THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
CASE NO : 146/2003
In the matter between :
THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Appellant
and
MULLER CONRAD RAUTENBACH First Respondent
WESSEL HENDRICK MOOLMAN RAUTENBACH Second Respondent
______________________________________________________________________________
Before: MPATI DP, NAVSA, NUGENT JJA, ERASMUS & PONNAN AJJA
Heard: 19 AUGUST 2004
Delivered: 22 NOVEMBER 2004
Summary: Prevention of Organised Crime Act 121 of 1998. Two separate appeals: (1)
Ancillary appeal - provisional restraint order - effect of noting of appeal against
order setting it aside (2) Main appeal - restraint order - requirements for grant of
– relationship between restraint order and anticipated confiscation order. The
orders in the two appeals are contained in paragraph 58.
______________________________________________________________________________
J U D G M E N T
(Dissenting in part pp 30-42)
(Concurring pp 42-45)
______________________________________________________________________________
NUGENT JA
2
NUGENT JA:
[1] There are two appeals before us, both of which originate from a
provisional restraint order that wa s made by the Johannesburg High Court
(Blieden J) in the exercise of the powers conferred upon it by s 26 of the
Prevention of Organised Crime Act 121 of 1998. The provisional order is
lengthy and its detailed provisions are not material for present purposes. It
is sufficient to say that the order placed under restraint, and appointed a
curator bonis to take charge of, certain prope rty, excluding ‘such realisable
property as the Curator, after determ ining the value that the property
disclosed to him is likely to yield wh en realised, may certify in writing that
he considers to be in excess of the va lue of R60 million.’ The property that
was encompassed by the order incl uded property held by the first
respondent (who I will refer to as Raute nbach) or by relatives to whom he
allegedly made affected gifts, which in turn included a house and six flats
in Sandhurst, a farm in KwaZulu-Nat al, a farm in the Western Cape, a
Falcon Jet aircraft, a Bell Ranger helicopter, a nd furniture, fittings,
equipment and other moveable items (subject to certain exclusions) that
were in or on the properties. The order was later extended to include
moneys held in certain bank account s. The only property that was taken
into the control of the curator pursu ant to the order was the specified
property to which I have referred and there is no indication that any other
property exists that might also be subject to the terms of the order. The
3
value of that property does not appear from the evidence but we were told
from the bar that it amounts to about R20 million.
[2] Another twenty-two respondents we re cited in the proceedings but
only one of them (Rautenbach’s fa ther, who was cited as the third
respondent) has joined with Rautenbach to oppose these appeals.
[3] The provisional restraint order was discharged by Rabie J on the
return day and the main appeal, which is before us with the leave of the
court a quo , is against that decision. Th e ancillary appeal raises the
question whether the initiation of the main appeal had the effect of keeping
the provisional restraint order in place. In separate proceedings that were
brought by the two respondents Rabie J declared that it did not have that
effect and he ordered the curator to return the property that had been placed
under restraint. The appellant appeal s against that decision with leave
granted by this court.
[4] Before turning to the merits of the appeals there are certain
preliminary matters that need to be dealt with. The prosecution of the
appeals was irregular in three respects – the notice of appeal in both cases,
and the appellant’s heads of argument, were all filed out of time – for
which the appellant sought condonation. Those applications were opposed
but the explanation that was tendered by the State Attorney, the importance
of the issues that arise in these appeal s, and the lack of material prejudice
that was caused to the respondents, to gether provide sufficient grounds for
condoning the irregularitie s. Furthermore, the respondents launched an
4
application to submit further evidence to this court, but that application has
now been abandoned and I need say no more about it. I will deal with the
costs relating to those matters later in this judgment.
THE ANCILLARY APPEAL
[5] The provisional restraint orde r was made on 18 September 2000 on
the ex parte application of the appellant. In due course Rautenbach filed
answering affidavits, which were replied to by the appellant, and
Rautenbach filed a further affidavit and applied to strike out portions of the
replying affidavits. On the extended return day the ma tter came before
Heher J who struck out some of the mate rial that had been objected to and
extended the return day. Further affi davits were then filed by Rautenbach
and replied to by the appellant.
[6] On the extended return day the matter came before Rabie J, who
discharged the provisional order with costs. (That order is the subject of the
main appeal.) Shortly after the pr ovisional order was discharged the
appellant lodged an appli cation for leave to appeal. The appellant took the
view that the effect of that appli cation was to revive the provisional
restraint order until the outcome of the application for leave to appeal (and
any consequent appeal) and the restrain ed property was not released. That
prompted the respondents to apply to the High Court, as a matter of
urgency, for an order compelling the cu rator to secure the release of the
property. The appellant opposed the ap plication and applied in the same
proceedings, conditionally upon it being found that the restraint order was
5
no longer in force, for an order pe rmitting the curator to remain in
possession of the property pending the outcome of the main appeal.
[7] Rabie J found in the respondent s' favour and issued an order
declaring that the lodging of the app lication for leave to appeal did not
revive the provisional order and that the property concerned was
accordingly not subject to any restraint, directing the curator to release the
property, and dismissing the counte r-application for conditional relief.
Leave to appeal against the whole of that order was refused by the court a
quo but was granted by this court.
[8] The appeal against the dismissal of the counter-application has been
abandoned by the appellant. Thus the only i ssue that arises in this appeal is
whether the court a quo correctly found that the provisional restraint order
was not revived by the lodgement of th e application for leave to appeal in
the main proceedings.
[9] Because the ancillary appeal con cerns the status of the provisional
restraint order only until such time as the main appeal is disposed of it will
be apparent that, as between the parties, the outcome of the ancillary appeal
will have no practical effect or result. Section 21A(1) of the Supreme Court
Act 59 of 1959 gives this court a disc retion, in those circumstances, to
dismiss the appeal on those grounds al one. While this court will generally
not entertain appeals that do not concern concrete controversies ( Coin
Security Group (Pty) Ltd v SA Nati onal Union for Security Officers and
Others 2001 (2) SA 872 (SCA)) the issue that arises in this appeal
6
nevertheless relates to an important que stion of law that is not only the
subject of some uncertainty 1 but it also arises frequently in practice and in
my view we should exercise our discretion to resolve it (cf The Merak S:
Sea Melody Enterprises SA v Bulktrans (Europe) Corporation 2002 (4) SA
273 (SCA) para 4).
[10] Rule 49(11) of the Uniform Rules provides that
‘where an appeal has been noted or an a pplication for leave to appeal against … an
order of a court has been made, the operati on and execution of the order in question
shall be suspended, pending the decision of su ch appeal or applica tion, unless the court
which gave such order, on the application of a party, otherwise directs.’
[11] The appellant submitted that in the present case two separate orders
were made – first, the provisional or der that was made by Blieden J and
secondly, the order by Rabie J discha rging it – and that the effect of
initiating an appeal against the second order was to suspend only that order,
with the logical result that the first order remained extant.
[12] That is to misconstrue the true nature of the orders. As pointed out
by Goldblatt J in Chrome Circuit Audiotronics (Pty) Ltd v Recoton
European Holdings Inc & Another 2000 (2) SA 188 (W) at 190 B-E orders
of this kind are not independent of on e another. An interim order that is
made ex parte is by its nature provisi onal – it is ‘conditional upon
confirmation by the same Court (albei t not the same Judge) in the same
proceedings after having heard the other side’ (per Harms JA in MV Snow
1 Cf Du Randt v Du Randt 1992 (3) SA 281 (E); MV Triena: Haji-Iannou and Others v MV Triena and
Another 1998 (2) SA 938 (D); The MV Snow Delta: Discount Tonnage Ltd v Serva Ship Ltd 1996 (4) SA
1234 (C) and cases there cited.
7
Delta: Serva Ship Ltd v Discount Tonnage Ltd 2000 (4) 746 (SCA) para 6),
which is why a litigant w ho secures such an orde r is not better positioned
when the order is reconsidered on the return day ( Pretoria Portland
Cement Co Ltd and Another v Competition Commission and Others 2003
(2) SA 385 (SCA) para 45). It follows th at when an appeal is sought to be
brought against the discharge of such an order there is nothing to revive for
it is as if no order was made in the first place.
[13] The appellant submitted that even if that is so in relation to ordinary
civil practice a distinction should be made in relation to an order of the
kind that is now before us otherwise the purpose and intent of the Act will
be undermined. I see no grounds upon whic h to make that distinction. The
reason for permitting restraint orders to be sought ex parte is not to ease the
burden upon the appellant by ensuring that he can obtain such orders
without opposition: it is to ensure that the property concerned is not
disposed of or concealed in anticip ation of such proceedings. The Act
contemplates that such an order is only provisional until it is confirmed on
the return day (s 26(3)(a)) and in that respect it is no different to an order
made in ordinary civil proceedings. If that means that property will not be
under restraint where a court erroneously refuses to make such an order
(either provisionally at the outset or fi nally on the return day) – and in my
view it does – that is the inevitable consequence of insisting upon an order
of a court before property is placed under restraint.
8
[14] For those reasons the ancillary a ppeal must fail. I have considered
apportioning the costs between the two appeals but on reflection that is best
left to the discretion of the taxing master. For the guidance of the taxing
master I record that the time that wa s taken up before us with the ancillary
appeal was minimal.
THE MAIN APPEAL
[15] Before turning to the true issues in the appeal it is necessary to deal
with various matters that were raised by Rautenbach.
[16] Much of his evidence was devot ed to matters that do not bear
directly on the case that was advan ced by the appellant but was directed
rather at supporting a submission that the appellant brought these
proceedings with an ulterior motive and that the provisional order fell to be
discharged on those grounds alone.
[17] At one point in his affidavit Rau tenbach seemed to suggest that the
proceedings were a further step in a campaign that was allegedly waged
against him by the motor manufacturing industry because of the success of
his business. (The business entaile d the importation of Hyundai motor
vehicles.) In support of that sugge stion he alleged th at in May 1997 the
Minister of Trade and Industry, acting in response to representations made
to him by the motor industry, threatened to take ‘tough action’ against the
companies with which he was associ ated for allegedly breaching customs
legislation. Shortly thereafter th e customs authorities impounded all
Hyundai vehicles at dealer outlets throughout the c ountry. Litigation
9
ensued and the vehicles were released but an e nquiry was launched by the
customs authorities to establish whet her customs duties had been evaded.
No action was taken by the authorities as a result of that investigation, but
the following year tax assessments we re received by the companies in the
group and by Rautenbach and a relative reflecting that R100 million in total
was payable by them. Further litigation followed with the result that most
of the claim was abandoned and only an amount of R5 million remained in
dispute. Then in November 1999 a ll the documents of the group were
seized by the Investigating Directorat e for Serious Econo mic Offences and
allegations, purporting to have emanated from, amongst others, the
appellant and a member of his staff, app eared in the press, to the effect that
Rautenbach had committed serious offences. 2 The business collapsed and
further litigation ensued.
[18] At another point in his affidavi t Rautenbach seemed to suggest that
the appellant acted against him becau se his activities in the Democratic
Republic of Congo had made him a thorn in the side of the South African
government. In support of that allega tion he pointed out that it had
repeatedly been reported in the press that he was respons ible for propping
up the governing regime of that count ry and that at one stage enquiries
were made of him by representatives of the appellant and the National
Intelligence Service concerning, amongst other things, a mining venture in
2 I have not dealt in detail with those events, which are traversed more fully in Hyundai Motor
Distributors (Pty) Ltd and Others v Smit NO and Others 2000 (2) SA 934 (T) and Investigating
Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others;
In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2001 (1) SA 545 (CC).
10
that country in which Rautenbach ha d an interest. All this, Rautenbach
said, ‘demonstrates unequivocally that political and strategic considerations
constitute the ‘raison d’etre’ for these proceedings’.
[19] Various other disparate facts and events were attested to by
Rautenbach to support his allegation that the appellant has acted in pursuit
of one or other or both of those motiv es or perhaps even another. I do not
think it is necessary to burden this judgment any further with those
allegations. It is sufficient to say th at in my view the evidence to which I
have referred goes no way to estab lishing that the appellant has acted
improperly or unlawfully in commenci ng these proceedings and there can
be no criticism of the appellant fo r not having been enticed down the
byways along which he was beckoned by this evidence.
[20] It was also submitted that until such time as the appellant has
produced a charge sheet it cannot be sa id that Rautenbach is to be charged
with an offence – which is one of the prerequisites for the exercise of the
powers conferred upon a court by s 25 (1)(b) – and support was sought for
that submission in an unreported decision of the Pretoria High Court.
3 The
section requires a court to be satisfied that the person concerned is to be
charged with an offence and not that the prosecution is imminent and the
decision to which we were referred does not purport to hold otherwise. In
my view that requires a court only to be satisfied that a prosecution is
seriously intended and not that a charge sheet has already been drawn. I see
3 National Director of Public Prosecutions v Alexander, unreported, dated 7 February 2000.
11
no reason to doubt that the appellant’s expressed intention in the present
case is serious. While Rautenbach rema ins outside the jurisdiction of the
South African courts (he is resident in Zimbabwe) it is clearly not possible
for effect to be given to that intention but I do not think that precludes the
appellant in the interim from utilizing the remedy provided for in the Act.
[21] Allied to that earlier contention was also a submission that the
appellant’s case is vague and inconsis tent and has varied over time with
consequent uncertainty for Rautenbach of the case that he was called upon
to meet. The appellant must set out his case in such a manner that the
respondent is fairly informed of the case that he or she is called upon to
meet (cf National Director of Public Prosecutions v RO Cook Properties
(Pty) Ltd et al)
4 but that does not mean that it must be presented in any
particular form. What is required is only that the case that is sought to be
made out by the appellant is articulated with sufficient clarity to reasonably
inform the respondent of the case agai nst him or her. But when evaluating
whether that has been done it can be assumed that a respondent is not
obtuse and will draw those inferences th at fairly present themselves from
the allegations, in much the same way as an accused person is expected to
do when confronted with an indictment.
5 In my view the case that the
appellant sought to make out in the fo unding affidavits is reasonably clear
and it is also apparent from Rautenbach ’s evidence that he was well aware
4 2004 (8) BCLR 844 (SCA).
5 See, for example, R v Preller 1952 (4) SA 452 (A) 460F-461B, R v Sachs 1953 (1) SA 392 (A) 399D-F.
12
of the case that he was called upon to meet. Moreover, I do not share the
view of the learned judge a quo that the appellant’s case – at least that part
of it that is material to this judgment – has shifted over time. In one respect
a new case was sought to be made in reply, but th at was permitted by
Heher J who heard the application to strike out, and Rautenbach had ample
opportunity to answer the new allegations.
[22] Finally it was submitted that the appellant failed to make material
disclosures when he applied for the provisional order and that on those
grounds alone the order was properly discharged. If ther e were material
non-disclosures – and in my view th ere were not – it was for the court a
quo to exercise the discretion that it ha d to discharge the order on those
grounds and no case has been made out for interference by this court if the
court a quo chose not to do so.
[23] I turn now to the case that the appellant advanced.
[24] The nature of a restraint order, and the circumstances in which such
an order might be granted, have been considered in various decisions of
this court, and I need not repeat what was said in those cases. 6 It is
sufficient to say that a court that convi cts a person of an offence is entitled,
in certain circumstances, to make an order (referred to as a 'confiscation
order') that such person pay to the st ate the value of the proceeds of the
offence or of related criminal activity. The purpose of a restraint order is to
6 National Director of Public Prosecutions v Basson 2002 (1) SA 419 (SCA); National Director of Public
Prosecutions v Rebuzzi 2002 (2) SA 1 (SCA); Phillips & Others v National Director of Public
Prosecutions 2003 (6) SA 447 (SCA); National Director of Public Prosecutions v Kyriacou 2004 (1) SA
379 (SCA).
13
preserve property in the interim so that it will be available to be realized in
satisfaction of such an order.
[25] A court from which such an orde r is sought is called upon to assess
what might occur in the fu ture. Where it is ‘satisfied that a person is to be
charged with an offence’ and that there are ‘reasonable grounds for
believing that a confiscation order ma y be made against such person’
(s 25(1)) it has a discretion to make a restraint order.
[26] The court a quo approached the matter as follows:
‘The Act requires that it must be shown that “grounds” exist which grounds
appear to a court to be of such a nature that they would support a future confiscation
order. This means that, as a first requireme nt, the Applicant has to prove the existence
of such “grounds”. That is a factual questi on and according to section 13(5) of the Act,
the onus of proving such facts must be di scharged by the Applicant on a balance of
probabilities.'
[27] In my view that is not correct. It is plain from the language of the
Act that the court is not required to satisfy itself that the defendant is
probably guilty of an offence, and that he or she has probably benefited
from the offence or from other unlawful activity. What is required is only
that it must appear to the court on reasonable grounds that there might be a
conviction and a confiscation order. While the court, in order to make that
assessment, must be apprised of at least the nature and tenor of the
available evidence, and cannot rely merely upon the appellant’s opinion
(National Director of Public Prosecutions v Basson 2002 (1) SA 419
14
(SCA) para 19) it is nevertheless not called upon to decide upon the
veracity of the evidence. It need ask only whether there is evidence that
might reasonably support a conviction a nd a consequent c onfiscation order
(even if all that evidence has not been placed before it) and whether that
evidence might reasonably be believed. Clearly that will not be so where
the evidence that is sought to be relied upon is manifestly false or
unreliable and to that extent it requi res evaluation, but it could not have
been intended that a court in such proceedings is required to determine
whether the evidence is probably true . Moreover, once the criteria laid
down in the Act have been met, and the court is properly seized of its
discretion, it is not open to the court to then frustrate those criteria when it
purports to exercise its discretion (cf Kyriacou, footnote 1, paras 9 and 10).
The misdirection by the court a quo pervaded all its reasoning and was
instrumental to the conclusion to wh ich it came and I have approached the
matter afresh.
[28] The principal accusation made ag ainst Rautenbach was that he was a
party to defrauding the South African Revenue Service in the course of
operating a business that imported vehicl es into southern Africa and into
South Africa in particular. Rautenbach was also accused of having stolen
money from one of the companies with which he was associated, and of
contravening s 86(e) of the Custom s and Excise Act 91 of 1964. For
reasons that will become apparent I have found it necessary to deal only
with the principal accusation.
15
[29] It is implicit in the principal a ccusation, when seen against the nature
of the business that was conducted, that the fraud of which Rautenbach
stands accused was allegedly perpetrated when vehicles were imported into
this country, though that is not expressly stated. The only real dispute in
this matter, however, relates to even ts that preceded the entry of the
vehicles into South Africa, and most of the evidence is devoted to that
issue. But what occurred at that stage is not to be seen in isolation for it was
but a step in a process that had as its ultimate aim th e sale of at least most
of the vehicles in South Africa.
[30] The territories of Botswana, South Africa, Lesotho, Namibia and
Swaziland together form a common cu stoms area that is governed by
uniform customs legislation and tari ffs. Within the common customs area
there is free trade in goods. Customs an d excise duties are collected at the
first point of entry of goods into th e common customs area. According to
the evidence the duties are paid into a common fund for appropriation to
the relevant state to which the duty accrues.
[31] In about 1993 a group of thre e companies with which Rautenbach
was associated commenced busine ss importing Hyundai motor vehicles
from Korea into southern Africa for sale mainly in South Africa. The
vehicles were imported into Botswana in partially disassembled form. The
components were reassembled in Bots wana and most of the reassembled
vehicles then made their way to South Africa where they were sold through
a network of distributors.
16
[32] The companies in the group were Hyundai Motor Distributors
Limited – a company incorporated in the British Virgin Islands (‘Hyundai
BVI’) – which had the sole right to distribute Hyundai vehicles in southern
Africa; Hyundai Motor Distributors Botswana (Pty) Ltd – a company
incorporated in Botswana (‘Hyundai Botswana’) – which imported the
vehicle components into Botswana where they were assembled; and
Hyundai Motor Distributors (Pty) Ltd – a company incorp orated in South
Africa (‘Hyundai SA’) – which distribute d the vehicles, mainly in South
Africa.
[33] Rautenbach and Mr Nissim Franco were the beneficial owners, in
equal shares, of Hyundai Botswana. It is alleged that the registered
shareholders of the other two comp anies were nominees for Rautenbach
and Franco but that has been denied. However it is clear from Rautenbach’s
own evidence that he was able to exer cise control over the affairs of these
companies and did so.
[34] The vehicles were imported into Botswana in partially disassembled
form in order to take advantage of the considerable customs duty rebate
that was allowed when ‘components’ of motor vehicles were imported. To
secure that advantage the vehicles were purchased from the manufacturer
in Korea but were then partially di sassembled after th ey came off the
production line (initially the vehi cles were disassembled by the
manufacturer in Korea but from about the middle of 1997 they were
17
disassembled in Mozambique) and th e partially disassembled components
were then imported into Botswana where they were reassembled.
[35] Whether partially disassemble d vehicles properly constituted
‘components’ for customs purposes, thus attracting the rebate, was
somewhat controversial, and that seems to have prompted the enquiry that I
referred to in paragraph [17] above. But whether or not those rebates were
legitimate is immaterial to this appeal because the conduct that is said to
have been fraudulent was quite unrelated to that question.
[36] Duties that are payable in the motor industry are derived from a
complex structure that altered with e ffect from 1 September 1995. In short,
before that date, the business attracted liability for payment of excise duty,
the amount of which was indirectly affected by the value that was
attributed to the imported goods. After that date ad valorem customs duty
was payable on the value of the imported goods. Thus both before and after
1 September 1995 the declared value of the goods, which was required to
be supported by commercial invoices, de termined, directly or indirectly,
the amount of duty that became payable by Hyundai Botswana. It fell to the
customs and excise authorities in Bo tswana, where the goods entered the
common customs area, to levy and coll ect the relevant duties, but when
vehicles were brought to South Africa the relevant duties that had been
collected and paid into a common fund accrued to the South African
Revenue Service.
18
[37] The value of imported goods for customs purposes is, broadly
speaking, their market value, which, in the case of goods that are purchased
at arms length, is the price that was paid or became payable when the goods
were sold for export. The legislation also allows for the deduction from that
price of amounts that might be included in the price for th e costs of such
things as transportation, handling, in surance, and expenditure incurred for
the ‘maintenance of the goods after they are imported.’
[38] When vehicles were purch ased from Hyundai Korea by Hyundai
BVI (whether in disassembled form un til early 1997 or in assembled form
thereafter) an invoice was issued by Hyundai Korea reflecting the price of
the goods and a separate charge fo r freight. The vehicles or the
disassembled components, as the case ma y be, were then sold to Hyundai
Botswana by Hyundai BVI (with a qualif ication that I will come to) which
would issue its own invoice. It is not disputed that the price of the goods
reflected on that invoice was invariab ly substantially less (the reduction
varied at times between 20% and 30% but may have been as high as 35%)
than the price that had been paid to Hyundai Korea. It was that lesser
amount that was declared to the authoriti es in Botswana as the value of the
goods for the purpose of calculating duties and the Hyundai BVI invoices
were used to substantiate the claims.
[39] Documentation relating to a trans action for the acquisition of thirteen
vehicles in about May 1998 illustrate s more clearly what occurred. The
invoice issued by Hyundai Korea reflects the purchase of thirteen vehicles
19
by Hyundai BVI for a unit price of US $5 435 (the total is US $70 655) and
an additional charge of US $6 678.93) for freight, giving a total invoice
amount of US $77 333.93. The invoice issued by Hyundai BVI for what
appears to be the same vehicles refl ects their sale to Hyundai Botswana for
a unit price of US $4 222 (the total is US $54 886). It reflects an additional
charge of US $33 813 for what is apparently meant to encompass non-
dutiable costs that are described as ‘p acking, inland road freight, in-Africa
shipping, insurance, clearing, port charges, handling, transshipment,
inspection road/rail, warranty, forward cover, marketing, finance cost’ thus
bringing the total to US $88 699. The same principles are evident from the
documentation relating to a series of transactions between 1996 and 1997
in which the purchase price of goods as reflected on the Korean invoices
totalling US $5 420 406 translated into a purchase price as reflected on the
Hyundai BVI invoices of US $3 814 721 (a reduction of almost 30%).
[40] In each case the Hyundai BVI invoices were submitted to the
Botswana authorities in support of declarations that the unit prices reflected
on the invoices constituted the value of the goods for customs purposes.
The appellant’s case, put simply, is that the Hyundai BVI invoices were
interposed, and the prices reflected on those invoices were fraudulently
reduced, in order to reduce the liability for duty.
[41] The allegation is not confined to the particular transactions to which
I have referred, which are said to be exemplary of how the business was
conducted from its inception. There is al so support for the contention that
20
the documentation reflects an ongoing cour se of conduct in the evidence of
a former employee, Mr Watson, who wa s employed in the business when it
first started and for some years ther eafter, and to a lesser degree in the
evidence of other former employees who became involved in the business
at a later date. Moreover, Rautenbach does not suggest that the transactions
I have referred to were somehow unique or unrepresentative of the manner
in which the business was ordinarily conducted.
[42] Watson’s evidence also provides support for the allegation that the
price differential was artificially reduced and was not the product of
legitimate commercial considerations. He said that when the business first
commenced he was instructed by Raute nbach to look for ways to reduce
the customs value of the imported good s. He said that after studying the
customs legislation he concluded th at 10% might be deducted from the
Korean price of the goods to account fo r costs that were legitimately non-
dutiable, but that when he was preparing the format and pricing for the
Hyundai BVI invoices he was told by Rautenbach to make that deduction
and more and to reflect the amount de ducted as non-dutiable charges, but
without identifying each charge separa tely so that the legitimacy of the
deduction would be more difficult to query. He said that Mr van Biljon, the
financial manager, who was aware of this arrangement, thereafter attended
to the management of the prici ng. From March 1997 Ms de Buys was
responsible for creating the Hyundai BVI invoices, from information
supplied to her by Van Biljon. The information in the invoices was
21
reflected in a pricing schedule that Ra utenbach approved, which reflected,
amongst other things, the Korean price of the particular vehicles, the price
to be used in the Hyundai invoice, and the percentage differential.
[43] When Van Biljon died in 1998 responsibility for maintaining the
pricing schedule passed to Mr van der Walt. He said that Rautenbach told
him what ratio the Hyundai BVI invoice pr ice should bear to the price paid
to Hyundai Korea – the difference varied for the various vehicles between
about 70 and 80% – but that there was no apparent method in arriving at
that ratio. Responsibility for the prici ng schedule passed to Mr Wolmarans
in December 1998 when Van der Walt resigned and he, to o, was reliant
upon Rautenbach for determining the pric es to be used in the Hyundai BVI
invoices.
[44] That evidence indica ting that the prices were arbitrarily reduced was
disputed by Rautenbach, who advan ced three explanations for the
discrepancy. He said th at the goods reflected on the two invoices did not
coincide and that to compare the two invoices was not to compare like with
like. He pointed out that the Korean invoices related to the full complement
of components for the particular vehicl es but he said that some of the
specialized components (the air-cond itioning compressors, for example),
which attracted a low rate of customs duty, were not sold direct to Hyundai
Botswana by Hyundai BVI, but were in stead sold to another company in
South Africa. Those components were directed to Hyundai Botswana
22
through South Africa, and thus did not form part of the goods that were
reflected on the Hyundai BVI invoice.
[45] According to Watson, to the ex tent that components were removed
and routed through South Africa, that occurred only after about the middle
of 1997, when the disassembling of vehicles commenced in Mozambique,
and that was not disputed. There is also evidence that the removal and
routing of such components was by no means a consistent practice.
[46] The second explanation advan ced by Rautenbach relates to the
manufacturer’s warranty that accompanied each vehicle. The price that was
paid to Hyundai Korea for each vehicl e incorporated an amount to cover
the anticipated cost to it of meeting that obligation. That portion of the
Korean price, said Rautenbach, was pr operly non-dutiable in terms of the
legislation because it represented expenditure incurred for the 'maintenance
of the goods after they were imported' and its deduction accounts for part of
the discrepancy between the unit values reflected on the Hyundai Korea
and Hyundai BVI invoices respectively.
[47] The Botswana authorities ind eed authorized a 10% deduction from
the price paid to Hyundai Korea to account for the cost attributed to the
warranty but that occurred only on 1 September 1997. (A refund of duties
that until then had been paid on that portion of the price of the vehicles was
also approved.) It thus explains por tion of the discrepanc y after that date
but not any discrepancy that might have occurred before then.
23
[48] Thirdly, he said that he had be en led to believe by Van Biljon that a
deduction was permissible for what he called ‘marketing assistance’ that
was built into the Korean price of th e goods. It is difficult to see how it
could have been genuinely believed th at a deduction of that nature was
permissible, and extraordinary that it could have been believed that a
deduction of that nature c ould be made without per tinent disclosure to the
customs authorities, bearing in mind th at permission was sought to deduct
the costs associated with the warranty. It is also significant that Rautenbach
made no attempt to quantify the amount that was deducted.
[49] The court a quo concluded, after reviewing the evidence, that it was
improbable that the customs and exci se authorities in Botswana were
defrauded in the manner alleged by the a ppellant. That seems to me to be a
bold finding to have made on this evid ence and it is one with which I do
not agree. While it is true that porti on of the discrepancy can be accounted
for by the allowance that was permitted for the cost of the warranty after 1
September 1997, and that in some cases after about the middle of 1997
portion of the discrepanc y might be accounted fo r by the removal of
specialized components, that does not seem to fully account for the
discrepancy. It also would not explai n any discrepancy that existed before
mid-1997. (I have already pointed out th at the appellant alleges that the
scheme was in operati on from the outset and there is no suggestion by
Rautenbach that the exemplary transac tions referred to in the evidence
were somehow unique). Moreover, there is no indication of how the
24
deduction allegedly made for 'marketing expenses' might bridge the
shortfall, and there is no apparent corroboration for Rautenbach’s assertion
that he genuinely believed this was deductible.
[50] But apart from those reservations there is a central consideration that
casts considerable doubt upon Raute nbach's explanations for the
discrepancy. If the discre pancy is indeed accounted for by the three factors
to which he refers it w ould be expected that the process by which the
Hyundai BVI prices were arrived at would have entaile d no more than
simple arithmetic subtractions of readily ascertainable amounts from the
Korean price. Yet the former employ ees describe a more complex process
by which those prices were arrived at , involving the application of ratios
that were determined by Rautenbach without any apparent basis. Moreover,
the pricing schedule included in the ev idence, which was a product of that
process, gives no indication that the prices were arrived at by simple
arithmetic subtraction.
[51] But I pointed out earlier that we are not called upon to decide
whether the offences were indeed comm itted, nor even whether they were
probably committed, but only whether there are reasonable grounds for
believing that a court might find that th ey were. In the absence of rather
more convincing explanations for the di screpancy in my view the evidence
adduced by the appellant indeed prov ides reasonable grounds for believing
that there might have been a scheme in operation from the outset to reduce
the customs value of the goods and thereby defraud the customs authorities.
25
And if the Botswana customs author ities were indeed defrauded the fraud
did not end there, as suggested Raute nbach, for the ultimate purpose of the
fraud was to enable most of the vehi cles to enter South Africa where the
benefits of the fraud would be reaped when the vehicles were sold. The free
entry of the vehicles into this country was dependa nt upon the South
African authorities believing that custom s duties had been properly paid at
the point of entry into the common cust oms area, and it follows that a court
might also find that the failure to disclose to the South African customs
authorities at the time the vehicles we re brought into this country that
duties had not been paid by itself constituted fraud ( S v Heller &
Another(1) 1964 (1) SA 520 (W) 536F-537E) or that the presentation of the
vehicles for free entry into this country constituted a fraudulent
representation that duties had been properly paid ( South African Criminal
Law and Procedure Vol 11 3 ed by JRL Milton 708-71 0). Presumably that
is what the appellant had in mi nd when he submitted that the fraud
'continued' in this country, for what continued was the intent ultimately to
defraud the South African Revenue Se rvice of the duties that would
ordinarily have accrued to it when th e vehicles were imported into this
country.
[52] A court that convicts a person of an offence that was committed after
the Act took effect, and that finds that he or she has benefited from the
offence or from any criminal activity th at is found to be sufficiently related
to the offence, may make an order ag ainst that person ‘for the payment to
26
the State of any amount it considers appr opriate’ (s 18(1)). Such an order is
referred to in the Act as a ‘confisca tion order’ but the name might be
misleading. Such an order is direct ed at confiscating the benefit that
accrued to the offender whether or not the offender is still in possession of
the particular proceeds. Once it is show n that a material benefit accrued the
offender may be ordered to pay to the state the monetary equivalent of that
benefit even if that means that it mu st be paid from assets that were
legitimately acquired. Thus the fact that some of Rautenbach's assets were
acquired before the offences were committed, and were not themselves
acquired from the proceeds of unlawfu l activity, is immaterial when
determining whether a confiscation order might be granted.
[53] Section 12(3) provides that a person has benefited from unlawful
activities ‘if he or she has at any time, whether before or after the
commencement of this Act, received or retained any proceeds of unlawful
activities.’ The amount for which a confiscation order may be made is
restricted to the lesser of (a) the monetary value of the proceeds of the
offences or related criminal activity or (b) the net value of the sum of the
defendant’s property and certain defined gifts (s 18(2)).
[54] The immediate beneficiary of th e alleged unlawful activity in the
present case would have been Hyund ai Botswana, whose assets were
inflated by the amount of any duty that it failed to pay. The company,
however, was little more than the vehi cle through which Rautenbach and
27
Franco conducted the business, and it wa s to them that the benefit accrued
in truth, even if only indirectly.
[55] I do not think it is possible, on th e material before us, to determine
what amount of duty was avoided a nd any attempt to do so would be
guesswork. Various calculations have b een advanced in the affidavits and
in argument but the assumption underlying them all is that the true customs
value of the goods concerned was the pr ice paid to Hyundai Korea and that
assumption is not necessarily correct. I have already pointe d out that from
September 1997 a 10% deduction from that price was permitted by the
Botswana authorities, and that from about the middle of 1997, in some
cases at least, specialized components might have been removed before the
goods arrived in Botswana. But though the benefit is not capable of being
determined with any accuracy it is likely that it runs into many millions of
rand bearing in mind the scale of the business.
[56] Where the requirements of the Ac t have been met a court is called
upon to exercise a discretion as to whether a restraint order should be
granted, and if so, as to the scope and terms of the order, and the proper
exercise of that discretion will be dictated by the circumstances of the
particular case. The Act does not require as a prerequisite to the making of
a restraint order that the amount in wh ich the anticipated confiscation order
might be made must be capable of being ascertained, not does it require
that the value of property that is placed under restraint should not exceed
the amount of the anticipated confis cation order. Where there is good
28
reason to believe that the value of the property that is sought to be placed
under restraint materially exceeds th e amount in which an anticipated
confiscation order might be granted then clearly a court properly exercising
its discretion will limit the sc ope of the restraint (if it grants an order at all)
for otherwise the apparent absence of an appropriate connection between
the interference with property rights and the purpose that is sought to be
achieved – the absence of an ‘appropr iate relationship between means and
ends, between the sacrifice the individua l is asked to make and the public
purpose that [it] is intended to serve’ 7 – will render the interference
arbitrary and in conflict with the Bill of Rights. To the extent that the
decision in National Director of Public Prosecutions v Phillips and Others
2002 (4) SA 60 (W) at 78A-B might suggest that a restraint order is
permissible even where it is apparent that there is no such relationship in
my view that is not correct. But in th e absence of any indication of the lack
of such connection I do not think the purported exercise of a court’s
discretion can import requirements for th e grant of such an order that the
Act does not contain. It must also be borne in mind, when considering the
grant of such an order, that once it is found that a person has benefited from
an offence, and that he or she held property at any time, a court that
conducts the enquiry contemplated by s 18(1), is required by s 26(2) to
presume until the contrary is shown that the property was received by him
7 Per Ackermann J in First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue
Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768
(CC) para 97. See too National Director of Public Prosecutions v RO Cook Properties (Pty) Ltd, footnote
4, para 15.
29
or her as an advantage, payment, serv ice or reward in connection with the
offences or related activities referred to in s 18 (1) (see National Director
of Public Prosecutions v Kyriacou 2004 (1) SA 379 (SCA) para 13).
[57] I have already expressed the vi ew that there are reasonable grounds
for believing that Rautenbach might be convicted of fraud and that a
confiscation order might be made against him in a substantial amount.
There is also no indication that the pr esumption to which I have referred
will be rebutted in relation to all of the property that is now in issue. There
is no reason to believe that any confis cation order that might be made will
be restricted to an amount that is less than the value of the property that is
now sought to be placed under restraint and it thus cannot be said that the
order that is sought is inappropriate to the ends that the Act seeks to
achieve. For these reasons in my view the provisional order should have
been confirmed.
(58) The following orders are made:
1. The applications for condonation are gr anted. The appellant is to pay
the costs occasioned by those applications.
2. The respondents are to pay the cost s occasioned by the application to
lead further evidence in this appeal.
3. The ancillary appeal is dismissed with costs.
4. The main appeal is upheld with cost s. The order of the court a quo is
set aside and the following order is substituted:
30
‘The provisional order is confirmed. The first and third respondents
are ordered to pay the costs occa sioned by their opposition to the
proceedings jointly and severally including the costs occasioned by
the employment of two counsel.’
4. The orders above relating to costs are to be construed to include the
costs occasioned by the employment of two counsel.
5. Insofar as the orders above require costs to be paid by the
respondents their liability for such costs shall be joint and several.
__________________
R W NUGENT
JUDGE OF APPEAL
NAVSA JA)
PONNAN AJA) CONCUR
AR ERASMUS AJA
[59] I have enjoyed the privilege of reading the judgment of my colleague
Nugent. I am in agreement with most of his reasoning, but must
respectfully disagree with one aspect thereof, which leads me to a finding
different to his in regard to the order to be made in the appeal.
[60] I agree that the ancillary appeal must be dismissed, for the reasons
set out by Nugent JA. I furthermore agree that the court a quo misdirected
itself on the question of onus, again fo r the reasons set out by Nugent JA.
What Rabie J lost sight of in his full analysis of the issues, with respect,
was that the explanations advanced by Rautenbach could well disintegrate
31
in the intense light of a full-scale crimin al trial. I, further, agree with my
colleague’s views regarding the natu re of the customs fraud within the
jurisdiction of these courts (at para [51] above), although I do not thereby
prejudge those issues. I associate myse lf with his judgment up to the point
where he declares (at para [55] above) that it is not possible, on the material
before court, to determine what am ount of duty was avoided and that any
attempt to do so would be guesswork. In following up that finding, I
respectfully differ from him on the que stion of the quantification of the
order.
[61] A restraint order is issued in an ticipation of a trial court later making
a confiscation order upon the conviction of the defendant of an offence (see
respectively s 26(1) and s 18(1) of the Act). The confiscation is ordered ‘in
addition to any punishment which (the court) may impose in respect of the
offence’. It is not itself a punishment, and any order which has that object
or effect would to that extent be c ontrary to the provisions of the law. The
sole purpose is to deprive the defendant of the benefits derived by him from
his or others’ criminal activities. The court orders that the defendant pay an
‘amount’ (of money) to the State. In regard to that amount, Howie P stated
in Philips v National Director of Public Prosecutions 2003 (6) SA 447
(SCA) at para 9:
‘In terms of s 18(2) the quantum of a confiscation order may not exceed the
lesser of two amounts. One is the value of the benefit which the defendant derived either
from the offence or offences of which he is convicted and, according to s 18(1)(c), from
32
any other criminal activity which the court finds to be “sufficiently related” to those
offences.’
(See too National Director of Public Prosecutions v (1) RO Cook
Properties (Pty) Ltd, (2) 37 Gillespie Street Durban (Pty) Ltd and another;
(3) Seevnarayan, 2004 (8) BCLR 844 (SCA); and National Director of
Public Prosecutions v Rebuzzi 2002 (1) SA (SCA) para 3). The calculation
of the value of the benefit involves a clinical accounting exercise with due
regard to all material facts and circumstances.
[62] A restraint order, on the other hand, is not expre ssed in monetary
terms (s 26). It relates to ‘realisable property’. The reason for the difference
in this respect between a restraint or der and a confiscatory order is clear.
The confiscatory order is final; a restra int provisional, its purpose being to
ensure that the benefits of the offen ce are not dissipated in the hands of the
defendant before the s 18 enquiry is held. It follows that the value of
property held under restraint need not be determined with the same
exactitude as in the case of the benefits that are confiscated by court order.
The Act does not expressly prescribe th at the value of the property under
restraint shall be equal to the bene fit derived by the defendant from the
offence ( National Director of Public Prosecutions v Phillips and others
2002 (4) SA 60 (W) paras 8-10). Neverthe less, the court acting in terms of
s 26 should, where possible, have regard to the amount of the benefit to be
confiscated, lest the restraint order be arbitrary and unfair to the defendant.
An unlimited order would obviously be improper. An excessive restraint
33
would constitute an undue infraction of the de fendant’s fundamental
property rights.
[63] The appellant obtained a provi sional order prohibiting Rautenbach
and two other respondents in the application from dealing with specified
assets up to a maximum of R60 000 000. That figure was arrived at by Mr
Malan, who was employed by the Sout h African Revenue Service as an
investigator in its special investig ations unit. His estimate was based on
assumptions made, so he indicated , on incomplete information. He
moreover worked on the premise that the Korean invoices were reduced on
average by 35% during the period beginning 1997 to 1999. On the evidence
of the company employees that dealt with the aspect, however, the average
reduction was between 20% and 30% increasing at times to a higher
percentage. Malan’s assumption of 35% reduction for the full period was
incorrect. His figure furthermore does not take into account the permissible
reductions set out by Nugent JA (paras [49] and [55]). But whatever the
savings on import duty for HMD Botswana may have been, that figure does
not necessarily constitute the amount of the benefit derived by HMD SA
from the alleged customs fraud. The bene fit to HMD SA translated into the
importation of vehicles into the Republic at a reduced cost price. The link
between the savings on import duties and the monetary value of those
benefits is indefinite. We do not k now how many vehicles were imported
into Botswana, nor how many of those ve hicles went to the other countries
in the customs union.
34
[64] The problem goes further: the benefits that HMD SA may have
derived from the scheme are not necessa rily the benefits that accrued to
Rautenbach personally. This is so even accepting that Rautenbach and his
business partner, Franco, were the bene ficial owners of the HMD group of
companies, and exerted full control over them. The group initially imported
vehicles through Durban in a regul ar manner, it seem s. The customs
irregularity apparently developed late r (nothing to the contrary has been
suggested). No monies actually passed to the companies as a result of the
fraud. They enjoyed a savings in cost s, which would have enhanced the
group’s profits, and possibly thereby the equity in the companies. However,
the companies in the group were placed under liquidation between
December 1999 and January 2000. Any beneficial inte rest that Rautenbach
may have had in the companies thereby became worthless. That interest has
now no market value ( see s 15(1)(b)). There is no suggestion that
Rautenbach’s personal estate ever deri ved any benefit from an increase in
the companies’ equity. Apart from the transactions which I deal with later
in the judgment (paras [70] to [73] ) the appellant does not point to any
drawings by Rautenbach on the companies. It is a further consideration that
for purposes of s 18(1) Rautenbach cannot be held to account for the
benefits derived from the scheme by Franco.
[65] The following emerges from the af oregoing: (a) Malan’s estimate of
R60m as the benefit that Rautenbach derived from the alleged customs
fraud is substantially excessive; and (b) it is not possible on the information
35
before court even to estimate the co rrect figure. The appeal must be
decided on that uncertain basis.
[66] The applicant bears the onus of making out a case for a restraint
order. When therefore, the value of the property to be placed under restraint
is a consideration, the applicant should make some attempt at establishing
the quantum of the prospective confiscation order, or place before the court
material upon which it can make some reasonable estimate of the value of
the goods to be put under restraint. If he is unable to do so, the applicant
should at least inform the court of th e reasons for his in ability to quantify
the benefit, so as to enable the cour t to exercise its discretion whether to
grant the order despite the absence of quantification.
[67] Rautenbach set out his defence in full in his answering affidavit. The
appellant and his staff ar e experts in the criminal law. There is no reason
why they could not have viewed the evidence and identified the issues as
Nugent JA has done. In quantifying th e benefits to Rautenbach flowing
from those crimes, the appellant ha d the assistance of the special
investigations unit of the SA Revenue Service. The prosecuting authorities
moreover had the cooperation of seve ral former employees in the HMD
group, including Van der Walt who was second in charge to Rautenbach
(see para [69] below). They had in their possession all the documentation
of the group of companies. With all this information and expertise, the
appellant should have been able to a dvance some acceptable quantification
of the benefits derived by Rautenbach from the customs fraud. The court
36
should be careful to ensure that the appellant’s failure to do so does not
impact unfairly on the respondents.
[68] The court in issuing a restraint order is required to strike a balance
between the (conflicting) interests of the State and the defendant. It could
be unfair to society to dismiss the a pplication simply because the applicant
– due to the defendant’s actions or for some other good reason – is unable
to quantify the benefits of the offe nces. On the other hand, it could be
unfair and unreasonable to issue a restra int order substantia lly in excess of
the benefits that the defendant derive d from the as yet unproved offences. I
find that on the particular facts and ci rcumstances of this matter, viewed in
the light of policy, an order placing und er restraint property to the value of
R60m, would be arbitrary and improper. The appeal can succeed therefore
only if the court can arrive at a figure that bears some relation to the benefit
derived by Rautenbach from the customs fraud, an aspect I consider later in
the judgment (paras [69] to [79]).
[69] In the application, the appell ant put forward a separate cause of
action based on alleged thefts of co mpanies’ monies. In view of his
conclusions on the fraud char ges, Nugent JA did not ha ve to deal with that
aspect. My conclusions however require me to consider the issue. The main
witness here was Van de r Walt. He joined the HMD group in 1995 as the
regional financial accountan t. In January 1996, he was promoted to group
project manager. In 1997, he was appointed by Raute nbach to be the chief
37
financial officer of the S outhern African operations of the HMD group. He
was from then on effectively second in command to Rautenbach.
[70] Van der Walt described the a lleged theft scheme. SA Botswana
Hauliers (Pty) Ltd (‘SABOT SA’) wa s a haulage company controlled by
Rautenbach as part of a number of co mpanies commonly referred to as the
Wheels of Africa (‘WOA’) group. In March 1997, Mrs Walkinshaw, the
outgoing financial director of SA BOT SA, told Van der Walt that
Rautenbach had issued instructions that he was to take over the running of
the so-called ‘cash payments’.
[71] The scheme worked as follows . Every month SABOT SA invoiced
Hyundai Motor Distribution (Pty) Lt d (‘HMD SA’) and Swedish Truck
Distributors (Pty) Ltd (‘STD’) for fi ctitious transport charges. The
payments received from the two comp anies were deposited into a special
bank account held in the name of SABOT SA. Rautenb ach gave Van der
Walt a list of people who were to recei ve cash payments. The top half of
the list was funded by monies receiv ed from HMD SA and STD, the lower
half of the list by SABOT SA. Raute nbach then filled in a cash cheque,
drawn on the SABOT SA account for the amounts received from HMD SA
and STD. A second cheque was made out for the payments to be funded by
SABOT SA. Rautenbach signed both of these cheques. A clerk then cashed
them and brought the money to Van de r Walt’s office where the latter kept
it in his safe before distributing it to the persons on Rautenbach’s list. The
38
beneficiaries (or most of them) signe d for the monies in a book kept by his
secretary, Ms Beutter.
[72] Franco was one of the chief be neficiaries. Van der Walt estimated
that he took about R1.6m in cash. This was on top of the management fees
(of US $100 000 per month) that he received from HMD. Rautenbach
received fixed payments of R30 000 per month in cash payments from the
funds drawn directly from SABOT SA. The cash was received by him on
top of his management fee from HMD of US $100 000 per month.
[73] From September 1997 until May 1999, Van der Walt was assisted by
Beutter. She stated that she was aware of the cash payments. These
payments took place once a month and were on the average between
R300 000 and R600 000 in total. She mentioned certain of the
beneficiaries. These included members of the Rautenbach family, as well
as others, most of whom - as far as I can make out – were not employees of
the HMD group.
[74] Rautenbach did not deny these al legations. He stated that none of
those acts constituted a crime of theft, as all the par ticipating parties
consented to the transactions. In view of his failure to explain the
transactions, a court is entitled to have regard to the prima facie inferences
justified by the evidence.
[75] It seems that the HMD SA a nd STD cheques were paid into the
special account of SABOT SA, only to be withdrawn in cash for the
payments to the various beneficiarie s. SABOT SA was merely a conduit.
39
The cash payments by means of m oney drawn directly upon the SABOT
SA account appear to have been in respect of employees’ salaries,
including the payment to Rautenbach of R30 000 per month. There is
therefore no case made out for theft from that company. However, the other
transactions must be viewed in the full context of the evidence, which
includes the evidence of the custom s fraud. The real possibility then
emerges that SABOT SA was used to launder monies from the HMD and
WOA groups. Rautenbach does not explain the reason for all the
accounting subterfuge, nor does he st ate on what basis the beneficiaries
were entitled to monies from HMD SA. No such reasons are apparent from
the papers. The inference is therefor e justified that Rautenbach used the
benefits of the customs fraud to sp read largesse among his family and
associates.
[76] The whole operation commencing with the presentation of the HMD
invoices to the Botswana Customs a nd Excise and ending with the cash
payments, was controlled by Rautenbach. There is a real possibility that a
court could find that the cash payments constituted drawings by
Rautenbach against the benefits of the customs fraud. The Act has the
object of depriving the defendant of the fruits of his crime or criminal
activities, but not necessarily the very same fruits. The confiscation order
reduces his estate pro tanto those benefits. It does not matter that
Rautenbach passed on the benefits to ot hers, nor that the subject matter of
the restraint order is property acquired by him from legitimate sources.
40
[77] I come to the quantification of the benefits. The proceeds of the
cheques drawn directly on SABOT SA cannot be taken into account, for
the reasons set out above (para [75]). Further, in the absence of any
information regarding SDT, it cannot be assumed that its cheques
constituted theft, or had any link with the customs fraud. One must
therefore work on the basis that only one quarter of the monthly cash
payments was linked to the fraud.
[78] At the appeal, counsel for appella nt handed to the court a schedule of
monetary calculations. It is in three parts. The first section is based on
monthly withdrawals of R300 000 fo r the period of January 1997 to
December 1998. The inflation figure is then compounded monthly until
August 2004 ( see s 15(2)(a)). The total figure a rrived at in this manner is
R12 186 842. The second part of the schedule is calculated on the same
basis but on receipts of R600 000 pe r month, which gives a figure of
R24 383 684 at August 2004. In the third part, a similar calculation is made
for the period January 1993 to D ecember 1996 on cash receipts of
R100 000 per month with inflation co mpounded until August 2004. This
gives a figure of R10 439 685.
[79] I comment on the aforegoing calculations. There is no direct
evidence of cash receipts from HM D SA between 1993 and 1996. Mrs
Walkinshaw, Rautenbach’s aunt, who apparently was in control during this
period does not mention such receipts. But on Van der Walt’s evidence, the
practice of cash payments was well es tablished when he took over from
41
Walkinshaw in March 1997. Furthermore, the investigation officer stated
that the scheme had been running si nce 1985 (which was not denied by
Rautenbach). In the circumstances, co unsel’s assumptions regarding the
R100 000 per month receipts as from January 1993 are sufficiently justified
for their calculation. As regard the period 1997 to 1999, a figure of
R450 000 per month seems reasonable on the evidence of Beutter. This
gives a total figure of about R18m in payments as at August 2004, to which
is added the approximate figure of R10m for the previous period. The total
figure is R28m. One quarter thereof is R7m, which would constitute the
approximate benefit derived by Rau tenbach from the customs fraud in
drawings out of HMD SA. The calculations were not questioned by counsel
for the appellant. My acceptance of th e reckoning is not a finding on the
correctness of the method of compoun ding interest. I would add that the
fact that I have quantified the order with some degree of precision, does not
mean that this exercise is necessary in every case.
[80] The property held under the prov isional order exceeds R7 000 000 in
value. The evidence as to the holding of that property is complex. Were my
judgment that of the majority of the court, the property that would most
suitably be seized in order to accomm odate my ruling, would have to be
identified.
42
[81] In the result, I concur in the or der proposed by Nugent JA, save that I
would amend the order to give approp riate effect to my conclusions in
paras [79] and [80].
__________________________
AR ERASMUS
ACTING JUDGE OF APPEAL
CONCURRED:
MPATI AP
NAVSA JA and PONNAN AJA
[82] We have had the benefit of read ing the judgments of Nugent JA and
Erasmus AJA. We agree w ith the reasoning and conclusions of Nugent JA
and find ourselves in respectful disa greement with Erasmus AJA where he
adopts contrary views.
[83] In respect of the question of balancing the value of the alleged
proceeds of criminal activity in relati on to the value of the property seized
in terms of a provisional restraint or der we consider it necessary to add
brief comments that are set out in the paragraphs that follow.
[84] The purpose of a restraint order in terms of s 25 and s 26 of the Act
is to preserve property on the premis e that there is a prospect that the
43
property in question may be realised in satisfaction of a confiscation order
in terms of s 18 of the Act.
[85] One of the objects of the Act is to provide for the recovery of the
proceeds of unlawful activity. Secti on 18 quite correctly restricts a
confiscation order after conviction to the value of the benefit derived by the
convicted person from criminal activity and significantly not necessarily
only in respect of the instant offence. See in this regard the provisions of
s 18 (1) of the act and the Kyriacou judgment at para [11]. There is no
statutory or other authority for issu ing a confiscation order in broader
terms.
[86] In the Act there is no expre ss limitation placed on the extent of a
provisional restraint order. Sections 26 (1) and (2) are couched in broad
terms, which ultimately leaves it to the discretion of the court to decide the
ambit and extent of the restraint or der. Section 26 (3) (a) provides for a
return day on which an affected pers on may show cause why the restraint
order should be set aside. Furthermor e, a person affected by a provisional
order is entitled, in terms of s 26 (10) (a) of the Act, to apply to the same
High Court that made the initial order to vary or rescind the order on the
following bases:
'(i) that the operation of the order concerned will deprive the applicant of
the means to provide for his or her reasonable living expenses and cause
undue hardship for the applicant; and
44
(ii) that the hardship that the applic ant will suffer as a result of the order
outweighs the risk that the property concerned may be destroyed, lost,
damaged, concealed or transferred; ...'
[87] There are thus statutory sa feguards to prevent overreaching and
abuse. However, it would be offensive to justice if the effect of a restraint
order was disproportionate to the contemplated future conviction and
confiscation order. See in this rega rd the judgment of Heher J in the
Phillips case, supra, at 78 B-E and the further comments by the learned
judge concerning the problems that th e prosecuting authority faces at the
restraint stage (at 78 F-J).
[88] This judgment should not be cons trued as an invitation to laxity in
the presentation of an application for a provisional restraint order in terms
of s 26 of the Act. Every effort should be made to place sufficient
information before the court to enable it to properly engage in the judicial
function envisaged in that section. Cour ts should be vigilant to ensure that
the statutory provisions in question are not used in terrorem. On the other
hand to insist at the provisional st age on a precise corre lation between the
value of property restrained and th e value of the alleged proceeds of
criminal activity would be to render a vital part of the scheme of the Act
unworkable.
[89] Erasmus AJA, at para [62] above whilst accepting that the value of
property sought to be plac ed under restraint need not be determined with
exactitude, nevertheless embarks on a co mplex accounting exercise in the
45
paragraphs that follow. We agree with Nugent JA's conclusion at the end of
para [55] above that, even consideri ng legitimate deductions in respect of
customs transactions, it is likely that the benefit to Rautenbach runs into
many millions of rand bearing in mind the scale of the business.
Rautenbach's empire according to the information at hand was built on the
back of the Hyundai imports. In our vi ew, having regard to the totality of
the evidence presented, the value of the property under restraint is not
disproportionate to what a court may in the future hold to be the value of
the benefits from the alleged criminal activity by Rautenbach.
________________
M S NAVSA
JUDGE OF APPEAL
________________
V M PONNAN
ACTING JUDGE OF APPEAL