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[2007] ZASCA 33
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S v Haslam (297/06) [2007] ZASCA 33; [2007] SCA 33 (RSA) (28 March 2007)
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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Not reportable
Case no: 297/06
In the matter
between:
BARRY STEPHEN HASLAM
......................
APPELLANT
and
THE STATE
......................
RESPONDENT
Coram:
CLOETE, CACHALIA JJA
et
THERON AJA
Heard:
8 MARCH 2007
Delivered:
28 MARCH 2007
Summary: Criminal
law - Fraud – Adequacy of proof. State failed to prove the
mechanics of the fraud therefore cannot impute
intention to the
appellant. Appellant’s version reasonably possibly true.
Neutral
citation: This judgment may be cited as HASLAM v THE STATE [2007] SCA
33 RSA
________________________________________________________________
JUDGMENT
________________________________________________________________
THERON AJA/…..
[1] The appellant, a senior and
experienced banker, was charged with and convicted in the
Magistrates’ Court, Johannesburg,
of ten counts of fraud and
sentenced to ten years’ imprisonment. His appeal to the
Johannesburg High Court was dismissed. He
now appeals to
this court, with the appropriate
leave, against his conviction and sentence.
[2] The evidence presented at the trial was in essence
the following: The appellant was employed as a relationship manager
by Nedcor
Bank Limited (Nedcor) at its Fox Street branch. In that
capacity he was responsible for the accounts of various clients.
Until the
end of September 1998, the appellant, in his capacity as
relationship manager, had a mandate to approve credit facilities up
to a
limit of approximately R150 000. With effect from October 1998,
the credit lending mandate of all relationship managers was
withdrawn.
All credit applications had to be channelled to the credit
department for investigation, consideration and approval.
[3] The appellant was, inter alia, responsible for the
accounts of Moonstar Commerce & Industry (Pty) Ltd (Moonstar) and
Emperor
Fisher International (Emperor Fisher), the latter company
being owned by Mr Zhang (Zhang). Mr Theuns Botha (Botha) was the
managing
director and sole shareholder of Moonstar and for a period
assisted in the management of Emperor Fisher. Both companies were
involved
in importing raw materials and goods from China into South
Africa.
[4] During 1999, Botha, on behalf of Moonstar, applied
to Nedcor for credit in the form of letters of credit. According to
the evidence,
a letter of credit is an irrevocable and autonomous
payment instrument issued by a bank which is particularly favoured
for use in
international transactions as a payment mechanism by
importers of foreign goods. Once a letter of credit has been issued
an independent
contract is established between the issuing bank and
the foreign beneficiary in terms of which the bank is obliged to make
payment
in accordance with the letter of credit. Global Business
Centre (Global), a unit within Nedcor, was primarily concerned with
the
processing and issuing of letters of credit.
[5] Moonstar’s applications for letters of credit
were submitted to the appellant and it is common cause that the
appellant
signed the credit application forms at the bottom right
corner in the space marked ‘approved (relationship/credit
officer’s
signature)’. He also inserted his signature
number on seven of the forms and his relationship number on a few
others. Either
number would enable an employee of Nedcor to determine
the appellant’s position within the bank using the bank’s
computer
network.
[6] During the period January 1999 to June 1999, ten
letters of credit (which form the subject of the ten counts of fraud)
were issued
by Global in favour of Moonstar. At least three of these
letters of credit were for the benefit and use of Emperor Fisher.
[7] Snyman, a credit manager in the employ of Nedcor,
who had managed the credit portfolio of the appellant’s
clients, testified
about the bank’s procedure in respect of
applications for letters of credit. Snyman said that the appellant,
in his capacity
as relationship manager, would receive such
applications and submit each application, together with a motivation,
to the credit department.
In the absence of a motivation, Snyman
would return the application to the appellant. It is common cause
that the appellant had not
attached motivations to any of the ten
application forms under consideration.
[8] It is further common cause that the application
forms in respect of the letters of credit had not been presented to
and approved
by the credit department prior to being issued by
Global. At the time, the personnel at Global were unaware of the
withdrawal of
relationship managers’ credit mandate despite the
fact that such withdrawal had been well publicized within Nedcor.
Global,
accepting that the applications met Nedcor’s credit
requirements, issued the letters of credit applied for. It is common
cause
that Nedcor’s risk in respect of the letters of credit,
was not secured.
[9] Moonstar’s account with Nedcor went into
overdraft. It was unable to pay its debts, including the debt to
Nedcor which arose
in consequence of Nedcor making payment pursuant
to the letters of credit. Moonstar was liquidated on 25 January 2000.
Nedcor suffered
considerable financial loss, the actual amount of
which was not proved.
[10] Central to the state’s
case is the appellant’s signature on the ten applications for
letters of credit. The evidence
presented by the state sought to show
that by signing the applications next to the word ‘approved’,
the appellant effectively
placed himself in the position of a
bona
fide
credit
manager and by implication, misrepresented to Global that he had the
mandate to approve letters of credit and that he had completed
all
the functions and duties of a credit manager. In this manner the
signing of the letters of credit by the appellant constituted
a
misrepresentation which Global, to the prejudice of Nedcor, had acted
upon.
[11] The appellant testified that he had appended his
signature to the documents simply to allow the applications to be
processed
by the credit department and that Snyman would have
disregarded his (appellant’s) signature for purposes of the
department’s
decision, as the credit decision was that of
Snyman alone. The appellant stated that he did not intend to bypass
the credit department.
According to the appellant his workload had
increased tremendously in consequence of the withdrawal of his credit
lending mandate.
Post October 1998 he was required to motivate each
and every application for credit. In respect of applications for
specialist products,
such as letters of credit, he would simply
ensure that these were put into the system in order to be processed
by the relevant department.
It was in fact his burdensome workload
which prompted him to seek alternate employment. It is common cause
that the appellant resigned
on 25 May 1999 and left the employ of
Nedcor on 25 June 1999 to take up a position with Standard Charter
Bank.
[12] The trial court considered the evidence presented
by the state sufficient to justify the conviction of the appellant.
The appellant’s
version was found to be inherently improbable.
In support of this finding as to the improbability of the appellant’s
version,
the trial court stated that it could not accept that an
experienced banker such as the appellant would ‘have just
rubber stamped’
Moonstar’s applications for letters of
credit. The trial court criticised the appellant for failing to
attach a motivation
to the application forms or a note indicating
that he had not considered the merits of each application. The trial
court concluded
that the appellant, by appending his signature to the
application forms, had intended to induce Global to believe that
Nedcor’s
normal credit lending requirements had been complied
with.
[13] On appeal, the high court also found the
appellant’s version ‘unacceptable’. The high court
further found that
the credit department had been by-passed, and that
the appellant ‘did not direct the applications’ through
the appropriate
channels ‘in all probability with the intention
to circumvent’ the bank’s credit procedure. It is these
findings
which the appellant takes issue with in this appeal.
[14] The crime of fraud consists
of unlawfully, and with intent to defraud, making a misrepresentation
which causes actual prejudice
or which is potentially prejudicial to
another.
1
It is alleged in the charge
that the appellant unlawfully and fraudulently misrepresented that:
(a) he had authority to approve applications for letters
of credit; and/or
(b) he had complied with Nedcor’s normal lending
requirements in approving the letters of credit; and/or
(c) he had acted within his lending mandate; and/or
(d) there were sufficient facilities and/or security in
place to ensure repayment of the letters of credit; and/or
(e) he had acted within the normal scope of his duties
by approving the letters of credit.
In this matter, it is difficult to appreciate how the
state could succeed in proving the guilt of the appellant without
showing that:
(a) the appellant was involved in a course of conduct
which, to his knowledge, would and did involve the making of a false
representation
to Global; and
(b) the appellant had knowledge that Global was unaware
of the change in the credit mandate system and would have issued the
letters
of credit on the basis of his signature alone.
[15] I turn now to consider whether the bypassing of the
credit department was brought about in consequence of any deliberate
and
intentional act or omission on the part of the appellant. The
only person who could explain how the documents ended up with Global
was Ms Huey Botha, the wife of Botha, who had been employed by Nedcor
as a foreign representative. In that capacity she acted as
translator/facilitator for the bank’s Chinese speaking clients.
According to her testimony she either received the application
forms
directly from the appellant or they were left in her office. This is
in stark contrast to the appellant’s testimony that
the
application forms were dispatched to Ms Botha via the bank’s
internal messenger system. Ms Botha said that once she received
the
application forms it was her responsibility to deliver them to
Global. The procedure she adopted does not accord with the procedure
testified to by Snyman and the appellant. According to Snyman and the
appellant the normal procedure was that the applications were
to go
from the relationship manager to the credit department.
[16] It is necessary to record that the trial court made
adverse credibility findings against the Bothas. It considered Botha
to be
a fairly convincing witness but one who had only partially told
the truth. The trial court adopted the view that it could rely on
Botha’s evidence only where it was corroborated or not in
dispute. It however found Ms Botha to be a ‘very bad witness’
and concluded that ‘very little evidential weight’ could
be attached to her testimony.
[17] In my view, the principal deficiency in the state’s
case is its failure to establish the mechanics of the fraud. If the
state is unable to prove the mechanics of the fraud - how the
application forms got from the appellant to Global, without being
channelled
through the credit department - on what basis can it be
found that that was the consequence intended by the appellant? There
is no
evidence to suggest that the appellant knew that Ms Botha would
not follow standard procedure and instead deliver the application
forms directly to Global. There is in fact evidence to suggest the
contrary. Ms Botha testified that the appellant had not given
her
specific instructions regarding the application forms. Botha’s
testimony is that the appellant had advised him (Botha)
that the
applications for letters of credit would follow the bank’s
normal procedures. On the evidence it cannot be found that
the
appellant intended to or took any steps, whether by action or
inaction, to cause any of the applications for letters of credit
to
bypass the credit department and the contrary finding by the high
court in paragraph [13] above cannot be supported.
[18] I turn to the second issue, namely, whether the
appellant knew that Global was unaware of the change in the credit
mandate system.
The appellant’s uncontested evidence is that he
had never been to Global’s premises and that he was not known
by the
personnel at Global. This evidence was confirmed by the staff
at Global. It is common cause that the withdrawal of the credit
mandate
of relationship managers was well publicized within Nedcor.
It is surprising that Global, which is not an independent entity, but
a division within Nedcor, was unaware of the changes in the bank’s
credit policy. There is not a shred of evidence to support
a finding
that the appellant knew or could safely have assumed that Global was
oblivious of the change.
[19] It is trite that in a
criminal matter the state must establish the guilt of the accused
beyond reasonable doubt and that where
the explanation of the accused
is reasonably possibly true, then an accused is entitled to be
acquitted. In
S v
Shackell
2
after restating the
standard of proof in criminal matters, Brand AJA stated that it is
permissible for a court to test an accused’s
version against
the probabilities but hastened to caution that an accused’s
version
‘
cannot be rejected merely
because it is improbable;
it can only be
rejected on the basis of inherent probabilities if it can be said to
be so improbable that it cannot reasonably possibly
be true
.’
(Emphasis added.)
The
appellant gave an account as to why he had appended his signature to
the application forms and although it may be contended that
this was
not the norm or the most practical way of ensuring that the
applications were processed, or even that the appellant may
have been
negligent, it is not possible, from that evidence, together with the
evidence led by the state, to make the quantum leap
in logic, as did
the magistrate, that by signing the application forms, the appellant
had ‘intended to pretend to Global that
credit vetting was
done’.
[20] I turn now to consider the evidence relating to
‘gifts’, ‘a job application’ and ‘a
trip to China’,
all of which, according to the trial court,
were circumstantial factors, pointing towards the guilt of the
appellant. The appellant’s
evidence was that he had received
gifts from Zhang, such as wine and royal jelly which were all below
the value of R500 and in terms
of the bank’s policy did not
have to be declared. Botha was not in a position to dispute this and
there is no reason to believe
that the appellant was being
untruthful. Botha in his evidence suggested that the appellant had
received cash from Zhang (R5000 per
month). This evidence was also
disputed by the appellant. Zhang was not called as a witness and in
the view of the approach adopted
by the magistrate, Botha’s
uncorroborated evidence has to be disregarded.
[21] The appellant did not make a
‘job application’ to either Moonstar or Emperor Fisher.
According to the evidence, Botha
had made an offer to the appellant
after
the
latter had indicated his intention to leave the employ of Nedcor and
after
the appellant had signed
the first letter of credit application form. It is in any event
extremely improbable that the appellant with
his credentials would
have considered for a moment taking up employment with either of the
companies, and the suggestion that he
may have been induced by the
offer of employment to commit the frauds is so far fetched that it
may be rejected out of hand.
[22] It is common cause that after resigning from the
employ of Nedcor, the appellant accompanied Botha, Zhang and certain
other delegates,
one of whom was a high ranking official from the
National African Chamber of Commerce and Industry (Nafcoc), on a trip
to China.
It is also common cause that Botha paid for the air
tickets. The importance of the trip to China was overstated by both
the trial
and high court. First, the appellant, by reason of his
expertise in the banking industry, was invited to be a member of the
delegation.
Secondly, the trip occurred subsequent to the appellant
leaving Nedcor. Thirdly, upon the appellant discovering that Botha
had misrepresented
to their Chinese counterparts that the appellant
was still employed by Nedcor, he immediately cut short his trip to
China. This response,
on the part of the appellant, does not support
the high court’s finding of the existence of a ‘special
relationship’
between Botha and the appellant.
[23] In my view, there is nothing improbable in the
explanation put forward by the appellant. It seems improbable that
the appellant,
a senior, highly respected and sought after banker,
would, for no apparent personal gain (apart from the negligible gifts
already
mentioned) put his successful banking career on the line for
a simple and unsophisticated series of frauds, which could and should
easily have been detected.
[24] The appeal succeeds and the appellant’s
convictions and sentences are set aside.
L V Theron
Acting Judge
of Appeal
CONCUR:
CLOETE JA
CACHALIA JA
1
See
S v Campbell
1991 (1) SACR 503
(NM) at 505b-c and JRL Milton
South African Criminal Law and Procedure
Vol 2, 3 ed (1996) p
702.
2
2001
(4) SA 1
(SCA) para 30.