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2024
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[2024] ZANCHC 107
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Theys v S (CA&R 62/23) [2024] ZANCHC 107; 2025 (1) SACR 318 (NCK) (29 November 2024)
IN
THE HIGH COURT OF SOUTH AFRICA,
NORTHERN
CAPE DIVISION, KIMBERLEY
Reportable
Case
No: CA & R 62/23
In
the matter between:
DR
DION THEYS
APPELLANT
And
THE
STATE
RESPONDENT
Neutral
citation:
Theys v
The State
(Case no. CA & R 62/2023 (29 November 2024)
Heard:
29 July
2024
Delivered:
29
November 2024
Coram:
Phatshoane DJP and Stanton J
Judgment
PHATSHOANE DJP:
[1]
One of the
key
components to our constitutional vision is to make a decisive
paradigm shift from the unchecked abuse of state power and
resources that
was virtually institutionalised during the
apartheid era.
[1]
The
Public Finance Management Act 1 of 1999 (PFMA) is the enabling
legislative framework that regulates financial management
in the
national government and provincial governments. It ensures that all
revenue, expenditure, assets and liabilities of those
governments are
managed efficiently and effectively and provides for the
responsibilities of persons entrusted with financial management
in
those governments.
[2]
[2]
The
appellant, Dr Dion Garvey Theys, an acting Head of the Department of
Health (HOD) and its accounting officer during the period
01 October
2009 to 31 March 2012, was entrusted with the statutory
responsibilities referred to in the preceding paragraph. He
is before
us on appeal with leave of the Special Commercial Crimes Court,
Kimberley (Magistrate V Smith), against his conviction
on three
counts of contravening s 86(1) read with ss 1, 38(1)(a)(iii);
38(1)(c) (ii); 38 (1)(n); 39(1)(b; 40(4); 40(5); 44(2)(d);
64 and
76(4)(c) of the PFMA, further read with s 217(1) of the
Constitution
[3]
. He was
sentenced to a fine of R150 000 or three-years imprisonment of which
R100 000 or two-years imprisonment was suspended
for a period of five
years on certain conditions. R10 000 of the fine was payable to the
clerk of the court on or before 7 September
2023 and thereafter R2000
on or before the 7
th
of each succeeding month until the fine was liquidated.
[3]
It is vehemently contested in this appeal whether the
appellant was correctly convicted of contravening the statutory
provisions
specified in the indictment. It is convenient at the
outset to lay down the statutory scheme which forms the basis of the
charges.
First, is s
86(1) of the PFMA which
provides that an accounting officer is guilty of an offence and
liable on conviction to a fine, or to imprisonment
for a period not
exceeding five years, if that accounting officer wilfully or in a
grossly negligent way fails to comply with a
provision of ss 38, 39
or 40 of the PFMA.
[4]
Section 38 deals with the general responsibilities of
accounting officers; it provides in s 38(1)(a)(iii); (c) (ii) and
(n):
“
(1) The accounting
officer for a department, trading entity or constitutional
institution-
(a)
must ensure that that department, trading entity or constitutional
institution has and maintains-
(iii)
an appropriate procurement and provisioning system which is fair,
equitable, transparent, competitive
and cost-effective;
(c)
must take effective and appropriate steps to-
(ii)
prevent unauthorised, irregular and fruitless and wasteful
expenditure and losses resulting from
criminal conduct; and
(n)
must comply, and ensure compliance by the department, trading entity
or constitutional institution, with the provisions
of this Act.”
[5]
Section 39(1)(b) stipulates that accounting officers should ensure
that effective and appropriate
steps are taken to prevent
unauthorised expenditure whereas s 40(4) and (5) deals with some of
their reporting responsibilities
on matters of revenue and
expenditure of departments. Section 44(2)(d)
concerns the delegation of the powers of
accounting officers or instructions to officials to perform duties
assigned to the accounting
officers which authority is subject to any
limitations and conditions the accounting officers may impose.
Section 64 prescribes
that the executive directives, with financial
implications, be in writing and where the implementation of such
directives is likely
to result in unauthorised expenditure, the
accounting officer is to be held accountable for such expenditure
unless he or she had
informed the executive authority in writing of
the likelihood of that unauthorised expenditure.
[6]
The charges are further predicated on s 217(1) of the Constitution
which provides that when an
organ of state in the national,
provincial or local sphere of government, or any other institution
identified in national legislation,
contracts for goods or services,
it must do so in accordance with a system which is fair, equitable,
transparent, competitive and
cost-effective. In respect of the
institutions to which the PFMA applies s 217 is given effect to by s
76(4)(c) of that Act which
provides that the National Treasury may
make regulations or issue instructions applicable to those
institutions concerning the
determination of a framework for an
appropriate procurement and provisioning system which is fair,
equitable, transparent, competitive
and cost-effective.
[7]
The appellant concluded three lease agreements on behalf of the
Department of Health, Northern
Cape (the department), with JP Hugo
Residence t/a Hoffe Park, which was represented by Mr H O Jansen Van
Vuuren, for the accommodation
of the Department of Health’s
Henrietta Stockdale Nursing College (the nursing college) students at
30 Birbeck Avenue, Newpark,
Kimberley (Hoffe Park). The first lease
was concluded on 12 July 2010, for a term of one year ending 30 June
2011, for the accommodation
of 60 students at the rental of R120 per
student daily which included their three daily meals. The
second lease was concluded
on 24 December 2010, for a term of
approximately six months ending 30 April 2011, for the accommodation
of 41 students at the rental
of R3 600 monthly per student inclusive
of their three daily meals. On 28 November 2011, the third lease was
concluded. Its inception
was 01 July 2011. The duration was for a
year ending 30 June 2012, for the accommodation of 200 students at
the rental of R210
per student daily inclusive of meals.
[8]
It is set out in the charge sheet that the appellant did not follow
any procurement process prior
to concluding the aforesaid leases with
Hoffe Park and had failed to record reasons for his deviation from
inviting competitive
bids. Insofar as the appellant procured
services, as he did, it was contended that he unlawfully, wilfully or
alternatively, in
a grossly negligent manner failed to comply with
the specified provisions of the PFMA. In addition, that he failed to
ensure that
the department has and maintains an appropriate
procurement and provisioning system which is fair, equitable,
transparent, competitive
and cost-effective; and or he failed to
prevent unauthorised, irregular, and or fruitless and wasteful
expenditure; and or he failed
to comply and ensure that the
department complies with the PFMA.
[9]
Apparent from the affidavit handed in in evidence by consent,
attested to by Mr DM Gaborone, the
Chief Financial Officer of the
department at the relevant time, from November 2009 to February 2013,
the department paid R23 941
779 for the Hoffe Park leases. From May
2013 to November 2016, when the HOD had already left the services of
the department, the
department paid R60 784 722.60 for the Hoffe Park
lease which at that stage appears to have been on a month-to-month
basis. From
February 2017 to March 2017 the amount of R2 223 834 was
paid whereas from May 2017 to October 2018 approximately R9 143 828
was
paid. In total the department paid rental in the order of R96 094
163.60. Prior to the closure of the State’s case, it sought
leave to bring an application for the amendment of the indictment,
based on the evidence adduced, to reflect the rental paid in
respect
of leases, during the appellant’s tenure as the HOD, to be R13
228 280 which amount appears to have been calculated
by the parties
based on the documentary evidence presented during the trial. The
application for the amendment was deferred but
never revisited. In
its verdict the trial court fixed the value of the leases at R13 228
280.
[10]
The appellant had pleaded not guilty and tendered no plea
explanation. The State called seven witnesses.
[11]
The Director General of the Northern Cape Provincial Government, Mr
Justice Bekebeke, explained that the
appellant ought to have been
reasonably familiar with the provisions of the PFMA. He became aware
of the contentious leases when
the investigating officer (I/O)
requested him to confirm the dates in respect of which the appellant
had acted as the accounting
officer of the department. Procurement of
goods and services is a matter that falls within the discretion of
the HOD. The duty
to investigate financial misconduct lies with the
Provincial Treasury but this did not prevent the National Prosecuting
Authority
(NPA) from instituting criminal proceedings against the
perpetrators.
[12] Mr
Thabo Modise is a portfolio manager in the property division of
Transnet responsible for the overall management
of Transnet’s
residential, commercial and industrial properties in the Free State
and Northern Cape. Transnet, represented
by Mr Modise, and JP Hugo
Residence represented by Mr HJ Jansen Van Vuuren, concluded an
agreement on 31 October 2012 in terms
of which Transnet leased the
same property referred to in the impugned leases from 01 September
2010 to 31 August 2013 at a rental
of R40 000 per month excluding
VAT. The contract did not prohibit subletting, provided Transnet
consented thereto. Mr Modise is
unaware that such consent was given.
Nevertheless, the property was sublet to the department and there had
been nothing irregular
with that insofar as Hoffe Park rented the
rooms for purposes of accommodation, he says.
[13] Ms
Nothemba Maxi Selemela was the principal at the nursing college
during the relevant period. The college
required accommodation for
nursing students who at the time resided in various places in
Kimberley. It was decided to accommodate
them in a single residence
in order to provide them with uniform services and for their
convenience. Where accommodation is to
be procured, as here, the
process she embarked upon was to write a submission containing the
number of students to be accommodated
which included accommodation
specifications in terms of the norms and standards of the South
African Nursing Council. She submitted
this document to her director.
Ordinarily, her director would pass this submission to the chief
director and the chief financial
officer who would verify whether the
goods and services to be procured were within the budget and further
verify the availability
of funds. Following this process, the
submission would be transmitted to the HOD and the MEC, respectively,
for approval. Once
approved the submission would be forwarded to
Human Resources for recordal and finally to the Supply Chain
Management Unit (SCM)
to follow the procurement process.
[14] Ms
Selemela says she was not involved in the SCM process. She intimated
that after the accommodation had
been secured, she and the college
(the end user) were invited to inspect the premises to assess if it
accords with the specifications.
There had been no urgency to procure
the accommodation but some pressure had been exerted. It took
approximately two months, from
the date her submission was drafted,
for the students to be accommodated at Hoffe Park. The written
submission has been mislaid
and could not be located. However, it
existed when payments in excess of R1 million annually were made to
Hoffe Park, approximately
R223 200 on a monthly basis. She was aware
that Hoffe Park did not belong to JP Hugo Residence but was
Transnet’s property
because the chief director of the
department had requested officials, prior to the engagement of JP
Hugo Residence, to verify whether
the accommodation could not be
directly sourced from Transnet.
[15] Ms
Selemela’s evidence took a different angle under
cross-examination. It turned out that she
was involved in the
process of identifying a suitable building for students’
accommodation. She and some colleagues in SCM
went in search of
accommodation around Kimberley but were unsuccessful. Their chief
director, a certain Dr Mbulawa, suggested that
they enquire from
Transnet whether Hoffe Park could not be procured. There were some
delays and eventually JP Hugo Residence acquired
the Transnet’s
lease. Following this, Ms Selemela and her team inspected the
building and were satisfied that it complied
with the applicable
norms and standards. Thereafter, SCM compiled a report, briefed the
chief director and the leases were concluded.
The contracts made
provision for accommodation, catering and laundry services.
[16]
From 2016 Mr Steven Motingoe was the acting chief director: corporate
services in the department. He
is not aware of the procurement
process that was followed to secure the leases because this was
before he joined the department.
He became aware of the leases
towards the end of 2016 when the students took issue with the strict
conditions attached to their
accommodation. At the time, Ms Wookie
had been recently appointed the HOD for Health. The department’s
legal services unit
did not have copies of the leases and its
director, Mr David Ndlovu, reported that legal services played no
role in the procurement
of nursing accommodation. It follows, as it
were, that legal services had not drafted the contracts but were
produced externally.
Although this was not an anomaly legal services
would still be required to verify the contracts.
[17]
Mr Faas, the director SCM of the department at the relevant time,
explained that the department
had in place the appropriate
procurement and provisioning system which was fair, equitable,
transparent and competitive as envisaged
in the PFMA. In respect of
goods or services above R10 Million a bid had to be advertised in the
State Tender Bulletin. Where the
contract value was less than R10
million but over R500 000 the advertisement would be placed in
regional and national newspapers.
Where it was impractical to obtain
the goods and or services through a competitive bidding process,
i.e
.
in cases of a sole supplier of goods and or services, or in cases of
an emergency or urgency, a deviation would be permitted in
terms of
the Treasury Regulation 16A. He referred to this as a secondary
procurement process.
[18] Mr
Faas explained that naturally financial projections serve as a guide
in respect of the manner in which
the market is to be engaged. He
intimated that insofar as the rentals for the leases exceeded
R500 000 the process set out
above kicked in and it would have
been initiated by a requisition and submission from the end-user (the
college). In this case
SCM did not have the requisition and the
submission from the college with financial projections on the
services to be procured
to commence with the procurement process. He
further indicated that the procurement of student accommodation is
not an emergency.
SCM could not say whether this was a case of a sole
supplier as it was never afforded the opportunity to test the market.
[19]
Mr Faas testified that in addition to the said failure to follow the
supply chain processes in
this case there had been no proper
deviation process in terms of Treasury Regulation 16A. Where there
was a deviation SCM would
draft a motivation and not the HOD, setting
out reasons for dispensing with the cumbersome process. He was
summoned to some
meetings at the college when complaints emerged,
which concerned, inter alia, the quality of food offered to the
students, use
of cold-water during winter and shortage of blankets.
Mr Faas stated that a proper procurement process would have
eliminated these
problems as these additional services would have
been part of the bid specifications.
[20] Mr
Faas testified that in the normal course of events SCM would have
uplifted the file which would contain
the minutes of the bid
specification committee (BSC), the bid evaluation committee (BEC) and
the bid adjudication committee (BAC).
Once the BAC had approved
the bid and issued a letter of appointment bearing a unique bid
reference this would be tabled before
the HOD for the approval of the
award. Following this proper process, the documents would be
transmitted to the legal services
department to draft a service-level
agreement (SLA) or a contract to be concluded with a successful
bidder. The copy of the
signed contract together with the bid
documents would be kept in the SCM unit and the originals filed with
the Contract Management
Unit (CMU).
[21] Mr
Faas said as the SCM had not been involved in the procurement process
he could not find any documents
in SCM which pertained to the leases.
The second lease overlaps the first in that when it was concluded the
first had not yet lapsed.
This was an anomaly and hindered any
procurement process that could have been implemented by SCM.
[22] Mr
Ockert Marthinus Vermeulen, a director supporting interlink financial
systems in the Provincial Treasury,
explained that in terms of the
National Treasury Practice Note No 8 of 2007/2008, item 3.4.1, the
accounting officers are required
to invite competitive bids for goods
and services above R500 000. Where there is a deviation para 3.4.3
required that the Provincial
Treasury and Auditor General be provided
with reasons for dispensing with the bidding process. The Provincial
treasury had no record
of approval of the deviation or digression,
nor any proof of the submission of such documents or the extension of
the contracts.
The documents in respect of the three leases, he said,
should be kept in the department even after the lapse of a nine-year
period.
He explained that had due diligence been performed, it would
have been uncovered, when testing the market for the first time
through
a bidding process, that the property belonged to Transnet to
obviate the leases being concluded with a third party who had no
ownership
of the property. Mr Vermeulen explained that the Provincial
Treasury does not investigate cases of financial misconduct. That
process
resorts within the ambit of the department.
[23]
The I/O, Capt BS Tawanyane of the South African Police Service -
Directorate for Priority Crime Investigations
(DPCI), commonly known
as the Hawks, commenced an investigation into the improper
procurement process during 2014 following receipt
of copies of the
leases from a whistle-blower. He, accompanied by Col Luis and Capt
Smith attended to the office of the HOD, Ms
Matlaopane, where they
were also furnished with copies of the leases and their payment
batches which comprised approximately 454
pages. Having established
that the procurement process had not been followed he investigated
whether there had been any recordal
of the deviation process. He
contacted the aforesaid Mr Vermeulen who reiterated the earlier
information. He also discovered that
Transnet owned Hoffe Park and
not JP Hugo Residence as set out in the leases. Capt Tawanyane
intimated that where State funds
were improperly used or where there
is a complaint of financial misconduct the Hawks would have the
authority to investigate and
collaborate with the Provincial Treasury
and other relevant departments.
[24] At
the end of the State’s case the appellant unsuccessfully
applied for his discharge in terms of s174
of the Criminal Procedure
Act 51 of 1977 (CPA). He then testified that the nursing students
were trained on models centred on group
studies, therefore, it was
convenient for them to reside under one roof. These students, who
were mostly young women, would occupy
his office anxious and lamented
the inadequacies of their security. He bore a duty of care and was
impelled to act within the confines
of the law. In light of the
disparities in the meals that the students received and their safety
and security the nursing college
accompanied by SCM went in search of
proper accommodation for these students and secured Hoffe Park which
catered for everything
that the department needed.
[25]
The appellant stated that he signed piles of documents daily. Any
procurement of goods and services was initiated
by a submission which
specified the reasons the goods and services were being procured; the
source of funding; and the legislative
framework which formed the
basis of the procurement. The end-user would sign the submission and
pass this on to the chief directorate
of the unit and lastly, to the
CFO who would verify the availability of funds. In this case the
submission went through the relevant
functionaries including SCM
which reports to the CFO. He says he had a functional SCM system, a
proper financial management system
and a competent CFO. These systems
and their functionaries played a role in the production of source
documents that informed his
decision to append his signature on the
three leases. According to him, in each of the leases SCM produced a
document which contained
reasons for deviating from inviting
competitive bids.
[26]
The appellant protested that he suffered substantial prejudice and
there had been an element of maliciousness
at play because some
crucial documents, which formed the basis of his defence (the
documents which informed his decision to append
his signature to the
three leases) could not be found and had not been placed before the
trial court by the State. Instead, incomplete
documents were handed
in on a piecemeal basis.
[27] He
explained that the leases were audited with no negative findings from
the Auditor General. It came as
a complete surprise to him years
later that the leases were being investigated by the Hawks. There had
been nothing untoward in
respect of the sundry payments that were
made for Hoffe Park because if there were irregularities his
functionaries would have
alerted him to such. Where sundry
payments were made there must be source documents in place to effect
payments. The documents
which evince the deviation from the
competitive bidding process should have been part of every payment
made in terms of sound financial
practices that were applied in his
department.
[28]
The appellant further stated that he signed the second lease before
the first had expired because of the
midyear admission of nursing
students which necessitated that a new lease be concluded, separate
from the first. This had been
preceded by due process. This version,
concerning the midyear intake of students, was not put to any of the
State witnesses who
testified that the second lease overlapped the
first. When probed further on this aspect he intimated that, in the
absence of supporting
documents, he was speculating and that this was
a common practice within the department. He later somersaulted
and disavowed
that he ever said that he speculated. He conceded that,
absent any explanation, the second lease interrupted the first. He
could
not say when the procurement of the second lease would have
commenced. He also could not explain why he signed the second lease
on Christmas Eve of 2010 when the lease commenced on 01 November 2010
and accepted that it was illogical.
[29]
The amount of rental per student in respect of the second lease was
R3 600 monthly. The appellant could not
explain why the midyear
intake was not made part of the first lease and blamed time-lapse and
fading memory for his inability to
explain. The payments made for the
duration of the first and the second leases did not distinguish
between the two. He also signed
the third lease on 28 November 2011,
some six months after its commencement date of 01 July 2011. He said
all documents were supposed
to be in a batch, which would include a
contract, prior to the payment of the invoices. However, in respect
of the third lease,
the services were rendered, and payments effected
prior to the contract being signed.
[30]
The appellant went on to say that the daily rental of R120.00 per
student in respect of the first lease was
value for money as the
students received three meals per day, had access to Wi-Fi, received
laundry services and were provided
with security. He conceded that
other services attendant to this lease such as laundry, catering, and
security could have been
procured elsewhere than from Hoffe Park but
maintained that he was guided by what was contained in the documents
to which he appended
his signature. He also conceded that the leases
made no mention of access to Wi-Fi which conflicts with his earlier
evidence.
[31]
The appellant was confronted with the Auditor General’s report
for the 2009/2010 fiscal year, handed
in by consent and the truth of
the contents thereof accepted, in terms of which it had been reported
that the department omitted
to disclose irregular expenditure
incurred due to the absence of a system to account for irregular
expenditure. The department
notched up R377 million and R147 million
in irregular expenditure resultant from the contravention of supply
chain management regulations
albeit the particulars of the
expenditure had not been specified.
[32]
The trial court found no fault in the wording of the charge and held
that s 86(1) of the PFMA is a crime-creating
provision. It rejected
the argument that the National Prosecuting Authority (NPA) was
statutorily barred from prosecuting the appellant
for the offences he
allegedly committed. The trial court further found that the appellant
signed the leases without following the
prescribed procurement
procedures. Based on Mr Faas’s evidence that the bids are
ordinarily advertised for a period of 30
days before the
closing date for purposes of “interacting with the market”
and that the bid specification, bid
evaluation and bid adjudication
committees should conclude the procurement process within a period of
90 days, the trial court
held the view that procurement of the
students’ accommodation ought to have been subjected to a
bidding process by means
of an advertisement for the specified period
and dealt with by the respective procurement committees prior to
referral to the HOD
for approval. Such an assessment, so
reasoned the court, would have assisted the HOD in making an informed
decision and a
proper lease agreement would have been crafted.
[33]
The trial court accepted that there would be circumstances where the
HOD would be justified to
deviate from applying the normal
procurement process. However, as the evidence demonstrated, even
then, the court held, the application
of the normal procurement
process ought to have been first explored to test the market prior to
the deviation being employed as
this would have fortified
transparency with the resultant value for money. The trial court was
displeased with the process the
appellant embarked upon and labelled
it unfair to other potential bidders. The court found that the
procurement for student accommodation
was not an emergency or urgent
which would have justified the deviation. The court could not
comprehend why the regular procurement
processes were not followed in
the circumstances where the department’s officials took the
trouble to consult, visit the
site and drafted the recommendations
for the approval of Hoffe Park as a service provider.
[34]
The appellant did not impress the trial court as a credible witness.
It acknowledged that he testified on
incidents that occurred many
years back but found that his memory conveniently faded when he had
to provide answers in respect
of documents that the State maintained
were nowhere to be located. The trial court found that the process
the appellant adopted
resulted in three “vague leases” or
“dubious rental agreements”. It expressed doubt whether
Hoffe Park
had the authority to conclude the first lease. Regarding
the second lease, the trial court remarked that it was difficult to
grasp
whether it had interrupted the first or whether it was a
separate agreement. As to the third lease, the trial court took issue
with the fact that it had been signed 5 months after its commencement
date with the result that payments were made to Hoffe Park
when the
written lease had not been concluded.
[35]
The trial court held that there were uncertainties on the type of
meals that were to be offered to the students
and payment for meals
which some of the students may have opted to abstain from. The court
also found that even though the appellant
placed a high premium on
cleaning, laundry and security services, these ancillary services,
although offered to the students, were
not provided for in the leases
or separately subjected to a bidding process. Instead, the
department engaged the same service
provider to render these services
which “created the impression that Hoffe Park was unfairly
favoured”.
[36]
Insofar as the court found that the appellant failed to follow the
supply chain procedures that were extant,
it concluded that his
actions were “unlawful and wilful” and “grossly
negligent”. To the extent that the
appellant purported to have
deviated from the procurement process, the court found that his
reasons were “unacceptable and
totally unlawful and reckless”.
The trial court concluded that the appellant contravened “the
relevant sections”
of the PFMA as set out in the indictment and
accordingly found him guilty as charged.
[37]
The appellant assails the judgment and order of the trial court on
multifarious grounds. Before turning to
the merits, it is necessary
to consider what I have condensed into two main technical points
raised before the trial court and
persisted in on appeal.
[38]
First, it was contended for the appellant
that the trial court
ignored the materiality and centrality of the Provincial Treasury in
instituting disciplinary and criminal
proceedings against the
accounting officers and that such proceedings cannot be capriciously
set in motion based on information
from an unknown whistle-blower
without the concurrence of or consultation with the Provincial
Treasury as contemplated in sections
3(3), 6(2)
(b)(g)(f)
,
18(2)
(b)
, 18(2)
(f)
and 85(1)
(c)
, of the PFMA
read with clauses 4.1.3 and 4.2.2 of the Treasury Regulations (2005).
It is imperative to set out the statutory architecture he relies on
in support of this point.
[39]
Section 6(2) of the PFMA provides, in the
relevant part, that to the extent necessary to perform the functions
mentioned in subsection
(1), the National Treasury-
“
(b)
must enforce this Act and any prescribed
norms and standards, including any prescribed standards of generally
recognised accounting
practice and uniform classification systems, in
national departments;
(f)
must
intervene by taking appropriate steps, which may include steps in
terms of section 100 of the Constitution or the withholding
of funds
in terms of section 216 (2) of the Constitution, to address a serious
or persistent material breach of this Act by a department,
public
entity or constitutional institution; and
(g)
may
do anything further that is necessary to fulfil its responsibilities
effectively.”
[40]
Section 18(2)
(b)
of the PFMA mirrors s 6(2)(b) except that it
applies to provincial treasuries. It provides that a provincial
treasury must enforce
the PFMA and any prescribed national and
provincial norms and standards, including any prescribed standards of
generally recognised
accounting practice and uniform classification
systems, in provincial departments. Section 18(2)
(f)
provides
that a provincial treasury may investigate any system of financial
management and internal control applied by a provincial
department or
a provincial public entity.
[41] At
s 84 of the PFMA it is stipulated that a charge of financial
misconduct against an accounting officer
or official referred to in s
81 or 83, or an accounting authority or a member of an accounting
authority or an official referred
to in s 82, must be investigated,
heard and disposed of in terms of the statutory or other conditions
of appointment or employment
applicable to that accounting officer or
authority, or member or official, and any regulations prescribed by
the Minister in terms
of s 85. Section 85(1) concerns the
regulations on financial misconduct. It provides in part that:
“
(1) The Minister
must make regulations prescribing-
(a)
the manner, form and circumstances in which allegations and
disciplinary and
criminal charges of financial misconduct
must
be reported to the National Treasury, the relevant provincial
treasury and the Auditor-General, including-
(i).
particulars of the alleged financial misconduct; and
(ii).
the steps taken in connection with such financial misconduct;
(b)
matters relating to the investigation of allegations of financial
misconduct;
(c)
the circumstances in which the National Treasury or a provincial
treasury
may
direct that disciplinary steps be taken or
criminal charges be laid against a person for financial misconduct.”
[42]
The regulations referred to in s 85(1) above are Treasury
Regulations,
[4]
in particular,
regulation 4 thereof. Regulation 4.1.3 finds application in domestic
disciplinary enquiries against the accounting
officers whereas
regulation 4.2. concerns the reporting and instituting criminal
proceedings against them. Regulation 4 provides
in part:
“
4.1
Investigation of alleged financial misconduct [Sections
85(1)
(b)
,
(c)
and
(d)
of the
PFMA]
4.1.3 If
an accounting officer is alleged to have committed financial
misconduct, the relevant
treasury, as soon as it becomes aware of the
alleged misconduct, must ensure that the relevant executive authority
initiates an
investigation into the matter and if the allegations are
confirmed, holds a disciplinary hearing in accordance with the
prescripts
applicable and agreements applicable in the public
service.
4.2
Criminal proceedings [Section 86 of the PFMA]
4.2.1 The
accounting officer must advise the executive authority, relevant
treasury and the Auditor-General
of any criminal charges it has laid
against any person in terms of section 86 of the Act.
4.2.2 The
relevant treasury
may
direct an institution to lay criminal
charges against any person should an accounting officer fail to take
appropriate action.”
[43]
Based on the aforesaid legislative framework the appellant argued
that the trial court’s finding, that
it was not necessary for
the criminal charges on financial misconduct to be preceded by a
complaint from the Provincial Treasury,
was erroneous. In
amplification, it was contended that s18(2)(b) read with s 84 and s
85 of the PFMA, together with the Treasury
Regulations, employs the
word “must” at least five times in their texts whereas s
18(2)(b) of the PFMA entrust Provincial
Treasuries with authority to
enforce that Act. It was argued that a contextual purposive
interpretation to s 6(2)(b), on the function
and powers of the
National Treasury where it states: the “National Treasury must
enforce this Act”, considered holistically
with all the
aforesaid sections of the PFMA, is peremptory. It was contended that
the Provincial Treasury was not afforded the
legislative right to
determine whether the financial misconduct in issue constituted gross
misconduct and to exercise its legislative
discretion to refer such
misconduct for criminal prosecution.
[44]
The appellant further contended that the trial court erred because it
did not consider that the Hawks and
the NPA could not initiate and
prosecute the appellant arbitrarily without the concurrence of the
Provincial Treasury.
It
was argued that
in
terms of
s
17D (1)
(a)
of
the
South African Police Service Act 68 of 1995
(SAPS Act)
the
Hawks
ought to investigate national priority crimes and not the offences
the appellant is alleged to have committed which,
ex
facie
the Constitutional Court’s decision in
Helen
Suzman Foundation v President of the Republic of South Africa &
others
[5]
,
do not constitute national priority offences referred to in Chapter 2
and s 34 of the Prevention and Combating of Corrupt Activities
Act 12
of 2004 (Corruption Act).
[45]
Section 20 of the National Prosecuting Authority Act 32 of 1998 (NPA
Act), inter alia, vests in the NPA
t
he power,
as contemplated in section 179 (2) and all other relevant sections of
the Constitution, to institute and conduct
criminal
proceedings on behalf of the State. The appellant argued that the
trial court
failed to consider that his prosecution in terms
of section 20(1) of the NPA Act could only be lawful if preceded by a
lawful investigative
process referred to in the PFMA.
[46]
The appellant contended that s 17D of the SAPS Act and s 20 of the
NPA Act do not
supersede the powers vested on Provincial
Treasuries in terms of the PFMA to initiate investigations and
exercise their discretion
to complain or refer financial misconduct
for criminal proceedings. To hold otherwise, it was argued, would be
to usurp the powers
conferred upon another organ of the State. In any
event, where there is an
inconsistency between
the PFMA and any other legislation, in terms of
s
3(3)
of the PFMA, the latter should prevail, so the argument went.
[47]
Section
17C(1) of the SAPS Act, which establishes the DPCI or the Hawks and
locates it within the SAPS, was enacted pursuant to
s 205(2) of the
Constitution. In terms of s 17D (1)
(a)
of
the SAPS Act the functions of the Hawks are to prevent, combat
and investigate national priority offences,
which in the
opinion of the National Head of the Directorate need to be addressed
by the Directorate. Section 17A defines
the national priority
offences as 'organised crime, crime that requires national
prevention or investigation, or crime
which requires specialised
skills in the prevention and investigation thereof, as referred to in
section 16(1)'. Section 16(1)
provides
that the circumstances referred to in s16(2) amounting to criminal
conduct or an endeavour thereto, shall be regarded as
organised
crime, crime which requires national prevention or investigation, or
crime which requires specialised skills in the prevention
and
investigation thereof. These circumstances comprise criminal conduct
or endeavour thereto: inter alia,
by
a person or persons in positions of trust and making use of
specialised or exclusive knowledge; crimes in respect of the revenue
or expenditure of the national government; or which takes on such
proportions or is of such a nature that the prevention or
investigation
thereof at national level would be in the national
interest.
[6]
[48]
The Constitutional Court in the
Helen Suzman Foundation
case
did not set aside the whole of s 16 of the SAPS Act save
t
he words 'in accordance with the approved policy guidelines'
as contained in s 16(2)
(h)
and (3). The definition
of national priority crime as set out in s 16 of SAPS Act is, in my
view, sufficiently wide
and may invariably result in an overlap
between the statutory mandate of the Hawks and that of SAPS. To
manage the tension apropos
the overlap, the legislature saw it fit to
provide in s 16(3) that in the event of a dispute between the
National Head of
the Directorate for Priority Crime Investigation and
the National Commissioner or the National Head for Priority Crime
Investigation
and a Provincial Commissioner regarding the question
whether criminal conduct or endeavour thereto falls within the
mandate of
the Directorate, the determination by the National Head of
the Directorate for Priority Crime Investigation shall prevail.
There was no dispute in this case amongst these bodies regarding
their respective mandates.
[49]
Section 16 provides for cooperation between all members of SAPS.
Where
an investigation of a crime or alleged crime reveals that it is a
national priority crime the Provincial Commissioner is enjoined
to
speedily report the matter to the National Head of the Hawks.
[7]
Additionally, the National Head of the Hawks may, after consultation
with the Provincial Commissioner, notwithstanding the presence
of the
circumstances referred to in s 16(2), direct that the investigation
or any part thereof, be conducted by the Provincial
Commissioner.
[8]
The establishment of the Hawks and its location within the framework
of the SAPS was principally designed to augment the capacity
or
improve the efforts of the SAPS to prevent, combat and
investigate national priority crimes and other serious
crimes.
[50]
It so that the
present alleged impropriety
did not involve corruption as set out in Chapter 12 of the Corruption
Act or an offence created by s
34 of that Act or an organised crime.
However, an untransparent tender process is just as much nefarious
and may require the Hawks’
investigation. In any event, insofar
as the value of the leases was found by the trial court to have been
in the order of R13 million
the offence amounts to a serious
commercial crime referred to in s 17B
(a)
of the SAPS Act.
Accordingly, I strain to find that the investigation the Hawks
carried out was improper. The appellant’s
argument on this
score must falter.
[51]
There is no evidence which posits that the Provincial Treasury had
been aware of the possible
flouting of the PFMA within the department
regarding the procurement of the students’ accommodation. What
the evidence revealed
is that the I/O had some consultation with the
Provincial Treasury after the alleged commission of the offences. To
the extent
that the I/O testified that he attended to the offices of
the Provincial Treasury to enquire whether the department had
properly
deviated from the procurement process it can safely be
accepted that the Provincial Treasury was alive to the investigation.
[52]
There is no question that the Provincial Treasury is endowed with the
obligation to enforce the
PFMA in the manner sought by the appellant.
Regulation 4.2.1 and 4.2.2 of the Treasury Regulations, referred to
in para 42 above,
does very little in prescribing the circumstances
in which the National Treasury or Provincial Treasury
may
direct
that disciplinary steps be taken against the accounting officer or
that criminal charges be laid against a person found to
have
committed a financial misconduct. I do not read regulation 4.2.1 and
4.2.2 to disentitle interested parties from laying a
criminal
complaint with the police for the violation of financial prescripts.
To find differently may render ineffectual the constitutional
mandate
of a concerted effort that ought to be made to fight against
white-collar crime. In the present case there had been no
complaint
from the Provincial Treasury that it was denied an opportunity to
exercise a discretion on whether to institute criminal
proceedings
against the appellant or a remonstration from it that it did not
concur in the investigation. In my view, the point
taken is devoid of
any merit.
[53]
As far as the NPA is concerned, their independence concerning
prosecutions is entrenched in s
179 of the Constitution and given
effect to by ss 20(1)
(a)
and 32(1
)(a)
of the NPA Act. Section 20(1)
(a)
vests the power to institute
and conduct criminal proceedings on behalf of the State in the
prosecuting authority whereas
s 32(1)
(a)
provides that a
member of the prosecuting authority shall serve impartially
and exercise, carry out or perform his or
her powers, duties and
functions in good faith and without fear, favour or prejudice and
subject only to the Constitution and
the law. The NPA
therefore acted within its constitutional mandate to prosecute the
appellant.
[54]
The appellant’s further challenge is that the trial court erred
in convicting him in terms of s 86(1)
read with section 38 of the
PFMA without particularising which of the provision(s) of the PFMA
had been violated. It was submitted
that the trial court failed to
sufficiently evaluate the evidence with reference to the specific
statutory provisions (sections
38(1)(a)(iii), 38(1)(c)(ii), 38(1)(b),
38 (1)(n), 39(1)(b), 44(2)(a) and 76(4)(c) of the PFMA) which the
appellant had been accused
of contravening. It was argued that it is
impossible to discern from the judgment whether the appellant was
found guilty of contravening
all the statutory provisions and
acquitted on some.
It was further submitted that
the offences created by section 86 of the PFMA were restricted to the
wilful or gross negligence emanating
from failure to comply with ss
38, 39 or 40 of that Act. Reference to any other provisions of the
PFMA in the charge sheet, it
was argued, was inconsistent with s 86
and rendered the charges defective.
[55] To
recap, in terms of s38(1)(a)(iii) the accounting officers must ensure
that a department maintains an appropriate
procurement and
provisioning system which is fair, equitable, transparent,
competitive and cost-effective. To this end, in terms
of s
38(1)(c)(ii) they are required to take effective and appropriate
steps to prevent unauthorised, irregular and fruitless and
wasteful
expenditure and losses resulting from criminal conduct. In terms of s
39(1)(b) they are required to ensure that effective
and appropriate
steps are taken to prevent unauthorised expenditure. At section
38(1)(n) they are required to comply and to ensure
the department’s
compliance with the PFMA.
[56] As
alluded to, the trial court found the appellant guilty as charged and
had not specified the sections of
the PFMA it returned the verdict
on. It is important to state that the three charges levelled against
the appellant referenced
the identical sections of the PFMA that the
appellant allegedly contravened. In issue is whether the charge sheet
was defective
to the extent that it set out some statutory provisions
(ss 44(2)(a) and 76(4)(c) of the PFMA and 217 of the Constitution)
which
fell outside the ambit of s 86(1) of the PFMA which only
criminalises contravention of
ss 38, 39 or 40.
Should the answer be in the affirmative, it follows that it must be
considered whether the trial court’s
failure
to specify
the statutory provisions the appellant was convicted on nullifies the
verdict.
[57]
Section 84(1) of the CPA provides that a charge shall set forth the
relevant offence in such manner and with
such particulars as to the
time and place at which the offence is alleged to have been committed
and the person, if any, against
whom and the property, if any, in
respect of which the offence is alleged to have been committed, as
may be reasonably sufficient
to inform the accused of the nature of
the charge. This section gives more meaning to the accused’s
right to be informed
of the charge with sufficient detail to answer
as contained in s
35(3)
(a)
of
the Constitution
.
In this case a summary of substantial facts as foreshadowed in the
indictment were reasonably adequate to inform the appellant
what the
State’s case was that he had to meet. In
Du
Toit: Commentary on the
Criminal Procedure Act
[9
]
the learned authors remark:
“
Normally,
prosecutors would include related sections in the charge, such as
those in which the penalty for a contravention of the
section is
prescribed or presumptions are created, or which contain a particular
evidential rule, or a particular regulation with
which a particular
section of an Act has to be read.”
[58]
Some of the provisions of the PFMA referred to in the charge sheet
may not be directly relevant to the offence.
However, I am
unpersuaded that they render the charges defective. This is
especially so because the appellant, who enjoyed legal
representation
at all relevant times, did not object to the charges being vague or
ambiguous or request that he be furnished with
further particulars
before he entered his plea. He undoubtedly understood the charges.
[59]
Regarding the reference to s 38(1)(a)(iii) in the charges it is not
in dispute that the department had in
place an appropriate
procurement and provisioning system which is fair, equitable,
transparent, competitive and cost-effective.
No evidence was adduced
to show that the systems were inadequate or fell short. The case
against the appellant was that when he
concluded the leases he had
failed to apply the procurement process that is fair, equitable,
transparent, competitive and cost-effective.
[60]
Fruitless and wasteful expenditure is defined in s 1 of the PFMA
as expenditure which was made in vain
and would have been avoided had
reasonable care been exercised whereas ir
regular
expenditure means expenditure, other than unauthorised expenditure,
incurred in contravention of or that is not in accordance
with a
requirement of any applicable legislation, including-
(a)
the
PFMA; or
(b)
the
State Tender Board Act 86 of 1968, or any regulations made in terms
of that Act; or
(c)
any
provincial legislation providing for procurement procedures in that
provincial government.
In respect of s 38(1)(c)(ii) it should
be mentioned that the State led no evidence in respect of any payment
that ostensibly could
have amounted to fruitless and wasteful
expenditure.
[61]
The State argued that it was never its case that the services Hoffe
Park rendered were unnecessary and or
that the department did not
require students’ accommodation and or that value did not enure
to the benefit of the department.
In light of this submission, it
seems to me that the appellant cannot be said to have failed to take
effective and appropriate
steps to prevent fruitless and wasteful
expenditure and losses resulting from criminal conduct and I do not
read the trial court’s
reasoning to be that the appellant
committed the department to such expenditure. What the court
mentioned in passing was that had
the BSC, BEC and the BAC been
engaged in the procurement process it would have assisted the
appellant in making an informed decision
before he signed the leases;
would have led to proper leases being drafted and obviated “possible”
fruitless and wasteful
expenditure. Largely, the State’s
argument is that the procurement of leases, absent a fair and
competitive bidding
process, resulted in irregular expenditure.
[62] As
regards the contravention of s 39 of the PFMA, it is to be remembered
that unauthorised expenditure is
defined in s 1 as
(a)
overspending
of a vote or a main division within a vote;
(b)
expenditure not in accordance with the purpose of a vote or, in the
case of a main division, not in accordance with the purpose
of the
main division. Here too, there was no evidence adduced which
demonstrated that the appellant failed to
ensure that
effective and appropriate steps were taken to prevent unauthorised
expenditure. This also applies to
ss 40, 44 and
64 of the PFMA.
Very l
ittle is said in
the charge sheet on the appellant’s alleged breach of these
sections. It seems to me that their inclusion
in the charge sheet was
superfluous.
However, it is difficult to conceive of
any adverse effect this might have had on the appellant’s fair
trial rights.
In addition, I am unpersuaded that they render the
charges susceptible to being quashed in the circumstances where the
appellant
was alive to the precise nature of the allegations against
him.
[63]
Turning to the merits. It bears repeating that
to
give effect to s 217 of the Constitution the Minister of Finance has
in terms of s 76 of the PFMA issued the Treasury Regulations.
More central to the present case is regulation 16A which governs
supply chain management.
Regulation 16A6.4 provides:
“
If in a specific
case it is impractical to invite competitive bids, the accounting
officer or accounting authority may procure the
required goods or
services by other means, provided that the reasons for deviating from
inviting competitive bids must be recorded
and approved by the
accounting officer or accounting authority.”
[64]
National Treasury Practice Note No.8 of 2007/2008 is promulgated in
terms of s
76 (4) (c) of the PFMA. Item 3.4. thereof applies where goods and
services are above the transaction value of R 500 000 (VAT included).
It provides:
“
3.4.1 Accounting
officers/authorities
should
invite competitive bids for all
procurement above R 500 000.
3.4.2 Competitive bids
should
be advertised in at least the Government Tender
Bulletin and in other appropriate media should an accounting officer
/ authority
deem it necessary to ensure greater exposure to potential
bidders. The responsibility for advertisement costs will be that of
the
relevant accounting officer / authority.
3.4.3 Should it be
impractical to invite competitive bids for specific procurement, e.g.
in urgent or emergency cases or in case
of a sole supplier, the
accounting officer / authority may procure the required goods or
services by other means, such as price
quotations or negotiations in
accordance with Treasury Regulation 16A6.4. The reasons for deviating
from inviting competitive bids
should be recorded and approved by the
accounting officer / authority or his / her delegate. Accounting
officers /authorities are
required to report within ten (10) working
days to the relevant treasury and the Auditor-General all cases where
goods and services
above the value of R1 million (VAT inclusive) were
procured in terms of Treasury Regulation 16A6.4. The report must
include the
description of the goods or services, the name/s of the
supplier/s, the amount/s involved and the reasons for dispensing with
the
prescribed competitive bidding process.”
[65]
The State argued that regulation 16A6.4 did not find application
because the procurement of student
accommodation was not an
emergency; it had not been urgent, and neither were the transactions
in issue concluded in a case of a
sole supplier. It is not in dispute
that the value of each of the leases far exceeded the threshold of
R500 000.
It is also common cause that the
appellant did not invite competitive bids when he procured students’
accommodation.
His defence in essence is that it was
impractical to procure any alternative accommodation, therefore, in
terms of the Treasury
Regulation 16A6.4 he approved that Hoffe Park
be procured. He accordingly appended his signature to the deviation
documents which
he intimated were forwarded to the Provincial
Treasury. He repeatedly stated that SCM had regard to the relevant
statutory framework
when they procured Hoffe Park which included
catering, security and other services they offered in terms of the
leases.
[66]
It should therefore be determined whether
the
appellant properly invoked and complied with regulation 16A6.4 read
with Practice Note No 8 item 3.4 when he dispensed with
the bidding
process. Otherwise put, whether the appellant was justified in
relying on regulation 16A6.4.
[67] It
is so that where it is impractical to invite competitive bids for
specific procurement, e.g. in urgent
or emergency cases or in case of
a sole supplier, the accounting officer may procure the required
goods or services by other means.
The Constitutional Court considered
the meaning of term “impractical” in
RAiN
Chartered Accountants Incorporated v South African Social Security
Agency
[10]
.
Madlanga
J there said:
“
To
use the hackneyed but useful legal phrase, what is impractical must
surely depend on the circumstances of each case. In some
instances,
impracticality may manifest in absolute impossibility to engage in a
competitive bidding process. Below that there may
be a range of what
constitutes impracticality. At the centre though must be the question
whether a competitive bidding process
is well and sensibly suited for
the circumstances. A dictionary meaning of “impractical”
is “not adapted for
use or action; not sensible”.
Ultimately what is impractical is a matter of a judgement call to be
made by the Organ of State
concerned. But what the Organ of State may
decide is not unbounded; it must be informed by the operative word –
“impractical”.
And that is an objectively accessible
notion.”
[68] To
demonstrate that Hoffe Park was a sole supplier the appellant relied
on Ms Selemela’s evidence and
two letters his successor, Ms GE
Matlaopane, addressed to Transnet on 22 August 2013 and 06 February
2014, which expressed the
department’s “intention to
engage directly with Transnet in the occupation of Hoffe Park
premises”. The letter
of 22 August 2013 reads:
“
The Department of
health would hereby like to declare its intent to engage directly
with Transnet in the occupation of Hoffe Park
Premises (Kimberley).
The department has been
requested to vacate its Nursing and EMS College from NIHE main campus
building at the end of December 2013,
so as to make way for the new
Sol Plaatje University. As a result, this has placed the department
in a difficult position due to
the non-availability of alternative
office accommodation.
The hostel accommodation
is currently leased from JP Hugo Residence BK on a month-to-month
basis at an exorbitant amount. We also
see this as [an] initial step
to build on our future long-term partnership with Transnet.”
[69] It
was contended for the appellant that the above correspondence showed
that, following the appellant’s
departure from the department,
there was still no alternative building to accommodate the students
under one roof.
In addition, it was argued that
the court paid no attention to the fact that Ms Matlaopane, despite
having incurred more expenditure
and having concluded oral leases,
was not arraigned for any financial misconduct. Instead, so it
was argued, the expenditure
she incurred was lumped together with the
expenditure the appellant allegedly incurred.
[70] It
was revealed, parenthetically during the trial, that following the
appellant’s departure from the
department and at the end of the
third lease sometime in 2012, the department, then headed by Ms
Matlaopane, as reflected in the
letters she directed to Transnet
dated 22 August 2013 and 06 February 2014 above, continued with the
lease of a month-to-month
basis or engaged the services of Hoffe Park
which resulted in the total rental paid being in the order of R96
million. Ms
Matlaopane was not before the trial court for
trial. The circumstances which led her to conclude the leases were
never placed before
the trial court nor was she called to cast
further light on the letters she penned. However, what was said
concerning Ms Matlaopane
is a cause for concern and may require an
investigation by those charged with that responsibility, if so
advised.
[71] On
Ms Selemela’s evidence, prior to the appointment of Hoffe Park,
her chief director requested the
college to verify whether the
accommodation could be directly obtained from Transnet as the owner
of the premises. What this means
is that JP Hugo residence was not
the sole supplier. Transnet may well have been a potential bidder. It
is remarkable that in the
preamble to the leases Hoffe Park
misrepresented that it was the owner of the leased premises.
[72]
The process Ms Selemela says she embarked upon, of identifying a
suitable building through a search she conducted
around Kimberley is
completely irregular and ought not to be countenanced. This would
naturally thwart the greater participation
by potential suppliers in
what ought to have been an open tender process. Item 2.2 of the
National Treasury Practice Note 6 of
2007/2008 underscores that the
SCM process of procuring goods and services by means of public
advertisement, including its publication
in the Government Tender
Bulletin, gives effect to the constitutional prescripts that all
potential suppliers be afforded the right
to compete for public
sector business through competitive bidding. In my view, the
competitive bidding process was appropriate
for the procurement in
issue. Any “judgment call” by the appellant was
ill-considered and irrational. No criticism
can be accorded to
the trial court’s remarks that the application of the normal
procurement process ought to have been explored
to test the market
before the deviation was employed as this fortified transparency and
would have served to establish whether
the leases were
cost-effective. It should be added that that would have also
dispelled any doubt on the availability of suitable
alternative
students’ accommodation.
[73]
An insuperable stumbling block in the appellant’s case is that
where there is a deviation from inviting
competitive bids the
involvement of SCM in the procurement process is unavoidable. Ms
Selemela intimated that she was not involved
in supply chain
processes. Mr Faas’s evidence was that
Ms Selemela’s
office, in terms of the established protocol, made no contact with
him as the director of SCM regarding the
procurement of the nursing
accommodation. She also did not have any communication with Mr Faas
on any progress which concerned
the procurement of student
accommodation as she had testified. Mr Faas says his unit was
never involved in the inspection
of Hoffe Park prior to its
procurement. This is so, he added, because that action is only
implemented subsequent to the evaluation
of the bids.
[74] On
Mr Faas’s version, SCM naturally compiles the deviation because
it would have had information why
the primary procurement process
(formal tender process) was unsuccessful or had not been followed.
This deviation would be forwarded
to the CFO and thereafter to the
HOD. In the present case, Mr Faas intimated, when the HOD dispensed
with the process, he did so
without any motivation from SCM. The
deviation document forms part of the payment batch and further
included in this batch would
be other supporting documents such as
the initial submission, requisition, a letter of appointment of a
service provider, the contract
and the service provider’s
invoice.
[75] Ms
Karin Du Toit, employed at Auxiliary Services of the department
initially and for a very short period
“handled” sundry
payments (payments made outside the scope of procurement process) for
Hoffe Park. The payments were
later on processed through the Human
Resources Department. According to Mr Faas the method of
payment employed was indicative
that the procurement process and
proper deviation had not been implemented. He explained that in
respect of the so-called sundry
payments, the supplier will provide
an invoice to the end-user for services rendered or goods supplied as
agreed with the end-user.
Mr Faas stated that ordinarily, where the
normal procurement processes were followed, SCM would process
payments through their
Logistics Management. Mr Vermeulen
corroborated in broad outline Mr Faas’s evidence on procedural
issues. He also testified
that where the standard procurement process
was followed there would have been a purchase order generated by the
procuring institution’s
SCM which would identify the goods or
services to be procured. The purchase order and other supporting
documents would have formed
part of the payment batch. In this case
the purchase order was not extant. There was nothing against
which to measure the
invoices paid. While the appellant was not
directly responsible for effecting sundry payment the evidence
suggests that had he
not signed the leases this form of payments
would have been avoided.
[76]
The above evidence is fatal to the appellant’s defence that he
lawfully deviated from inviting competitive
bids because Hoffe Park
was the sole supplier of the services. Additionally, t
he
appellant was statutorily enjoined to report, inter alia, the reasons
for dispensing with the prescribed competitive bidding
process within
10 working days to the Provincial Treasury and the Auditor-General
(AG) because the transactions were above the
value of R1 million (VAT
inclusive) and had allegedly been procured in terms of regulation
16A6.4. The so-called deviation documents
are nowhere to be found.
In
my view, the trial court cannot be faulted in having drawn an
inference based on the aforesaid evidence that
the sundry
payments were made due to lack of proper procurement and that the
lack of proper supporting documents were as a result
of failure to
inform the Provincial Treasury of the negotiations that went about
between the contracting parties. The inference
is also supported by
Mr Faas’s evidence that SCM had no record of the transaction
because they were not involved in the procurement
process.
[77]
The appellant’s counsel argued tangentially that Ms Selemela’s
evidence contradicted that of
Mr Faas in material respects. Counsel
also criticises the trial court wrongly that it disregarded the
discrepancies without any
lawful basis. Counsel went on to
unjustifiably accuse the magistrate of having impugned the
appellant’s credibility without
setting any evidentiary basis
for discrediting him. It was further argued that the trial court
erred in not considering the defence’s
impeachment of the
credibility of Mr Faas about his repeated enforcement of the disputed
leases whereas he decried their irregularity.
Counsel did not direct
us to specific discrepancies in the evidence of the two State
witnesses which he argued were material.
[78]
It
has
consistently been the approach of our courts that an appeal court
should be slow to upset the credibility findings by a trial judge,
who was steeped in the atmosphere of a lengthy trial and
had the advantage of seeing and hearing the witnesses.
Such
findings are only disturbed if there is a clear misdirection, or the
trial court's findings are clearly erroneous.
[11]
It
is so that there were some differences in Ms Selemela and Mr Faas’s
accounts. As alluded to, Ms Selemela intimated that
she and some of
the officials in SCM went in search of accommodation around
Kimberley. She also explained that she inspected Hoffe
Park with SCM
following which SCM compiled a report and briefed the CFO. Ms
Selemela may have been mistaken about the involvement
of SCM. This is
so because s
he
gave various inconsistent responses on the question whether Mr
Faas, as head of supply chain, would have been aware
of the process
the department undertook in securing the leases.
[79] Mr
Faas, on the other hand, was steadfast that his unit played no role
and had no records which pertained
to the procurement of the leases.
The divergence, in my view, is immaterial. Mr Faas’s
credibility could not be impeached
on the basis that he enforced the
leases. He was obliged to attend to students’ complaints in
respect of, inter alia, the
catering services and Hoffe Park’s
queries concerning their payments which emerged after the leases had
been concluded because
the horse had already bolted.
[80]
The trial court critiqued
the appellant’s
credibility
mainly because his memory conveniently faded when
he had to give account on the documents the State intimated were
nowhere to be
found. Truth be told, the record is replete with many
such instances of purported memory lapses.
[81]
On the aforegoing exposition the deviation the appellant embarked
upon
smacks of impropriety and
illegality
. Accordingly, he did not
comply,
and ensure compliance by the department, with the provisions of the
PFMA as envisaged in s 38(1
)(n)
and committed the department
to irregular expenditure as contemplated in s 38(1)
(c)(ii)
.
For the impropriety to be criminal in nature and thus attracting a
sanction in terms of s 86(1) of the PFMA the accounting officer
concerned
must have acted wilfully or in a
grossly negligent way in his or her failure to comply with the
provisions of s 38 of the PFMA.
Ordinary
negligence would not suffice to sustain a conviction under s 86(1).
[82]
I now
consider whether the impropriety was
wilful or negligent and if negligent to what degree. On this aspect
t
he appellant argued that it was legally incompetent and a
glaring misdirection for the trial court to have made a finding of
wilfulness
and gross negligence in contravention of s 86(1) of the
PFMA, without a distinction between the two grounds of culpability.
It
was argued that the trial court not only conflated the two
separate grounds but also failed to identify the aggravating factors
upon which a finding of extreme gross negligence was grounded. Put
differently, that there was a paucity of diligent analysis of
the
proven facts to establish ordinary negligence and further identifying
aggravating features indicative of gross negligence.
[83]
The actions of the accounting officers are to be measured against the
standard of the notional reasonable
person. A notional reasonable
person is a person of the same group or class as the accounting
officer. It was argued for the appellant
that whilst a higher
standard of conduct can be expected from the holder of a public
office such as an accounting officer, a high
degree of perfection is
not required. It was further contended that without any evidence that
the appellant failed to manage the
revenue or financial resources of
the department in a sound manner, no gross negligence could be
imputed to him.
[84] In
MV S
Tingas; Transnet Ltd t/a Portnet v Owners of the MV Stella Tingas and
Another
[12]
Scott JA had occasion to distinguish between ordinary negligence and
gross negligence. As to the latter he said:
“
(T)o qualify as
gross negligence the conduct in question, although falling short of
dolus eventualis
, must involve a departure from the standard
of the reasonable person to such an extent that it may properly be
categorised
as extreme; it must demonstrate, where there is found to
be conscious risk-taking, a complete obtuseness of mind or, where
there
is no conscious risk-taking, a total failure to take care. If
something less were required, the distinction between ordinary and
gross negligence would lose its validity.”
[85]
The learned judge cited some examples from caselaw where gross
negligence had been held to be established,
which replicates 'the
extreme nature of the negligence required to constitute gross
negligence', such as 'no consideration whatever
to the consequences
of his acts';
'a total disregard of duty'
; 'negligence of a
very serious nature'; 'a particularly high degree of negligence';
'ordinary negligence of an aggravated form
which falls short of
wilfulness'; and 'an entire failure to give consideration to the
consequences of one's actions'.
[86] I
come
to apply the principles enunciated above
to the present case. T
hat the appellant acted wilfully, in
other words, intentionally or deliberately is out of the question as
no evidence supports that
conclusion. However, the fact that there
was a need to accommodate the students did not warrant that the
procurement processes
be flouted. The evidence shows that following
the failure to implement the correct deviation process the leases
were procured in
a slovenly fashion with the second lease concluded
midstream the duration of the first and the third lease being signed
five months
after it had already commenced. Belatedly, the appellant
sought to suggest that these were separate leases with none
interrupting
the other. As already adverted to, this version was not
put to any of the State witnesses. There is also no evidence to show
that
the leases were concluded on the strength of a single or
multiple deviations. In addition, the accommodation Hoffe Park
offered
included other services, such as security, catering and
laundry which could have been separately procured or put out on
tender.
[87]
The evidence further shows that there had been no proper service
level agreement which described the quality
of additional services
such as catering, cleaning, laundry, and security in detail and the
price. There was no proper control on
how the service provider
invoiced the department and did so at his whim. The lack of
involvement of SCM in the whole procurement
process, in my view,
signalled ostensible irregularity and must have alerted a
conscientious and vigilant accounting officer to
the
inappropriateness of the transactions. The appellant had to respond
with a high sense of duty to
prevent the
irregular use of taxpayer's monies which was clearly occasioned by a
complete lack of effective oversight in this case.
In its
analysis the trial court incorrectly classified the conduct as both
deliberate and grossly negligent. It is patently clear
that the court
made a mistake because wilfulness appears only once in its judgment
whereas gross negligence covers a wider field
of its reasoning. On
the conclusion I have come to the misdirection is not of such a
nature as to vitiate the proceedings.
I am satisfied that
the appellant was grossly negligent.
[88]
Finally, the appellant lamented on the inordinate delays in the
prosecution of the offences which he claimed
subjected him to
forensic prejudice and breached his fair trial rights.
The
basic requirement that a trial must be fair is central to any
civilised criminal justice system.
[13]
The right of an accused to a fair trial requires fairness to the
accused, as well as fairness to the public as represented by the
State.
[14]
[89]
The appellant argued that the trial court gave little or no regard to
the approximately nine-year delay from
the completion of the
investigation and the pressing of charges against him and that he had
to rely solely on his memory to put
up his defence. The delay, he
contended, resulted in the State being unable to place before court
documents which formed the basis
of his defence. Instead, few
documents were presented to the court on a piecemeal basis. The
appellant further argued that all
the necessary documents which
informed his decision to deviate from the normal tender process, when
he procured the leases, were
not preserved and thus he could not be
expected, ten years later, to recall the details that concerned his
approval of the deviation
in the circumstances where at the relevant
time he approved numerous unrelated documents in the department.
[90]
It was further argued for the appellant that the State failed to
comply with s 40(1)
(a)
of the PFMA which requires that t
he
accounting officer for a department must keep full and proper records
of the financial affairs of the department in accordance
with any
prescribed norms and standards and regulation 17.2.4
of
the Treasury Regulations which provides:
“
When
financial information is required as evidence in proceedings before a
court, Parliament, a provincial legislature, an official
inquiry or
otherwise, or for purposes of an audit, it must be secured in its
then current form until no longer required, even if
the National
Archivist has authorised its disposal.”
[91]
The appellant argued that the trial court ought to have found that
the quality and the nature of the evidence
brought against him, some
nine years after the commission of the alleged financial misconduct,
constituted forensic prejudice and
any piecemeal use of documents was
unlawful and inconsistent with the said Treasury Regulation 17.2.4.
[92] As
already discussed, the I/O commenced with the investigation during
2014. The record indicates that on
24 March 2021 the matter was
before the commercial crimes court for a pre-trial conference and was
set down for trial on 14 September
2021 when it was postponed to 08
November 2021 due to the unavailability of the appellant’s
counsel. On 08 November 2021
the trial date was arranged for the week
of 28 March 2022. The trial itself got underway intermittently
between the period
March 2022 and 25 May 2023 with final arguments
heard on 04 August 2023 and the judgment on the merits was handed
down shortly
thereafter on 16 August 2023. There was never any
complaint of dilatory tactics which had been employed during the
trial.
[93]
The delay may well have occurred during the investigation. The
difficulty here is that the appellant did
not set out any basis for
his contention that he suffered prejudice following the lengthy
investigation. For instance, the I/O
was never questioned on the
delay that related to the investigation and or the date upon which
the Hawks concluded such investigation.
With the benefit of the
record, we were able to ascertain that Mr Vermeulen’s statement
was obtained on 23 August 2019. It
also came to light during the
trial that a certain Mr Jonkers’s statement was obtained in
2019 whereas that of Mr Gaborone
on 31 March 2020, approximately two
years prior to the commencement of the trial. It is generally
notorious that investigations
of serious commercial crimes often take
long to conclude. Absent evidence showing that the I/O dragged his
feet, in bringing the
investigation to a close, it cannot be
concluded that the appellant suffered prejudice on account of a
protracted investigation.
[94]
The State argued that all the documents gathered during the
investigation were discovered before the commencement
of the trial.
It further produced all the documents it had in its possession for
purposes of the trial. What the evidence
demonstrates is that
the documents the appellant alleges were not preserved could not be
found and may be non-existent. The appellant
did not take issue or
complain of a trial by ambush at any stage during the trial regarding
the “piecemeal” manner
in which he contended the
documents were provided to him. To the contrary, the documents were
handed in evidence by consent without
any demur on his part. Under
these circumstances the appellant failed to show that he suffered any
trial-related or forensic prejudice.
The trial was accordingly fair.
It follows that the appeal must fail. In the result, I make the
following order.
Order:
1.
The appeal is dismissed.
______________________________
Phatshoane DJP
I concur
________________________________
Stanton J
Appearances
:
For the
appellant:
Adv M Mphaga SC with Adv J Modiba
Instructed by Mjila and
Partners Inc t/a Mhlabeni Inc,
Kimberley.
For
the respondent:
Adv IM Mphela
Instructed
by National Director of Public Prosecutions, Kimberley.
[1]
Economic
Freedom Fighters v Speaker of the National Assembly; Democratic
Alliance v Speaker of the National Assembly
2016
(3) SA 580
(CC)
para
1.
[2]
Preamble
– Public Finance Management Act 1 of 1999 (PFMA)
[3]
The
Constitution of the Republic of South Africa, 1996.
[4]
Published under GN R225 in
GG
27388
of 15 March 2005.
[5]
Helen
Suzman Foundation v President of the Republic of South Africa &
others
2015
(2) SA 1
(CC),
2015 (1) BCLR 1
(CC) - concerned the
constitutionality of various provisions of the
South African Police
Service Act 68 of 1995
(SAPS Act) as amended.
[6]
See
s 16(2)
(b)(i)
-
(ii)
and
(c)
of
SAPS Act.
[7]
Section 16(4)
(b)
of
SAPS Act.
[8]
Section
16(4)
(c)
of SAPS Act.
[9]
S Terblanche (ed)
Du
Toit: Commentary on the Criminal Procedure Act
-
(‘Jutastat e-Publications’- 2021 Revision Service 67) at
ch14-p16B.
[10]
RAiN
Chartered Accountants Incorporated v South African Social Security
Agency; In re: Black Sash Trust and another v Minister
of
Social Development and others (Corruption Watch (NPC) and another
as amici curiae)
2021 (11) BCLR 1225
(CC) para 30.
[11]
AM and
Another v MEC for Health, Western Cape
2021 (3) SA 337
(SCA) para 8.
[12]
2003 (2) SA 473
(SCA) para 7.
[13]
S v
Jaipal
[2005] ZACC 1
;
2005
(1) SACR 215
(CC);
(2005 (4) SA 581
(CC) para 26.
[14]
Ibid
para 29.