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[2016] ZANCHC 37
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National Director of Public Prosecutions v Scholtz and Others (2027/2012, KS20/2013) [2016] ZANCHC 37; 2017 (1) SACR 483 (NCK) (6 December 2016)
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IN
THE HIGH COURT OF SOUTH AFRICA
[NORTHERN
CAPE DIVISION, KIMBERLEY]
CASE NO: 2027/2012
(KS 20/2013)
Date
heard: 28 September 2016
Date
delivered: 06 December 2016
In
the matter between:
NATIONAL
DIRECTOR OF PUBLIC
PROSECUTIONS
APPLICANT
And
ALFEUS
SCHOLTZ
FIRST DEFENDANT
TRIFECTA
INVESTMENT HOLDINGS(PTY) LTD
SECOND DEFENDANT
TRIFECTA
HOLDINGS (PTY)
LTD
THIRD DEFENDANT
TRIFECTA
TRADING 434 PROPERTY 4 (PTY) LTD
FOURTH DEFENDANT
TRIFECTA
TRADING 434 PROPERTY 5 (PTY) LTD
FIFTH DEFENDANT
TRIFECTA
TRADING 434 PROPERTY 7 (PTY) LTD
SIXTH DEFENDANT
TRIFECTA
TRADING 434 PROPERTY 11 (PTY) LTD
SEVENTH DEFENDANT
JOHN
FIKILE
BLOCK
EIGHTH DEDENDANT
CHISANE
INVESTMENT (PTY)
LTD
NINTH DEFENDANT
JUDGMENT:
CONFISCATION
Phatshoane
J
INTRODUCTION:
[1]
On 25 January 2016 the National Director of Public Prosecutions
(NDPP) brought an application for an enquiry to be conducted
in terms
of s 18(1) of the Prevention of Organised Crime Act, 121 of 1998
(POCA), against Mr Alfeus Christo Scholtz, Trifecta Investment
Holdings (Pty) Ltd, Trifecta Holdings (Pty) Ltd; Trifecta Trading 434
Property 4 (Pty) Ltd, Trifecta Trading 434 Property 5 (Pty)
Ltd,
Trifecta Trading 434 Property 7 (Pty) Ltd, Trifecta Trading 434
Property 11 (Pty) Ltd, Mr John Fikile Block, and Chisane Investment
(Pty) Ltd, the first to the ninth defendants. The enquiry
follows on the conviction of the defendants on various counts of
corruption and money laundering.
[2]
The convictions of the defendants are predicated on the following
facts. In a nutshell, the Northern Cape Department of Social
Services
and Population Development entered into six lease agreements with the
Trifecta Group of Companies (Trifecta GOC) and related
entities from
the period 01 May 2006 to 01 August 2008. Mr Scholtz and the Trifecta
GOC were found guilty of corruption in that
they and their
representative, the late Mr Sarel Breda, offered benefits and/or
gratification to the late Ms Yolanda Botha in the
form of 10% Shares
to her nominated trust, the Jyba Investment Trust; renovated her
house in the amount of R 1 265 611,99; and
gave her cash payment in
the amount of R15 000.00.
The
trial court found that
Ms
Botha had nefariously circumvented the prescribed procurement
processes by ensuring that the Department of Social Development
and
or the South African Social Security Agency (SASSA) entered into the
following lease agreements with the Trifecta GOC:
2.1
Old Oranje Hotel, the Upington Lease Agreement;
2.2
14 Van Riebeeck Street, Springbok Lease Agreement;
2.3
Summer Down Place Office Campus, Kuruman Lease Agreement;
2.4
Keur en Geur Building, Douglas Lease Agreement;
2.5
Du Toitspan Building, Floor 5, 6, and part of 7, Kimberley Lease
Agreement;
and
2.6
Du Toitspan Building, Floors 9, 10 and 11, Kimberley Lease Agreement.
[3]
The Departments of Sports Arts and Culture and the Department of
Agriculture and Land Reform also entered into lease agreements
with
Trifecta on 22 October 2005 and 09 November 2005. Mr Block was found
guilty of corruption in that he exerted his political
influence upon
Mr Crouch, a director of property management in the Department of
Transport, Roads and Public Works, to corruptly
assist his
friend, Mr Sarel Breda, to secure the
mentioned leases for benefit of Trifecta. Mr Block
in return received
gratifications or benefits from Trifecta in the form of R 228 000.00
(paid to Chisane Investment on 07 March
2006); R 500 000.00 (paid to
Mr Block on 26 April 2006); R 338 521.25 (paid to Duncan and Rothman
for the benefit of Mr Block on
20 August 2007); R 298 151.95 (paid to
Mr Block between 30 October 2007 to 29 April 2008); and on 08
September 2006, 25 Ordinary
Shares in Trifecta Resources and
Exploration (Pty) Ltd, a subsidiary in the Trifecta GOC, were awarded
to Mr Block; and in addition,
his guesthouse was renovated. Mr
Scholtz and the Trifecta GOC were similarly found guilty of
corruption in that they and/or their
representatives offered the
aforesaid gratification to Mr Block and Chisane investment.
[4]
Having carefully considered the arguments I authorised the enquiry to
be commenced with and granted further ancillary relief
with regard to
the timeframes for the filing of the statements in terms of s
18(6)(a)(iii) (iv) read with ss 21(1)(a); 21(2)(a)
and (b) and
21(3)(a) of POCA. These statements pertained to information relating
to the determination of the value of all the defendant’s
proceeds of unlawful activities derived from the offences they were
convicted of and the filing of the statements by them, in the
event
they disputed the correctness of any of the allegations in the
statements made on behalf of the NDPP. In the course of the
enquiry,
which had been postponed several times, various issues were raised
pertaining to,
inter
alia
,
non-disclosure of documents by Mr Scholtz and the Trifecta GOC, which
were relevant to the computation of the amount liable to
be
confiscated. There were also meetings between the parties in an
attempt to distil common positions with regard to the calculation
of
certain amounts. This process significantly delayed the finalization
of the enquiry and indeed the sentencing proceedings.
[5]
Section 18 of POCA provides in part:
“
(1)
Whenever a defendant is convicted of an offence the court convicting
the defendant may, on the application of the public prosecutor,
enquire into any benefit which the defendant may have derived from-
(a)
that
offence;
(b)
any
other offence of which the defendant has been convicted at the same
trial; and
(c)
any
criminal activity which the court finds to be sufficiently related to
those offences,
and,
if the court finds that the defendant has so benefited, the court
may, in addition to any punishment which it may impose in
respect of
the offence, make an order against the defendant for the payment to
the State of any amount it considers appropriate
and the court may
make any further orders as it may deem fit to ensure the
effectiveness and fairness of that order.
(2)
The amount which a court may order the defendant to pay to the State
under subsection (1)-
(a)
shall
not exceed the value of the defendant's proceeds of the offences or
related criminal activities referred to in that subsection,
as
determined by the court in accordance with the provisions of this
Chapter; or
(b)
if the
court is satisfied that the amount which might be realised as
contemplated in section 20 (1) is less than the value referred
to in
paragraph (a), shall, not exceed an amount which in the opinion of
the court might be so realised.”
[6]
The Supreme Court of Appeal (SCA) pronounced on the purpose of the
confiscation enquiry as follows in
National Director of Public
Prosecutions v Gardener and Another
2011 (4) SA 102
(SCA) at
107D-108A paras 18-19:
“
[18]
The purpose of the enquiry is twofold: first, the court has to decide
whether to make an order against the defendant for payment
to the
State of an amount of money; and, secondly, it must determine the
appropriate amount to be paid. In this regard the court
exercises a
discretion, which, as O'Regan ADCJ said in
S
v Shaik and Others
[2008] ZACC 7
;
[2008 (5) SA 354
(CC)]:
'is
peculiarly a matter for the court which has convicted the relevant
person; that is no doubt the reason why the legislature sought
to
ensure that it would be that court which, in the first instance,
would determine the appropriate amount to be confiscated. It
will
only be interfered with by an appellate court where that court is
satisfied that the court which determined the amount acted
unjudicially or misdirected itself or where the appellate court is of
the view that the amount confiscated is disturbingly inappropriate.'
[19]
In the exercise of its discretion a court must bear in mind the main
object of the legislation, which is to strip sophisticated
criminals
of the proceeds of their criminal conduct. To this end the
legislature has, in Ch 5 of POCA, provided an elaborate scheme
to
facilitate such stripping. The function of a court in this scheme, as
appears from what I have said above, is to determine the
'benefit'
from the offence, its value in monetary terms and the amount to be
confiscated. It is undoubtedly so that a confiscation
order may often
have harsh consequences, not only for the defendant, but also for
others who may have innocently benefited, directly
or indirectly,
from the criminal proceeds. This is what the legislation
contemplates, and a court may not, under the guise of the
exercise of
its discretion, disregard its provisions — harsh as they may
be…”
[7]
The Court articulated further in this manner on the primary object of
a confiscation order in
National
Director of Public Prosecutions v Rebuzzi
2002 (2) SA 1
(SCA) at 7E-G para 19:
“
[19]
The primary object of a confiscation order is not to enrich the State
but rather to deprive the convicted person of ill-gotten
gains. In my
view, it is therefore not significant that in some cases the State
might end up receiving nothing. It is because the
purpose of such an
order is to prevent the convicted person from profiting rather than
to enrich the State that the court's inquiry
in terms of s 18(1) is
directed towards establishing the extent of his benefit rather than
towards establishing who might have
suffered loss. Indeed, in the
case of so-called 'victimless' crimes, such as drug-dealing and the
like, there will be no person
who could be said to have suffered a
loss. That a confiscation order might not be necessary in order to
deprive the convicted person
of the proceeds of crime (ie where there
is an identifiable victim who has suffered loss) does not seem to me
to be a reason to
withhold such an order. It still serves the purpose
of ensuring that, irrespective of whether claims are in due course
established,
the convicted person will not remain in possession of
the proceeds.”
[8]
The confiscation order sought in respect of Mr Scholtz and the
Trifecta GOC is primarily founded on their conviction for corruption,
for obvious reasons, that the funds pertaining to money laundering
would not have flowed to them but to the late Ms Botha and Mr
Block.
I deal with the case of Mr Block and Chisane Investment later on
because in that case the parties reached an agreement resolving
all
the issues and agreeing on the mount liable for confiscation.
THE
ENQUIRY IN THE CASE OF MR SCHOLTZ AND THE TRIFECTA GOC:
[9]
It is important to mention that in the case of Mr Scholtz and the
Trifecta GOC the parties have also reached an agreement which
disposed of a substantial part of the evidence. In particular, they
have agreed that the aggregate nett proceeds of the leases
liable for
confiscation is approximately R6 043 960.00 whereas the grand total
of the added advantage (the capital gain) is in
the amount of R53
763 021.84.
[1]
[10]
The following matters of principle were placed in dispute:
10.1
Whether the NDPP is entitled to a confiscation order in terms of s 18
of POCA;
10.2
Whether the NDPP established that Mr Scholtz and the Trifecta GOC
received the proceeds of crime as envisaged
in s 18 of POCA, with
reference to the income received as rental from several lease
agreements referred to earlier; and lastly
10.3
Whether the NDPP established that Mr Scholtz and/or the Trifecta GOC
received proceeds of crime as envisaged
in s 18 of POCA, as a result
of the increase in value of any of the buildings in relation to the
lease agreements, referred to
as the added advantage.
[11]
As foreshadowed in the preceding paragraphs these is
sues
fall within the narrow compass of whether the nett profit from the
rental and the increase in the capital value of the lease
buildings
are benefits as contemplated in s 18(1) and therefore liable for
confiscation to the State.
[12]
In his initial statement filed in terms of s
21(1)(a),
signed
on 23 February 2016, Mr Trevor Sean White, a deponent to the NDPP
statement explained:
“
77
The properties that Trifecta leased to various government departments
were sold to third parties with the corruptly obtained
leases in
place. The fact that these were long term leases with the government
departments in place would have enabled Trifecta
to sell these
building so as to further benefit from their crimes. In the absence
of the requested documents I am unable to determine
such further
benefit.”
[13]
In a statement filed on 10 June 2016 by Mr White with regard to the
preliminary partial calculation of the added advantage
he further
propounded the rationale for the added advantage as follows at paras
34;35; 37 and 38:
“
34
The fact that the corruptly obtained lease agreements had a
significant effect on the value at
which the buildings were sold is
evident from the two agreements, TSW 39 and TSW 41 that I have
managed to obtain copies from Mr
Shawn Williams, the appointed
curator
bonis
in this matter.
35
These agreements are titled “Sale of Rental Enterprise
Agreement” and it
is very clear from reading them that the
purchaser, apart from buying the respective building, was actually
purchasing the “Rental
Enterprise” which included “all
right, title and interest of the Seller in and to the relevant
leases.” This
is further spelt out in clause 14.1 thereof,
which states that “the Purchaser will effect from the effective
date take over
and complete all leases for his own account.
37
The relevant defendants gained additional advantage (beyond the
profit made on the
tainted lease contracts) in the form of profits
made on the sale of the buildings that included the corruptly
obtained leases.
38
Therefore, if confiscation of the full lease contract is found to be
disproportionate
(as the defendants submit), a proportionate
appropriate confiscation order would reflect the profit gained under
the lease contract,
together with the value of the additional
advantage. This is the advantage in addition to the rental income
that was received that
the relevant defendants would not have
received or retained had it not been for the corruptly acquired or
obtained lease agreements”.
[14]
Adv Van der Linde SC, for the NDPP, argued that the leases in issue
had a positive effect on the Trifecta GOC’s business
and the
increase in value of the leased buildings. He contended that without
the corrupt activities there would have been no lease
agreements, no
profit from the lease agreements, no increases in the rental and no
enhancement in the value of the buildings.
Counsel contended
that the nett profit derived by Mr Scholtz and the Trifecta GOC from
the corruptively concluded leases, is a
benefit directly derived from
the crime of corruption. The same also applied to added pecuniary
advantaged (capital gain) in respect
of the lease premises.
[15]
In support of his argument that the added advantage was a benefit
prone to confiscation Mr Van der Linde relied on the United
Kingdom
Supreme Court Decision in
R v Waya
[2010] EWCA Crim 412,
handed down on 14 November 2012, in particular the following dictum
at para 42:
“
42
In economic terms, the benefit that Mr Waya obtained from the offence
for which he was convicted was obtaining credit, on better
terms than
those that he could expect to get if he told the truth. With that
credit came the prospect of obtaining a handsome capital
gain if the
market for high-grade residential property in London continued to
rise (as it did). If on the other hand the market
had fallen
substantially, the mortgage lender’s security might have proved
inadequate, and the mortgagor’s personal
covenant to repay
principal and interest might have been shown to be worthless.
Depriving him of that prospective capital gain,
or a proportionate
part of it, would therefore be the appropriate way of making the
confiscation order fit the crime. Moreover
that is the way in which
the provisions of POCA apply in this case, on a fair and purposive
construction that takes account of
section 3 of HRA (Human Rights
Act, 1998) and the need for proportionality under A1 P1”.
[16]
Mr Van Der Linde referred also to the English decision in
Regina
and Peter John Sale
[2013] EWCA Crim 1306. In that case the Court
remarked in para 52:
“
It
seems to us that there are certain important features of this case
which require close consideration. Firstly, this is not, in
our
judgment, a case analogous to one where goods or money have been
entirely restored to the loser. True it is that Network Rail
received
value for money, but Mr Sale had obtained contracts for his company
by corrupt means on a continuing basis so that every
contract for his
company obtained was tainted by it. Moreover, in a case of this
nature it is wholly unrealistic to regard Network
Rail as the only
victim of crime. Corruption of this nature clearly impacts on others.
The company obtained contracts with a client
with whom it had had no
previous business relationship. Existing contractors with Network
Rail were cheated out of the tendering
process. The substantial
market in Network Rail contracts of this type was distorted, with the
company gaining a market share to
the detriment of others. Tendering
costs were avoided.”
At
para 57 the Court then held;
“
However
we have already alluded to the pecuniary advantage gained by
obtaining market share, excluding competitors, and saving on
costs of
preparing tenders. A proportionate confiscation order would need to
reflect those additional pecuniary advantages and,
it seems to us,
that an order for profit gained under these contract, together with
the value of pecuniary advantage obtained,
would represent a
proportionate order which will avoid double counting. There is no
difficulty in attributing these items to the
Appellant as
proportionately representing his benefit since he was the sole
shareholder in the company”.
[17]
Adv Cilliers SC, for Mr Scholtz and the Trifecta GOC, argued that
there is no factual or legal basis for a finding that the
defendants
derived any benefit from the offences committed. He contended that
the State cannot succeed in confiscating the nett
proceeds or the
added advantage because Mr Scholtz and the Trifecta GOC were
acquitted on all the charges pertaining to fraud which
were premised
on,
inter
alia
,
misrepresentation; and that they allegedly inflated the rentals. He
argued that the State departments received full value for
the rental
amount they paid in that they occupied the leased premises. In any
event, he contended, there is no nexus between the
offence of
corruption and the leases that were concluded.
[18]
Mr
Cilliers on his part relied on
National
Director of Public Prosecutions v Ramlutchman
2016 (1) SACR 362
(KZP) for the proposition that the state received
full value for its money and therefore is not entitled to any
confiscation order.
In that
case
the respondent was charged with twenty-one counts of fraud under the
Criminal Procedure Act, 51 of 1977
, read with
s 51
of the
Criminal
Law Amendment Act, 105 of 1997
, and one count of corruption in terms
of the
Prevention and Combating of Corrupt Activities Act, 12 of
2004
, for giving a benefit. The defendant created fake documents that
he submitted to the Construction Industry Development Board (CIDB)
to
support an application for a 6GB Grade by the CIBD. The defendant was
not entitled to such grading. He fraudulently misrepresented
the
status of his business AC Industrials Sales and Service that he
registered with the CIBD. This resulted in him and his business
being
awarded tenders based on fraudulent documentation and information
submitted to CIDB.
At
376 para 33 of that judgment the Court held:
“
[33]
……. The appellant sought to persuade the trial court as
it does this court that ‘benefit’ means the
same as
‘proceeds of unlawful activities’, which in this case was
the entire proceeds of the contract. Reasoning in
reverse, the
contract was the consequence of the crime; depriving the defendant of
the proceeds of the contract would eliminate
the benefit. With
respect, the reasoning is flawed, the approach mechanical for all the
reasons advanced above and more. On a purely
factual and common sense
approach the entire amount received as the proceeds of unlawful
activities cannot be a benefit if it is
not exclusively a gain or
profit. The cost of construction component of the proceeds received
cannot rationally be equal to a gain
or benefit. To treat it as such
and order its confiscation would result in the state unjustly
enriching itself at the expense of
the respondent. It would be
disproportionate and an imbalance between effectiveness and fairness.
Furthermore, it would amount
to the respondent paying more than the
amount by which he benefited which is prohibited under
s 18(2)(a).
Similarly to
Mtungwa
[National
Director of Public Prosecutions v Mtungwa
2006 (1) SACR 122
(N)]
the
appellant failed to prove the value of the benefit the respondent
received in this case.”
[19]
Mr Cilliers further argued that the office space provided by the
Trifecta GOC accorded with the lawful transactions following
the
proper procurement process. Counsel was at pains to demonstrate with
reference to some of the extracts from the record of the
criminal
proceedings that the evidence of the state witnesses was to the
effect that there was no improper or unlawful influence
from either
the late Ms Botha or anyone of the members of the Bid Evaluation
Committee (BEC) or the Bid Adjudication Committee
(BAC) during the
procurement of the leases. I must immediately point out that I have
said in the main judgment
[2]
,
for reasons fully articulated therein, that the evidence by some of
the state witnesses to the effect that there was nothing untoward
in
the procurement processes followed by the BEC or BAC or that they had
not been influenced in the execution of their duties was
less than
frank. This was a factual determination which only the Court could
make. They had unquestionably been influenced.
[20]
Mr Cilliers further contended that the added advantage (benefit) was
not part of the initial confiscation order sought and
that it was
never the NDPP’s case that the added advantage amount be
confiscated. He went on to argued that the immovable
property
increased in value not because of crime but because of the normal
market related factors and conditions
.
No
court in this country has ever confiscated the added advantage, he
argued. A reading of Mr White’s affidavit in particular
the
extracted paragraphs referred to in para 12 and 13 above demonstrate
that the NDPP’s case had at all relevant times being
that the
added advantage ought to be confiscated.
[21]
For purposes of determining whether Trifecta benefited from the
proceeds of their unlawful activities I find it expedient to
refer to
some of the findings that were made in the main judgment with regards
to multifaceted procedural flaws in the procurement
of the office
space that advantaged and unduly benefited Trifecta. For example:
21.1
With regard to the Old Oranje Hotel, the Upington lease, a finding
was made that for the period 31 May 2006
to January 2012, 69 payments
of rental in the amount of R18 390 008.49 were made by SASSA to
Trifecta Trading 434 Property 5 (Pty)
Ltd, (the fifth defendant).
From May 2006 to 2007 Trifecta received rental payments in the amount
of R 1 651 516.86 even though
its premises were not yet occupied by
the department (Social Development)/SASSA.
21.2
With
regard to the Kuruman Lease it was found that the Bid Evaluation
Committee (BAC) had resolved that the Trifecta’s bid
be
accepted and that amongst others, the lease period of five years with
an option to renew for another five years; and the 8%
annual
escalation be negotiated. The late Ms Botha, former accused No 8 in
the criminal trial, deviously approved the memo that
had been
forwarded to her by the BAC: “
With
proviso that the lease period be extended to 10 years (120 months)
with an option to renew for another 10 years and a 9.5%
annual
escalation.”
21.3
With regard to the Keur and Geur Building, the Douglas lease
,
the
Department of Social Development initially required 205 m². It
was saddled with 400 m². The difference being 195 m².
Mr
White calculated the 195 m² difference at the rental escalation
rate of 9.5% over the five-year lease period. That came
down to a
total of R790 106.57. In view of the fact that only two employees
were accommodated in this office as at August 2012,
this expenditure
had been deliberately made in vain.
[22]
Section
12(3)
provides that for purposes of Chapter 5
[3]
a person has benefited from unlawful activities if he or she has at
any time, whether before or after the commencement of this
Act,
received or retained any proceeds of unlawful activities.
The
onus is on the NDPP to prove on the balance of probabilities that
they are entitled to a s 18 confiscation order
[4]
.
On the reading of
s12(3)
it is apparent that the NDPP has to establish the nexus between the
unlawful activity and the proceeds of the crime.
[23]
Regard
being had to the facts of this case t
here
can be no doubt that the corrupt relationship that existed between Mr
Scholtz and the Trifecta GOC or their representative
and the
government officials or persons in positions of influence was the
sine
qua non
for
the acquisition of the various leases in issue
and the proceeds of the unlawful activity, in this case the rental
paid by the State to Trifecta GOC
.
[24]
The ConCourt dealt with what would constitute a benefit for purposes
of s 18 of POCA in
S v Shaik and Others
[2008] ZACC 7
;
2008 (5) SA 354
(CC) at 379B-E para 60 as follows:
“
[60]…..
What
constitutes a benefit, therefore, is defined by reference to what
constitutes 'proceeds of unlawful activities'. It is not
possible in
the light of this definition to give a narrower meaning to the
concept of benefit in s 18, for that concept is based
on the
definition of the 'proceeds of unlawful activities'
.
That definition goes far beyond the limited definition proposed by
the appellants. 'Proceeds' is broadly defined to include any
property
,
advantage
or reward derived, received or retained directly or indirectly in
connection with or as a result of any unlawful activity. A further
difficulty with the appellants' argument is to be found in s 18(2).
That
section expressly contemplates that a confiscation order may be made
in respect of any property that falls within the broader
definition,
and is not limited to a nett amount
.
The narrow interpretation of 'benefit' proposed by the appellants
cannot thus fit with the clear language of s 18 and the definition
of
'proceeds of unlawful activities'. To interpret the section as
suggested by the appellants would require giving a meaning to
the
section which its ordinary wording cannot sustain…” (Own
emphasis)
At
paras 381F-382E paras 69 -71 the
ConCourt
gave the following seminal considerations relevant to the exercise of
the discretion by the Court in terms s 18:
“
[69]
First, a court considering what will constitute an appropriate amount
as contemplated by s 18 will have regard to all the circumstances
of
the criminal activity concerned. Secondly, in considering what will
be appropriate, a court will bear in mind that the definition
of
'proceeds of unlawful activities' in the Act makes it possible to
confiscate property that has not been directly acquired through
the
commission of crimes. It also makes it possible to confiscate
property that has been acquired not through crimes of which the
defendant has been convicted, but through related criminal activity.
One
of the key considerations a court will take into account will be the
extent to which the property to be confiscated derived
directly from
the criminal activities.
In
most circumstances it will be entirely appropriate that all direct
profits of crimes of which the defendant has been convicted
be
confiscated. So, a bank robber caught red-handed in possession of R50
million which he or she has just stolen from the bank
may quite
appropriately be required to pay that money back. In these
circumstances, the primary purpose of the Act - to ensure
that a
criminal does not enjoy the fruits of his or her crime - will be
directly served.
[70]
On the other hand, the more removed the derivation of the property
from the commission of the offence, the less likely it may
be that it
will be appropriate to order the full confiscation of the property.
In taking this consideration into account, however,
a court must take
care to remember that often criminals do seek to disguise the profits
of their crime. One of the purposes of
the broad definition of
'proceeds of unlawful activities' is to ensure that wily criminals do
not evade the purposes of the Act
by a clever restructuring of their
affairs.
[71]
A third consideration relevant to determining what constitutes an
'appropriate' amount will be the nature of the crimes that
fall
within the express contemplation of the Act. The closer the crimes or
criminal activity concerned to the ambit of organised
crime, the more
likely it will be that the appropriate amount will constitute all the
proceeds of the unlawful activities as defined
in the Act. The reason
for this is that the larger the value of the confiscation order, the
greater the deterrent effect of such
an order. The Act clearly seeks
to impose its greatest deterrent effect in the area of organised
crime; and so where organised
crime is involved, the purpose of
general deterrence will often be best achieved by a maximum
confiscation order, although of course
that will always be subject to
a full consideration of all the relevant circumstances. In asserting
this principle, too, it is
important to bear in mind the difficulty
of prosecuting organised crime successfully as is noted in the
preamble to the Act. The
difficulties are many. To name just one,
crime syndicates are often organised in a manner that makes it
possible for senior members
of the syndicate to evade prosecution,
because many of the crimes committed are committed by junior members
of the syndicate.”
With
regard to the offence of corruption the Court pronounced,
inter
alia
,
at 384B para 75:
“
[75]
….(
I)t
is clear that corruption is a serious crime which is potentially
harmful to our most important constitutional values. Moreover,
it is
clear that both our Parliament and the international community
recognise the close links between corruption and organised
crime. In
the circumstances, it seems to me that corruption is one of the
offences closely related to the purposes of the Act and
a court
should bear this in mind when determining the 'appropriate' amount
contemplated in s 18 of the Act
.”
(My emphasis)
[25]
The argument that the State Departments received full value for the
rental amount they paid ignores the fact that the leases
were
corruptly concluded. Mr Johannes Lodewyk Bouwer, who attested to the
Trifecta defendants’ statement in terms of s 21(2)(3)
of POCA,
stated at para 19:
"Although
I do not suggest that the principle in all cases should be that only
benefit/profit should be considered for confiscation,
I respectfully
submit that in this case it should be the principle to apply…”
It
is therefore remarkable that an argument would be made that the State
cannot demand that part of the rental (the nett proceeds
of the
leases) be paid back to it and if the confiscation order is granted
it will be enriched in the amount of approximately R6
million, being
the nett proceeds of the lease as agreed to between the parties. It
is incomprehensible that an astute business
man in the position of Mr
Scholtz would have entered into or allowed the leases to be concluded
with the State departments in the
absence of some benefit that would
have accrued to his business empire. Trifecta is a multimillion rand
corporation due to,
inter
alia
,
the tainted leases. On the facts of this case I am satisfied that the
NDPP is entitled to a confiscation order in terms of s 18
of POCA in
respect of the income generated (the nett proceeds of the rental) on
the leases entered into between Mr Scholtz and
the relevant Trifecta
GOC on one hand and the relevant Government Departments on the other
hand.
[26]
It is clear from
Shaik
supra that a benefit as envisaged in s 18 is not limited to the nett
amount. A benefit includes the value of the appreciation of
the
assets that were acquired with the criminal proceeds, and not just
the appreciation in the money benefit the defendants received.
[5]
I find the following view expressed in
R
v Waya
supra
at 15 para 26 apposite:
“…
To
embark upon an accounting exercise in which the defendant is entitled
to set off costs of committing his crime would be to treat
his
criminal enterprise as if it were a legitimate business and
confiscation a form of business taxation. To treat (for example)
a
bribe paid to an official to look the other way, whether at home or
abroad, as reducing the proceeds of crime would be offensive,
as well
as frequently impossible of accurate determination. To attempt to
enquire into the financial dealings of criminals as between
themselves would usually be equally impracticable and would lay the
process of confiscation wide open to simple avoidance”.
[27]
I am satisfied that the NDPP established on the balance of
probabilities that the value of the capital gain (the added
advantage)
less the capital gains tax plus the CPI on capital gain is
a benefit as contemplated in s 18 of POCA.
[28]
Mr Cillier sought to argue further that a confiscation order, if
made, would amount to the punishment of Mr Scholtz and the
Trifecta
GOC. A confiscation order cannot be equated to a punishment.
The
purpose of sentencing is to punish an offender for his or her
criminal wrongdoing whereas the main purpose of a confiscation
order
is to deprive offenders from deriving any benefit from their
ill-gotten gains.
[6]
[29]
For purposes of proportionality, it is important to bear in mind that
the NDPP does not seek that the full extent (the gross
rental amount)
of the benefit paid to Trifecta GOC be confiscated. All it requires
to recoup is the nett proceeds of the rental
received and the value
of the added advantage flowing from the leases.
[30]
The value of the Trifecta GOC’s realizable assets is in excess
of R500 million. The amount sought to be confiscated
(R 6 043
960.15 in respect of the nett proceeds of the lease including CPI and
the amount of R53 763 021.85 in respect of the added
advantage) fall
within the ambit of s 18(2) in that it does not exceed the value of
the Trifecta defendants’ proceeds of
the offences.
I am
satisfied that these amounts stand to be confiscated.
THE
ENQUIRY IN THE CASE OF MR BLOCK AND CHISANE INVESTMENT:
[31]
The NDPP, Mr Block and Chisane Investment (Pty) Ltd, the eighth and
ninth defendants, entered into an agreement on the amounts
to be
confiscated which was handed in evidence as Exhibit “A4”
at the proceedings of 28 September 2016 and sought that
it be made an
order of the Court. I am satisfied that this settlement accords with
the facts and principles enunciated hereinbefore.
[32]
In the result I make the following order:
Order:
A.
In
respect of Mr Christo Alfeus Scholtz and the Trifecta GOC the
following order is made
:
1.
A
confiscation order in the sum of R6 043 960.15 is made against Mr
Alfeus Christo Scholtz, Trifecta Investment Holdings (Pty) Ltd,
Trifecta Holdings (Pty) Ltd; Trifecta Trading 434 Property 4 (Pty)
Ltd, Trifecta Trading 434 Property 5 (Pty) Ltd, Trifecta Trading
434
Property 7 (Pty) Ltd, Trifecta Trading 434 Property 11 (Pty) Ltd (the
first to the seventh defendants), jointly and severally
the one
paying the other to be absolved.
2.
A
confiscation order in the sum of R53 763 021.85 is made against the
first to the seventh defendants, jointly and severally the
one paying
the other to be absolved.
3.
The
confiscated amounts in para 1 and 2 of this order are payable to the
State within 30 calendar days from date of this order.
4.
The
confiscation order shall be satisfied by a deposit into the National
Treasury Account Number: [...] held at ABSA Bank of the
stated
amounts within 30 calendar days from the date hereof and such payment
to the Bank shall be deemed as payment of the confiscation
order
amounts to the State;
5.
The
first to the seventh defendants are to pay the fees of the
curator
bonis
,
Mr Shawn Williams.
6.
This
order is a civil judgment against the first to the seventh defendant
and interest on the aforesaid amounts will run at the
prevailing
legal rate from due date for payment to date of payment.
B.
In
respect of Mr John Fikile Block and Chisane Investment (Pty) Ltd, the
eighth and ninth defendants, by agreement between the parties
the
following order is made:
1.
A
confiscation order, together with the fluctuation of the value of
money calculated from the dates of receipt of R1 364 673.20
to May
2016 is made in the sum of R2 069 966.62 in respect of Mr John Fikile
Block and Chisane Investment (Pty) Ltd, the eighth
and the ninth
defendants.
2.
The
confiscated amounts referred to in para 1 of this order are payable
to the State within 30 calendar days from date of this order.
3.
The
confiscation order shall be satisfied by a deposit into the National
Treasury Account Number: [...] held at ABSA Bank within
30 calendar
days from the date hereof and such payment to the Bank shall be
deemed as payment of the confiscation order amounts
to the State.
4.
The
sum of R123 047.82 pertaining to the appointed curator’s fees
and disbursements will be deposited by the eighth defendant
within 30
calendar days from date of this order into the appointed curator’s
Bank account Number: [...] held at ABSA.
5.
This
order is a civil judgment against the eighth and the ninth defendants
and interest on the aforesaid amounts will run at the
prevailing
legal rate from due date for payment to date of payment.
____________________________
MV
PHATSHOANE
JUDGE
NORTHERN
CAPE HIGH COURT
Appearance
for the first to the seventh defendants : Adv. J.G Cilliers SC
assisted by Adv. MMW Van Zyl SC
Instructed
by W.A Du Plessis Attorneys
Appearance
for ninth and the tenth defendants : Adv. S Joubert SC assisted by
Adv Tshavhungwa
Instructed
by Mjila & Partners
Appearance
for the NDPP: Adv. H Van der Linde SC assisted by Adv. N K
Ndzengu
Instructed
by The National Director of Public Prosecutions
[1]
The agreement was handed in evidence as Exhibit A1, with Annexure A2
and A3 thereto.
[2]
The verdict on the convictions of the defendants.
[3]
Chapter 5 which deals with proceeds of unlawful
activities.
[4]
Section 13 provides in part:
“
(1)
For the purposes of this Chapter proceedings on application for a
confiscation order or a restraint order are civil proceedings,
and
are not criminal proceedings.
(2) The rules of evidence applicable in civil proceedings apply to
proceedings on application for a confiscation order or a restraint
order.
(3) …….
(5) Any question of
fact to be decided by a court in any proceedings in respect of an
application contemplated in this Chapter
shall be decided on a
balance of probabilities.”
[5]
See
National Director of Public Prosecutions v Gardener and
Another
2011(4) 102 (SCA) at 111 para 32
[6]
See
National
Director of Public Prosecutions v Gardener and Another
2011 (4) SA 102
(SCA) at 108 para 23