third respondent,
Mr S Abrahams,
alternatively, the second respondent, Mr M Mpshe, to authorise a
prosecution in terms of section 2(4) of the Prevention
of Organised
Crime Act 121 of 1998 (‘POCA’), against TSA on a charge
of racketeering in terms of section (2)(1)
(e)
of POCA, be declared to be inconsistent with the principle of
legality. It seeks to have the decision reviewed and set aside.
[2]
The second respondent,
Mr Mpshe, was the Acting National Director of Public Prosecutions at
the time when he signed the authorisation
as required by section 2(4)
of POCA on 14 December 2007.
[3]
The third respondent,
Mr Abrahams, was the National Director of Public Prosecutions when he
signed the second authorisation in terms
of section 2(4) of POCA on 6
June 2018.
[4]
The parties were ad
idem that the issue before the court is in essence whether the second
or third respondents (‘the NDPPs’)
rationally concluded
that there was reasonable and probable cause to believe that TSA had,
directly or indirectly or with common
purpose, participated in an
enterprise run by Mr Shabir Shaik, through a pattern of racketeering
activity, comprising the planned,
ongoing, continuous or repeated
participation or involvement in at least two Schedule 1 offences.
[5]
TSA sought the
following relief in its notice of motion:
‘
2.
Declaring the decision taken by the Third Respondent in terms of the
provisions of
Section 2(4) read with Section 1 and 2 of the
Prevention of Organised Crime Act No. 121 of 1998 (“POCA”)
on 6 June
2018 to authorise the Applicant’s prosecution on a
charge of racketeering in terms of Section 2(1)(e) read sections 1,
2(2)
and 3 of POCA (“the second authorisation”),
inconsistent with the Constitution of the Republic of South Africa,
1996
and invalid;
3.
Reviewing and setting aside the aforesaid decision taken by the Third
Respondent
on 18 June 2018;
4.
And, in the event that the above Honourable Court finds that the
authorisation
dated 14 December 2007 (“the first
authorisation”), is valid an order in terms of prayer 2 above
as well as an order
declaring the decision taken by the Second
Respondent in terms of the provisions of Section 2(4) read with
Section 1 and 2 of the
Prevention of Organised Crime Act No. 121 of
1998 (“POCA”) on 14 December 2007 to authorise the
Applicant’s prosecution
on a charge of racketeering in terms of
Section 2(1)(e) read sections 1, 2(2) and 3 of POCA, inconsistent
with the Constitution
of the Republic of South Africa, 1996 and
invalid;
5.
Reviewing and setting aside the decision taken by the Third
Respondent on 6 June
2018 and the decision taken by the Second
Respondent on 14 December 2007;
6.
Declaring the decision taken by the First and/or Second and/or Third
and/or Fourth
Respondent to charge the Applicant pursuant to the
authorisation in prayer 2 and/or prayer 4 on a racketeering charge in
count
1 of the Indictment in case number CCD30/2018 in the High Court
the KwaZulu Natal held at Pietermaritzburg to be inconsistent with
the Constitution of the Republic of South Africa 1996 and invalid;
7.
Reviewing and setting aside the decision taken by the First and/or
Second and/or
Third and/or Fourth Respondent to charge the Applicant
pursuant to the authorisation in prayer 2 and/or prayer 4 on a
racketeering
charge in count 1 of the Indictment in case number
CCD30/2018 in the High Court the KwaZulu Natal held at
Pietermaritzburg;
8.
Ordering the Respondents who oppose this application to pay the
Applicant’s
costs of suit jointly and severally, which costs
are to include the costs consequent upon the employment of two
counsel;
. . .’
Chronology
[6]
On 2 June 2005, Mr
Shaik and a number of corporate entities were convicted in the Durban
and Coast Local Division of, inter alia,
contraventions of the
Corruption Act 94 of 1992 and POCA. The judgment delivered by Squires
J, reported as
S v
Shaik and others
2007 (1) SACR 142
(D), deals with the evidence presented by the State
as well as the analysis thereof in detail. The matter subsequently
came before
the Supreme Court of Appeal, reported as
S
v Shaik and others
[2006] ZASCA 105
;
2007 (1) SA 240
(SCA) where the convictions appealed against, were
upheld. The matter then came before the Constitutional Court,
reported as
S v
Shaik and others
[2007] ZACC 19
;
2008
(2) SA 208
(CC) where, inter alia
,
the application for
leave to appeal against the criminal convictions and sentences was
dismissed.
[7]
Shortly after Mr
Shaik’s conviction and on 16 June 2005, the fourth respondent,
Mr Downer SC, and Mr A Steynberg, the Deputy
Director of Public
Prosecutions, KwaZulu-Natal, addressed a memorandum to the National
Director of Public Prosecutions at the time,
Mr V Pikoli, on the
prospects of a successful prosecution against Mr J Zuma.
[8]
On 4 July 2005, the
fourth respondent and Mr Steynberg addressed a further memorandum to
Mr Pikoli to deal with the possibility
of prosecuting TSA and Thint
(Pty) Limited (‘Thint’), a subsidiary of TSA, which was
initially charged as an accused
with Mr Shaik and other corporate
entities.
[9]
On 4 November 2005 both
TSA and Thint were summoned to appear with Mr Zuma. Their trial was
scheduled to commence on 31 July 2006
in the Pietermaritzburg High
Court.
[10]
Various applications
were launched which are irrelevant to the current proceedings. Of
significance however are the proceedings
on 20 September 2006, at
which Msimang JP refused an application by the State to postpone the
trial and the matter was struck off
the roll.
[11]
On 13 November 2007 the
prosecution team submitted a formal application in terms of section
2(4) of POCA to the second respondent,
as it now wanted to include
for the first time a racketeering charge in terms of section 2(1)
(e)
of POCA in the indictment against Mr Zuma, TSA and Thint.
[12]
On 14 December 2007,
the second respondent signed the authorisation in terms of section
2(4) of POCA for the inclusion in the indictment
of a charge of
contravening section 2(1)
(e)
of POCA against Mr Zuma, TSA and Thint.
[13]
On 28 December 2007 a
new indictment was served on TSA, Thint and Mr Zuma. Mr Zuma brought
an application in the Pietermaritzburg
High Court, seeking to review
and set aside the decision to recharge him on the ground that he was
not given a prior hearing. On
12 September 2008, Nicholson J upheld
Mr Zuma’s application for judicial review. The decision was
subsequently set aside
by the Supreme Court of Appeal on 12 January
2009.
[14]
Mr Zuma thereafter made
representations to the second respondent who accepted the
representations, and on 6 April 2009 decided to
withdraw the charges
against Mr Zuma, TSA and Thint. The charges were formally withdrawn
in court on 7 April 2009.
[15]
On the same day, the
Democratic Alliance brought an application for a judicial review of
the second respondent’s decision
to withdraw the charges
against Mr Zuma. It culminated in the Supreme Court of Appeal on 13
October 2017 upholding a decision by
the Pretoria High Court,
reviewing and setting aside the second respondent’s decision to
withdraw the charges against Mr
Zuma, on the basis that it was
unlawful and irrational.
[16]
Despite receiving
representations from Mr Zuma, the third respondent announced his
decision to proceed with the prosecution against
Mr Zuma and TSA,
accused no 1 and accused no 2 respectively. Thint no longer featured
as it had been deregistered.
[17]
On 24 May 2018, the
prosecution team requested the third respondent to sign a ‘fresh’
authorisation in terms of section
2(4) of POCA, as the original
authorisation signed by the second respondent could not be located,
and Thint was no longer an accused,
due to it having been
deregistered. On 6 June 2018, the third respondent signed the current
authorisation for Mr Zuma and TSA to
be tried on a charge of
contravening section 2(1)
(e)
of POCA. The charges against TSA as set out in the indictment were
briefly:
(a)
One count of racketeering in contravention of section 2(1)
(e)
read
with sections 1, 2(2) and 3 of POCA as amended: whilst employed by or
associated with any enterprise, conducts or participates
in the
conduct, directly or indirectly of such enterprise’s affairs
through a pattern of racketeering activities (count 1).
This count
related to TSA’s conduct or participation in conduct, directly
or indirectly in the affairs of the enterprise
through a pattern of
racketeering between 25 October 1995 and 1 July 2005, which involved
the participation or involvement in the
predicate offences set out in
racketeering acts 1 – 1582 and/or included in the commission of
two or more predicate offences.
(b)
One count of corruption in contravention of section 1(1)
(a)
read with section 1(2) and 3 of the Corruption Act with two sub
counts as alternatives (count 3). This count related to TSA, acting
in concert with Mr Shaik, unlawfully and corruptly giving services or
benefits between 25 October 1995 and 1 July 2005 as set out
in a
schedule, which were not legally due to Mr Zuma, with the intention
to influence him to commit any act in relation to his
powers and/or
duties to further the interests of Mr Shaik and/or TSA.
(c)
One count of corruption in contravention of section 1(1)
(a)
read with section 3 of the Corruption Act (count 5). This related to
the period between 30 September 1999 and 2001, and involved
TSA
corruptly agreeing to or offering to give Mr Zuma annual benefits
(R500 000 per annum until certain dividends became payable)
with
the intention to influence him to further the interests of TSA, Mr
Shaik and the Nkobi Group.
(d)
One count of money laundering in contravention of section 4, read
with sections 1 and 8
of POCA (count 6). This count related to TSA
and various other parties entering into a so-called service provider
agreement between
30 September 1999 and 2001 which had the effect of
concealing or disguising the nature, source, location, disposition of
property.
[18]
Both Mr Zuma and TSA
brought applications for a permanent stay of their prosecutions.
TSA’s application included constitutional
relief as well as a
review of the third respondent’s decision to charge it together
with Mr Zuma. The applications were heard
by a Full Court of the
Pietermaritzburg High Court, which dismissed both applications. The
judgment was handed down on 11 October
2019 and is reported as
S
v Zuma and another; Thales South Africa (Pty) Limited v KwaZulu-Natal
Director of Public Prosecutions and others
[2019]
ZAKZPHC 76.
[19]
Applications for leave
to appeal were dismissed by the Full Court as well as the Supreme
Court of Appeal. Applications to the Constitutional
Court were
launched but not proceeded with.
Present
application
[20]
The present application
was launched on 26 June 2020. Mr J Ripley-Evans, the attorney of TSA
deposed to the founding affidavit on
behalf of TSA.
[21]
According to him, TSA’s
current attorneys of record, who were appointed as such in October
2019, received the police docket,
consisting of ‘hundreds of
thousands of pages’ in addition to a forensic report with its
annexures which exceeded ‘tens
of thousands of pages’
.
[22]
TSA’s legal team
commenced perusing the documents, and discovered what appeared to be
the prosecution’s application
to the second respondent,
requesting an authorisation to charge TSA with racketeering offences.
It apparently consisted of a memorandum
dated 30 November 2017 with a
draft indictment annexed to it, a memorandum relevant to Mr Zuma and
Thint (now TSA) and a separate
memorandum on TSA. It also appeared
from the documents that the aforementioned authorisation was granted
on 14 December 2007.
[23]
According to Mr
Ripley-Evans, it became clear upon perusing the application, that it
did not disclose evidence upon which the second
respondent could have
concluded that there was reasonable and probable cause to believe
that TSA had committed a racketeering offence
in order to justify the
granting of the first authorisation. The second respondent’s
decision accordingly violated the principles
of legality.
[24]
TSA’s legal
representatives entered into correspondence with the prosecution
team, and it subsequently became clear that the
application for the
first authorisation initially identified by TSA’s
representatives was not the complete application. It
was also
disclosed by the prosecution that there was an application for a new
authorisation which was issued by the third respondent
on 6 June
2018, in order to replace the ‘missing’ first
authorisation.
[25]
TSA was supplied with a
copy of the second application; however it remained of the view that
no reasonable and probable cause existed
to implicate it in the
racketeering activities which justified the authorisation granted by
the second and third respondents.
[26]
The present application
was brought and has been opposed by the first, third and fourth
respondents (‘the respondents’).
The second respondent
has filed no papers and failed to co-operate with the respondents’
legal representatives.
[27]
The respondents have
filed under separate cover the records of the proceedings in relation
to the authorisations issued on 14 December
2007 and 6 June 2018
respectively, as required by rule 53(1)
(b)
of the Uniform Rules of Court, the contents of which will be dealt
with herein below.
[28]
Both sides have filed
comprehensive affidavits, totalling close to 1700 pages, including
annexures, and have also submitted comprehensive
heads of argument,
for which I thank counsel involved.
Applicant’s
case
[29]
It is the applicant’s
case that the principle of legality applies to section 2(4) of POCA.
This section reads as follows:
‘A person shall only be charged
with committing an offence contemplated in subsection (1) if a
prosecution is authorised
in writing by the National Director’.
TSA contends that the authorisations have failed the test of
legality.
[30]
In
Booysen
v Acting National Director of Public Prosecutions and others
2014
(2) SACR 556
(KZD), Gorven J dealt with the legal framework governing
applications of this nature and in particular with the principle of
legality.
The following was said at paras 14-15 (footnotes omitted):
‘
[14]
The principle of legality is an aspect of the rule of
law. In
Fedsure
it
was said that the principle of legality expresses the fundamental
idea that “the exercise of public power is only
legitimate
where lawful”. It is clear that the NDPP exercised a
public power in arriving at the impugned decisions.
The impugned
decisions are therefore subject to the scrutiny of the court based on
the principle of legality. This begs the question
as to the
content of the principle of legality in the context of the impugned
decisions. The detailed content of the principle
of legality must be
worked out from the Constitution as a whole. This is an ongoing,
incremental process which has been addressed
by the Constitutional
Court in a series of cases involving non-administrative action. Sachs
J in a minority judgment in
Minister
of Health and Another NO v New Clicks South Africa (Pty) Ltd and
Others (Treatment Action Campaign and Another as Amici
Curiae)
described
the principle of legality as “an evolving concept in our
jurisprudence, whose full creative potential will be developed
in a
context-driven and incremental manner”.
[15] In
turn, the principle of legality requires that the exercise of public
power “must be rationally related to the purpose
for which the
power was given”. This is the rationality test. It has
been held that rationality is a minimum requirement
applicable to the
exercise of all public power. “Decisions must be
rationally related to the purpose for which the power
is given,
otherwise they are in effect arbitrary and inconsistent with this
requirement.” A rational connection means
that —
“
objectively
viewed, a link is required between the means adopted by the [person
exercising the power] and the end sought to be achieved”.
The test is
therefore twofold:
“
Firstly,
the [decision-maker] must act within the law and in a manner
consistent with the Constitution. He or she therefore must
not
misconstrue the power conferred. Secondly, the decision must be
rationally related to the purpose for which the power was conferred.
If not, the exercise of the power would, in effect, be arbitrary
and at odds with the rule of law.”’
[31]
Gorven J also referred
to the decision of
Bato
Star Fishing (Pty) Limited v Minister of Environmental Affairs and
Tourism and others
[2004] ZACC 15
;
2004
(4) SA 490
(CC),where it was held at para 46 that (footnotes
omitted):
‘
the
need for Courts to treat decision-makers with appropriate deference
or respect flows not from judicial courtesy or etiquette
but from
the fundamental constitutional principle of the separation of
powers itself.
’
[32]
Gorven J proceeded to
consider the merits of the matter, and dealt quite extensively with
what was said by the NDPP in her affidavit,
and came to the
conclusion that the documents relied on by the NDPP did not provide a
rational basis for the decisions to sign
the authorisations in terms
of section 4(2) of POCA. Although the outcome was based purely on the
facts of that matter, the following
useful comments were made at para
38:
‘
As
mentioned, there is reference to documents in correspondence and the
NDPP states that she will not detail all the information
placed
before her prior to her making the first impugned decision. Had she
outlined even in basic terms what these documents
and
information comprised, said that she had relied on them and shown
that they had included information linking Mr Booysen to
the offences
in question, this application might not have seen the light of day.
The “rhyme or reason” test for rationality
might have
been satisfied. The level of disclosure of the NDPP for offences of
this nature cannot be such as to prejudice the state
in its conduct
of a future trial. In my view it will therefore not require an
exacting, still less an exhaustive, level of
disclosure.
De
Vries
found
that the consideration of a request for authorisation “forwarded
to the NDPP under cover of a letter summarising
the form and content
of the charge-sheet, setting out a detailed background to the charges
and summarising the evidence”
was sufficient. It is certainly
not necessary to disclose every detail of the state's case, strategy
or evidence where this is
not subject to the criminal discovery
process. In the light of the provisions of POCA, it is also not
necessary to have before
her sworn statements from witnesses on which
the state intends to rely. I expressly refrain, however, from making
a positive finding
as to the level of disclosure necessary in
meeting an application such as the present one, or the detail
required. This can
only be assessed on a case by case basis.’
The reference to
De
Vries
is the matter of
S v De Vries and others
2008 (4) SA
441
(C) paras 26-28.
[33]
In his concise heads of
argument, counsel for TSA, Mr Roux SC submitted that in order to
determine probable cause, the NDPPs at
the very least had to consider
the draft indictment, as well as the prosecutor’s memoranda in
the context of a summary of
the available identified evidence in
order to satisfy themselves that:
(a)
What was alleged in the draft indictment and the memoranda was
substantiated by available
and acceptable evidence; and
(b)
The allegations met the requirements of participation forming the
basis of the alleged contravention
of section 2(1)
(e)
of POCA.
[34]
It was further
submitted that no summary of the evidence was placed before the
NDPPs, and that the prosecution simply alleged that
there was
sufficient evidence to show that TSA was aware of the payments
without reference to the available evidence (which Mr
Ripley-Evans
contended in the founding affidavit does not exist).
[35]
It was also submitted
that where the prosecution seeks to rely in the alternative on
racketeering acts 1569 (the alleged corruption
agreement) and 1570
(the alleged payment in terms of the corrupt agreement –
alleged to be money laundering) to create the
two required Schedule 1
offences referred to in POCA, they are actually only one offence.
[36]
It was furthermore
submitted that the payment was not from the proceeds of crime and
could therefore not be money laundering.
The
State’s case
[37]
In their short heads,
counsels for the State submitted that the prosecutors’
memoranda to the NDPPs, read with the documents
accompanying them, as
well as the judgments of the High Court, the Supreme Court of Appeal
and the Constitutional Court in the
successful criminal prosecution
of Mr Shaik and his Nkobi group of companies, referred to the
evidence available to the State.
Such evidence showed that there was
reasonable and probable cause to believe that:
(a)
The TSA officials
controlling TSA were aware that Mr Shaik and his companies were
making corrupt payments to or for the benefit
of Mr Zuma;
(b)
Between October 1999
and March 2000, the TSA officials controlling TSA and Mr Shaik
engaged in the planning and conclusion of an
illegal agreement
between the Thales Group and Mr Zuma. In terms of this agreement, Mr
Zuma would, in exchange for an annual payment
of R500 000 until
certain dividends became payable, protect the Thales Group against an
ongoing investigation into corruption,
and also promote the interests
of the Thales Group in South Africa; and
(c)
During early 2001, the
officials of the Thales Group controlling TSA, and Mr Shaik, caused a
false service provider agreement to
be concluded between Thales
International Africa Limited (Mauritius) and Kobifin (Pty) Limited,
with the aim of concealing the
payment of the annual bribes by the
Thales Group to Mr Zuma pursuant to the illegal agreement concluded
in March 2000. In February
2001, pursuant to the alleged false
service provider agreement, R250 000 was paid by the Thales Group to
Kobitech (Pty) Limited
and then on-paid to the Development Africa
Trust – to which Mr Zuma owed money.
[38]
It was also submitted
that the conclusion of the annual bribe agreement in March 2000, on
the one hand, and the conclusion of the
false service provider
agreement in early 2001 and the payment of the R250 000 pursuant
thereto, on the other hand, constituted
separate offences. The first
being corruption in contravention of section 1(1)
(a)
read with sections 1(2) and 3 of the Corruption Act (as set out in
count 5) and the second being money laundering in contravention
of
section 4, read with sections 1 and 8 of POCA (as set out in count
6).
[39]
It was further
submitted that the prosecution did not seek the authorisation to
prosecute Thales on the charge of racketeering for
an improper
purpose (as alleged by TSA in its founding affidavit).
[40]
A few days before the
hearing, we were provided with the State’s ‘Note for
hearing’ drafted by the first and fourth
respondents’
lead counsel, Mr Trengrove SC. At the hearing of the matter before
us, TSA’s counsel indicated that he
would present argument
based on the State’s note for hearing only, which he duly did.
I will deal with this more fully herein
below.
Reasonable
and probable cause
Documents
provided to NDPPs
[41]
It is of course
necessary to firstly scrutinize and consider what exactly was placed
in front of the NDPPs in order to be able to
gauge objectively
whether there was sufficient evidence before them on which they could
rationally conclude that reasonable and
probable cause existed that
TSA had committed the alleged racketeering acts it is being charged
with.
[42]
From the record of the
so-called 2007 authorisation, it appears that the following documents
were placed before the second respondent:
(a)
Various judgments which
comprised the following:
(i)
S v Shaik and others
2007 (1) SACR 142
(D);
(ii)
S v Shaik and others
[2006] ZASCA 105
;
2007 (1) SA 240
(SCA) (Criminal Appeal);
(iii)
Shaik and others v S
[2006] ZASCA 106
;
[2007] 2 All SA 150
(SCA) (Civil Appeal);
(iv)
S v Shaik and others
[2007] ZACC 19
;
2008 (2) SA 208
(CC);
(v)
National Director of
Public Prosecutions and others v Zuma and another
2008
(1) SACR 298
(SCA); and
(vi)
Thint (Pty) Limited
v National Director of Public Prosecutions and others
[2008]
1 All SA 229
(SCA).
(b)
A report on the
prospects of a successful prosecution of Mr Jacob Zuma dated 16 June
2005, comprising 88 pages:
(i)
The introduction inter alia contains references to the investigation,
which
assumed large proportions, requiring documents in excess of 50
000 pages to be perused. It also refers to business records,
financial
statements, correspondence and bank records having been
obtained in respect of the Nkobi group of companies, Mr Shaik and
various
entities within the Thomson/Thales Group, both in South
Africa, France and Mauritius.
(ii)
Under the heading ‘Evidence’ mention is made of the fact
that:
‘
Much,
although by no means all, of the evidence is circumstantial in
nature”. It also states that: “Since much of what
follows
has now become notoriously familiar in light of the evidence
presented at the Shaik trial and summarised in the judgment
thereto,
the reader who is familiar with such evidence may wish to skim
through the next section.’
The evidence is then
dealt with under various headings over the next 69 pages, and
includes references to inter alia TSA’s
correspondence which
indicates that it was urgently seeking influence in South African
government circles, minutes of meetings
and of course the so-called
encrypted fax.
(iii)
It concludes, inter alia
,
with a recommendation that although
the possibility of adding Thomson as an accused had been considered,
it had been discounted
due to ‘practical difficulties and
misjoinder issues’
.
(iv)
It was recommended that the Shaik judgment and ‘the evidence in
respect of the second
corruption charge’ be referred to the
French authorities with a view to prosecute the Thomson/Thales
entities and personalities
in France, in accordance with ‘French
extra-territorial corruption provisions’.
(c)
A report dated 4 July
2005 on the legality of charging Thint (the former accused no 3) and
whether it should be added to the prosecution
of Mr Zuma:
(i)
It expressed the view that the National Prosecuting Authority would
be at liberty
to regard a previous agreement not to charge Thint as
being of no force and effect.
(ii)
Mention was also made of the fact that TSA was never charged, and
that there was
no agreement not to prosecute it. Mention was inter
alia made of the fact that Mr Shaik was at all times a director of
Thint, and
that ‘documents seized from Shaik’s premises
will arguably be admissible against Thint (Pty) Limited in terms of
section
332(3) and (4) of Act 51 of 1977’.
(iii)
It concluded that it was tactically and legally advisable to add
Thint ‘Holdings
and Pty’ as co-accused to Mr Zuma’s
prosecution.
(d)
A memorandum on the
motivation for deciding to prosecute Thint Holdings (Pty) Limited and
Thint (Pty) Limited dated 13 October 2005:
(i)
It appears from this short memorandum that despite the
recommendations in the
report dated 4 July 2005, the then NDPP
decided to hold over the decision pending developments. Reference was
made to additional
motivation appearing from an affidavit by SSI du
Plooy.
(ii)
It is again recommended that the two Thint entities be indicted
immediately on the
two charges of corruption as previously detailed.
(e)
An extension of an
investigation in terms of section 28(1)
(c)
of the National Prosecuting Authority Act 32 of 1998 (‘the ‘NPA
Act’) dated 1 December 2006. In terms of this
document, the
investigation was extended to include the offences of racketeering in
contravention of section 2 of POCA, and money
laundering in
contravention of sections 4, 5 and 6 of POCA against Mr Zuma, Thint
Holdings (TSA) and Thint (Pty) Limited.
(f)
A report on the
investigation in terms of section 33 of the NPA Act, Project
Bumiputera, dated 8 October 2007:
(i)
It dealt with various issues which included the refusal of the
State’s
application for an adjournment, and subsequent
developments such as the dismissal of Mr Shaik’s appeals in
both the Supreme
Court of Appeal and the Constitutional Court.
(ii)
With reference to the Supreme Court of Appeal judgment it stated
that:
‘
without
entering into a detailed analysis of the judgment, suffice it to say
that every aspect of the State case was confirmed,
including issues
of law, facts, credibility and admissibility. One issue that bears
mentioning is that the legal basis for the
admissibility of the
so-called encrypted fax would also render it admissible against Zuma
and the Thint companies.’
(iii)
It also dealt with various issues regarding documents from Mauritius
and the United Kingdom,
as well as search warrant appeals which
appeared to be ‘the only real obstacle to the decision on
whether to recharge’.
(g)
The application to the
Acting NDPP, the second respondent, for the institution of a
prosecution in terms of Chapter 2 of POCA in
the
State
v JG Zuma and Others,
dated
13 November 2017:
(i)
Attached to the application as annexures were the indictment, the
report dated
16 June 2005, the report dated 4 July 2005, the Supreme
Court of Appeal judgments in the matters of
NDPP v Zuma, supra
and
Thint (Pty) Limited v NDPP, supra
(which dealt with the search
warrant appeals and the request for documents in Mauritius).
(ii)
In the introduction, mention was made of the appeal regarding the
Thint search, and
that the judgment was regarded as ‘being
overwhelmingly in favour of the State.’ A view was expressed
that a prosecution
in terms of section 2(1) of POCA ‘provides
the best solution to the unique challenges which face the State in
this matter.
Furthermore, we believe that a racketeering prosecution
best suits the merits of the matter.’
(iii)
Under the heading ‘Summary of the Case and Synopsis of the
Evidence’, reference
was made to the two earlier reports dated
16 June 2005 and 4 July 2005 which were attached as annexures. It was
stated that the
State’s evidence had been ‘thoroughly
tested in the Shaik case and found to be credible and reliable’
and that
‘we are of the view that the evidence will prove
equally satisfactory in the present matter’.
(iv)
The application also contained a heading ‘The Racketeering
Prosecution Theory and
Legal Discussion’, one of the two
sections in the application that drew a lot of criticism from TSA’s
counsel in argument
before the court and of course in the application
papers.
(v)
Reference is made to the indictment and specifically to the preamble
from which the
prosecution theory appears. The racketeering
‘enterprise’ for the purpose of the prosecution is
defined as the corporate
entity Nkobi Investments (Pty) Limited,
which was the operating company through which Mr Shaik ran his Nkobi
group of companies
(two of which were convicted of money laundering
in the Shaik prosecution).
(vi)
Reference was made to the pattern of racketeering activities set out
in the indictment
which comprised of, firstly, the ongoing and
corrupt payments of benefits to and on behalf of Mr Zuma as set out
in a schedule.
It was alleged ‘that the Thint Companies were
socii criminis
and hence also liable for these acts of
racketeering’. Secondly, the specific corrupt agreement set out
in the encrypted
fax formed another discreet racketeering act to
which all accused were party to. Thirdly, and finally, it was alleged
that the
Thint Companies were
socii criminis
in respect of the
money laundering scheme devised between the enterprise and Mr Alain
Thetard to disguise payments pursuant to
the specific corruption as
proceeds of a ‘service provider agreement’. It was also
stated that the Thint Companies
were ‘associated with the
enterprise as joint venture parties in ADS and Prodiba projects as
well as their alleged complicity
in the bribery of Zuma’.
(vii)
The second section that came under attack from TSA was what was
contained under the heading
‘The Benefits of a Racketeering
Prosecution.’ It dealt with the potential misjoinder between Mr
Zuma and Thint and
stated that:
‘
the
evidence of Thint’s involvement in the general corruption count
is open to more than one interpretation . . . They will
no doubt
argue that there is no acceptable evidence upon which the State can
charge them on this count and that it has done so
merely in an effort
to avoid a misjoinder, which would amount to an abuse of process.’
(viii)
The view was however expressed that there was sufficient evidence to
support the allegation that
Thint was aware of Mr Shaik’s
payments to Mr Zuma (this issue was pertinently addressed in the
State’s Note for hearing
and in argument and will be addressed
herein below). Caution was however expressed that this remained one
of the weakest aspects
of the case, as ‘it relies predominantly
from inferences rather than direct evidence’ and was vulnerable
to criticism.
(ix)
The evidential benefits were discussed with specific reference to
section 2(2) of POCA
which allows for the admission of hearsay
evidence and similar fact evidence. It is this aspect, TSA alleged,
that points to an
improper purpose for seeking the racketeering
prosecution.
(x)
The application concluded with a recommendation that the Acting NDPP
authorise a prosecution
in terms of Chapter 2 as per the attached
indictment.
(h)
The application to the
Acting NDPP for the centralisation of charges in terms of section 111
of
Criminal Procedure Act 51 of 1977
in the
State
v JG Zuma and others
dated
20 November 2007, to which was attached the memorandum (application)
dated 13 November 2007, the draft indictment, the draft
summary of
substantial facts, the draft list of witnesses, and a draft
section
2(4)
certificate for racketeering authorisation.
(i)
A report on the
investigation in terms of section 33 of the NPA Act, Project
Bumiputera, dated 3 December 2007, which provided an
update on issues
such as the search warrant appeals, confirming that the investigation
was all but complete as well as an explanation
for the additional
charges brought against Mr Zuma and the Thint Companies as opposed to
what Mr Shaik was charged with. Attached
to it was a copy of the
indictment.
(j)
An internal memorandum
regarding the delay of the announcement of the decision to charge Mr
Zuma and Thint dated 6 December 2007.
(k)
The authorisation in
terms of section 2(4) of POCA, signed on 14 December 2007. Although a
signed copy is enclosed in the papers,
it is assumed that initially
an unsigned draft copy would have been placed before the second
respondent.
(l)
The final indictment.
[43]
From the record of the
2018 authorisation, it appears that the following documents were
placed before the third respondent:
(a)
The two judgments delivered in the Gauteng High Court and the Supreme
Court of Appeal respectively,
namely:
(i)
Democratic Alliance v Acting National Director of Public
Prosecutions and others
2016 (2) SACR 1
(GP); and
(ii)
Zuma v Democratic Alliance and others
2018 (1) SA 200
(SCA).
(b)
A prosecution memorandum regarding Mr GJ Zuma and Thint dated 12
January 2018:
(i)
The history of the matter as well as the outcome of the most recent
litigation,
which required that Mr Zuma should face the charges in
the indictment, was discussed.
(ii)
The previous memoranda were attached to the report, including the
report dated 16
June 2005, the report dated 4 July 2005 and the
application dated 13 November 2007.
(iii)
The issue of Mr Zuma’s representations was also dealt with in
detail.
(iv)
It also contained a discussion of the evidence still available,
reporting that ‘with
some insignificant exceptions and
qualifications’, the State witnesses have been traced and were
available in principle to
testify.
(v)
The documents also remained available, and in particular
‘
the
mainstay of the corruption charges, for instance, being Shaik’s
783 payments to Zuma, are incontrovertibly proved by the
various bank
statements and other pieces of documentary evidence that are immune
to the ravages of time’.
(vi)
It was recommended that the prosecution against Mr Zuma and Thint be
enrolled immediately.
(c)
Correspondence between Mr Driman and Advocate Noko regarding the
instructions from
the Thales Group to make representations dated 3 to
8 February 2018, as well as correspondence between Mr Driman and the
NDPP’s
office requesting an opportunity to make
representations, and the refusal of such requests by the NDPP dated
14 February 2018.
(d)
A prosecution memorandum which contained the prosecution team’s
response to the representations
received from Mr Zuma and his legal
team dated 23 February 2018.
(i)
It comprised 52 pages and attached to it was a chronology of material
facts,
drafted by Mr Zuma’s representatives and a copy of the
indictment.
(ii)
Copies of the previous memoranda dated 16 June 2005 and 4 July 2005
were referred
to under the heading ‘Evaluation of the Evidence
against the accused’ and were also attached. It was stated that
the
prosecution team ‘aligns itself with these memoranda’.
A lot of the content of this report was a repetition of what
was
contained in previous reports.
(iii)
It was recommended that the representations should not be acceded to
and that the prosecution
be reinstated.
(e)
The media announcement regarding the representations by Mr Zuma,
dated 16 March 2018, in
terms of which it was announced that the
representations were unsuccessful.
(f)
A memorandum dated 24 May 2018 from the prosecution team to Advocate
Noko, DPP KZN,
requesting the NDPP to sign a new section 2(4)
certificate as the old signed one could not be found:
(i)
A new certificate was also necessary to incorporate certain formal
changes,
as the name of accused no 2, Thint Holdings South Africa
(Pty) Limited had been changed to Thales South Africa (Pty) Limited
and
accused no 3, Thint (Pty) Limited, had been deregistered.
(ii)
Attached to the memorandum was a copy of the 2007 application to the
Acting NDPP
dated 13 November 2007.
(g)
The application to the NDPP for authorisation to prosecute the
accused for racketeering
in terms of section 2(1)
(e)
and
(f)
of POCA, dated 28 May 2018.
(h)
A memorandum dated 4 June 2018 advising the NDPP on the application
for authorisation of
a racketeering prosecution. In the memorandum
reference is made to the
Zuma v DA supra
judgment and the NDPP
is also advised on the applicable case law such as
S v De Vries,
supra
, in matters of this nature. It was recommended that the
approval be granted for the prosecution of the accused in terms of
section
2(4) of POCA.
(i)
The authorisation signed by the NDPP, the third respondent, on 6 June
2018.
As before, it is presumed that an unsigned draft copy would
have been placed before the third respondent.
(j)
A memorandum from the prosecuting team regarding representations made
on behalf
of TSA dated 28 June 2018, with a recommendation that the
representations not be acceded to.
(k)
Correspondence from the NDPP informing TSA’s legal
representatives that the
representations were unsuccessful.
[44]
One of the key
arguments advanced by TSA’s counsel was that it would not
suffice if the prosecution team placed what amounted
to mere
allegations before the NDPPs, resulting in the NDPPs relying on the
mere say-so of the prosecution. This, it was argued,
would amount to
a rubberstamping exercise. It was further submitted that at least a
summary of the facts had to be provided in
order to enable the NDPPs
to independently determine if the offences were committed.
[45]
TSA’s counsel,
accepted, for purposes of the hearing only, that there was a general
retainer between Mr Shaik, the Nkobi Companies
and Mr Zuma, and that
the so-called encrypted fax agreement constituted an agreement to
bribe. It was also accepted that the NDPPs
had read the Shaik
judgments, and would have known that Mr Shaik was not on the list of
witnesses for the State. It was submitted
in this regard that a lot
of the findings in the Shaik judgments were based on Mr Shaik’s
evidence.
[46]
As mentioned, one of
the primary reasons for bringing this application centred on the
allegations that there was no evidence amongst
thousands of pages of
discovered documents to indicate that TSA was aware of the 783
payments made to Mr Zuma.
[47]
It was stated in the
application dated 13 November 2007 to the second respondent for his
authorisation that the State would be relying
on ’predominantly’
drawing of inferences ‘rather than direct evidence’.
[48]
It was argued by the
State’s lead counsel that the question we have to decide is
whether the NDPPs had evidence before them
on which they could
rationally conclude that there was reasonable and probable cause that
TSA knew of the ongoing retainer.
History of TSA,
Mr Shaik and his companies
[49]
It is crucial to take
note and understand the history, structure and role of TSA, Mr Shaik
and his group of companies when considering
the issue of TSA’s
knowledge of the ongoing retainer. The background of the various role
players is set out in the general
preamble and the summary of
substantial facts in the indictment, and is also dealt with in the
High Court judgment in
S
v Shaik and others
2007
(1) SACR 142
(D)
,
at
149D-I and at 163C-E.
[50]
The applicant, TSA,
formed part of a group of companies, the Thomson CSF Group.
Thomson-CSF International (France) was a division
of the Thomson CSF
Group. It was headed by Mr Jean-Paul Perrier. Its name was later
changed to Thales International.
[51]
Thales International
Africa Limited (Mauritius) was a subsidiary of Thales International
and was headed by Mr Yann Leo Renaud de
Jomaron.
[52]
Thomson-CFS Holding
(Southern Africa) (Pty) Limited was incorporated in South Africa on
21 May 1996. It later changed its name to
Thint Holding (Southern
Africa) on 23 October 2003. It subsequently changed its name to
Thales South Africa (Pty) Limited which
is of course the applicant,
TSA.
[53]
At the time of TSA’s
incorporation, 85 shares were issued to Thomson-CSF (France), 10
shares were issued to Nkobi Investments
(Pty) Limited and 5 shares
were issued to Gestilac SA (Switzerland).
[54]
At various stages, the
authorised share capital of TSA was increased and transfers of shares
took place between different entities,
resulting ultimately in TSA
being wholly owned by Thomson-CSF International (France).
[55]
On 4 April 2001,
Thomson-CSF International (France), now known as Thales
International, transferred all its shares in TSA to Thales
International Africa Limited (Mauritius).
[56]
Mr Shaik was a director
of TSA from its incorporation in 1996 until 30 September 1999. Nkobi
Investments (Pty) Limited was initially
wholly owned by Mr Shaik.
[57]
Mr Alain Thetard was
appointed as a director of TSA from 1 April 1998 until 30 September
2002. Mr Pierre Jean-Marie Rober Moynot
was a director of TSA from
its incorporation until 1 April 1998. He was reappointed on 1 October
2002.
[58]
On 16 July 1996,
Thomson-CSF (Pty) Limited was incorporated in South Africa. TSA
(which was still called Thomson-CSF Holding (South
Africa) (Pty)
Limited at the time) was issued with 70 shares and Nkobi Investments
(Pty) Limited was issued with 30 shares. TSA’s
shareholding was
later increased to 75% and Nkobi Investments’ shareholding was
reduced to 25%.
[59]
Thomson-CSF (Pty)
Limited changed its name to Thint (Pty) Limited on 19 August 2003 and
later to Thales Participation South Africa
(Pty) Limited.
[60]
Mr Shaik was a director
of Thales Participation South Africa (Pty) Limited since the date of
incorporation until 16 June 2005. Mr
Thetard was appointed as a
director on 1 April 1998 and resigned on 30 January 2002. Mr Moynot
was a director since the date of
incorporation until 1 April 1998. He
was reappointed on 16 January 2004.
[61]
Thales Participation
South Africa (Pty) Limited was previously charged, and was accused no
3 in the criminal proceedings where it
has always been referred to as
Thint (Pty) Limited. It has since been deregistered, as mentioned
before, resulting in the prosecution
against it no longer proceeding.
[62]
Nkobi Investments (Pty)
Limited, mentioned hereinabove, formed part of the Nkobi group of
companies. On 20 August 1998, Nkobi Holdings
was the sole shareholder
in Nkobi Investments, which in turn wholly owned, inter alia Kobifin
(Pty) Limited and Kobitech (Pty)
Limited. Mr Shaik was at all
relevant times a director of and exercised control over all the
corporate entities in the Nkobi Group.
Discussion
[63]
It was submitted by the
State’s counsel that it was important to recognise that TSA was
not a Thomson company at arm’s
length with Mr Shaik and his
group of companies who paid bribes to Mr Zuma. TSA and its subsidiary
were set up pursuant to a shareholders’
agreement concluded
between Mr Shaik and Thomson International. In terms of this
agreement, Thomson International undertook to
conduct all its South
African business through these two joint venture companies.
[64]
It was submitted that,
bearing in mind that Mr Shaik was a director of TSA until 30
September 1999, his knowledge of the bribes
paid to Mr Zuma under his
ongoing retainer, was accordingly attributable to TSA at least until
that date. It means, it was argued,
that TSA was the vehicle of a
partnership, while Mr Shaik, who was one of the partners, had Mr Zuma
in his pocket through the payment
of ongoing bribes.
[65]
A further argument
advanced to counter TSA’s claim that there was no proof of any
knowledge of the racketeering on TSA’s
part, was with reference
to an incident where Mr Zuma interceded on Mr Shaik’s behalf
when Thomson International reneged
on its agreement with Mr Shaik to
hold its South African interests through TSA. Mr Zuma attended a
meeting in London during July
1998 and persuaded Mr Perrier of
Thomson International to retain Mr Shaik as its South African
partner, to which Thomson International
agreed. The Supreme Court of
Appeal in its judgment in
S
v Shaik and others
[2006] ZASCA 105
;
2007
(1) SA 240
(SCA), when dealing with this incident, said the following
at para 119:
‘
It
is clear that what Shaik wanted Zuma to do was to act in conflict
with his constitutional duty. He was asked, against the background
of
the past and ongoing payments made to him or on his behalf, to
go and speak to the French to assure them that Nkobi was
acceptable .
. . This was something no commercial competitor would have been able
to procure.’
It was submitted
that TSA knew that this ‘extraordinary intervention’ was
achieved by the ongoing bribes paid to Mr
Zuma by Mr Shaik, who, when
he paid these bribes and convinced Mr Zuma to intervene on his
behalf, was also a director of TSA.
[66]
It was also argued that
further indications of TSA’s knowledge or awareness were the
events surrounding the encrypted fax
and what followed thereafter.
News broke of threatened investigations into the so-called arms deal.
Mr Shaik sought to persuade
Mr Thetard at a meeting on 30 September
1999 to pay bribes to Mr Zuma of R500 000 per annum. Following a
conversation with Mr Perrier
in Paris on 10 October 1999, Mr Thetard
required confirmation of the request for the bribes from Mr Zuma
personally. The fax, authored
by Mr Thetard, described the meeting
with Mr Shaik and Mr Zuma on 11 March 2000. Mr Zuma confirmed the
request for the bribes by
an ‘encoded declaration’. The
purpose of the bribe was twofold, firstly to buy Mr Zuma’s
protection and secondly
to buy Mr Zuma’s permanent support. It
was contended that the only way Mr Thetard would have been persuaded
to pay the bribes
is if he had been told by Mr Shaik, if he did not
know so already, that he had Mr Zuma ‘in his pocket’.
[67]
Squires J, in his
judgment in
S v
Shaik and others
2007
(1) SACR 142
(D) at 215A-217D, 220B – 221E and 222G –
223B dealt with this particular aspect in detail and described the
evidence
which established the facts.
[68]
In conclusion on this
particular point, the State’s lead counsel submitted that TSA
was at all material times aware of the
ongoing bribes paid by Mr
Shaik to Mr Zuma under their ongoing retainer and that TSA
participated in Mr Shaik’s racketeering
in the following
manner:
(a)
As an accessory after
the fact to the bribes paid to Mr Zuma under his general retainer
before the encrypted fax agreement;
(b)
As an accomplice to the
bribes paid to Mr Zuma under his general retainer after the encrypted
fax agreement; and
(c)
By agreeing to pay Mr
Zuma’s bribes of R500 000 per annum in terms of the encrypted
fax agreement.
[69]
Bearing in mind what is
contained in the various memoranda by the prosecution, the indictment
and in particular its preamble and
summary of substantial facts and
the judgments in the Shaik matters, it is difficult to fault this
reasoning.
As far as
participation is concerned, ‘actual participation’ is
required, as held by Cloete JA in
S
v Eyssen
2009 (1)
SACR 406
(SCA) para 5, and has been established by the State, despite
this particular aspect not being dealt with in so many words in the
memoranda.
[70]
A further argument
advanced by TSA’s counsel relates to counts 5 and 6, pertaining
to corruption and money laundering, also
described in the indictment
as racketeering acts 1569 and 1570. It was submitted that it only
constituted one offence as the bribe
and the payment of the bribe are
intrinsically linked.
[71]
Reliance was inter alia
placed on the fact that the Supreme Court of Appeal in
S
v Shaik and others
[2006] ZASCA 105
;
2007
(1) SA 240
(SCA) disagreed with the finding of Squires J that
the encrypted fax in itself was a corrupt agreement and instead found
that it was a request for a bribe by Mr Shaik.
[72]
The prosecution was
also accused, for want of a better word, of splitting the alleged
corrupt agreement and the alleged payment
into two separate counts in
order for it to constitute a pattern of racketeering, which is
defined in POCA as:
‘
The
planned, ongoing, continuous or repeated by participation or
involvement in any offence referred to in Schedule 1 and includes
at
least two offences referred to in Schedule 1, of which one of the
offences occurred after the commencement of this Act and the
last
offence occurred within ten years . . . after the commission of such
prior offence.’
[73]
The State’s
lead counsel, in dealing with this particular aspect, submitted that
under section 1(1)
(a)
of the Corruption Act (with which TSA is charged on count 5) anybody
who ‘corruptly gives or offers or agrees to give’
a bribe
to another person was guilty of corruption. On that basis, the mere
offer or agreement to pay a bribe was accordingly a
complete offence.
Therefore, the payment of the bribe was not a necessary ingredient,
nor was the disguising of such payment.
[74]
It was further
submitted that the fraudulent disguise of the bribe, as a lawful
payment under a service provider agreement, was
an additional
‘feature’ which constituted the offence of money
laundering and contravention of section 4 of POCA. It
was separate
from and in addition to the crime of corruption.
[75]
In
S
v Shaik and others
[2006] ZASCA 105
;
2007
(1) SA 240
(SCA)
,
the Supreme Court
of Appeal at paras 206 and 208 held:
‘
[206]
The State proved that Thomson corruptly offered (the offer having
been communicated to Shaik)
•
to
give a benefit
•
which
was not legally due
•
to
a person, being Zuma,
•
who
had been charged with duties, being the duties set out in s 96(2) of
the Constitution
•
by
virtue of the holding of the office of Deputy President of the RSA
•
with
the intention to influence him
•
to
commit or to do an act in relation to such duty.
The State, therefore, proved that
Thomson committed an offence in terms of s 1(1)
(a)
(i) of the
CA. The section does not expressly require communication of the offer
to the person who is sought to be influenced and
there is no reason
to read such a requirement into the section. . . .
[208] In terms of s 4 of POCA any
person who knows or ought reasonably to have known that property is
or forms part of the proceeds
of unlawful activities . . . It
is clear that fourth appellant by entering into the service-provider
agreement and the
fifth appellant by receiving the payment made in
terms of the service-provider agreement assisted Shaik and Thales to
avoid prosecution
and that they therefore committed an offence in
terms of the section.’
[76]
It was also submitted
that there is always a link between the underlying crime of
corruption and the money laundering of its proceeds,
simply because
the very essence of money laundering lies in the disguise of the
proceeds of a crime. It does however not detract
from the fact that
they are two separate offences.
[77]
I agree with this
argument. The offence of corruption had clearly been completed. In
paragraphs 78 to 81 of the general preamble
of the indictment, the
payment of the bribe is dealt with. The following is stated:
‘
[78]
It was agreed between the parties that the bribes would not be paid
directly to accused no. 1, but
that some method of payment would be
employed that was calculated to disguise the nature of the payments
so as to avoid detection.
Consequently, during the period late 2000
to early 2001, Kobifin (Pty) Limited entered into a so-called
“service provider
agreement” with Thomson-CSF
International Africa Limited in Mauritius, as a device to conceal or
disguise the true nature
and source of the payment of the bribe. In
terms of the agreement remuneration was to be paid in instalments of
R250 000-00. The
first two instalments were initially due before the
end of December 2000 and on February 2001 respectively. Shaik
stipulated that
the total remuneration was to be R1 million.
[79]
Accused no. 1 needed funds to pay for the development of his
traditional residential village
estate at Nkandla in rural KZN. Plans
for the development were dated March 2000 . . . At no stage during
construction and thereafter
has accused no. 1 been able to settle the
outstanding amount or obtain finance without the intervention and
assistance of third
parties, including arrangements for payment
through Shaik in accordance with the agreement to disguise payments
to accused no.
1 described above.
[80]
On 16 February 2001 R249 725-00 was transferred from Thales
International Africa Mauritius to
the Absa current account of
Kobitech (Pty) Limited as a first payment in pursuance of the
abovementioned scheme.
[81]
Within eight days (on 24 February 2001) and in furtherance of the
common purpose to bribe accused
no. 1, Kobitech (Pty) Limited paid
R250 000-00 to Development Africa, a trust to which accused no. 1 was
indebted to the sum of
R1 million, in reduction of accused no.
1’s liability to Development Africa.’
This was in line
with what the Supreme Court of Appeal had found in relation to the
money laundering.
[78]
TSA’s counsel
also submitted that the money paid by Thales International Africa
Limited (Mauritius) to Kobitech was not the
proceeds of crime as it
was not ‘dirty or hot money’ and therefore did not
constitute money laundering.
[79]
Section 4 of POCA,
which deals with money laundering, reads as follows:
‘
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 arrangement 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 any other 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)
. . .
shall
be guilty of an offence.’
[80]
In terms of section 1
of POCA ‘proceeds of unlawful activities’ is defined 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’.
[81]
In section 1 of the
Financial Intelligence Centre Act 38 of 2001 (FICA), ‘money
laundering’ and ‘money laundering
activity’ is
defined as:
‘
an
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 includes any activity which constitutes
an
offence in terms of section 64 of this Act or section 4, 5 or 6 of
[POCA]’.
[82]
It is clear from the
definitions of money laundering and the proceeds of unlawful
activities, read with what is set out in section
4 of POCA, that the
concept of money laundering is so much wider than simply looking at
whether the money was ‘hot’
or ‘dirty’.
[83]
In
S
v Van der Linde
2016
(2) SACR 377
(GJ) para 111, Nicholls J refers to the three stages of
money laundering namely, placement, layering and integration and
discusses
various cases. The following was said at paragraph 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.’
The Court found that
there was no attempt at concealment and that the accused were
therefore not guilty of money laundering.
[84]
Authors L de Koker et
al in
South African
Money Laundering and Terror Financing Law
,
November 2019 – SI 20, paragraph 3.05 in Chapter 3, criticised
the judgment in
Van
der Linde, supra
,
in as far as it overlooked certain aspects of section 4. The
following was said towards the conclusion of the section on money
laundering:
‘
Whether
the actions of an accused has, or are likely to have, the effects
listed in paragraphs 4(i) or (ii) is largely a factual
question and
while the mere spending of proceeds of crime may not necessarily have
these effects, it is arguable that actions,
such as using the bank
account of a legal person instead of one’s own to receive and
disburse those proceeds, are at least
likely to conceal their source
as well as the ownership of or interests in them.’
[85]
De Koker,
supra,
when dealing with
the definition of proceeds of unlawful activities in paragraph 3.04
said that
‘
.
. . money or property can only constitute proceeds of crime if the
crime that gives rise to the proceeds (the “predicate
offence”)
has been completed and the relevant proceeds was derived, received or
retained in connection with or as a result
of that offence.’
Reference was also
made to the decision of
S v Imador
2014 (2) SACR 411
(WCC)
where Blignault J referred to a judgment of the England and Wales
Court of Appeal (Criminal Division) in
R v Anwoir and others
[2008] EWCA Crim 1354 para 21, where that Court of Appeal held
that:
‘
.
. .
there are two ways in which the
Crown can prove the property derives from crime, a) by showing that
it derives from conduct of a
specific kind or kinds and that conduct
of that kind or those kinds is unlawful, or b) by evidence of the
circumstances in which
the property is handled which are such as to
give rise to the irresistible inference that it can only be derived
from crime.’
[86]
In the present matter,
the crime of corruption had been completed after the offer had been
made or there was an agreement to pay.
When it however came to the
actual payment of the bribe, the proceeds of the crime, it was agreed
that the payment had to be concealed
or disguised, especially in
light of the spotlight being cast on all activities surrounding the
so-called arms deal. It was concealed
by disguising the money to be
paid to Mr Zuma as a payment in terms of the service provider
agreement between Thales International
Africa Limited (Mauritius) and
Kobifin and payment to Kobitech for on-payment to Development Africa,
to eventually reach its destination
for the benefit of Mr Zuma.
[87]
The Supreme Court of
Appeal confirmed Kobifin and Kobitech’s convictions on the
charge of money laundering and what was said
in that regard is
equally applicable to TSA. As mentioned hereinabove it also
referred to the fact that the two companies
had helped Mr Shaik and
TSA to avoid prosecution.
[88]
The service provider
agreement was clearly contrived and designed to conceal the true
nature of the payment. It would simply make
no sense that TSA, as an
accomplice in the group also including Thales International Africa
Ltd (Mauritius), should escape prosecution
because the latter
allegedly used its own ‘clean money’ to pay the bribe.
The moment the decision was made to pay the
bribe and the transaction
to effect payment commenced, the money used to do so became proceeds
of the unlawful activity.
[89]
TSA’s counsel
relied on
National
Director of Public Prosecutions v RO Cook Properties (Pty) Ltd
;
National Director of
Public Prosecutions v 37 Gillespie Street Durban (Pty) Ltd and
another
;
National
Director of Public Prosecutions v Seevnarayan
2004 (2) SACR 208
(SCA) as support for his submission that the
payment was not from the proceeds of crime and could therefore not be
considered to
be money laundering. In that particular matter, the
State had applied for an order forfeiting funds held by Sanlam after
it was
invested by the respondent under fictitious names. The State’s
application was dismissed as it had failed to prove that the
funds
were derived from crime or that the funds were initially earned
through crime. The facts are clearly distinguishable from
the present
matter and the matter does not assist TSA.
[90]
Finally, TSA’s
counsel’s contended that the prosecution of TSA for
racketeering was instituted for alleged ulterior
purposes. Section
2(2) of POCA clearly comes to the assistance of prosecutors by
allowing a court to ‘hear evidence, including
evidence with
regard to hearsay, similar facts or previous convictions, relating to
the offences contemplating in subsection 1.
. .'. It does however
contain a safeguard by including the words ‘provided that such
evidence would not render a trial unfair’,
which would protect
an accused person’s rights.
[91]
TSA’s
protestations in this regard stems from what was said in the
application dated 13 November 2007, where the prosecution
team set
out the benefits of charging TSA with racketeering. It is however
clear that the particular comments followed upon a chapter
where the
prosecution team had justified the racketeering charge by dealing
with the merits of such a charge. I agree with the
submission on
behalf of the State that it was perfectly legitimate for the
prosecutors to discuss the advantages of a lawful racketeering
charge. Even more so when POCA itself specifically grants such
advantages.
[92]
The State’s
counsel referred to the matter of
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) para 38 where it was held that:
‘
The motive
behind the prosecution is irrelevant because, as Schreiner JA said in
connection with arrests, the best motive does
not cure an otherwise
illegal arrest and the worst motive does not render an otherwise
legal arrest illegal. The same applies to
prosecutions.’
[93]
In the final analysis,
it is clear in my view that sufficient information was placed before
the NDPPs on which they could rationally
conclude that there was
reasonable and probable cause to believe that TSA had, directly or
indirectly or with common purpose, participated
in the enterprise run
by Mr Shaik, through a pattern of racketeering activity compromising
the planned, ongoing, continuous or
repeated participation or
involvement in at least two Schedule 1 offences.
Order
[94]
The following order is
accordingly made:
The application is
dismissed with costs, such costs to include those consequent upon the
employment of two counsel.
BEZUIDENHOUT
AJ
I
agree.
VAN
ZYL J
I
agree.
CHETTY
J
APPEARANCES:
APPLICANT’S
COUNSEL:
ADV B. ROUX SC and
ADV S. JACKSON
Instructed
by:
Messrs HERBERT SMITH FREEHILLS
(Ref:
J Ripley-Evans)
c/o
Austen Smith Attorneys
Pietermaritzburg.
Email:
Ranitha@austensmith.co.za
RESPONDENTS’
COUNSEL:
ADV W. TRENGROVE SC
ADV
A BREITENBACH SC
ADV
N MAYOSI and
ADV
H RAJAH
Instructed
by:
The State Attorney (KwaZulu-Natal)
Durban
(Ref:
Mr P J Kevan)
Tel:
031 365 2525
Email:
PKevan@justice.gov.za
C/o
State Attorney (KwaZulu-Natal)
(Satellite
Office)
Magistrates’
Courts Building
Pietermaritzburg.
MATTER
ARGUED ON:
26 OCTOBER 2020
JUDGMENT
DELIVERED:
22 JANUARY 2021