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[2012] ZAKZPHC 41
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S v Kwatsha (CC 65/2011) [2012] ZAKZPHC 41; 2013 (1) SACR 311 (KZP) (24 July 2012)
REPUBLIC OF SOUTH AFRICA
KWA ZULU NATAL HIGH COURT,
PIETERMARITZBURG
SITTING AT RAMSGATE
CASE
NO. CC 65/2011
THE
STATE
versus
THANDO
KWATSHA
JUDGMENT (On Sentence)
Delivered on 24 July 2012
NDLOVU J
[`1] On 21 June
2012 the accused was convicted, on his plea of guilty,
1
of 37 counts of
fraud involving the total sum of R5 955 000
2
,
upon the Court being satisfied of his tendered written plea
explanation
3
that he was,
indeed, guilty as charged. The charge was subject to the provisions
of section 51(2) of the Criminal Law Amendment
Act
4
.
[2] The
modus
operandi
whereby
the accused misrepresented the true state of facts to the 37
complainants and to the prejudice of both the complainants
and
Standard Bank (the Bank), in the commission of the crimes concerned,
is clearly set out in paragraphs 3 and 4 of the preamble
to the
Indictment which, for the sake of convenience, I propose to repeat:
‘
3.
Whilst employed as (financial planner) at either the Kokstad, Ixopo
and Matatiele branches (of Standard Bank), the accused interacted
with the complainants herein and misrepresented to them that the
amounts invested by them will be deployed to approved investment
companies within the Standard Bank group.
4.
The accused however deployed the money paid in by the complainants
herein to Messin Projects CC, which account is operated by
an
associate of the accused and not one of the approved investment
companies within the Standard Bank group.’
[3] In mitigation of sentence the
accused elected to give evidence and he furnished his personal
particulars. He is 38 years old
currently resident at 9283 NU3
Mdantsane in East London, Eastern Cape, with his mother and younger
brother. He has his own property
registered both in his name and that
of his estranged wife who left him together with their two minor
children aged 7 years and
12 months, consequent upon the accused’s
arrest on this matter. At the moment their Kokstad home is being
rented out.
[4] The accused holds a tertiary
education qualification - that is, a national diploma in inventory
and stores management. He had
worked for the Bank as financial
planner since 1 October 2001. He was based in Kokstad but also
serviced the Bank’s branches
in Matatiele and Ixopo. His duties
mainly involved selling life insurance and investment products, long
and short term. In this
regard, he gave advice to the Bank’s
clients who came to him for service. The Bank’s approved and
associated investment
companies were Stanlib and Liberty Life. The
accused further told the Court that he did not have a basic salary
and that he earned
his income from an average monthly net commission
of R15 000 which he received from the Bank. He was dismissed
from work as
a result of this case.
[5] He then sought to explain that he
committed these crimes through the influence of his father. He told
the Court that in or about
April 2008 just before the offence
referred to in count 1, his father who was then employed by a sorghum
breweries company in Midrand,
Gauteng, contacted him and requested an
amount of R100 000 which the accused responded he did not have.
His father then introduced
to him the existence of Messin Projects CC
in which he (his father) said he was involved with a certain other
lady partner whose
name was also given to the accused. The accused
said his father then suggested to him that he should get his clients
to invest
their funds at Messin Projects, instead of the Bank’s
approved investment companies, saying that the clients would get a
more lucrative interest return by investing with Messin Projects. His
father supplied him with the banking details of Messin Projects
into
which the accused would deposit or transfer the clients’
investment funds.
[6] His father had also told him that
he (his father) was owed in the region of R2 million by Industrial
Development Corporation
(the IDC) for which his father’s
business had rendered security services under a tender contract.
According to his father,
certain officials at IDC who had to process
the R2 million payment, were demanding an amount of R100 000 (which
appeared to be
bribe money) in order for them to expedite the
processing of his father’s payment. This was the sum of money
which his father
initially asked for from the accused. His father had
promised that the money would be repaid after a week. However when
that did
not happen his father told him that the IDC officials were
demanding more money and that the accused had to get that from other
clients, which the accused then did. He said he kept on believing
that his father would eventually ensure that the clients’
investment funds would be paid back.
[7] The accused said he had trusted
and respected his father as someone who had never committed a wrong
and he had believed in him.
As a result, he had then transferred, or
caused to be transferred, the clients’ investment funds into
the account of Messin
Projects, as alleged in the Indictment.
[8] He said he started encountering a
problem in or about March 2009 when Mrs CN Conana the complainant in
count 5, who had invested
R200 000, requested a refund of her
money. However, the refund was not possible because the accused had
transferred the money
to Messin Projects account, although he had
told Mrs Conana that her money would be invested on an open account
with Stanlib. Confronted
with this problem, he had then phoned his
father and informed him that there was a client who wanted her money
back, which was
R200 000. His father said he and his business
partner would try and get the money paid back soon. However, that did
not happen.
[9] In the meantime Mrs Conana kept on
coming to the Bank asking for her money from the accused. Out of fear
that the issue would
probably come to the attention of the Bank
authorities, the accused decided to call in another client whom he
knew had about R240 000
in her estate account. That was Mrs PZ
Langa, the complainant in count 7. He advised her to take her money
out of the estate account
and invest it with Stanlib, to which the
unsuspecting Mrs Langa agreed. Then, on 13 March 2008, instead of
doing what he had undertaken
to Mrs Langa he would do, the accused
transferred her funds, in the sum of R210 000, into the account of
Messin Projects. In other
words, even at that stage, notwithstanding
Mrs Conana’s urgent demands, the R210 000 which the
accused obtained from
Mrs Langa, was not used to refund Mrs Conana of
her R200 000, but was again transferred and paid into Messin
Projects account.
[10] The accused admitted that the
same
modus operandi
continued, on the dates mentioned in the
Indictment, until the fraudulent transaction on 22 January 2010
(count 37) proved to be
the final straw. This was after the
complainant, Mrs Mahlawe, suspected that something untoward had
occurred and she reported the
matter to the Bank authorities, which
resulted in the arrest of the accused shortly thereafter. He said
only three of the 37 clients
were paid back their monies by Messin
Projects.
[11] The accused’s spiritual
adviser, Pastor Cecil Hemero, was called by the defence to testify.
He confirmed that the accused
and his wife were members of his
church, The Power of Love Church based in Kokstad and that they
regularly attended the church
services. He told the Court that the
accused came and confided to him that he was having a problem at work
which the accused described,
referring to this incident. The pastor
said he had also impressed on the accused that the matter was serious
indeed. The accused
had further told him that one of the clients had
sought to cancel her investment with the Bank and wanted her money
back, which
was unfortunately not available. (This client was
apparently Mrs Conana.) The pastor told the Court that he had then
advised the
accused to come clean to the authorities with respect to
what he had done.
[12] The State called the Bank’s
forensic investigator, Clifford Michael Uppink. He had been in the
employ of the Standard
Bank for some 23 years, of which 14 years as a
forensic investigator. He told the Court that after the Bank received
the complaint
from Mrs Mahlawe, he was mandated to investigate the
matter. During the course of his investigation he interviewed the
accused
who admitted to him that he had indeed transferred the
clients’ funds to Messin Projects without the knowledge and
authority
of the clients. The accused had then signed an
acknowledgment of debt with the Bank whereby he undertook to repay
the money. However,
no such repayment was forthcoming. It would
appear, however, that the accused was arrested shortly thereafter.
[13] Mr Uppink further testified that
the Bank staff at all three branches (that is, Kokstad, Matatiele and
Ixopo) were extremely
shocked on learning the news of the accused’s
arrest, given the fact that he was highly respected by his
colleagues, due
to his position in the Bank. He was regarded in a
more senior level than the average Bank’s front staff.
[14] The witness had also interviewed
most of the 37 complainants. He said it appeared that most of the
invested funds consisted
of pension monies either of the clients’
deceased spouses or the clients’ own pensions. Most of the
complainants were
elderly people, about 90% of whom were
unsophisticated and from rural areas. The Bank’s analysis
showed that the deposits
were their life savings which were invested
to secure their future.
[15] Mr Uppink further stated that the
Bank had, in the meantime and on a goodwill gesture basis, taken a
decision to refund all
the clients who came forward and submitted
their claims for refund. However, they were only refunded their
initial investments
without interest. The Bank would consider the
issue of interest after the finalisation of this case. Thus far the
Bank had written
off some R5,1 million which was used to pay the
clients.
[16] The witness further pointed out
that fraud and theft were very prevalent in the banking industry, in
that the current statistics
revealed that during the last financial
year the banks, generally, lost an estimated R2.5 billion through
fraud and theft, which
included cybercrime and card theft. Recovery
of stolen money through these crimes was usually very difficult.
[17] He further told the Court that,
as a result of this incident, the Bank’s reputation was
certainly impacted negatively
in the Kokstad, Matatiele and Ixopo
areas. The Standard Bank brand in those areas was severely damaged in
that the confidence which
the people had of Standard Bank had been
severely tarnished. In fact, the witness was not even sure whether
any of the 37 complainants
had reinvested their monies with Standard
Bank after their reimbursement, which was effected only after a year
since the matter
was investigated.
[18] Under cross-examination, Mr
Uppink confirmed that during his investigation he examined the
accused’s personal account
with the Bank and noticed that there
was insignificant credit balance therein, although he could not
remember how much it was.
The witness also conceded that this
particular type of bank fraud (i.e. committed with this typical
modus
operandi
) was not a regular occurrence.
[19] Mr
Chetty
, in his address
in mitigation, asked me to find that there are substantial and
compelling circumstances to justify the Court’s
departure from
the imposition of the prescribed minimum term of imprisonment. He
submitted that the mitigating factors included
the following:
The accused is a first offender.
He was influenced
by his father to commit the crimes. In this regard he referred me to
the decisions in
S
v Flannagan
5
and
DeSousa
v The State
6
.
The
modus
operandi
in
the commission of the crimes was unique.
The accused pleaded guilty and thus
showed remorse.
He did not acquire any personal gain
from the crimes.
He agreed to assist the police with
their further investigations.
[20] However, Mr Chetty conceded that
the crime was very serious and that a term of imprisonment was the
only suitable sentence.
However, in the light of the mitigating
factors he submitted that the Court should still find the presence of
substantial and compelling
circumstances.
[21] Ms Jacobs submitted that the only
mitigating factor in favour of the accused was that he was a first
offender and that this
factor was far outweighed by the aggravating
circumstances of the case. She asked the Court to find that there
were no substantial
and compelling circumstances present.
[22] As Mr
Chetty
correctly
conceded, the crime of fraud is very serious, more so that it
involved such a large sum of money. Considering the nature
and
magnitude of the crimes I am not persuaded to accept that the
mitigating factors alluded to by Mr Chetty justify the extent
of the
leniency that Mr
Chetty
has implored me to show in terms of
sentence.
[23] Whilst
traditionally a first offender should be kept out of prison, it is
not necessarily so with respect to serious crimes
.
In
S
v Krieling and Another,
7
the
Appellate Division
(per Smalberger JA) stated:
‘
While
it is a salutary principle of sentencing that a first offender
should, as far as possible, be kept out of prison, it is well
recognised that in appropriate cases first offenders may, and indeed
should, be incarcerated. Whether or not imprisonment is indicated
depends essentially upon the facts of each particular case. It is
true that imprisonment will cause the appellants great hardship.
It
will effectively terminate their careers, they will probably lose
their homes, their families will unfortunately suffer and
they will
be exposed to all the negative influences of prison … One is
not unmindful of these considerations. No court would
deliberately
seek to harm a convicted person or cause him undue hardship - no
enlightened system of justice would tolerate that.
But harm or
hardship may be the unavoidable consequence of an otherwise fair and
proper sentence. A balanced approach to sentencing
requires that not
only the appellants' personal circumstances and the potential
hardship to them be given due weight, but also
the nature of their
crime and the interests of the community.’
[24] In
S
v Holder
8
the Appellate
Division (now the Supreme Court of Appeal) emphasised that the
approach that imprisonment is only justified in certain
cases cannot
be accepted and is a limitation which does not exist in the meting
out of punishment. Any serious offence, irrespective
of the nature
thereof, can lead to imprisonment and imprisonment is sometimes the
only appropriate sentence which ought to be imposed.
9
In the application
of the principle that imprisonment ought to be avoided, the punitive
element of punishment must, in serious offences,
of whatever nature,
come to the fore and be properly considered, if punishment is to have
any meaning in the criminal law.
10
[25] In the present case the accused
committed 37 counts of fraud involving approximately six million rand
against mostly elderly
and unsophisticated rural people who had
placed their trust and confidence in him. Mr
Chetty
has
conceded that custodial punishment was the only suitable sentence. In
my view, it is indeed so. On this basis, the consideration
of
correctional supervision or a suspended sentence as an option simply
falls away.
[26] I am certainly
not convinced that the accused’s conduct in committing all 37
counts of fraud was as a result of direct
influence by his father,
which he could not resist. The facts in the present case are, in my
view, clearly distinguishable from
Flannagan
and
De Sousa,
relied on by Mr
Chetty
.
In
Flannagan
the appellant, a
female bank clerk, was convicted of one count of fraud involving R8,5
million which she fraudulently transferred
from one account to
another. It was established that she had been forced by her husband
to commit the fraud. She was 31 years old
and a mother of three
children. She was sentenced to seven and a half years’
imprisonment, of which two years was conditionally
suspended. On
appeal, the sentence was reduced to 4 years’ imprisonment in
terms of section 276(1)(i) of the CPA.
[27] In
De
Sousa
the
appellant was convicted of 13 counts of fraud involving the sum of
R1.228 million. The trial Court found that there were substantial
and
compelling circumstances present and sentenced her to seven and a
half years’ imprisonment. She was 32 years old and
a first
offender. The facts established that she had committed the crimes ‘
at
the instance of her boyfriend who preyed on her vulnerabilities’
11
and that she
‘
had
assisted her boyfriend to implement a fraudulent plan.’
12
She only benefitted
R90 000 from the crime and she had repaid that amount. She
co-operated fully with the police and had shown
genuine remorse.
There was also little likelihood that she would commit the crime
again. On appeal, her sentence was reduced to
four years’
imprisonment.
[28] It seems to me there is simply no
comparison between the two decisions and the present instance. In
fact, I do not even appreciate
on what basis Mr
Chetty,
with
respect, referred to
Flannagan
because the question of
influence, in the context relied on, clearly did not arise there. In
that case the accused was not just
influenced, but forced by her
husband to commit the crime. Further, there was only one count of
fraud involved, as opposed to 37
counts in this case. Similarly, in
De Sousa
the Court found that the accused’s boyfriend
had preyed on her ‘vulnerabilities’ and further that she
had at
least repaid the amount of R90 000 which she had
benefitted from the crime. Such facts or considerations are not
present here.
[29] In any event, any influence which
a husband may have over his wife or a boyfriend over his girlfriend,
on the one hand, cannot
be equated or compared with the so-called
influence by a father living in Gauteng over his 36 year old,
married, sufficiently qualified
and independent son living with his
own family in the KZN south coast town of Kokstad. The accused was a
sophisticated and intelligent
adult person. It was highly unlikely
that he could so easily, without more ado, submit to any influence,
from whomsoever, to commit
a serious crime such as this one. The
accused’s version in this regard was so highly improbable that,
on questioning by me,
he conceded that if he were to be placed in the
position of a listener to his story he would himself not have
believed the veracity
thereof. In short, the accused’s feeble
explanation about his father influencing him in this regard is so
simplistic and
ludicrous that it falls to be rejected outright as a
clear fabrication. It can only exist as a figment of his imagination.
I do
not need to have any opposing evidence to controvert it.
[30] The fact that
the accused committed these crimes using a
modus
operandi
that
may be described as unique is, to my mind, simply immaterial. The
upshot of the matter is that this is bank fraud and a white
collar
crime, which is quite serious and prevalent in the country. In
De
Sousa
the
Court remarked that
‘
white-collar
crime had reached alarming proportions and its corrosive impact upon
society was all too obvious.’
13
[31] Whilst it is noted that the
accused was convicted on his guilty plea, which is usually regarded
as a sign of remorse, this
is not necessarily always the case. The
accused did not, once the matter appeared before court, indicate his
intention to confess
to the crimes. Instead, the contrary was shown
when he chopped and changed his legal representatives and caused the
trial not to
proceed on its first set down but instead postponed more
than once at his own instance. A number of witnesses were arranged
and
secured by the State to come to Court and testify and this was
obviously done on the assumption that the accused was not admitting
his guilt. Had he indicated otherwise at the outset, all those
arrangements would not have been made.
[32] The accused took some two and a
half years to make up his mind to plead guilty. In this situation I
am inclined to conclude
that his tendering of a guilty plea was more
to do with his realisation of the overwhelming and watertight case
against him than
his showing of genuine remorse.
[33] It is not uncommon that in some,
if not many, cases the disposal or whereabouts of the proceeds of
crime involving monetary
assets permanently remains the secret of the
perpetrator, who would rather choose to go prison and serve whatever
sentence than
to reveal the secret. In any event, it seems to me that
in such situation where the stolen money is never recovered by the
owner,
this factor should only serve as an aggravating feature.
[34] If the accused is genuinely
willing to assist the police in their further investigation of this
matter it is strange why the
police are apparently still not in
possession of evidential material enabling them to effect further
arrests or, at least, to recover
something from the stolen loot. As
stated, this matter has now taken some two and a half years already
without the accused’s
professed assistance being seen to bear
fruit. Instead, he decided to flee Kokstad and went to stay with his
mother in East London
against the knowledge and approval of the
investigating officer as it was required in terms of his bail
conditions. In any event,
from what he told the Court about this
case, it is inconceivable what other information, he would want the
Court to believe, he
could assist the police with.
[35] In my view,
this is a typical case where the consideration of rehabilitation was
to give way to that of retribution and deterrence.
In this regard, I
am reminded of the remarks by Nugent JA in
S
v Swart
14
where the learned
Judge of Appeal stated the following:
“…
[I]n
our law retribution and deterrence are proper purposes of punishment
and they must be accorded due weight in any sentence that
is imposed.
Each of the elements of punishment is not required to be accorded
equal weight, but instead proper weight must be accorded
to each
according to the circumstances. Serious crimes will usually require
retribution and deterrence should come to the fore
and that the
rehabilitation of the offender would consequently play a relatively
smaller role.”
[36] I agree with Ms Jacobs’s
submission that the only mitigating factor may be that the accused
has a clean criminal record.
However, I do find that the following
constitute aggravating features in this case:
36.1 This fraud involves a large sum
of money in aggregate, namely, approximately R6 million.
36.2 The crimes were not committed on
the spur of the moment, but over a period of about two years and on
37 different occasions
and against 37 different complainants, during
that period.
36.3 The crimes were committed against
unsuspecting Bank customers who were mostly rural and unsophisticated
elderly people who
had placed their trust and confidence in the
accused, which the accused so mercilessly abused.
36.4 The accused also breached and
abused the position of trust and confidence which the Bank, as his
employer, had placed in him.
36.5 His conduct had damaged and
tarnished the Bank’s image and reputation not only with the 37
victims but generally in the
Kokstad, Matatiele and Ixopo areas.
36.6 The stolen money was never
recovered.
36.7 The fact that the stolen money
could not be traced at the accused’s door is not, in my view,
necessarily proof that the
accused acquired no personal gain from the
proceeds of these crimes.
36.8 Despite Mrs Conana having
confronted the accused for her refund, the accused did not thereafter
stop perpetuating his crimes.
It is likely therefore that had he not
been arrested he would have continued doing so indefinitely.
36.9 Finally, this kind of crime does
not only affect the banking industry, but it has a huge negative
impact on the economy of
the country.
[37] In my finding, the aggravating
circumstances far outweigh the mitigating factors. Accordingly,
substantial and compelling circumstances
as envisaged in
section
51(3)
of the
Criminal Law Amendment Act 105 of 1997
do not exist in
this case.
[38] In the result, the accused is
sentenced to undergo 15 (fifteen) years imprisonment. All counts are
taken as one for the purpose
of sentence.
1
S
ection
112(1)(b) of Act 51 of 1977 (the CPA)
2
The
detailed particulars of all 37 counts appear in Schedule ‘A’
to the Indictment. The amount per count ranges between
R40 000
and R500 000.
3
Section
112 (3) of the CPA. The written plea statement was admitted and
marked as Exhibit ‘A’.
4
Act
105 of 1997
5
1995
(1)
SACR 13
(A)
6
[2008]
JOL 22428
(SCA)
7
1993
(2) SACR 495
(A)at 497A. See also:
S v
Kulati
1975 (1) SA 557
(EC) at 559A-560H;
S
v Sakabula
1975 (3) SA 784
(C) at 786H-787H;
S v Makkahela
1975
(3) SA 788
(C) at 789F - G;
S v Ceylon
1998 (1) SACR 122
(C) at 123j-124b.
8
1979
(2) SA 70
(A)
9
S
v Holder
, above, at
77H-78A .
See also
S v Silimela
1999 (2) SACR (C)
10
S
v Holder
, above, at 74H-75A
11
Par
[9]
12
See
head note
13
par
[11]
14
2004
(2) SACR 370
(SCA) at para 12. See also:
Director
of Public Prosecutions, KwaZulu Natal v Ngcobi and others
2009 (2) SACR 361
(SCA) at para 22;
Director
of Public Prosecutions, North Gauteng, Pretoria v Thusi and others
2012 (1) SACR 423
(SCA).