Scholtz and Others v S (428/17, 491/17, 635/17, 636/17) [2018] ZASCA 106; [2018] 4 All SA 14 (SCA); 2018 (2) SACR 526 (SCA) (21 August 2018)

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[2018] ZASCA 106
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Scholtz and Others v S (428/17, 491/17, 635/17, 636/17) [2018] ZASCA 106; [2018] 4 All SA 14 (SCA); 2018 (2) SACR 526 (SCA) (21 August 2018)

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THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 428/17, 491/17, 635/17, 636/17
In
the matter between:
ALFEUS
CHRISTO SCHOLTZ
FIRST
APPELLANT
TRIFECTA
INVESTMENT
HOLDINGS
(PTY) LTD
SECOND
APPELLANT
TRIFECTA
HOLDINGS (PTY) LTD
THIRD
APPELLANT
TRIFECTA
TRADING 434
PROPERTY
4 (PTY) LTD
FOURTH
APPELLANT
TRIFECTA
TRADING 434
PROPERTY
5 (PTY)
LTD
FIFTH
APPELLANT
TRIFECTA
TRADING 434
PROPERTY
7 (PTY)
LTD
SIXTH
APPELLANT
TRIFECTA
TRADING 434
PROPERTY
11 (PTY) LTD
SEVENTH
APPELLANT
JOHN
FIKILE
BLOCK
EIGHTH
APPELLANT
CHISANE
INVESTMENT (PTY) LTD
NINTH
APPELLANT
and
THE
STATE
RESPONDENT
Neutral
citation:
Scholtz & others v The
State
(428/17, 491/17, 635/17, 636/17)
[2018]
ZASCA 106
(21 August 2018)
Coram:
Leach, Mathopo, Van der Merwe and Mocumie JJA
and Mothle AJA
Heard:
3 May 2018
Delivered:
21 August 2018
Summary:
Corruption under
ss 3
and
4
of the
Prevention
and Combating of Corrupt Activities Act 12 of 2004
– what
constitutes – offence committed even if gratification paid
after the event.
Sentence
to be imposed in respect of offence of corruption – factors
relevant thereto – little weight to be afforded
to compensatory
order.
ORDER
On
appeal from:
Northern Cape Division of
the High Court, Kimberley (Phatshoane J sitting as court of first
instance):
A
In case numbers
428/17 and 635/17
:
1 The appeal of the
first appellant against his conviction of corruption on count 16 is
upheld and such conviction and the sentence
imposed on that count are
set aside.
2 The appeals of the
first, second and third appellants against their conviction of money
laundering on count 34, as well as the
appeals of the first and third
appellant against their conviction of money laundering on count 35,
are upheld and such convictions
and the sentences imposed in respect
thereof are set aside.
3 Save as the
foresaid, the appeals of the first to seventh appellants are
dismissed and their convictions, as well as the sentence
of 15 years’
imprisonment imposed on the first appellant in respect of count 15,
confirmed.
B
In case numbers
491/17 and 636/17
:
1 The appeals of the
eighth and ninth appellants (the ninth and tenth accused) against
their convictions of money laundering on
count 35 are upheld, and
their convictions and sentences on that count are set aside.
2 Save as the
foresaid, the appeals of the eighth and ninth appellants against
their conviction on count 15 and the eighth appellant
against the
sentence of 15 years’ imprisonment imposed on that count are
dismissed, and that sentence is confirmed.
C The Registrar of
this court is directed to forward a copy of both this judgment and
the record to the Law Society of the Northern
Provinces for it to
consider possible disciplinary action in the light of para 213 of the
judgment.
JUDGMENT
Leach
JA (Mathopo, Van der Merwe and Mocumie JJA and Mothle AJA concurring)
Introduction
and background
[1]
Flowing from the circumstances under which certain commercial
properties were leased to the Northern Cape’s Department
of
Social Services and Population Development, 12 accused, including the
nine appellants, were arraigned in the Northern Cape Division
of the
High Court, Kimberley on a plethora of charges, that included various
counts of corruption, money laundering and fraud.
[2]
The trial was a lengthy and drawn out affair, during the course of
which several of the charges were withdrawn. Commencing on
3 February
2014, it ran intermittently until judgment on the merits was
delivered on 13 October 2015. At the end of the State’s
case,
the accused applied for their discharge and when that application was
refused, they applied to the learned judge to recuse
herself. That,
too, was refused. Such refusal will be dealt with more fully in due
course. During the course of presentation of
the defence case, but
after she had testified, the eighth accused, Ms Y Botha, died of
cancer.
[3]
In any event, at the end of the day the court a quo convicted the
first accused, Mr Scholtz, and the second to seventh accused,

companies in which he had an interest, on count 8, a charge of
corruption. The first and third accused were also each convicted
on a
further charge of corruption, count 16, as well as money laundering
on counts 34 and 35. The second accused was also convicted
of money
laundering on count 34 but acquitted on a similar charge, count 35.
Mr Block, the ninth accused, and his company
Chisane Investment
(Pty) Ltd, the tenth accused, were both convicted on count 15, a
charge of corruption, as well as of money laundering
on count 35.
Accused 11 and 12, respectively Mr Alwin Botes and his company, Itile
Supply Services (Pty) Ltd, were acquitted on
all charges. Substantial
fines were imposed on the second to seventh accused, whilst the first
and ninth accused were sentenced
to an effective 15 years’
imprisonment. As the tenth accused was bereft of assets, no sentence
was imposed on it.
[4]
The court a quo granted those accused who had been convicted, leave
to appeal to this Court against their convictions, but refused
them
leave in regard to their sentences. The first and ninth accused (who
are the first and eight appellants) later obtained the
leave of this
Court to appeal against their sentences. Flowing from this, for some
inexplicable reason four different appeal files
were opened, each
with its own appeal number: case no 428/2017 in regard to the
convictions of the first to seventh appellants
(the first to seventh
accused); case no 491/2017 in respect of the convictions of the ninth
and tenth accused (the eighth and ninth
appellants); case no 635/2017
relating to the first appellant’s sentence; and case no
636/2017 for the eighth appellant’s
sentence. However, as the
appeals against both the appellants’ convictions and the
sentences of the first and eighth appellants
were otherwise treated
as a single appeal, I intend to provide a single judgment. In doing
so, as certain of the accused initially
before the court a quo are
not parties to this appeal, I shall where convenient refer to the
individual appellants either by name
or by their accused number as
reflected in the record.
[5]
As it will appear more fully in due course, the charges on which the
appellants were convicted relate to a number of lease agreements

concluded by various State entities or departments in the Northern
Cape with members of what is known as the Trifecta Group of
Companies
(the second to seventh accused) during the period May 2006 to August
2008. As appears from the documentation included
in the record, a
company named Trifecta Trading 434 (Pty) Ltd was registered under
number 2003/018438/07 on 1 August 2003.
Its name was changed
with effect from 18 January 2006 to Trifecta Holdings (Pty) Ltd (the
third accused). Trifecta Investment Holdings
(Pty) Ltd (the second
accused) was registered, albeit under a different name, under number
2006/011099/7 on 11 April 2006.
The majority of its shares were
held by the Casee Trust, a private trust of the first accused, Mr
Scholtz, and the Shosholoza Trust,
the family trust of Mr Breda.
The second accused is the majority shareholder of the third accused
whilst the latter is either
the majority or sole shareholder of the
fourth, fifth, sixth and seventh accused which were used to acquire
and then rent out properties.
(The documentary evidence is to the
effect that the fifth accused is wholly owned by the third accused.
Information was placed
before the Department of Social Services that
75% of its shares were owned by the Shosholoza Trust and the
remaining 25% by the
Casee Trust. This conflict was not explained in
the evidence and is of no great impact.)
[6]
Corruption is all too often an issue which has to be determined by
way of inference drawn from the proven facts. In this regard,
like
pieces in a jig-saw puzzle, a number of events need to be taken into
account to determine the full factual matrix from which
inferences
may permissibly be drawn. For this reason it is necessary to consider
in detail the evidence on record in order to determine
whether the
court a quo correctly convicted the appellants.
[7]
The first accused (and first appellant), Mr Scholtz, is a businessman
based in Pretoria, engaged in the private equity sector
of the
economy. He administered a private equity fund which advanced funds
for investment in commercial ventures and, as a quid
pro quo,
obtained shares in the companies used to conduct such ventures
(generally a minimum of 25% of the shareholding). In this
way, as
more fully set out below, he became a shareholder in the Trifecta
Group of companies, of which Mr Sarel Breda, another
Pretoria
businessman, was a director and shareholder.
[8]
Mr Breda was running a company, known as Granite City, which dealt in
granite slabs and granite installations. He and Mr Scholtz
had first
met in the year 2000 when he approached Mr Scholtz for financial
assistance for a large contract he had obtained to do
the granite
installation in a well-known Johannesburg hotel that was being
converted into a conference centre. Mr Scholtz provided
the necessary
finance. From this initial contact, the relationship between them
blossomed and Mr Breda asked Mr Scholtz to help
him as a business
mentor. This he was prepared to do although, in accordance with his
business model, he stated that he did not
become involved in the day
to day administration of any of the companies involved.
[9]
At the time he first met Mr Breda, Mr Scholtz was one of a number of
partners in a private equity fund which invested mostly
in the
telecommunication and service industries. In 2004, however, he
started his own private equity fund and broadened the scope
of his
investments to include, amongst others, various property developments
and a diamond dealing house to which he introduced
Mr Breda.
This, in turn, led to Mr Breda being engaged as a so-called ‘spotter’
who made regular visits to mining
companies and diggings to seek out
diamonds in which to invest.
[10]
In late 2004, or early 2005, on reading an article in the
Business
Day
newspaper, Mr Scholtz learned that the
Northern Cape lacked the necessary infrastructure and housing to
accommodate provincial government
departments. Leasing suitable
accommodation to the State thus appeared to be a potentially
lucrative source of income, particularly
for an entrepreneur having
Black Economic Empowerment (BEE) credentials. He envisaged a business
model of acquiring largely rundown
buildings such as hostels, hotels
or blocks of flats, renovating and refurbishing them, and then
leasing them to provincial government
departments.
[11]
He explained this to Mr Breda, a historically disadvantaged
individual, who had BEE credentials and was regularly in the Northern

Cape on his diamond spotting rounds. He asked Mr Breda to make
enquiries in regard to the possibility of such a business venture
in
the province. Although Mr Breda subsequently confirmed that there was
indeed a potential market, he ‘disappeared for a
while’ –
as Mr Scholtz put it. However, in October 2005, Mr Breda reappeared
and asked Mr Scholtz for financial assistance,
explaining that he had
already made offers to acquire properties in the Northern Cape with
the intention of renting them to the
State. The inference is
inevitable that pursuant to their earlier discussion, Mr Breda
had decided to invest in fixed properties
for that purpose.
[12]
According to Mr Scholtz, he agreed with Mr Breda that any business
venture on which they embarked should involve the participation
of a
broad base empowerment group of previously disadvantaged individuals,
preferably women and children. Mr Scholtz claimed that
he did not
know any previously disadvantaged persons in the Northern Cape other
than Mr Breda and, for that reason, it was decided
that Mr Breda
would identify people or entities as potential BEE participants in
the venture. They agreed that any shareholding
would have to be
transferred to the BEE participants without requiring payment from
them or, at most, payment at par value of the
shares. Their
shareholding would be held by Mr Breda in his Shosholoza Trust,
pending transfer to the identified participants.
Mr Scholtz claimed
that his involvement in the venture at that stage was minimal and
consisted in the main of the provision of
capital requirements which
he provided through his family trust, the Casee Trust.
[13]
It is necessary at this stage to take a step back in time and detail
how Mr Breda had come by this investment opportunity.
He was
apparently a prominent member
of
the
African National Congress (the ANC), the ruling political party both
in national government and in the Northern Cape. So was
the ninth
accused (but eighth appellant), Mr John Fikile Block, who had served
as the provincial secretary of the ANC in that province
for more than
a decade. From March 2001 to December 2003, Mr Block had also been
the MEC for the Department of Roads, Transport
and Public Works (for
convenience I intend to refer to it simply as the Department of
Public Works). And although Mr Block was
not holding a provincial
government post at the time, his star was on the rise and he was
shortly due to become the ANC’s
provincial chair. In any event,
he subsequently became an ANC member of the Northern Cape’s
legislature and, on 2 December
2008, was appointed MEC for the
Department of Education. He served in that capacity until 11 May 2009
when he was appointed MEC
for Finance. It is clear from this that Mr
Block was a man of considerable political influence in the Northern
Cape. He was also
a director of his private company, Chisane
Investment (Pty) Ltd, the tenth accused (the ninth appellant), which
had been registered
on 18 February 2004.
[14]
Mr Scholtz’s information that there was a dire need for office
space in the Northern Cape to accommodate government departments
and
State agencies, was correct, and it is clear from the undisputed
evidence of the witness, Mr E J Crouch, who was the Director
of
Property Management in the Department of Public Works, that Mr Breda
had solicited Mr Block’s help to secure leases with
State
entities. The head of that department (the HOD) was Mr Selemela who,
in 2005, had appointed Mr Crouch as head of a recently

established property unit whose function was to provide accommodation
for all the various provincial State departments.
Supply
Chain Management Procedures
[15]
It is convenient at this stage to deal with the prescribed procedures
to be followed in procuring accommodation for a department
or State
entity. As a starting point, s 217(1) of the Constitution prescribes
that when an organ of State in the national, provincial
or local
sphere of government contracts for goods or services ‘it must
do so in accordance with a system which is fair, equitable,

transparent, competitive and cost-effective’. Pursuant to this
the Public Finance Management Act 1 of 1999 (the PFMA), as
amended by
the
Public Finance Management Amendment Act 29 of 1999
– the
purpose of the latter Act being to amend the former to provide for
the application of the former to provincial governments
– was
enacted to regulate financial management in national and provincial
governments and, as set out in its long title,
‘to ensure that
all revenue, expenditure, assets and liabilities of those governments
are managed efficiently and effectively
. . .’.
[16]
Under s 36 of the PFMA every department must have an accounting
officer. Section 38 of the PFMA goes on to lay down the general

responsibilities of accounting officers. Inter alia, the accounting
officer for a department must maintain an ‘effective,
efficient
and transparent systems of financial and risk management and internal
control’ – s 38(1)
(a)
(i)
– and ‘an appropriate procurement and provisioning system
which is fair, equitable, transparent, competitive and

cost-effective’ – s 38(1)
(a)
(iii).
The accounting officer is also ‘responsible for the effective,
efficient, economical and transparent use of the resources
of the
Department’ – s 38(1)
(b)
.
Moreover, under s 76 of the PFMA the National Treasury must make
regulations or issue instructions applicable to departments
concerning a variety of matters, including financial management and
internal controls of all institutions to which the PFMA applies
–
s 76(4)
(b)
– and
the determination of a framework for an appropriate procurement and
provisioning system which is fair, equitable, transparent,

competitive and cost-effective – s 76(4)
(c)
.
[17]
On 5 December 2003, the National Treasury issued what became known as
the Supply Chain Management Regulations
[1]
which obliged national and provincial departments to establish a
system of Supply Chain Management (SCM) for the acquisition of
goods
and services. These regulations were repealed with effect from 15
March 2005 by the Treasury Regulations for departments,
trading
entities, constitutional institutions and public entities, (the
Treasury Regulations). Promulgated under s 76(4)
(c)
of
the PFMA, they were similar in nature, albeit more extensive, than
the regulations they repealed. Regulation 16 thereof also
provides
for a SCM framework to apply to all national or provincial
departments whilst reg 16A3.1 provides that the ‘accounting

officer or accounting authority of an institution to which these
regulations apply must develop and implement an effective and

efficient supply chain management system in his or her institution
for the acquisition of goods and services’. Regulation16A3.2

goes on to require such an SCM system to be ‘fair, equitable,
transparent, competitive and cost effective . . .’.

Then, importantly, reg 16A6 provides:
‘
16A6.1
Procurement of goods and services, either by way of quotations or
through a bidding process, must be within the threshold
values as
determined by the National Treasury.
16A6.2 A supply
chain management system must, in the case of procurement through a
bidding process, provide for –
(a) the adjudication
of bids through a bid adjudication committee;
(b) the
establishment, composition and functioning of bid specification,
evaluation and adjudication committees;
(c) the selection of
bid adjudication committee members;
(d) bidding
procedures; and
(e) the approval of
bid evaluation and/or adjudication committee recommendations.’
[18]
In April 2006 the Northern Cape government published its provincial
SCM policy to give effect to its statutory obligations
contained in
the legislative matrix set out above. This policy proclaimed that it
had been adopted in September 2005 by the provincial
government under
the PFMA and the regulations under that Act published in Government
Gazette 25767 on 5 December 2003. However
as appears from what I
have said above, those were the Supply Chain Management Regulations
that had been repealed six months previously
and, presumably, it was
intended to refer to the Treasury Regulations which had come into
operation on 15 March 2005.
[19]
Be that as it may, both the Treasury Regulations and the SCM policy
contain various provisions relevant to the present matter.
Regulation
16A8.3(a) provides that a SCM official or other role player ‘must
recognise and disclose any conflict of interest
that may arise’
while reg 16A8.3(c) stipulates that such a person ‘may not use
their position for private gain or to
improperly benefit another
person’ and reg 16A8.3(d) in turn requires officials to ‘ensure
that they do not compromise
the credibility or integrity of the [SCM]
system through the acceptance of gifts or hospitality or any other
act’.
[20]
Importantly, clause 9 of the SCM Policy goes on to provide that goods
and services may be acquired by way of different delegation
levels.
Thus telephonic quotations up to R10 000 per case required three
quotations, and the one accepted had to be confirmed
in writing for
purposes of audit. Formal written quotations, with a minimum of three
per case, were required for acquisitions of
a transaction value over
R10 000 and up to R200 000. A competitive bidding process
for acquisitions exceeding R200 000
per case was prescribed with
bids to be advertised in the Government Tender Bulletin, the Diamond
Fields Advertiser and Die Volksblad
and, where applicable, in the
Northern Cape Regional Newspapers. I should mention that this echoes
Treasury reg 16A6.3(c) which
requires bids to be advertised in the
Government Tender Bulletin for a minimum period of 21 days
before closure, save in urgent
cases.
[21]
The provisions of reg 16A6.2 quoted above are  also echoed in
the SCM Policy which requires bids for the acquisition of
goods and
services to be evaluated initially by a Bid Evaluation Committee
(BEC) whose recommendation is thereafter to be taken
into
consideration by a Bid Adjudication Committee (BAC). As was explained
by the witness Ms Potgieter, who was at the time
the director of
asset management in the provincial Treasury, under the Province’s
SCM Policy a recommendation made by the
BAC will be considered by the
HOD, who has the discretion to agree or disagree, or to alter the
terms on which the relevant department
would commit.
[22]
However reg 16A6.4 provides that if in a specific case it is
‘impractical to invite competitive bids’, the accounting

officer may procure the required goods or services by other means
and, in that event, ‘the reasons for deviating from inviting

competitive bids must be recorded and approved by the accounting
officer’. The necessity to act in this way was stressed
by the
National Treasury in its practice note SCM 2 of 2000 circulated to
all accounting officers on 10 May 2005. Ms Vosloo also
testified that
a deviation from the official acquisition process on inviting
competitive bids for specific procurement would only
be justified in
an ‘extremely urgent or emergency situation’.
[23]
Clause 24 of the SCM Policy is also pertinent to the issues that
arise in this matter. It provides as follows:
‘
UNSOLICITED
BIDS
·
The Accounting Officer should refrain from
considering unsolicited bids received outside a normal bidding
process as it eliminates
transparent competitive acquisition
processes.
·
If an unsolicited bid is considered due to an
exceptional product benefit, or cost advantages of a person or
company is the sole
provider of a product or service the following
procedure must be followed:-
-
The Adjudication Committee must consider the
unsolicited bid, the meeting must take into account any comments
submitted by the public
and have to acquire written inputs from
Provincial Supply Chain Management prior to making a recommendation
to the Accounting Officer.
-
If any recommendations of the Provincial Supply
Chain Management Unit are not followed, the Accounting Officer must
submit to the
Auditor-General and the Provincial Supply Chain
Management Unit the reasons for rejecting or not following these
recommendations.
Such submissions must be made
before
any commitment is made or contract entered into. The Auditor-General
and Provincial Supply Chain Management Unit will have 30 days
from
receiving the submission to provide inputs to the Accounting Officer
during which period no contract may be concluded.’
[24]
Bearing these requirements in mind, I turn now to consider the
circumstances under which the various leases which form the
heart of
the charges against the accused came to be concluded. I shall deal
with each of the properties in the order in which the
leases were
concluded.
The
Northern Cape Training Centre and the Kimberlite Hotel, Kimberley
[25]
It was in respect of the Northern Cape Training Centre (NCTC) and the
Kimberlite Hotel, Kimberley that Mr Breda had approached
Mr Scholtz
for financial assistance in October 2005. As appears from what
follows, the procedures relating to the leasing of property
outlined
above were not followed in respect of these properties. Mr Crouch
testified that on Tuesday, 17 May 2005, he received
a telephone call
from Mr Block, who was at the time the Deputy Chair of the ANC in the
Northern Cape. Mr Crouch, who was also a
member of the ANC, knew who
Mr Block was and what position he held. He had served as a director
in the Department of Public Works
when Mr Block had been the MEC for
that department in 2001 to 2003. Mr Block had it seems long been a
prominent member of the ANC
and, as already mentioned, was shortly to
become the provincial chair of the party. He referred to him as the
‘Big Chief’.
[26]
In any event, Mr Block told him that he had sent Mr Breda to see him,
that Mr Breda was also ‘in the building environment’
and
that he should see how he could help him. Mr Crouch stated that in
the light of the position Mr Block held, he took this
as an
instruction to help Mr Breda. When asked why he had not objected to
this, he said that Mr Block had been his leader for many
years, had
previously been his MEC, and that, in the Northern Cape, everyone
listened when Mr Block spoke.
[27]
In any event, Mr Block gave him Mr Breda’s cell-phone number
and said he should contact him. Even before he could do
so Mr Breda,
who he had not previously met, arrived at his office and introduced
himself, stating that he had been sent by Mr Block.
He further
explained that he had two properties in Kimberley available to lease
to the State. These were the NCTC building and
the old Kimberlite
Hotel,
[28]
As head of the property unit, Mr Crouch had recently received
requests for accommodation from two government departments, the

Department of Sport, Arts and Culture and the Department of
Agriculture and Land Reform (again for convenience I shall truncate

the names of these departments to the Department of Sport and the
Department of Agriculture, respectively). He therefore told Mr Breda

that he would make arrangements to meet with the HOD’s of these
two departments and for them to inspect the buildings to
see if they
would be suitable. He also explained that protocol demanded that the
service provider, in this instance Mr Breda, should
not be present at
any inspection. He later reported his meeting with Mr Breda to his
own HOD, Mr Selemela, to whom I shall
later refer.
[29]
After this initial meeting, Mr Breda came to visit Mr Crouch’s
office on several occasions, and pestered him about progress
on the
proposed leases, despite it being explained that certain procedures
had to be followed before leases could be concluded.
Eventually
Mr Crouch telephoned Mr Block, to explain to him that prescribed
procedures had to be followed and that members
of his staff were
beginning to feel uncomfortable as a result of Mr Breda’s
visits and wanted to know why he was being afforded
priority. Mr
Block brusquely answered by telling Mr Crouch to see to it that
the question of office accommodation for the
Department of Sport be
finalised.
[30]
The following day, Mr Breda again arrived unannounced at Mr Crouch’s
office and told him that the ‘Big Chief’
had said he
should come and fetch him and take him to inspect the buildings. Mr
Crouch complied and accompanied Mr Breda,
first to the NCTC
building. In an entry in his diary dated 15 September 2005, he
recorded that Mr Breda had told him that
he was busy finalising the
purchase of the building and that, although it did not at the time
provide adequate office accommodation,
he would see to it that it
would be altered to meet the needs of the Department of Sport.
[31]
From there they proceeded to the Kimberlite Hotel which had been
proposed as accommodation for the Department of Agriculture.
Whilst
inspecting that property, which as it stood also did not provide
adequate office accommodation but which Mr Breda said he
would
rectify to meet what was required, the HOD of the Department of
Agriculture, Mr Mothibe, and another representative of that

department, Mr Thabang, arrived to view the building.
[32]
It is necessary to record at this stage that on 12 July 2005 the
Premier of the Northern Cape had addressed the following letter
to
the MECs of the various Provincial Departments:
‘
RE: LEASE
AGREEMENTS
In terms of Chapter
13 sub-paragraph 13.2.4 of the Treasury Regulations promulgated in
terms of the
Public Finance Management Act No 1 of 1999
as amended.
“The accounting officer of an institution may, for the purpose
of conducting the institution’s business,
enter into lease
transactions without any limitations provided that such transactions
are limited to operating lease transactions”.
With immediate
effect, the Head of Department and Accounting Officer of the
Department of Transport, Roads and Public Works shall
cease to enter
into any lease agreements on behalf of other Provincial Departments
in due observance of the
Public Finance Management Act and
its
Regulations.
However, the
department of Transport, Roads and Public Works will advise the
Departments on how best and effective to utilize the
available space
in terms of standing National Public Works norms and standards.
For those
departments where the Department of Transport, Roads and Public Works
is responsible for budgeting and paying for office
accommodation on
behalf of other departments, the Department of Transport, Roads and
Public Works must engage other departments
including Provincial
Treasury to agree on the amounts to be transferred to the different
departments in the adjustment estimates
and over the medium term
expenditure framework.
Agreement must also
be reached between departments and the Department of Transport, Roads
and Public Works with regard to the date
on which departments must
take full responsibility for the budgeting and payment of such
leases.
Your cooperation in
this regard will be highly appreciated.’
[33]
The effect of this directive was to divest Mr Crouch of his capacity
to negotiate leases on behalf of various provincial departments,
and
that it was thereafter up to the various HODs to rent accommodation
for their departments. Mr Crouch said he became aware of
this letter
at the time of the inspection of the NCTC Building and the Kimberlite
Hotel. However he explained that as he had years
of experience in the
Department of Public Works, he understood his continuing role to be
to provide support and advice to the various
other departments.
[34]
Some two weeks later, on 28 September 2005, Mr Crouch again went to
view the Kimberlite Hotel building. On this occasion he
was
accompanied, inter alia, by Mr Breda, Mr Mothibe and Ms T M
Joemat-Pettersson, the latter being the MEC for Agriculture and
Land
Affairs in the province at the time, who appeared to support the idea
of the Department of Agriculture renting the building.
On that
occasion Mr Breda made it clear that he was the owner of the
building, although he had earlier indicated that he was still
in the
process of purchasing it. Further meetings between Mr Crouch,
the HOD and various other officials of the Department
of Agriculture
were held during October 2005 at which the lease of the Kimberlite
Hotel building, the alterations that would be
necessary to meet the
department’s requirements and the floor planning necessary to
accommodate the department’s personnel,
were discussed. Clearly
the project was viewed as viable by the provincial authorities, and
it must have been at about this time
that Mr Breda went to see Mr
Scholtz and told him about the business opportunity he had negotiated
but in respect of which he needed
finance as already mentioned.
[35]
Despite these meetings having concentrated on the Kimberlite Hotel,
the proposed lease of the NCTC building had not been lost
in the
wash. The HOD of the provincial Department of Sport was at the time
Mr Henry Esau who had been with Mr Mothibe of the Department
of
Agriculture during the inspection of 15 September 2005. On 22
October 2005, Mr Crouch received a call from Mr Esau
asking
him to attend a meeting at the guesthouse of Mr Breda’s wife.
On his arrival, he found Mr Esau in the company
of Mr Breda.
They had already signed a written lease agreement in respect of the
NCTC building and he was requested to sign as
a witness. This he did,
without demur.
[36]
The parties to this lease were, on the one hand, the Department of
Sport, on whose behalf Mr Esau had signed as lessee, and
a company
cited as ‘Trifecta Trading (Pty) Ltd reg nr 2003/018138/07’
represented by Mr Breda, who had signed as lessor.
As appears from
what has already been mentioned, the company having that registration
number is the third accused, Trifecta Holdings
(Pty) Ltd. However
nothing turns on the failure to set out its name fully on this lease.
The crucial fact is that Mr Breda, acting
on behalf of the third
accused, leased the NCTC building to the Department of Sport for a
period of 15 years with effect from 1
January 2005, renewable for
another 15 years. The rental agreed commenced at R108 000 per
month but was to increase to R200 000
per month for the second
six month period, to R240 000 per month after a year, and
thereafter at 8% per annum.
[37]
Two days after the signing of the lease of the NCTC building,
Mr Crouch attended another meeting with Mr Breda and the
HOD of
the Department of Agriculture, Mr Mothibe. This time they discussed
the plans for the Kimberlite building and the renovations
that were
required. At a subsequent meeting on 7 November 2005, Mr Mothibe
and Mr Crouch discussed various aspects of a proposed
lease relating
to the Kimberlite Hotel. Shortly thereafter at yet a further meeting,
Mr Mothibe expressed his satisfaction with
the building and stated he
would finalise the lease.
[38]
Following these meetings, on 9 November 2005 Mr Mothibe and Mr Breda,
respectively representing the Department of Agriculture
and Trifecta
Holdings (the third accused), signed a written agreement in terms of
which the department leased the Kimberlite Hotel
for a period of ten
years, commencing on 1 March 2006, at a rental of R150 000 per
month. The lease was signed at the residence
of the MEC, Ms
Joemat-Pettersson, and was also witnessed by Mr Crouch.
[39]
After the conclusion of both the NCTC and Kimberlite Hotel leases,
Mr Crouch addressed separate letters relating to each
property
to Mr Breda. In each he stated that all protocols,
norms,
standards, terms and conditions as prescribed by the Department of
Public Works had been followed.
He testified that
he had been instructed to write these letters by the HOD of his
department, Mr Selemela, and had done so
despite knowing that,
as a matter of fact, the necessary protocols and procedures
prescribed for provincial government leases already
mentioned above,
had not been followed. Whether they ought to have been is a dispute
to which I shall return in due course.
[40]
It was only after these leases were concluded, that the Kimberlite
Hotel and the NCTC building were acquired by members of
the Trifecta
Group; the former being purchased on 11 November 2005 for R7.3
million and transferred to Trifecta Trading 434 (Pty)
Ltd on 21
December 2005; the latter being purchased on 23 December 2005 for
R1.3 million and transferred to Trifecta Holdings (Pty)
Ltd on 25 May
2006. Both these purchases appear to have been funded by way of
advances secured by mortgage bonds registered by
commercial banks
over the properties.
The
Oranje Hotel, Upington
[41]
In any event, the conclusion of the leases of the NCTC Building and
the Kimberlite Hotel was not the end of negotiations between
Mr Breda
and the provincial government in regard to office accommodation.
Section 4 of the South African Social Security Act 9
of 2004 provides
for the establishment of the South African Social Security Agency
(SASSA) as the agent for the administration
and payment of social
assistance. In September 2005, the Chief Financial Officer of the
Department of Social Development, Mr Thabo
Holele – who was
also the chair of the provincial bid adjudication committee (the BAC)
established under the SCM policy –
sent a written request to
the Department of Public Works to start an open tender process to
acquire office accommodation for SASSA
‘across the length and
breadth of the Province’.
[42]
This request followed a discussion Mr Holele had held with Ms Yolanda
Botha who, as appears from what follows, played a pivotal
role in the
further leases which lie at the heart of this case. Ms Botha had
qualified with a BA degree and a teaching diploma
in 1989 and, the
following year had commenced work as an English teacher at a
secondary school in Upington. In March 1994, she
experienced a
meteoric rise when she was appointed an ANC national senator, a post
she held until 1996. Thereafter she served as
an ANC member of the
Northern Cape’s provincial legislature from 1997 to 2001, and
was appointed the HOD of the Department
of Social Services in 2001, a
post she held until April 2009. She thereafter served as an ANC
member of parliament. She was the
eighth accused in the court below
but, as mentioned at the outset, tragically passed away from cancer
before the conclusion of
the trial.
[43]
In a letter to the provincial tender board dated 17 October 2005,
after stating that it was fundamental to the transition of
social
services for SASSA to acquire office space in the region, Mr Holele
recorded that the immovable property known as 43 Market
Street,
Upington (also known as the Diesel Electric building) was suitable
for a SASSA regional office. He set out the terms on
which its owner,
Mr W Schmidt, was prepared to extend a lease for five years and
recommended that a lease on those terms be concluded.
His
recommendation was supported by Ms Botha as HOD of Social Services.
[44]
The Diesel Electric property was examined by an architect and various
departmental officials on 13 December 2005, and found
to be suitable
for SASSA’s needs. It was 1270 m
2
in extent, comprised two floors and could be converted into 46
offices, 32 on the ground floor. Although there were certain
alterations
that would have to be effected to accommodate SASSA at a
cost of some R450 000, Mr Schmidt was prepared to bear these
expenses
himself. However, despite these advantages, the MEC of
Social Services, Mr G Akharwaray did not agree to the
property
being leased without more ado, stating that the matter ‘must
be put on tender with a view to empowering BEE players in that
area’.
[45]
As a result, on 2 November 2005, Ms Botha telefaxed a memorandum to
Mr Holele and Ms Daleen Vosloo (the latter being the
assistant
director of administration in the Department of Social Services)
informing them that the MEC, Mr Akharwaray, had told
her that he
would not sign any lease agreement relating to accommodation for
SASSA until it had been subjected to a bidding process.
She
instructed that all SASSA leases and procurements for office space
should be put on tender in order to advance BEE.
[46]
Pursuant to this, on 7 November 2005 Ms Vosloo wrote to the
Provincial Tender Board. She explained that the MEC required
bids for
the provision of office accommodation for SASSA in Upington and asked
for permission to advertise the invitation of bids
for accommodation
only in the local newspaper, a publication that rejoices in the name
of ‘Gemsbok’. Such restricted
advertising  flew in
the face of the Treasury Regulations as well as the Northern Cape’s
SCM policy which required that
leases be advertised for a period of
at least 21 days in the Government Tender Bulletin and two local
newspapers. Without waiting
for the requested permission, an
advertisement was placed in the Gemsbok on 9 November 2005. The
following week, on 14 November
2005, Ms Vosloo sent a memorandum to
Ms Botha, Mr Holele and the Director of Social Assistance Grants,
advising them that, in response
to this advertisement, bid documents
had been issued to two prospective bidders in respect of the Diesel
Electric and Umbra buildings
in Upington. It was only four days later
that the Tender Board, in a letter addressed to the HOD, approved  Ms
Vosloo’s
request to allow publication of the invitation for
bids to take place solely in the Gemsbok.
[47]
In any event, the Umbra building was not up to the mark. Indeed it
appears from a letter dated 10 October 2005, sent by the
head of
Corporate Services of the Department of Social Services to Ms Vosloo,
that the building had already been inspected and
found to be
unsuitable for SASSA’s needs. On the other hand, the Diesel
Electric building was suitable, but its owner, Mr
Schmidt, lacked BEE
credentials. It was due to this that negotiations with him eventually
broke down.
[48]
But Ms Botha knew Mr Breda, whom she described as being her ‘comrade
friend’. She contacted him and ascertained
that he was prepared
to lease the old Oranje Hotel building in Upington to SASSA. As a
result, she gave his contact details to
Ms Vosloo who, on 7 February
2006, sent an email to Mr Thabo Masasa of SASSA to tell him of this
‘good news’. She went
on to state that Mr Breda had ‘HDI
status’ (meaning he was a ‘historically disadvantaged
individual’);
that Mr Masasa should liaise with Mr Breda
to view the building and with Mr Kevin Ryland in regard to the terms
of a lease;
and that she would only become involved should the rental
exceed R500 000 per annum as, in that event, special approval
(presumably
under the SCM policy) would be needed.
[49]
On 15 February 2006 a company known as Marssen 2 (Pty) Ltd was
registered and, on 20 February 2006, Mr Breda and Mr Scholtz
were
appointed its directors. On 7 March 2006, its name was changed by
special resolution to Trifecta Trading 434 Property 5 (Pty)
Ltd, ie
the fifth accused. As appears from a deeds office report, the fifth
accused obtained transfer of the old Oranje Hotel building
on 3 March
2006, almost a month after Ms Vosloo’s email to Mr Masasa.
[50]
Ms Vosloo testified that due to the negotiations around the Diesel
Electric building having come to nought, Ms Botha’s

introduction of Trifecta had been a relief. Be that as it may, and in
circumstances not unattended by confusion, the Department
of Social
Services proceeded to enter into a written lease agreement of the
Oranje Hotel. On 20 March 2006 Mr Breda directed a
letter to the
Department of Social Services on behalf of the third accused,
confirming details of the rental of the property which
‘excluded
VAT’. A formal lease of the building, now between the
department and the fifth accused, was signed by Ms
Botha on behalf of
the department that same day, ie about six weeks after she had
introduced Mr Breda to officials of the department.
Mr Breda
signed the lease on behalf of the fifth accused on 28 March 2006.
[51]
This lease was concluded without the Tender Board’s approval.
On 28 March 2006 a written submission, prepared by
Ms Vosloo but
signed by Mr Holele, was sent to the Tender Board. It stated that the
‘proprietor of the Oranje Hotel, Trifecta
Holdings (Pty) Ltd’
(the third accused and not the fifth accused who was by then the
registered owner) had offered 2 600
m
2
of the Oranje Hotel building at R49 per m
2
(excluding VAT) per month for a period of five years with the option
to renew for a further five years; the all-inclusive monthly
rental
would be R145 236; annual escalation would be fixed at 7.5%; the
annual income would exceed the standing delegation
of R500 000
to provincial departments in respect of rental for office
accommodation; the HOD would enter into a lease agreement
on behalf
of SASSA; and that officials from SASSAs national office had approved
of the building as its district office. It concluded
with a request
that the provincial Tender Board ratify a lease on those terms. This
request was approved by Ms Botha as HOD under
her signature on 29
March 2006.
[52]
When testifying, Ms Botha could not explain why she had signed the
lease before the Tender Board had even been asked to approve
the
lease and before she had given her approval as Head of Department. It
may be that she signed the contract on the expectation
that it would
be ratified by the Tender Board.  Her doing so, however, is not
the only unsatisfactory aspect of her conduct
relating to this lease.
[53]
In a letter addressed to the Department of Social Services for the
attention of Ms Vosloo, the Tender Board recorded that it
had
approved the request to rent a portion of the Oranje Hotel ‘at
a cost of R49 m
2
excluding VAT for 5 years with 7.5% escalation annually’. It
concluded ‘the Board further noted that your HOD [ie Ms
Botha]
has signed the contract and this is ratified’. This letter was
dated 24 March 2006, but as it purported to be in answer
to the
submission of 28 March 2006, it was presumably incorrectly
dated. To compound the confusion, there exists a memorandum
dated 30
March 2006, submitted to the Tender Board for discussion and
decision, in which the head of the provincial SCM recommended
a lease
of the Oranje Hotel on the identical terms proposed by Mr Holele in
his written submission to the Tender Board of 28 March
2006. This,
too, must have pre-dated the Tender Board’s ratification of the
lease, and corroborates a finding that the letter
dated 24 March 2006
was not written on that day.
[54]
That is not the only issue on which there is a lack of clarity. The
contract signed by Ms Botha is for 2 640 m
2
of rental space as opposed to the 2 600 m
2
that had been offered by Mr Breda and referred to by both Mr
Holele in his submission of 28 March 2006 and the Tender Board’s

memorandum of 30 March 2006. Furthermore, the all-inclusive rental
was agreed in the lease at R147 740.40 per month and not

R145 236 per month as it initially been set out in the request
for approval of 28 March 2006. These differences notwithstanding,

what is truly remarkable is that Ms Botha went ahead to rent premises
approximately double the size and twice as expensive as the
Diesel
Electric building that had been found to be suitable for SASSA’s
needs. This alone speaks for Ms Botha committing
the Department of
Social Services to an unnecessarily expensive lease.
[55]
There are further circumstances relevant to the impropriety of this
lease. As I have said, it was negotiated to provide SASSA
with office
accommodation. SASSA had instructed all its regional offices that
lease contracts were not to be longer than three
years. Despite this,
Ms Botha had negotiated a five year lease. On 7 March 2006 she had
written to SASSA asking for a variation
and suggesting a period of
five years. It was only on 30 March 2006 that the Chief Executive
Officer of SASSA wrote to Ms Botha
and informed her that, taking into
consideration the scarcity of office accommodation in the area,
permission was granted to deviate
from the instruction to allow for a
lease period of five years. This approval was also only granted after
Ms Botha had already
committed the Department of Social Services to a
five year lease.
[56]
Furthermore, on 29 March 2006, the day after the lease had been
signed but before SASSA granted permission for a five year
lease, Ms
Botha on behalf of the Department of Social Services, Mr Breda on
behalf of the fifth accused, and Mr F Makiwane purporting
to
represent SASSA, concluded a written agreement under which the
department ceded its rights and obligations under the lease to
SASSA
with effect from 1 May 2006. Why this was done with such rapidity,
one does not know. What becomes clear, however, is that
the leased
building was not ready for SASSA to use.
[57]
I have already mentioned that the building was about double the size
of the Diesel Electric building, a property which met
SASSA’s
needs. That it was just too big is borne out by the fact that, in
fullness of time, various portions of the leased
premises which were
surplus to requirements were sub-let. It is also clear that, as it
stood, the building needed a great deal
of work to put it into a
condition in which SASSA could use it. On 19 May 2006, Mr Breda,
presumably acting on behalf of the fifth
accused,
[2]
wrote as follows to the Department of Social Services for the
attention of Ms Botha:
‘
Your
department entered into a lease agreement with Trifecta for and on
behalf of the South African Social Security Agency on 28
March 2006
for premises at Upington. The rental agreement was based on the
assumption that a minimum of modifications would be
required prior to
the occupation of the South African Social Security Agency in May
2006.
The South African
Social Security Agency (SASSA) wishes to obtain a specific corporate
identity for their premises throughout the
Northern Cape Province.
Due to this requirement it will necessitate various additions,
modifications and remodelling of the existing
premises to obtain the
objective of SASSA. SASSA requested the modification and remodelling
to be according to their specifications
and requirements. Various
structural changes will be necessary to the premises which will
necessitate the involvement of professional
practitioners to ensure
the correct methods and principles are adhered to during the
modification and alteration phase.
The capital cost to
the premises to achieve the minimum requirements and specifications
of SASSA will be R3 839 995.00
inclusive of VAT. See
attached annexure A for a breakdown on the capital cost to modify the
premises to the requirements of SASSA.
SASSA indicated that
they do not have the capital to fund the modifications in their
current budget but are willing to discount
the capital cost over the
lease period.
Trifecta is willing
to assist SASSA to achieve their objective to obtain specific
corporate identity on the basis of discounting
the capital cost over
the lease period.
Please note that
Trifecta can only accommodate these modifications if the lease period
is a minimum of 120 months.
It is important to
note that the modifications and alterations to the premises will take
place over a period of approximately 90
days from the day that the
Department of Social Services and Population Development agrees to
the implementation of the modification
to the current lease agreement
to accommodate the specific requirements of SASSA. SASSA indicated
that they wish to take physical
occupation of the premises by 1
September 2006. We can only partly accommodate their requirement if
we receive the final lease
agreement before 31 May 2006.
The Department will
however be responsible for the rental during the modification and
alteration phase.’
The
letter continued to state that the fifth accused was prepared to
assist SASSA by doing the envisaged alterations and providing
a
further 140 m
2
of
floor space if the rental was increased by more than R20 per m
2
from R49 to R69,80 per m
2
with the annual escalation being increased from 7.5% to 8% and the
lease period doubled to ten years (despite SASSA’s original

request that it be no longer than three years). Moreover, despite
this and the fact that the building was only likely to be ready
in
September, it wished rental to be payable with effect from 1 May
that year.
[58]
Subsequent to this, the Department of Public Works inspected the
Oranje Hotel premises – which I should mention had been

transferred into the name of the fifth accused on 3 July 2006
pursuant to a written deed of sale by which it purchased the property

for R14 million – presumably in order to consider its position.
In a written report dated 5 July 2006, it set out the various

alterations that would be needed. The same day Ms Botha co-signed a
letter on behalf of SASSA to the Department of Public Works,
a copy
of which was sent to Mr Crouch, requesting help to urgently
estimate the cost of the proposed alterations to the building
‘as
we (are) already in the third month of the lease agreement, and have
not as yet taken occupation of the premises’.
[59]
Ms Botha also telephoned Mr Crouch to request his help in obtaining
an estimate of costs for alterations to the building. Although
such
costing was not part of his responsibilities, he requested his
regional office in Upington to do the necessary. When there
was some
delay in this regard, Mr Crouch received a call from Mr Block
who asked how far the costing exercise had proceeded.
He explained
that work had commenced but that certain procedures had to be
followed. To this Mr Block brusquely replied that Mr Crouch

should see to it that the process should be speeded up and finalised
or else he would come and do the work himself. As a result
of this,
Mr Crouch contacted his subordinate in Upington responsible for doing
the costing and instructed him to hurry things along.
[60]
Thereafter, on 17 August 2006, SASSA and the fifth accused,
represented by Mr Breda, signed a lease agreement for the Oranje

Hotel premises which reflected the increases Mr Breda had sought in
his letter of 19 May 2006. It appears from a letter of 11 April
2017
which Mr Breda sent to SASSA, that the latter was given what he
referred to as ‘beneficial occupation’ on 1 December
2006
but only took physical occupation of the property on 3 January 2007.
However in terms of the leases, from May 2006 it paid
rental in the
sum of R235 930.98 per month for seven months (a total of
R1 651 516.86) to the fifth accused despite
not being in
occupation. Simply put, the fifth accused, aided and abetted by Ms
Botha’s interventions ended up with a lease
extremely
beneficial to it and binding for a far longer period than SASSA had
wanted. Flowing from this lease, until January 2012,
SASSA paid in
excess of R18 million in respect of rental for the property.
14
Riebeeck Street, Springbok
[61]
The lease of the premises at 14 Riebeeck Street, Springbok, was
concluded a few months after the Upington leases. On 17 August
2006,
the Physical Unit of the Department of Social Services visited
Springbok together with Mr Breda who showed them a block of
flats
which he said he was going to convert into offices. On 30 August
2006, Mr R M Saal, the Manager of that unit, sent a memorandum
to Mr
Holele in regard to the crucial need for office accommodation in
Springbok, and sought permission to advertise a bid in the
local
newspapers. In a subsequent memorandum dated 13 October 2006, Mr Saal
reported to Ms Vosloo on the visit of 17 August
and stated that
there was at the time insufficient office space in Springbok for the
various departments that were there as well
as the officials of
SASSA, and that there was no option but to acquire more
accommodation. Since, so he said, the property Mr Breda
had
pointed out was the only other accommodation available in the town,
he recommended that the Department of Social Services look
into the
possibility of leasing it.
[62]
In any event, on 15 September 2006 advertisements inviting bids for
office accommodation were placed in the Diamond Fields
Advertiser,
the Noordwester and Die Plattelander by Ms Flatela, who was at the
time the secretary to the BEC and BAC. The advertised
closing date
for bids was 29 September 2006, with a period of lease being set
out as three to five years with an option to
renew for a similar
period, the date of commencement being January 2007. On the
instructions of Ms Botha, the lease period was
subsequently changed
to ‘negotiable’ and an erratum to this effect was
advertised in the press.
[63]
The fifth accused submitted a bid in response to this advertisement.
Under its contracting information, responsibilities and
condition
(again submitted under a letterhead of Trifecta Trading 434 (Pty)
Ltd) it recorded that the floor size it offered was
1300 m
2
with the final measurements to be confirmed on occupation, and an
annual escalation of 8%. The rental was offered at a monthly
rental
of R65 per m
2
excluding VAT, R120 per m
2
for parking and R165 per m
2
for
shaded parking. The minimum lease period of 120 months (ten years)
was proposed with an option to renew for a further 60 months
(five
years).
[64]
On 5 October 2006, Ms Vosloo wrote to Ms Botha informing her that
only one bid, that of the fifth accused, had been received,
but that
on receipt of the fifth accused’s registration certificate, the
list of shareholders did not correspond to the information
contained
in the bid documents which rendered the bid invalid. She stated that
there was severe pressure to obtain alternative
accommodation in
Springbok, and sought permission to advertise a fresh bid for one
week in three local newspapers. Ms Botha
approved this shortened
period. She explained when testifying that she had done so as the
tender had already been previously advertised
and there was an
accommodation crisis.
[65]
A bid for office accommodation at Springbok was re-advertised as a
result, with the closing date of 16 October 2006, the lease
period
being ‘negotiable’ and a date of commencement being
January 2007. As the court a quo observed, what was remarkable
about
this is that in the initial cancelled bid the fifth appellant had
offered a ten year lease despite the advertisement having
stipulated
that it was to be for a period of three to five years, and this
subsequent advertisement did not refer to the shorter
period its
predecessor had contained. The re-advertisement was also not placed
in the Government Tender Bulletin. According to
Ms Botha, this was as
it took a week for the Government Tender Bulletin to process an
advertisement and the delay would be too
long.
[66]
Although only one prospective bidder, Trifecta (accused 5) requested
the bid documents on 11 October 2006, two bidders responded
to the
advertisement – accused 5 and accused 12, the latter’s
bid documents having been submitted in person by accused
11, Mr Alvin
Botes. Both offered the same building for rental. Indeed both bids
were virtually identical, the only difference being
that accused 5’s
bid made no provision for shaded parking as was the case in accused
12’s bid.
[67]
On 18 October 2006, Ms Flatela sent a memorandum to Ms Botha
informing her that the bid of accused 5 scored 97.16 points out
of
100 and that of accused 12, had scored 70.31 points. The same day
both the BEC and the BAC held meetings and resolved to approve

accused 5’s offer subject to various conditions. These included
a lease period of five years with an option to renew for
another five
years; the installation of air-conditioning; and that the escalation
be increased to 9.5% from the 8% tendered.
[68]
In the normal course, the BEC would first make an evaluation of a bid
and make a recommendation that the BAC would then consider.
This did
not happen in this instance. Instead the BAC first decided to accept
the fifth accused’s bid and thereafter the
members of the BEC
were requested ‘to concur with the recommendation as approved
by the Adjudication Committee and to sign
on the space below’ –
which they all did. In any event, once this had taken place, the
recommendation that the fifth
accused’s offer be accepted
subject to those conditions was placed before Ms Botha for her
approval as HOD. This she gave
on 19 October 2006, but:
‘
With the
proviso that we change the lease period to 120 months with an option
to renew for another 120 months (10 years). It makes
sense since it
will provide institutional stability for department.’
[69]
Ms Vosloo promptly informed Mr Breda that the fifth accused’s
offer had been accepted, subject to a ten year lease renewable
for
ten years and an annual escalation of 9.5% applicable for the
duration of the lease; that there be secure lockable overnight

parking for 10 to 15 official vehicles; that air conditioning and an
electronic alarm system be installed; and that all renovations
were
to be completed before occupation.
[70]
Pursuant to this, the fifth accused and the Department of Social
Services concluded a written lease agreement in Kimberley
on 3
November 2006, signed by Mr Breda and Ms Botha on behalf of the
respective parties. It recorded a commencement date of
1 March 2007,
a commencement rental of R65 per m
2
per month, a parking rental of R680 per month and a resulting total
monthly rental of R74 780 with an escalation of 9.5% and
a
determination date of 28 February 2017. Clause 14.2 thereof
recorded that the written lease contained the whole agreement
between
the parties and that representations or guarantees not therein
contained would not be binding.
[71]
The written lease failed to deal with the various conditions (such as
the provision of parking and the installation of air
conditioning or
an electronic alarm system) that had been set out in Ms Vosloo’s
letter to Mr Breda of 19 October
2006. This failure was to
be the source of trouble the following year. In August 2007, there
was a disagreement as to whether the
Department of Social Services
was obliged to pay for parking at the premises. In an email Ms Vosloo
sent to Mr Vuba of the
department’s legal support services
on 28 August 2007, she stated that it was not supposed to pay
for parking at all
as it had been included in the VAT exclusive
rental of R65 per m
2
and
that the lease agreement was incorrect as it did not correspond with
the offer that had been accepted. She also stated that
the department
had increased the annual escalation of 8% to 9.5% as ‘compensation
for the parking, alarm system, air conditioning
and blinds’.
[72]
Mr Vuba included these contentions in a letter he addressed to
the fifth accused, in which he also alleged that the office
space in
fact measured almost a 170 m
2
less than that agreed upon, and that there were no lockable overnight
parking base, no shaded parking base, no toilet facilities
for people
with disabilities, no air conditioning, no electronic alarm system
and no access ability into the building for the disabled.
He went on
to record that the department viewed these deficiencies in a serious
light, and that the State’s resources were
being unjustly used.
He concluded by placing the fifth accused on terms to remedy things
within 30 days failing which, so he stated,
the lease might be
terminated.
[73]
Mr Vuba took it upon himself to forward a copy of this letter to Rand
Merchant Bank, which held a bond over the property, presumably
in
respect of funds advanced to the fifth accused to enable it to
purchase it. The fifth accused, or presumably Mr Breda on its
behalf,
took exception to this and contacted Ms Botha. She, in turn,
telephoned Mr Vuba that night and angrily instructed
him to
immediately withdraw the letter to the bank. He complied. On 31
August 2007, he wrote to Rand Merchant Bank saying that
he had
discussed the matter with Mr Breda, had resolved the outstanding
issues in the lease and would not be taking steps
to terminate it as
the matter had been ‘amicably resolved’. This was a clear
distortion of the truth.
[74]
When testifying, Ms Botha stated that Mr Vuba had overstepped the
mark and that he ought to have brought the financial officer
of the
department to see her to find a solution before sending out this
letter. I should mention at this stage that the court a
quo found
this to be ‘a glaring demonstration of the extent to which Ms
Botha went to protect the pecuniary interest of Trifecta
and, as it
turned (out), her own’. As appears from what follows in due
course, that comment is justified.
[75]
Be that as it may, in mid-2010, an addendum to this lease was
eventually signed in which the Department of Social Services
agreed
to lease additional space in the Social Services Place Campus from
the fifth appellant. But even then, none of the difficulties
set out
by Mr Vuba were addressed.
Summerdown
Place, Kuruman
[76]
The events leading up to the conclusion of a lease in respect of this
property bear in many respects a striking similarity
to those
relating to the Springbok property. As mentioned in para 60 above, on
17 August 2006 Mr Breda viewed the property
in Springbok with
members of the physical unit of the Department of Social Services.
The following day they all went to Kuruman
where offices purportedly
owned by Mr Breda were inspected. And just as he had done in respect
of the Springbok property, on 30
August 2006 Mr Saal addressed a
memorandum to Mr Holele in which he stressed the dire need for the
Department of Social Services
to acquire office accommodation in
Kuruman and requested leave to advertise for office accommodation in
the local newspapers.
[77]
In his subsequent memorandum of 13 October 2006 (the same memorandum
already mentioned in respect of the Springbok accommodation)
Mr Saal
reported to Ms Vosloo that Mr Breda’s premises ‘would,
with a few alterations, accommodate the department’s
increased
multi-disciplinary staff’ and recommended that the department
‘explore the possibility of entering into a
lease agreement
with the said proprietor as these office space will indeed satisfy
our Department’s need in terms of office
accommodation’.
[78]
In any event, in late September 2006 an advertisement was placed in a
number of newspapers in which bids were invited for the
lease of
office accommodation in Kuruman, commencing January 2007 for a
negotiable period with an option to renew. Once again,
and not
surprisingly, Mr Breda used a Trifecta company in order to make
such a bid. On this occasion, however, he used the
sixth accused,
Trifecta Trading 434 Property 7 (Pty) Ltd. This was a company that
had been incorporated in 2006 under the name
Genvest 96 (Pty) Ltd,
the name of which was changed to Trifecta Trading 434 Property 7
(Pty) Ltd on 3 March 2006, In October
2006 its auditor confirmed
that 75% of its shares were held by Trifecta Holdings (Pty) Ltd (the
third accused) of which, in turn,
Mr Breda’s Shosholoza
Trust held 75% of its shares, with the remaining 25% being held by Mr
Scholtz’s Casee Trust.
[79]
In any event, both the sixth accused and a company known as TEB
Properties CC responded to the advertisement. The sixth accused

offered 1 300 m
2
of the premises I shall refer to as Summerdown Place at a rental of
R65 per m
2
per
month excluding VAT for a period of ten years, with the option to
renew for a further five years and an annual escalation of
8%, with
the lease to commence on 1 December 2006. The precise terms of
the opposing bid of TEB Properties CC are unknown
as its bid
documents disappeared at some stage and were never made available to
the court a quo. However, in a letter addressed
by Ms Vosloo to the
department on 23 October 2006, it is stated that the offer was
to construct a new building on an erf in
Kuruman’s central
business district with a proposed date for occupation being ‘April
or May 2007’. As appears
from this letter, comparison between
the two offices resulted in the sixth accused achieving a total score
of 97.16 out of a 100
whilst TEB Properties CC scored but 54.15.
[80]
On 25 October 2006, the BEC discussed these competing bids. It
recommended the acceptance of the sixth accused’s bid
‘on
condition that lease period be reduced to five years instead of the
ten years as offered’. Five days later the
matter came before
the BAC which recommended not only that the lease period be five
years with an option to renew for another five
but that there should
be an electronic alarm system installed and maintained, with
monitoring of the alarm to be paid by the department.
Presumably this
second recommendation was due to the suggestion of Ms Vosloo in her
email to Mr Holele of 25 October 2006
reporting on the status of
various bids for office accommodation, apparently in preparation for
the BAC meeting.
[81]
Ms Botha, as HOD, was not happy with this. She approved the BAC’s
approval but again added the proviso that the lease
period ‘be
extended to ten years (120 months) with an option to renew for
another ten years and at 9.5% annual escalation’.
Effectively
Ms Botha demanded that the original offer of a ten year lease be
accepted despite the views of the evaluation
and adjudication
committees on the duration of the lease. She also demanded that an
escalation 1.5% higher than that asked by accused
6 be paid, and that
the option to renew be extended from the five years offered to ten
years.
[82]
The increase of the rental period from five years to ten years was a
source of some dissatisfaction. The day after Ms Botha
had insisted
upon the longer period, Mr Holele, the chair of the BAC wrote to her,
explaining the rationale for recommending a
five year lease period.
He stated that the manager of Supply Chain Management had contacted
several banks to ascertain whether
financial institutions had a
policy regarding the approval of loans based on the duration of the
lease period. Absa Bank had informed
him that a ten year loan is not
a prerequisite for approval and that such lease agreements are not
common practice ‘as it
borders on ownership’. Standard
Bank had stated that the general norm for duration of leases was
three years. Moreover the
MEC for Finance had been critical of ten
year leases and, after long leases of that nature had been agreed by
other departments
in the province, had concluded that leases for
longer than five years should be discouraged. In the light of these
considerations,
the BAC had deemed it necessary to propose a five
year lease period.
[83]
This letter was received by Ms Botha on 2 November 2006. Within four
days the concerns of the BAC had been magically swept
away. On 6
November 2006, Ms Vosloo, as head of SCM, wrote to inform Ms Botha
that the members of the BAC had agreed to revise
the lease period to
ten years and, in order to facilitate an installation of an
electronic alarm system, to increase the annual
escalation from 8% to
9.5%. The increase in the duration of the lease was alleged to be due
to Rand Merchant Bank, the entity that
was going to provide accused 6
with the funds to acquire the building and to make the necessary
alterations, having insisted that
‘the minimum period of lease’
should be ten years.
[84]
In argument, much was made of Rand Merchant Bank’s attitude to
show that Ms Botha had not off her own bat sought to increase
the
duration of the lease as she had done in the other leases dealt with
above. However, no representative from the bank was called
to say
this had been its attitude and a letter from the bank tendered into
evidence to support this allegation does not in fact
do so. Dated
4 October 2006, it requested various documents which it stated
were ‘still outstanding and will be needed
to finalise the
above transaction’. These included copies of the lease clearly
setting out its terms including the minimum
initial gross income, the
annual rental escalation and the minimum period of lease being ten
years. Clearly all the bank did was
call for a copy of the lease
agreement containing the terms which it had been informed had been
agreed upon. It did not prescribe
what the terms of the lease should
be. And even if it had, that was no good reason for the department to
embark upon expenditure
it did not want to incur. It is clear that
the BAC succumbed to the pressure of Ms Botha. The production of this
letter was just
an excuse for its change of stance.
[85]
In any event, this led in mid-November 2006 to the conclusion of the
written lease agreement between the sixth accused and
the Department
of Social Services relating to the Summerdown Place property in
Kuruman for a ten year period at a rental escalation
of 9.5%.
Thereafter on 15 March 2007, Ms Botha and Mr Scholtz signed an
addendum to this lease in Kimberley which sought to
correct the
amounts payable in respect of parking space on the schedule to the
main agreement. (I should mention that Mr Scholtz,
in attempting to
distance himself from knowing how these leases had come about, stated
that he had not been in Kimberley from 2005
until after the death of
Mr Breda in 2009. This addendum gives the lie to this allegation, as
it records he signed it in Kimberley
on behalf of the sixth accused).
In this way in respect of both properties viewed during the outing in
which Mr Breda had gone
with members of the physical planning unit to
visit Springbok and Kuruman, a Trifecta company ended up securing a
lease on better
terms than what it had offered in the first place.
And again, Ms Botha played a vital part in ensuring that outcome.
The
Keur en Geur Building, Douglas
[86]
Ms Botha played a similar role with a similar result in respect of a
lease relating to the Keur en Geur Building, in Douglas.
As appears
from the judgment of the court a quo, a full set of the procurement
documents relating to that lease could not be found.
However, what
can be established is that a lease for office accommodation in
Douglas for a period of three to five years was invited
in an
advertisement and that, as a result of the directive from Ms Botha,
it was re-advertised under an erratum for a period described
as
‘negotiable’.
[87]
At the time there were no more than two State employees that were
being accommodated in Douglas, a social worker and her assistant.
The
initial need of the Department of Social Services was assessed as
being 205 m
2
for a
total of nine single offices. In a memorandum dated 13 October 2006
prepared by Mr K Ryland, (who was at one time an accused
but against
whom charges were dropped) Ms Vosloo was informed that he had visited
the premises with Mr Breda who was willing to
lease office
accommodation of about 500 m
2
to the department, and recommended that the possibility of concluding
such a lease be assessed and considered. In a subsequent
memo of 16
October 2006 addressed to Ms Botha, it was stated that a bid had been
advertised in three local newspapers; that Mr
Breda in his capacity
as trustee of the Shosholoza Trust had submitted a bid by the closing
date of 29 September 2006; that offer
was for 400 m
2
(as opposed to the required 205 m
2
)
at a monthly rental of R50 per m
2
excluding VAT with an annual escalation of 9.5% for a period of ten
years with an option to renew for another five years.
[88]
The minutes of a BEC meeting held on 17 October 2006 reflect
that it was recommended that Shosholoza Trust’s bid
should be
accepted on condition that the lease be negotiated for 205 m
2
for a period of five years, with an option
to renew for another five years, at a monthly rental of R40 per m
2
excluding VAT. These conditions were agreed by the BAC at its meeting
the following day. That committee also agreed to the proposed
annual
escalation of 9.5%.
[89]
However, in an email sent to Mr Holele on 25 October 2006, Ms Vosloo
indicated that the building was 400 m
2
in extent but that the Department of Social Services only wanted some
200 m
2
and could not pay for office
space it was not going to use. According to her, the Shosholoza Trust
had said that it could not subdivide
the property and had therefore
refused the department’s offer. Ms Vosloo thus suggested
the possibility of placing SASSA
officials in the building so that
the department and SASSA would in effect share the lease.
[90]
According to Ms Vosloo, she and Mr Saal were subsequently called by
Ms Botha to her office where she instructed them to
accept the
extra 200 m
2
and
said that the additional space would be used for registry and board
room purposes. When testifying, Ms Botha agreed that she
and Mr
Holele had approved the full 400 m
2
,
with the additional 200 m
2
that the department did not require for office space to be used for a
registry, a kitchenette, a store room and a board room as,
according
to her, it made sense to have such facilities available. She also
said that it was a case of all or nothing as Trifecta
(or more
properly the Shosholoza Trust) was offering 400 m
2
and that the department had to take the whole if they wanted to get
the 205 m
2
portion
it wanted.
[91]
Nothing seems to have happened about Ms Vosloo’s suggestion of
making portion of the building that had been offered available
to
SASSA. On 13 March 2007, however, the BEC reconsidered the bid
and accepted Shosholoza Trust’s offer of the whole
400 m
2
of the building for a lease period of five years at a monthly rental
of R49 per m
2
excluding VAT and an escalation of 9.5% for the duration of the
lease. Its explanation for doing so was that Mr Saal of physical

planning had indicated in writing that the department would use the
extra space. However, Ms Botha testified that she and the
department’s financial officer had discussed the matter and
decided to take the total area offered. Two days later, at its

meeting on 15 March 2007, the BAC accepted these recommendations.
[92]
A written lease of the building including a rental schedule table
from 1 August 2008 to 31 July 2013 was signed by Mr
Breda on
behalf of the Shosholoza Trust and Ms Botha on behalf of the tenant,
the latter having signed on 15 January 2009.
As set out below,
the lease was later ceded to the second accused. Once more, as a
result of Ms Botha’s actions the Department
of Social Services
ended up being bound with a Trifecta lease of premises it really did
not need, but at substantial cost to the
department. Moreover, as was
rightly found by the court a quo, there was in fact no urgency to
procure this lease if regard is
had to the lapse of time after the
terms had been agreed until the lease was signed. It is important to
also point out that there
were but two persons who required
accommodation in Douglas when the lease was negotiated and there was
still just two persons using
the building four years later. Bearing
all of this in mind, the court a quo had ample justification when it
said the following
in regard to this transaction:
‘
On the basis
of the largely common cause facts with regard to the procurement of
this lease, it can hardly be said that Ms Botha
acted in the best
interest of her department . . . the department initially required
205 m
2
. It was
saddled with 400 m
2
.
. . The 195 m
2
difference [calculated] at the rental escalation rate of 9.5% over
the five year lease period . . . came down to a total of
R790 106.57.’
[93]
In any event, in a letter dated 10 December 2008, approximately a
month before she signed the lease, Ms Botha informed Shosholoza
Trust
that the Department of Social Services had no objection to the lease
being ceded by the trust to the second accused, Trifecta
Investment
Holdings (Pty) Ltd. When he testified, the first accused explained
that the cession had been necessary as Mr Breda
had signed an
agreement of sale on behalf of Shosholoza Trust to purchase the
property in issue. The latter, however, could not
pay for it, whilst
the second accused could arrange the finance. This illustrates what
appears to have been part of Mr Breda’s
modus operandi: secure
a lease with the department and then acquire the property so leased
with the financial assistance of Mr Scholtz.
The
fifth, sixth and a portion of the seventh floor of the Du Toitspan
building, Kimberley
[94]
As had occurred in other instances, the process in respect of this
property commenced with Mr Saal, as Head of the Physical
Planning
Unit of the Department of Social Services, directing a memorandum
dated 14 September 2006 to Mr Holele relating to the
dire need of
office accommodation in Kimberley. This he stated was due to the
office accommodation then occupied by the Department
of Social
Services not meeting its needs and as various units of the department
needed to be relocated. He stated that the Physical
Planning Unit had
assessed the office space requirements of the department and that a
total of approximately 1 150 m
2
was required in a building that had to be accessible to disabled
persons. He concluded by requesting approval for the advertisement
of
office accommodation in the local newspapers in order to secure a
suitable office block for the department.
[95]
Interestingly, although the memorandum was dated 14 September 2006,
it bears a date-stamp showing that it was only received
on 16 October
2006, more than a month later. In any event, this led to an
advertisement for office accommodation required by the
Department of
Social Services for a negotiable period commencing December 2006
being advertised in both the Diamond Fields Advertiser
and Die
Volksblad newspapers. It was not advertised in the Government Tender
Bulletin.
[96]
In a bid made in response to this advertisement on 3 November 2006,
the fourth accused (Trifecta 434 Property 4 (Pty) Ltd)
offered 1 150
m
2
office space in
the Du Toitspan building, Kimberley at R65 per m
2
per month excluding VAT and shaded parking at R68 per parking per
month excluding VAT, for a minimum period of 60 months (five
years)
with an option to renew for a further 60 months. Interestingly, to
the very square meter, the floor size contained in this
offer was
that set out in the memorandum Mr Saal had sent to Mr Holele dated
14 September 2006. One is left to wonder whether
this was a mere
coincidence.
[97]
A competing bid was received from a company known as Gallovents
Fifteen (Pty) Ltd, which alleged that it was a Northern Cape
company
but gave a Beacon Bay, East London postal address and an East London
telephone number. In a memorandum directed to Ms Botha
dated 14
November 2006 the competing bids were scored and resulted in the
fourth accused being allocated 94.66 points out of a
hundred and
Gallovents bid being scored at 88.59 points (it had offered 1 642m
2
of office space at R45,60 per m
2
per month). The offered recommendation was that the fourth accused’s
offer of R65 per m
2
per month excluding VAT, basement parking of R68 per month excluding
VAT, a lease period of five years and an annual escalation
of 8% with
occupation being given on 1 December 2006, be accepted. A material
factor in favour of the fourth accused was stated
to be that the
extent of office space it offered met the department’s need of
1 150m
2
whereas
the competing bid offered a larger area.
[98]
The fourth accused’s bid was endorsed and recommended, first by
the BEC on 17 November 2006 and, thereafter, by the BAC
on
27 November 2006. On 28 November 2006, Ms Botha as HOD
approved these decisions.
[99]
Despite these terms having been agreed upon, it appears as if no
formal lease agreement was signed at that stage. Some two
months
later, on 29 January 2007, Mr Saal addressed a memorandum to Ms
Vosloo stating that it had since been discovered that an
extra 400 m
2
of office space was required to accommodate the intended officials
that had to be relocated to the Du Toitspan building. He recorded

that negotiations had been held with ‘the proprietor of the
building to accommodate our needs’ following which it had
been
agreed that ‘the additional 400 m
2
office space be allocated to the Department
of Social Services . . . but that only 200 m
2
will be billed for, thus creating a saving of R13 000 per
month’. He therefore requested that an additional amount of

R13 000 (excluding VAT) per month for the extra 200 m
2
was required as well as one extra cleaner to clean the seventh floor,
and that a lease agreement would be concluded once permission
was
granted for the additional funds.
[100]
Without being placed before either the BEC or the BAC for
consideration of the rental of this additional 400 m
2
of floor space, a formal written agreement was signed on 23 April
2007 by Mr Breda on behalf of the fourth accused and, on 25 April

2007, by Ms Botha on behalf of the Department of Social Services. It
recorded the size of the rented premises at 1 656 m
2
to be rented at R65 per m
2
per month (excluding VAT). How that size of the leased premises was
arrived at is not clear, bearing in mind that the initial agreement

was for 1 150 m
2
to which a further 400 m
2
was agreed upon. This should have made it 1 550 m
2
rather than 1 656 m
2
.
Moreover the additional 400 m
2
was only going to be charged for on the basis that it was 200 m
2
so the rental of 1 656 m
2
at R65 per m
2
appears to be incorrect and too high.
[101]
That is not the only difficulty. An annual escalation rate of 8% in
regard to rental had been approved by the BEC, the BAC
and Ms Botha.
No mention was made of any change in the escalation rate in the
memorandum of Mr Saal of 29 January 2007 which
recorded the
further negotiations that had been held. The formal lease relating to
the increased area when prepared therefore recorded
an annual
escalation of 8% but that appears to have been deleted and a figure
of 9.5% inserted in longhand in its place. How this
came about one
does not know (the record also contains a signed copy of the lease
without this alteration.) The court a quo justifiably
commented on
this as follows:
‘
There is no
justification why the additional 400 m
2
was not subjected to an open tender process. The argument that it was
only practical and logical not to subject the additional
400 m
2
to a competitive bidding process in view of the fact that Trifecta
was already leasing part of the property to the department is

unpersuasive. The additional 400 m
2
to Trifecta’s initial 1 150 m
2
comes down to 1 656 m
2
.
Almost the size of the space (1 642 m
2
)
that had been offered by Gallovents. This stripped the tender process
of an element of fairness which requires the equal evaluation
of
tenders.’
That
this latter comment was justified in particular by reason of the
competing bid of Gallovents having been disqualified in the
first
instance for offering 492 m
2
more than Trifecta. The
end result was that the latter ended up leasing almost that space
area to the department but at a substantially
higher rental than if
Gallovents’s offer had been accepted.
The
ninth, tenth and eleventh floors of the Du Toitspan building
[102]
On 2 June 2008, a little over a year after the Du Toitspan lease had
been concluded, Mr Breda wrote to the HOD of Social Services
(who was
at the time Ms Botha but the letter was marked for the attention of
Mr Saal) referring to negotiations in connection with
the Du Toitspan
building and stating:
‘
In line with
the request from your Department to amend the current lease on the
facilities in the Du Toitspan Building to include
the following
facilities, we reflect the amendment in this offer to lease:
Description
Floor Area (m2)
Current Utilisation
Amended Utilisation
Floor 5
670.50 m2
670.50 m2
670.50 m2
Floor 6
259.00 m2
259.00 m2
Floor 9
807.28 m2
807.28 m2
Floor 10
807.28 m2
807.28 m2
Floor 11
807.28 m2
807.28 m2
To
affect the amended request to reduce the floor area utilisation on
floors 5 and 6, Trifecta and the Department will amend the
current
lease agreement for floors 5 and 6, signed in December 2006, to
reflect the new requirement on these floors and will enter
into a new
lease agreement for the additional requirement as set out in this
offer.
As discussed with
the Department of Social Services and Population Development (DSS &
PD) representatives, we confirm that the
following rental parameters
will be applicable for floors 9, 10 and 11 of Du Toitspan building:
A.
Contracting information, responsibilities and conditions:
Premises:

Floors 9, 10 and 11 of Du Toitspan Building, Kimberley
Floor
size:

Approximately 2 421.84 square metres, final measurements to be
confirmed on occupation.
Rental per
month:

R70-20 per square metre per month excluding VAT.
Parking rental per
month:

Undercover parking bays: R185-00 / parking bay per month.
Initial lease
period:

Minimum 120 months.
Option
period:

60 Months after expiry of initial lease period.
Annual
Escalation:

10% annually
Lease Commencement
Date:
1 August 2008 (if lease is
signed before 30 June 2008).’
[103]
This letter appears to have set the ball rolling. On 12 June 2008, Mr
Saal indicated in a memorandum that the acquisition
of new or
additional office accommodation would be inevitable as there were a
number of vacancies which had to be filled. He suggested
that certain
units be relocated to the external office accommodation at the Du
Toitspan building and that he had held a discussion
with the owner of
the building who had told him that he had office space available. He
recommended that approval be granted to
enter into a lease agreement
in respect of this office space.
[104]
Ms Botha’s response was immediate. The same day, she and Mr
Breda signed an addendum to the previous lease to the effect
that the
portion of floor 7 presently being let would not be required once the
department took occupation of additional space on
floors 9, 10 and
17. They also signed a separate lease agreement relating to floors 9,
10 and 11, reflecting rental of R70.20 per
square metre per month for
2421.84 m
2
(that
being the total extent of the space to be let on floors 9, 10 and 11
as reflected in Mr Breda’s letter of 2 June 2008)
with an
escalation of 10% per annum for a period of eight years (from 1
August 2008 to 31 July 2016), and an option to renew for
five years.
[105]
In this way the fourth accused came to lease another portion of the
same building, but at a substantially higher rental and
a higher
escalation rate and for a substantially longer period than the lease
it had in respect of the other portions of the building.
And all of
this was done in great haste, without any of the procurement
processes prescribed by the statutory matrix already mentioned
having
been followed, and with substantial financial consequences to the
department. The rental for the additional floors as set
out in the
schedule to the lease amounted to R193 815.01 per month with
effect from 1 August 2008, increasing to R377 690.63
per month
by 1 August 2015.
[106]
The day after this lease and addendum were signed, Mr Holele
addressed a letter to the Head of the Department of Social Services

(farcically that was Ms Botha, the person who had signed the
lease and addendum) to attempt to justify the deviation from
normal
procedures, stating:
‘
1. The
Department is under severe pressure to obtain additional office
accommodation due to the population of the organogram –
with
specific reference to the Social Welfare Services’ Programme.
2. In 2006 the
market for office accommodation was tested under Bid
NC/SOC/0020/2006. Only two (2) prescribed by the Procurement
Policy
Framework Act 05 of 2000.
3. The Department
successfully negotiated leasing of office accommodation on floors 9,
10 & 11 in addition to floors 5 &
6, Du Toitspan Building.
4. It would be in
the best interest of the Department to enter into a separate lease
agreement for floors 9, 10 & 11 as the
rental per m
2
differs from that of floors 5 & 6:
·
Floors 9, 10 & 11: R80.03 / m
2
(incl. VAT)
·
Floors 5 & 6: R74.10 / m
2
(incl. VAT)
5. It is therefore
recommended that the appended addendum to agreement of lease as well
as the lease agreement between Trifecta
Trading 434 Property 4 (Pty)
Ltd be signed.’
[107]
The reasoning set out in this letter is insupportable for various
reasons.  First, the fact that the market may have
been tested
two years previously, and generated but two bids of which the fourth
accused’s was accepted, did not mean that
any bid for any other
portion of the building made by the fourth accused would necessarily
be the best course for the department
to follow. Circumstances may
well have changed and, without going through the normal bid
procedures, the existence of alternative
or more desirable
accommodation would not be established. In this respect, there is no
suggestion, nor could there be, that Trifecta
was necessarily the
sole provider of office accommodation in Kimberley, particularly in
the light of the earlier bid of Gallovents.
[108]
Second, concluding a lease in this way also flew in the face of
clause 24 of the SCM Policy in that account was taken of an

unsolicited bid outside a normal bidding process – which even
if it was to be considered, required the BAC to consider it
and make
a recommendation only after taking into account comments submitted by
the public and after obtaining written input from
the Provincial SCM.
[109]
Third, there can be no suggestion of extreme urgency justifying a
deviation from the official acquisition process as required
by the
provincial SCM Policy (as referred to in paragraph 19 of this
judgment). Ms Botha testified that there was an urgent need
to
require the office space because posts had been advertised,
appointments had to be made, there was a lack of office space and
the
department needed more floors in the same building. That may have
been the case, but that falls short of the extreme urgency
the
existence of which is required before the prescribed procedures may
justifiably not be followed. And Mr Holele, while conceding
the
existence for the need of office space, when pressed in
cross-examination was not prepared to concede that such need was
urgent.
Thus while accepting that there was a need the evidence did
not establish an urgency so extreme as to justify the Treasury
Regulations
and the SCMA Policy being ignored.
[110]
In these circumstances there was no justification for a departure
from the normal procedures, and the letter Mr Holele quoted
above was
clearly nothing more than a blatant
ex post facto
attempt to
justify the unjustifiable, addressed as it was to the person who had
already signed the lease agreement. It seems to
me to be clear that
Messrs Breda, Holele and Saal, together with Ms Botha, just took it
upon themselves to re-organise the lease
of the building as if they
were not bound by any restrictions or procedures. This resulted in
the department becoming obliged to
make substantial rental payments
on a monthly basis without the safeguards of the SCM Policy being met
– payments that operated
to the financial benefit of members of
the Trifecta group.
Matters
arising out of these leases
[111]
As appears from what I have set out above, the modus operandi of
Mr Breda in securing these leases appears in the main
to have
been this: in line with Mr Scholtz’s vision of acquiring
and refurbishing largely run-down buildings in order
to lease them to
provincial government departments, he would identify a property which
might be suitable to be converted into office
accommodation; he would
then introduce such property to the provincial government, mostly
before the formality of an advertisement
calling for bids for
accommodation having been published; he would then negotiate the
terms of the lease for such property; in
the event of such
negotiations being successful and a lease either having been
concluded or  likely to be agreed, he would
then acquire the
property using one of the Trifecta group of companies or, on one
occasion, his own private trust which later ceded
the lease to a
Trifecta company. Any person able to assist this business scheme
would obviously be of significant advantage to
the Trifecta group and
those who benefitted through it.
[112]
As appears from the history set out above, the conclusion of these
leases was riddled with irregularities. Indeed, the Treasury

Regulations and the rules of the SCM Policy were honoured more in
their breach than in their observance. Inter alia, and without

intending to be exhaustive:
(a) In respect of
not one of the leases was a bid advertised in the Government Tender
Bulletin for a minimum period of 21 days before
closure as required
by Treasury reg 16A6.3(c) and clause 9(iii) of the SCM Policy. In the
instances of the leases of the Springbok,
Kuruman and Du Toitspan
buildings, tenders were advertised for less than that period and only
in local newspapers.
(b) The NCTC
building and the Kimberlite Hotel leases were concluded without any
SCM protocols being observed: this to the knowledge
of both the MEC’s
of the respective departments that took occupation of the properties,
Mr Esau and Ms Joemat-Pettersson,
and despite Mr Crouch’s
so called ‘comfort letters’ to the contrary effect
written by him on the instruction
of his HOD, Mr Selemela –
which must be construed as a clear attempt at a cover-up.
(c) Unsolicited bids
were entertained in breach of the SCM Policy, not only in respect of
the NCTC Building and Kimberlite Hotel
as already mentioned, but also
in respect of the Oranje Hotel, Upington and the ninth, tenth and
eleventh floors of the Du Toitspan
building, Kimberley.
(d) In a similar
vein, in respect of the leases of 14 Riebeeck Street, Springbok and
Summerdown Place, Kuruman, although the department
did advertise for
bids for office accommodation in Springbok and Kuruman, it did so
only after members of its Physical Unit had
visited those centres
with Mr Breda and being shown the buildings which were later leased.
In these cases, too, Mr Breda’s
approach must effectively
be construed as being an unsolicited bid in respect of each property
rather than one solicited by a bid
advertisement.
(e) In respect of
the Springbok lease, the BEC did not sit to evaluate tenders. Only
once the lease was awarded was it approached
to ratify it.
(f) Similarly, the
unsolicited bid in respect of the Oranje Hotel in Upington resulted
in Ms Botha signing a lease before its terms
had been discussed and
accepted by the provincial Tender Board, as was required until 30
June 2006. As already mentioned, she was
unable to give a coherent
explanation as to why she had done so.
(g) What is truly
alarming is that Ms Potgieter, who was at the time the Director,
Provincial Asset Management in the Provincial
Treasury of the
Northern Cape, testified that there was nothing unusual in a HOD
signing a lease contract for accommodation without
it having passed
through the SCM Policy procedures which was later ratified by the
Tender Board, particularly in cases of urgency
and emergency. Also
disturbing is that despite the terms of the SCM Policy and Treasury
Regulations, she testified further that
it was not the practice at
the time to advertise in the Government Tender Bulletin before
procuring services, save for tenders
in excess of R40 million –
this apparently in an effort to encourage BEE procurement.
Fortunately, she stated that in terms
of a practice introduced in
2011, tenders in contracts above R500 000 had been advertised in
the Government Tender Bulletin.
(h) It is also
necessary to comment on the evidence by Mr Selemela who, from 2004,
was the HOD of the Department of Public Works
in the Northern Cape
Province. Called by the ninth accused Mr Block, he testified that
during his ten year period as HOD of the
Department of Public Works,
no tender processes were followed nor tenders invited in procurement
of office accommodation and that,
rather, the department requiring
office accommodation would seek out an appropriate building then
negotiate with the owner. Mr
Crouch would then give advice in regard
to the norms and standards in respect of the category of employees to
be accommodated and
the extent of the spaces they required. If this
was in fact the true state of affairs, it shows a deplorable neglect
of prescribed
constitutional and statutory procedures. The court a
quo found his evidence in this regard to be ‘disquieting’
and
flew in the face of the province’s procuring procedures. It
went on to find Mr Selemela to have been a poor and unreliable

witness ‘whose evidence became debased when he intimated that
he could not recall if the tender process had not been followed’.

One is left with the distinct impression that he set out to denigrate
Mr Crouch, an important State witness, and to try to
minimise
the defects in the procedures to which his political cronies had been
parties.
The
failure to recuse
[113]
Before dealing with the merits of the convictions, it is necessary to
deal with an
in limine
argument that this appeal should be allowed as the learned judge in
the court a quo ought to have recused herself after she had
failed to
discharge the accused at the end of the State’s case. At that
stage of the proceedings the accused applied for
the discharge on all
counts in terms of the provisions of
s 174
of the
Criminal Procedure
Act 51 of 1977
which provides that if ‘the court is of the
opinion that there is no evidence that the accused committed the
offence referred
to in the charge or any offence of which he may be
convicted on the charge, it may return a verdict of not guilty’.
[114]
As appears from what follows in this judgment, the accused were not
convicted on any of the charges of fraud which were laid
against them
and, as already mentioned, the State has conceded that the charges of
money laundering cannot be sustained. On the
other hand, there
clearly was evidence incriminating the accused on the charges of
corruption levied against them. Their contention,
both in the court a
quo and in this Court, that they were entitled to a discharge on all
counts cannot be entertained.
[115]
However, in refusing the application for a discharge under
s 174
, the
court a quo observed as follows:
‘
There is a
common thread that runs through the charges which can be gleaned from
the evidence presented by the State. There is also
a synergy which
can be gathered from the accused’s plea explanations, the line
of cross-examination by the defence counsel
and their argument in
respect of this application which points to some collaborative effort
and scheme amongst the accused not
to incriminate each other. This is
a factor which I permissibly take into account.’
Arising
from this, but before the defence case commenced, all the accused
applied by way of notice of motion supported by a founding
affidavit
deposed to by the first accused for the learned judge to recuse
herself. It was alleged that her ruling created a perception
of bias
on her part. This argument was dismissed by the court a quo but
repeated again in this Court.
[116]
The essence of the appellants’ argument was that
the trial court had made a final decision that there had been a
synergy in
collaborative effort in the conduct of their defence
which, taken together with her refusal to discharge them on various
charges
in respect of which the State had conceded it had not proved
its case, created a reasonable apprehension of bias on her part.
[117]
In my view there is no merit in this argument. For there to be a
reasonable perception of bias, a proper factual basis must
be laid –
see
President of the Republic of South Africa
& others v South African Rugby Football Union & others
[1999] ZACC 9
;
1999 (4) SA 147
(CC) paras 45 and 48. In my view, no such basis was
established. Although collaboration between the defence was
mentioned, it is
clear from the judgment on the discharge application
that no final decision in that regard had been made. Furthermore, the
court
a quo was not bound by the concession of counsel for the State
in regard to the guilt or otherwise or the accused in regard to any

of the charges laid against him. And in hearing an application for a
discharge, a court is called upon to exercise its discretion.
That is
what it did. So even if this Court, on reflection and with the
benefit of the entire record, is of the view it would have
exercised
its discretion differently, that is no reason to hold that a failure
to have done so automatically resulted in a reasonable
perception of
bias.
[118]
Accordingly, in the present case, although the reasoning of the court
a quo in regard to the refusal of the application may
have lacked
cogency in certain respects, the necessary factual basis upon which
reasonable persons, objectively applying themselves
to the facts,
would have formed a reasonable apprehension of bias, was not
established. The court a quo correctly rejected the
application for
recusal.
The
offence of corruption
[119]
At common law, it is a crime for a person to offer or give to an
official of the State, or for any such official to receive
from any
person, an unauthorised consideration in respect of such official
doing, or abstaining from, or having done or abstain
from, any act
and exercise of his or her official capacity. Thus in
R v Chorle
1945 AD 487
, in which the common law in regard to the offence was
discussed, the appellant had given money to a municipal official to
induce
him to use his influence to expedite the issuing of a building
permit. This Court held that he had committed the common law offence

of bribery. The learned judge went on:
‘
The law of
bribery is designed to protect the State against those who by gifts
tempt its officials to use their opportunities as
such to further
private interests in State affairs and there is no reason why the
law, which in its original form was wide enough
to secure that
protection, should, by restrictive interpretation, be cut down to
something less than is necessary to achieve its
object.’
[120]
As was pointed out by this Court in
S v Shaik
& others
[2006] ZASCA 105
;
2007 (1) SACR 247
(SCA) para 71,
s 2
(b)
of the
Prevention of Corruption Act 4 of 1918 extended the crime of bribery
from employers of the State to agents who by definition
included,
amongst others, employees in general. That Act was replaced by the
Prevention of Corruption Act 6 of 1958 (the 1958 Act),
s 2
(b)
of which provided that any person who ‘corruptly gives or
agrees to give or offers any gift or consideration to any agent
as an
inducement or reward for doing or forbearing to do or for having done
or forborne to do any act in relation to his principal’s

affairs or business’ was guilty of an offence.
[121]
The Corruption Act 94 of 1992 (the Corruption Act) repealed both the
1958 Act as well as the common law offence of bribery.
It did away
with the requirement that the relevant penalised act had to relate to
the affairs of a principal and replaced it with
a requirement that it
had to relate to the powers and duties of the person sought to be
influenced by the giving or offering or
paying of a benefit.
[3]
[122]
The Corruption Act, in turn, was repealed by the PCCA Act. Section 3
of the latter contains the formulation of a general crime
of
corruption while s 4, which is of similar connotation, provides
specific provisions in respect of corruption relating to public

officers. Section 3 reads as follows (the reader is advised to take a
deep breath):
‘
3. Any person
who, directly or indirectly –
(a)
accepts or agrees or offers to accept any gratification
from any other person, whether for the benefit of himself or herself
or
for the benefit of another person; or
(b)
gives or agrees or offers to give to any other person
any gratification, whether for the benefit of that other person or
for the
benefit of another person,
in order to act,
personally or by influencing another person so to act, in a manner –
(i) that amounts to
the –
(aa)
illegal, dishonest, unauthorised, incomplete, or biased; or
(bb)
misuse
or selling of information or material acquired in the course of the,
exercise, carrying
out or performance of any powers, duties or functions arising out of
a constitutional, statutory, contractual
or any other legal
obligation;
(ii) that amounts
to –
(aa)
the abuse of a position of authority;
(bb)
a breach of trust; or
(cc)
the violation of a legal duty or a set of rules,
(iii) designed to
achieve an unjustified result; or
(iv) that amounts to
any other unauthorised or improper inducement to do or not to
do anything,
is guilty of the
offence of corruption.’
[123]
As the learned author Prof Snyman points out, if this lengthy
definition is stripped of conjunctive words or phrases, it is

possible to abbreviate it to read as follows:
‘
Anybody who
(a)
accepts any gratification from anybody else, or
(b)
gives any gratification to anybody else
in order to
influence the receiver to conduct herself in a way which amounts to
the unlawful exercise of any duties, commits corruption.’
[4]
It
must be immediately recorded that ‘gratification’ is a
word of wide connotation. Its definition in s 1 of the PCCA
Act
includes money, a gift, a loan, an interest in property, any favour
or advantage of any description, and any real or pretended
aid or
influence (the list goes on and on).
[5]
[124]
It is not necessary to repeat the full terms of s 4 of the PCCA Act
and the offence it creates of corruption relating to a
public
officer. Although its provisions are fuller than those of s 3,
conceptually they are the same. What is of relevance is that
in each
section both the giver of the gratification and its receiver, commit
the crime. Corruption by the recipient is set out
in subsecs 3
(a)
and 4
(a)
while
corruption committed by the giver of the inducement is set out in
subsecs 3
(b)
and 4
(b)
.
The one is in effect a mirror image of the other.
[125]
Prof Snyman gives the following comparison between the crimes in the
2004 Act and those in the 1992 Act:
[6]
‘
If one
compares the definition of the crime in the 2004 Act with that in the
1992 Act, it is clear that the provisions of the 2004
Act is
applicable only to cases in which X gives a gratification or benefit
to Y (or Y accepts it from X) in order to persuade
Y to act in a
certain way
in the future
.
In terms of the rules relating to bribery and corruption which
applied before 2004, the crime could also be committed if X gives
a
gratification or benefit to Y (or Y accepts it from X) in order to
compensate Y (or as a
quid pro quo
),
for something which Y had already done
in the
past
. In this respect the definition in the
2004 Act is narrower than that in the 1992 Act. It is surprising that
the giving or acceptance
of a gratification as compensation for
something which the receiver has already done in the past, is not
incorporated in the definition
in the 1994 Act, since this rule has
formed part of the crime for centuries. It formed part of the
Placaat
of the States General of the United Netherlands of 1651 – a
document which is among the most important sources of the common-law

crime of bribery. Thus, if X has passed her practical examination for
a driver’s licence and has received her licence, and
only
thereafter gives the official who gave her the pass mark R500 for
awarding her the pass mark, she does not commit corruption
in terms
of the 2004 Act. In terms of the 1992 Act she would have committed
the crime.’ (Footnotes omitted.)
[126]
Prof J R L Milton in his seminal work
South African Criminal Law
and Procedure
Vol 3 (Statutory Offences – Binder 1) at D3-5
expressed a similar view. He stated:
‘
Writers have
stated that the 2004 Act suffers by comparison with its “commendably
brief” predecessor, given its prolix
and complex definitions,
and the large measure of repetition in the Act. Of greater concern is
that the Act, the purpose of which
is to
strengthen
measures to prevent and combat corruption, actually has a narrower
definition of corruption than the definition applied in the
1992 Act,
in that it punishes those instances where gratification is given in
order to bring about a particular action in the
future
,
and does not apply to compensation for an action brought about in the
past
. Prior to the
inception of the Act, whether under the 1958 Act in association with
the common law crime of bribery, or whether
in terms of the 1992 Act,
both these forms of corruption were(?) subject to criminal sanction.
The
lacuna
is obviously contradictory to the aims and purposes of the 2004 Act.
Given that the Act, which has been enacted to strengthen and
not
weaken the fight against corrupt activity, has omitted an entire
category of conduct previously held to be unlawful, could
it not be
argued, in the light of the above reasoning relating to Section
12(2)
(a)
of the
Interpretation Act, that it was indeed the intention of the
legislature to revive the common-law crime of bribery when it

repealed the 1992 Act? In this way the law at least extends the
corrupt compensation for past deeds in respect of state officials,

whereas the alternative interpretation simply means that the new
legal regime seeking to counteract corruption is more narrowly

defined, and thus weaker, than in the past.’
[127]
Whether the PCCA Act in its repeal of the Corruption Act has revived
the common law crime of bribery, is a thought provoking
question.
[7]
But it is of academic interest only in the present case as none of
those accused charged with corruption under the PCCA Act were
charged
in the alternative with common law bribery. Thus even if entitled to
an acquittal on the corruption charges, they could
not in the
alternative be convicted of common law bribery, even if that offence
is to be regarded as revived. Hopefully the Executive,
which daily
expounds the necessity of fighting corruption, will take heed of the
concern expressed by these learned authors that
the Corruption Act
has in fact weakened the fight against corrupt activities, a result
that was probably not intended.
[128]
The views of Professors Milton and Snyman were drawn to the attention
of the court a quo, which responded in its judgment
as follows:
‘
I am of the
view that the prevention and combating of corruption and corrupt
activities will be rendered meaningless if the Act
was interpreted to
narrowly regulate conduct where a gratification or benefit is given
or offered by a donor to the recipient in
order to persuade the
recipient to act in a certain way only in the future. This could not
have been the intention of the legislature
having regard to the
purpose of the Act, its preamble and the manner in which this offence
has been dealt with in the past by our
Courts. On the whole I am of
the view that the giving or acceptance of a gratification as
compensation for something which the
receiver has already done in the
past should be read as forming part of the modern day offence of
corruption as set out in ss 3
and 4 of the Act. If not miscreants
could simply conspire to deliver or transfer the gratification
subsequent to the unlawful deed
and thereby render a portion of ss 3
and 4 of the Act nugatory
.
’
[129]
I have difficulty with this analysis. The court a quo’s
professed difficulty with accepting that the section restricted

liability to instances where the gratification was offered in order
to persuade the recipient to act in a certain way in the future

appears to be premised upon its view that if that were so, miscreants
could avoid criminal liability by simply arranging for the

gratification to be paid or delivered after the event. But it seems
to me to be clear that offenders could not avail themselves
of this
simple ruse to avoid criminal liability. As is set out in both s 3
(a)
and
(b)
the offence is
committed when a person either accepts or gives the gratification or
when such person ‘agrees or offers to’
accept or give the
gratification. Thus the offence is committed on agreement to give or
even on merely offering to give the gratification.
The sections in
their normal connotation therefore envisage that a person who
undertakes to act in a way which constitutes corruption
commits the
offence, even if the promised gratification is only forthcoming after
the event.
[130]
It also seems to me to be clear that agreement between a corruptor
and corruptee on precisely what actions is required for
any
gratification to be given need not be reached, and a general common
understanding suffices. Thus in
S
v Selebi
2012
(1) SACR 209
(SCA) the appellant, who at the relevant time had been
the head of the national police service had received payments from
Mr Glenn
Agliotti.
[8]
This
Court found that when Mr Agliotti had made such payments, the
appellant had known they were intended to induce him as
the head of
the national police to afford Mr Agliotti some favour in one way or
another and that this was sufficient for purposes
of the offence.
[9]
It also held that the appellant must have realised that the
generosity and payments he had received had created a dynamic whereby

he, in his post, would be indebted to Mr Agliotti and would have to
remain willing to do him favours in the future, and this constituted

corruption as envisaged under s 4 of the PCCA, irrespective of
whether any
quid
pro quo
was in fact given (although it found that gratification had in fact
been given).
[131]
It seems to me then that where one party does a ‘favour’
amounting to the unlawful exercise of any duties on behalf
of the
other, on the understanding that a gratification of some sort as
defined will be forthcoming in due course, it is neither
necessary
for the nature or amount of that gratification to be specifically
agreed, nor for it to have been given, before the crime
of corruption
is committed.
Count
15
[132]
In the light of the above, I turn to consider the convictions of the
appellants. For convenience I intend to deal at the outset
with the
convictions of the ninth and tenth accused, Mr Block and his company
Chisane Investment, on count 15, a charge of corruption
in alleged
contravention of s 3
(a)
of the PCCA Act. In paragraph 152 of
the charge sheet it was alleged they were guilty of that offence:
‘
152. IN THAT
during the period between March 2006 and April 2008 and at or near
Kimberley in the regional division of Northern Cape
and within the
area of jurisdiction of this Honourable Court, the Accused, did
directly or indirectly accept or agree or offer
to accept any
gratification from Accused 1 and or Accused 2 and or Accused 3 and or
the late Mr Sarel Breda to wit, the following
payments;
152.1 R 228 000,00
(paid to Accused 10 on 07 March 2006);
152.2 R 500 000,00
(paid to Accused 9 on 26 April 2006);
152.3 R 338 521,25
(paid to Duncan and Rothman Attorneys for the benefit of Accused 9 on
20 August 2007);
152.4 R 298 151,95
(paid to Accused 9 between 30 October 2007 to 29 April 2008);
153. Accused 9 also
received the following gratification from the aforesaid Accused and
or the late Mr Sarel Breda;
153.1 He received 25
Ordinary Shares in Trifecta Resources and Exploration (Pty) Ltd (on
08 September 2006) which is a subsidiary
of Accused 2 and or Accused
3;
153.2 His guest
house situated at 382 and 383 Shimane Street, Upington, was renovated
to the amount of R346 919,74.
154. Accused 9
received the aforementioned gratifications for the benefit of himself
and Accused 10 in order for Accused 9 to personally
act or by
influencing another person, to wit Mr Crouch, so to act in a manner-
(i) That amounts to
the –
(aa) illegal,
dishonest, unauthorised or biased exercise, carrying out or
performance of any powers, duties or functions arising
out of a
contractual or any other legal obligation;
(ii) That amounts to
–
(aa) the abuse of a
position of authority; or
(bb) a breach of
trust; or
(cc) the violation
of a legal duty or a set of rules;
(iii) designed to
achieve an unjustified result; or
(iv) that amounts to
any other unauthorised or improper inducement to do or not to do
anything,
155. to wit, that
Accused 9 influenced and or instructed Mr Ebrahim Crouch to act in a
manner that would ensure that the Department
enters into a Lease
Agreement with the Trifecta Group of companies and or with Mr Breda
in respect of the Kimberlite Hotel building
and The Northern Cape
Training Centre building; and or
156. that Mr Ebrahim
Crouch acts in a manner that would ensure that the prescribed
procurement processes of the Department are circumvented
or that Mr
Crouch influences the Departmental employees not to adhere to the
prescribed procurement processes when procuring Kimberlite
Hotel
building and The Northern Cape Training Centre building for office
space as aforesaid.’
[133]
As appears from its terms, this charge relates solely to the
department’s leases of the Kimberlite Hotel and the NCTC

building concluded in late 2005. It is clear from the circumstances
that Mr Breda must have identified those buildings, which were
owned
by third parties at the time, as being run down but capable of being
renovated and hired to government departments or entities;
that he
therefore approached Mr Block to use his influence to assist in
procuring leases; and that as a result Mr Block phoned
Mr Crouch and
told him to help Mr Breda who was coming to see him. That this
influenced Mr Crouch and the conclusion of the
leases, is clear.  It
was on the strength of his introduction that Mr Breda made
contact with Mr Crouch and despite the
latter’s protestations
that due protocol had to be followed, events were set in train which
led to the buildings being viewed
and the leases being signed without
the prescribed tender processes having been followed or the Tender
Board’s permission
being obtained.
[134]
Mr Block was not called to testify in his own defence, and as a
result the court a quo, correctly in my view, accepted Mr
Crouch’s
description of the telephone calls that had taken place between the
two of them. Counsel for Mr Block, relying
on the content of the
Premier’s letter of 12 July 2005 (quoted in full in para 32 of
this judgment) – in which it is
stated that para 13.2.4 of the
Treasury regulations was amended to read that the accounting officer
of an institution (in these
cases the HODs) may enter into leases of
this nature ‘without any limitations’ – fell back
on an argument that
this meant that no protocols or SMC procedures
had to be followed before the HOD’s of the relevant departments
signed the
leases of the Kimberlite Hotel or the NCTC building, and
thus there had been no irregularities in respect of these leases.
[135]
Regulation 13.2 of the Treasury Regulations provides as follows:
‘
13.2 Lease
transactions
13.2.1 For the
purpose of this regulation, a lease is an agreement whereby the
lessor conveys to the lessee in return for a payment
or a series of
payments the right to use an asset for an agreed period of time.
13.2.2 A lease is
classified as a finance lease if it transfers substantially all the
risks and rewards incidental to ownership
of an asset. Title may or
may not eventually be transferred.
13.2.3 An operating
lease is a lease other than a finance lease.
13.2.4 The
accounting officer of an institution may, for the purposes of
conducting the
institution’s
business, enter into lease transactions without any limitations
provided that
such transactions
are limited to operating lease transactions.
13.2.5 With the
exception of agreements concluded in terms of Treasury Regulation 16,
the accounting officer of an institution may
not enter into finance
lease transactions.’
[136]
The leases in question were clearly ‘operating’ leases as
envisaged by this regulation, but the argument that
by reason of reg
13.2.4 it was unnecessary for HOD’s to comply with SMC
procedures as they were empowered to enter into such
leases ‘without
limitation’ cannot be sustained. The regulation must be
interpreted in context of the regulations as
a whole, which make it
abundantly clear that the SMC procedures are to apply to all
departments relating to the acquisition of
goods and services, be
fair, equitable, transparent, competitive and cost effective and
comply with the relevant legislation –
see reg 16A. To argue
that this one clause in a regulation essentially renders all these
regulations nugatory has no foundation.
To hold otherwise would give
rise to the absurdity that the requirements of the Constitution and
the PFMA, relating to the establishment
and functioning of the SCM
detailed in paragraphs 15 to 23 of this judgment, could be ignored.
Regulations cannot override
the founding legislation under
which they were made.
[137]
Moreover, in the National Treasury’s Practice Note SCM 2 of
2005 dated 10 May 2005, which applies ‘to all national
and
provincial departments, constitutional institutions and public
entities’, provision is made for threshold values when

procuring goods or services, hiring or letting anything, acquiring or
granting any right or disposing of State property. In clause
4, it is
specifically stated that accounting officers should invite
competitive bids for all procurements above R200 000,
and that
competitive bids should be advertised in at least the Government
Tender Bulletin and in other appropriate media.
[138]
It is unnecessary for present purposes to determine the precise
meaning of the words ‘without limitation’ used
in reg
13.2.4. In my view, it was probably intended to connote that HOD’s
were not bound to a limitation in respect of the
rental to be paid,
but clearly it cannot be construed as providing an abandonment of the
SCM procedures to be followed in procuring
a lease. Regulation 13.2.4
certainly cannot be construed as providing a free hand to every HOD
to contract as he or she wished
without following any procurement
protocols or applicable SCM policy. Nor does it appear ever to have
been regarded in that light
by the provincial government officials
involved in procurement. That this is so is also borne out by the
fact that SCM schemes
were followed in most of the other leases which
form the basis of the charges in this matter and, significantly, Mr
Crouch’s
HOD ordered him to issue a declaration that all
protocols had been observed in respect of these particular leases
despite knowing
the contrary was true. This was on obvious attempt to
cover up which would hardly have been necessary if it was thought
there were
no such protocols applicable.
[139]
There can thus be no doubt that the HOD’s could not conclude
leases with gay abandon without complying with SCM protocols
nor that
the leases of the Kimberlite Hotel and the NCTC building were
concluded irregularly and in breach of the requirements
of the SCM
policy, which at that time required a fair, open and competitive
process, advertisement for bids in the Government Tender
Bulletin,
and the approval of the Tender Board. The argument that the leases
had not been irregularly concluded as the SCM procedures
did not
apply in their instances, borders on the spurious.
[140]
I turn to deal with the question of gratification. It was common
cause as a result of the plea explanation that the amounts
referred
to in paras 15.1-15.4 of the charge sheet ‘were in fact paid
and received’. However, in respect of the sum
of R228 000
paid to the tenth accused, Chisane Investment in March 2006, the plea
explanation proffered was that the amount
was paid for ‘consultancy
services’ rendered by accused 9 ‘in his capacity as the
Director and a shareholder
of Chisane Investment’ to the
Shosholoza Trust at the request of Mr Breda. And in respect of the
sum of R500 000 paid
to him on 26 April 2006, Mr Block’s
plea explanation was that he was paid the sum from a company of Mr
Breda, Data Force
Trading 53 (Pty) Ltd, also ‘in respect of
assistance provided in the management of business affairs in the
Northern Cape,
as well as other business areas outside Northern Cape
where Mr Breda had interests’.
[141]
The sole suggestion is, then, that these payments were due to Mr
Block for having rendered ‘consultancy services’
(that
the most vague and imprecise definition of work rendered) or for
providing business ‘assistance’ (an equally
amorphous
description of what he had allegedly done) to justify these large
amounts being paid to him. Had Mr Block in fact performed
work or
rendered services justifying those payments, it would have been a
simple matter for him to have both explained what he
had done in his
plea explanation and then entered the witness box and testified. For
reasons best known to himself, he failed to
do so. No one, not even
Mr Scholtz, was able to explain the underlying causa of these amounts
being paid. In the light of Mr Block’s
own plea explanation
that he was unemployed at the time, and the fact that all he appears
to have done in regard to Mr Breda or
his companies was to introduce
Mr Breda to Mr Crouch and then put pressure for leases to be
concluded, I am driven to the inevitable
conclusion that the payments
were made as a
quid pro quo
for his doing so due to a prior agreement or understanding.
[142]
It was argued, however, that these amounts were paid several months
after the conclusion of the leases, so that no inference
in linking
them to the conclusion of those leases could be drawn. I do not
agree. The leases were concluded by the third accused,
an entity
which required financial assistance in order to purchase the
properties. Put simply, the third accused appears simply
to have
lacked the funds to immediately make such substantial payments.
However, the two properties it had leased generated substantial

incomes: the NCTC Building generated R108 000 per month with
effect from 1 January 2006 and the Kimberlite Hotel R171 000
per
month with effect from April 2006. The amounts of R228 000 and
R500 000 paid in March and April 2006 were paid once
the
properties concerned had become income producing. There was therefore
no substantial delay as was argued. Without Mr Block
giving any
explanation, the inference made by the court a quo that these
substantial amounts were paid due to his involvement in
the leases
being procured was correctly drawn.
[143]
Mr Block was at the time the Provincial chair of the ANC, and a man
of considerable political influence. It was through his
introduction
that the two properties at the heart of this charge became known to
the Department of Public Works and it was his
influence which helped
overcome Mr Crouch’s resistance to the normal processes not
being followed. But strictly speaking,
it matters not whether his
influence in fact led to the leases being signed. The offence of
corruption would have been committed
if Mr Block undertook to use his
political influence in an attempt to influence the department to
conclude the leases and subsequently
accepted a gratification for
doing so.
[10]
[144]
And that is precisely what Mr Block did. There is no suggestion on
the evidence that he had any other aims when he introduced
Mr
Breda to Mr Crouch and pressed him to assist Mr Breda in
concluding the lease agreements The inference is therefore
irresistible
that these actions were the ‘consultancy services’
for which he was paid. He is clearly guilty of corruption relating
to
the amounts of R228 000 and R500 000 referred to in clauses
152.2 and 152.3 of the charge sheet, and to that extent
was correctly
convicted on count 15.
[145]
But does his guilt on that count extend to the further gratifications
he received as set out in the remaining sub-clauses
of 152 and clause
153? In this regard, there seems to me to be no doubt that there was
a ‘generally corrupt relationship’
– a somewhat
notorious but apt description – which developed between Mr
Block, on the one hand, and Mr Breda and his
Trifecta companies, on
the other. That Mr Block was prepared to use his political clout to
advance Mr Breda’s business
interests, bears no doubt. It
is borne out not only by the circumstances under which the Kimberlite
Hotel and NCTC building leases
were concluded, but also his
intervention on behalf of  Mr Breda in regard to the Oranje
Hotel in Upington when he threatened
Mr Crouch to hurry up or else he
could personally come and do the work himself. It is also confirmed
by the further payments which
are the subject of this charge.
[146]
It is common cause that an amount of R338 521.25 was paid to
attorneys in respect of legal fees (he said in his plea
explanation
Mr Breda had agreed with Mr Scholtz to loan that sum to him); that
between October 2007 and April 2008 he had been
paid the sum of
R298 151.95 (in his plea explanation he stated this had been
forthcoming from the Trifecta group as salary
for services rendered
to Trifecta Resources and Exploration (Pty) Ltd); that he had been
given 25% of the issued ordinary shares
of the latter company (Mr
Breda and Mr Scholtz held the remaining shares); and that his
guesthouse in Upington was renovated by
a building contractor
employed by the Trifecta group.
[147]
Importantly, Trifecta Resources and Exploration, of which Mr Block
had been given a 25% share, never traded or exploited
any mining
activities. To suggest that Mr Block was entitled to a salary for
services rendered to a dormant company borders on
the ridiculous. If
there was an innocent explanation, why did Mr Block not testify to
give it? The inference is clear that he had
no such explanation.
[148]
In regard to the improvements to the guesthouse, the evidence is in
certain respects somewhat confusing. It was common cause
at the stage
of his plea explanation that the total cost of the renovations was
R346 919.74. Although Mr Block did not
specify precisely
what the arrangement had been, he stated that Mr Breda had said that
he ‘would be of assistance when financial
payment had to be
made in that Trifecta had building operations in Upington at that
stage and renovations to this amount was not
an obstacle to be
effected’. Quite what that means is not clear but it seems that
the Trifecta group would presumably pay
for the work.
[149]
During the course of the trial, the contractor who performed the
work, Mr Myles,
[11]
was
called to testify. He explained that while doing the necessary
renovations to the Oranje Hotel in Upington on behalf of the
fifth
accused, he was asked to quote on renovations to a disused funeral
parlour in Upington which Mr Block intended to convert
into a
guesthouse. He did so and was in due course employed to do the
necessary work, although he was told Mr Block would be responsible

for paying him. He submitted invoices to the fifth accused although,
during the course of the contract, he was instructed by Mr
Scholtz to
clearly indicate which of the work he was doing related specifically
to the guesthouse and to submit separate invoices
in that regard. At
some stage he was told to stop all work, but carried on for a while
in the hope that he would in due course
be paid.
[150]
Under cross-examination by counsel for Mr Block, Mr Myles stated that
he had been paid about R156 000 for the renovations
to the
guesthouse and that the amount of R346 919.74 (which had
initially not been in dispute as being the cost of the renovations)

was in fact his estimate of the balance still due, although it
included a component relating to the work he had done after he had

been instructed to stop. In this Court, counsel for Mr Block argued
that we should accept that this latter sum constituted the

gratification in issue, but this overlooks that, at the end of the
day and once he had been able to consider the invoices and add
them
up, Mr Myles calculated that he had been paid about R251 000 for
the work he had done at the guesthouse.
[151]
However, these various payments were made long after the Kimberlite
Hotel and NCTC building leases were concluded, and whilst
they may
have been forthcoming as an ex post facto gratification for those
leases, it seems more likely that Mr Breda and Mr Scholtz
were
probably happy to have Mr Block, with his considerable political
clout, ‘in their pocket’ so to speak and
that they paid
him these amounts in order to be able to use his political influence
to their advantage from time to time. If that
is so, the reasoning
similar to that adopted by this Court in
Selebi,
both they and Mr Block, who must have been
aware of why these amounts were being paid to him, probably made
themselves guilty of
the offence of corruption as envisaged by the
PCCA Act.
[152]
But that it is not an issue on which a final decision needs be
reached as it is not the crime of corruption in respect of
which the
State charged them. The charge related solely to the conclusion of
the 2005 contracts of lease of the Kimberlite Hotel
and the NCTC
Building, and it seems to me that the payments set out in paras 152.3
and 152.4 and the other gratifications particularised
in para 153
of the charge, were probably not given and accepted as a quid pro quo
in respect of those leases. Rather they
were more likely to have been
due to a continuing corrupt business relationship between the
parties, albeit a relationship which
had its roots in the initial two
leases in respect of which the payments set out in paras 152.1 and
152.2 of the charge sheet (ie
the amounts of R228 000 and
R500 000) had been made.
[153]
In my view, it therefore seems to me that the offence of corruption
on count 15 has been established taking into account the
initial two
payments of R228 000 and R500 000, but that the other
alleged gratifications, albeit paid and extended to
Mr Block as part
of a corrupt relationship, do not fall within the aegis of the
charge. Thus whilst Mr Block may consider himself
fortunate that he
was charged in the manner in which he was, and had the charge been
differently framed he may well have been found
guilty of corruption
relating to all the payments and gratifications alleged in the charge
sheet. In the circumstances, although
the conviction must stand it
must be recorded that it relates only to the payments reflected in
para 152.1 and 152.2 of the charge
sheet, and does not embrace the
further gratifications the State sought to prove against him on this
count.
[154]
In regard to Mr Block’s company, Chisane Investment, it
received the payment of R228 000 paid on 7 March 2006.
Mr Block
stated in his plea explanation that it related to consultancy
services he had rendered on behalf of Chisane Investment.
It was not
suggested to this Court that even if Mr Block was guilty, he had not
acted on behalf of the tenth accused to whom the
payment was made.
There is thus no reason to interfere with the tenth accused’s
conviction on this count as well, albeit
that its guilt does not
include the gratification of the sum of R500 000 paid to Mr
Block.
Count
16
[155]
Only Mr Scholtz and the second and third accused were indicted on
this charge which is the mirror image of count 15. It is
alleged that
Mr Scholtz, or the second accused, or the third accused, or the late
Mr Breda, gave the gratifications referred to
in count 15 to Mr Block
or Chisane Investment as a
quid pro quo
for Mr Block influencing Mr Crouch to ensure that the Department of
Public Works leased the Kimberlite Hotel and the NCTC Building.
[156]
The court a quo convicted Mr Scholtz and the third accused on this
count, essentially for the same reasons it had convicted
Mr Block and
Chisane Investment on count 15, namely, that Mr Block had exerted his
political influence upon Mr Crouch to corruptly
assist Mr Breda to
secure the leases for the benefit of the third accused. However, it
found the second accused not guilty on this
count as it had only been
incorporated in 2006, subsequent to the leases having been concluded,
and could therefore not have been
a party to the corruption.
[157]
For the reasons already given in respect of count 15, even if there
was an ongoing relationship of corruption between Mr Block,
on the
one hand, and Mr Breda and the Trifecta companies on the other,
as a result of the charge having related solely to
the Kimberlite
Hotel and NCTC Building leases, only the payments of R228 000
and R500 000 can be regarded as gratifications
that were given.
On a similar basis of reasoning, any conviction on this count must be
limited to those gratifications. The court
a quo thus erred in
founding its conviction upon the further gratifications referred to
by the State in the indictment.
[158]
However, just as Mr Block and Chisane Investment were guilty of
corruption in respect of the gratifications of R228 000
and
R500 000, there can be no doubt that Mr Breda was similarly
guilty of corruption by paying those sums as a
quid
pro quo
for Mr Block agreeing to use his
political influence to have the leases concluded. Mr Breda clearly
acted on behalf of the third
accused in doing so, and thus its
conviction on this count, even though it relates only to the two
payments I have mentioned, must
stand.
[159]
But what of Mr Scholtz? He alleged that he was unaware of these
payments and the reasoning of the court a quo in founding
him guilty
on this count is by no means clear. There was certainly not a finding
that he had personal knowledge of the payments
of R228 000 and
R500 000 and counsel for the State conceded in this Court that
the evidence fell short of establishing
beyond a reasonable doubt
that Mr Scholtz in fact knew of these payments. In the circumstances,
the appeal of Mr Scholtz on this
count should succeed, as was
correctly conceded by the State, and his conviction and sentence on
this count set aside. This will
be reflected in the order set out
below.
Count
8
[160]
That brings me to count 8, a further charge of corruption brought
against Mr Scholtz and the Trifecta companies, the second
to seventh
accused. As it involved the alleged corruption of a public official,
it was brought under s 4(1)
(b)
of the PCCA Act. In paras 127
to 129 of the indictment it was alleged that accused 1 to 7 were
guilty of corruption (a deep breath
is again advised):
‘
127. In that
during the period between 2005 and December 2009 and at or near
Kimberley in the regional division of Northern Cape
an within the
area of jurisdiction of this Honourable Court, Accuse 1 to 7 and or
the late Mr Sarel Breda, who was then a co-Director
in Accused 2, did
directly or indirectly give or agree or offer to give any
gratification to wit,
127.1 10% Shares
held by Accused 2 to [Ms Botha)] and or to Jyba Investment Trust;
and/or
127.2 Renovated the
house of [Ms Botha] to the amount of R1 265 611,99; and/or
127.3 Cash payment
in the amount of R15 000.00 to [Ms Botha],
128. for the benefit
of [Ms Botha] and or for the benefit of Jyba Investment Trust, in
order for [Ms Botha] to personally act in
a manner –
(i) That amounts to
the –
(aa) illegal,
dishonest, unauthorised, incomplete, or biased exercise, carrying out
or
performance of any
powers, duties or functions arising out of a constitutional,
statutory, contractual or any other legal obligation;
or
(ii) That amounts to
–
(aa) the abuse of a
position of authority,
(bb) breach of
trust; or
(cc) the violation
of a legal duty or set of rules
(iii) Designed to
achieve an unjustified result,
129. to wit, that
[Ms Botha] circumvented the prescribed procurement processes to
ensure that the Department and or SASSA enter
into the Lease
Agreements referred to hereunder with Accused 1 to 7 on the terms
beneficial to them.
129.1 Old Oranje
Lease Agreement, Upington – Lease Agreement
129.2 14 Van
Riebeeck Street, Springbok – Lease Agreement
129.3 Summer Down
Place Office Campus, Kuruman – Lease Agreement
129.4 Keur en Geur
Building, Douglas – Lease Agreement
129.5 Du Toitspan
Building, Kimberley – Lease Agreement
129.6 Du Toitspan
Building, Kimberley, Floors 9, 10 and 11 – Lease Agreement.’
[161]
There can be no doubt that, in regard to the lease agreements
particularised in para 129 of the charge, Ms Botha made decisions

beneficial to the first to seventh accused. Not only was she
responsible for awarding them the various leases, but in some cases

did so on terms even more beneficial than those in respect of which
they had originally tendered to contract. It is unnecessary
to repeat
all the various respects in which this took place. For present
purposes it is sufficient to recall that:
(a)
In the instance of the Oranje Hotel, Upington the
Department of Social Services ended up leasing premises almost double
the size
of what was required and which still needed a considerable
deal of work to put it into proper condition, for a longer period on

that which was necessary, at a rental having an escalation higher
than had been tendered, and without prior approval having been

obtained from the Tender Board – and which resulted in rental
in excess of R1.6 million being paid to the fifth accused over
a
further seven month period despite the premises not being fit for
occupation.
(b)
Contracts longer than had been advertised were
concluded also in respect of 14 Van Riebeeck Street, (a lease of
three to five years
had been advertised; accused 5 had initially
offered a lease of five years; on the insistence of Ms Botha the
lease was eventually
signed for ten years at an annual rental
escalation of 9.5% rather than the 8% accused 5 had tendered) and
Kuruman (again although
both the BEC and BAC had recommended a lease
credit of five years be approved Ms Botha again insisted that
the lease period
be ten years and that the annual escalation of the
rental should be 9.5% rather than the 8% contained in the original
tender made
by the sixth accused).
(c)
In respect of the Keur en Geur building in
Douglas, Ms Botha instructed that the Department of Social Services
should accept twice
as much office space as was required, and an
additional 400 m
2
was
included in the lease without a competitive bidding process being
adopted.
(d)
In respect of the second Du Toitspan
Building lease, the fourth accused came to lease the department
another portion of the same
building for a substantially longer
period, and at a substantially higher rental and annual escalation
rate, than the lease it
had in respect of the other portions of the
building – all of which was done on Ms Botha’s
instigation without necessary
procurement processes being followed.
[162]
Why would Ms Botha act in a way which substantially benefitted the
Trifecta group to the disadvantage of the State in all
these
instances? The answer to this question is to be found in the creation
of the Jyba Investment Trust (for convenience I intend
to refer to it
simply as the ‘Jyba Trust’) which, it is common cause,
came to hold 10% of the shares in the third accused,
transferred to
it from Mr Breda’s Shosholoza Trust after the death of Mr
Breda. It has five capital and income beneficiaries
who were
nominated by Ms Botha. They are the children of her brother and her
sister. The trustees are Ms Angelique Botha,
one of the
beneficiaries who was employed by a Trifecta company, and Mr Ettiene
Jacques Naude, an attorney practising in Pretoria
who did work for Mr
Scholtz and the Trifecta group.
[163]
Ms Botha testified that in 2005, possibly about September or October
that year, and at a time when she was the HOD of the
Department, she
had discussed the creation of a trust with Mr Breda. According to
her, he had wanted to expand his business in
the Northern Cape and
had asked her for names for people to serve on a trust for business
purposes who were likely to help him.
However, according to Ms Botha,
this was really no more than a passing comment and nothing more was
said about the matter until
after the death of Mr Breda on 3
March 2009. As some stage thereafter, according to Ms Botha, Mr
Scholtz asked her about a
trust and the transfer of shares, and she
told him that her niece, Angelique, was already working for Trifecta
and would be a good
candidate for the trust as she was already in the
property business. She then gave the names of her other nephews and
nieces. This
was her explanation as to how her nephews and nieces
came to be the beneficiaries of a trust, which was then created
solely for
their benefit, holding assets which were valued at
approximately R4.5 to R6 million.
[164]
This is a somewhat vague and, in certain respects, an unconvincing
and unlikely version, particularly if one bears in mind
that both Mr
Breda and Mr Scholtz were looking for persons to benefit who had
skills and were likely to grow the business
of the proposed trust.
Indeed it was for this reason that Ms Botha proposed her niece,
Angelique, who was already in the property
market, as a beneficiary –
or so she alleged. But by the time Ms Botha testified in June 2014,
six years later, three of
the five beneficiaries of the Jyba Trust
whom she had nominated were still minors who, six years previously,
would almost certainly
have lacked the required business skills and
qualities required to grow the trust’s business. The simple
fact is she nominated
people in her immediate family as the sole
beneficiaries of this trust, and as a result they were duly appointed
as such in the
trust instrument. The obvious intent was to benefit
them solely because of her close familial relationship with them.
[165]
Mr Scholtz’s explanation is also far-fetched. In his plea
explanation he stated that when he first approached Mr Breda
about
doing business in the Northern Cape, they had discussed and agreed as
follows (‘the deceased’ referred to is
Mr Breda):
‘
7.1 Accused 1
insisted in the participation of a broad base empowerment group,
preferably involving women and children.
7.2 In the light of
the fact that Accused 1 did not know any previously disadvantaged
individuals in the Northern Cape region other
than the deceased, it
was decided that the deceased will in due course identify people
and/or entities that would become part of
the broader base BEE
participants in the business venture.
7.3 Accused 1
realised that neither the deceased, nor any other person who would
participate in the business venture, would be in
the financial
position to contribute [meaningfully] to the business and that
shareholding would have to be transferred to the BEE
participants
without requiring payment and/or at par value for shareholding.
7.4 Accused 1
further realised and accepted that any other shareholder, including
the deceased, would not be in the financial position
to contribute to
the capital and expenses of the business venture and that he would
have to provide all the required capital to
establish the business.
7.5 The shareholding
meant for further distribution to broaden the black economic
empowerment base referred to above would in the
meantime be held by
the deceased in his Trust pending the transfer to further identified
participants.’
[166]
If Mr Scholtz was insistent upon a broad BEE group to participate in
his business venture as he stated in this extract, why
was he
ultimately prepared to pass on shareholding relating to his group,
valued on his own evidence at about R4.5 to R6 million,
to a trust
which represented the interest of a few persons, mostly children, all
of whom had close family ties with one person
who had played a vital
part in his business venture procuring leases with the Provincial
Government? This bears the hallmark of
corruption. And if his genuine
intention was to have a broad based BEE participation in the venture,
why was the trust not established
at the outset and only years later
after the death of Mr Breda?
[167]
The key to the answer to these questions is to be found in the
evidence of Mr Scholtz, not in the present proceedings
but in a
previous application brought as a matter of urgency by the joint
trustees of the Shosholoza Trust against the second accused,
the
Casee Trust of Mr Scholtz, and numerous other companies, mostly of
the Trifecta group, in which it was sought to interdict
the
alienation or encumbrance of various assets. Mr Scholtz deposed to an
affidavit opposing this relief. Although it is unnecessary
for
purposes of the present case to traverse in detail the various
factual allegations raised by the respective parties, what is
of
importance is that the 10% shareholding of the second accused which
the Shosholoza Trust had been holding for the benefit of
others, and
its value, were dealt with in some detail. And in that regard, Mr
Scholtz stated the following (again, the ‘Deceased’

referred to in these passages is Mr Breda):
‘
After taking
the 10% shareholding which was being held by the Shosholoza Trust as
nominee into consideration, the net result is
a value of
R24 913 774.41. Although the Shosholoza Trust was
registered as a shareholder of 55% of the shares in the
(second
accused
)
, the Shosholoza
Trust represented by the Deceased had, to my personal knowledge, in
2005 undertaken to transfer a 10% shareholding
in the first
respondent to the nominee of Yolanda Botha, who was a close friend of
the Deceased and influential in political circles.
She had not yet
nominated the entity to which the shares should be transferred at the
time of the Deceased’s death, and hence
the reference to the
“YB Trust” in the spreadsheet. That 10% shareholding is
also reflected in the organogram, annexure
“CS3” which I
had handed to and discussed with the first applicant at our meeting
in March 2009, and was at no time
queried or disputed by any of the
applicants.
. . .
I refer to what I
have stated above in regard to the undertaking given by the Deceased
on behalf of the Shosholoza Trust, and accepted
by Yolanda Botha, to
transfer 10% of the shares held by the Shosholoza Trust in the
(second accused) to the nominee of Yolanda
Botha. This agreement was
confirmed by both of them together to me in 2007 and on numerous
subsequent occasions. It was expressly
confirmed to me that until
such time as she had decided upon and nominated the entity which was
to hold the 10% shareholding, the
Shosholoza Trust would continue to
hold 10% of the shares in the (second accused) for and on behalf of
the entity to be nominated
by Yolanda Botha.’
[168]
The second accused was only incorporated in April 2006, and to that
extent the reference in this statement to the Shosholoza
Trust
undertaking in 2005 to hold 10% of its shares on behalf of Ms Botha’s
nominee is strictly speaking incorrect. But nothing
really turns on
this as it is common cause that 10% of the scheme would be held by a
BEE entity, and the fact that the second accused
was only
incorporated on a later date and thereafter used as the overall
holding company in the business scheme is neither here
nor there. Its
shares ended up being held by the Shosholoza Trust and the Casee
Trust in a respective ratio of 55% to 45%
-
consistent with the acknowledgment by Mr Scholtz in this
affidavit that he knew from the outset that 10% of the shares being

held by the Shosholoza Trust were being held on behalf of an ‘entity’
to be nominated by Ms Botha.
[169]
Of course on Ms Botha’s version she knew nothing about a 10%
share being held by the Shosholoza Trust awaiting  her

nomination of beneficiaries, and to that extent these two versions
are irreconcilable. However, if Ms Botha had no reason to contemplate

that such a valuable share of the business worth millions of rand
would be made available to her or anyone else, which on her version

is the case, why did Mr Scholtz suddenly make this fortune available
to the Jyba Trust immediately after the death of Mr Breda?
His
explanation was that he had done so as he and Mr Breda had held
discussions on this issue in the few months before Mr
Breda’s
death, that Mr Breda had said he would get on with establishing the
envisaged trust and had told him that he had
made contact with Ms
Botha about it (she mentions no such contact). Mr Scholtz explained
that he thus felt duty bound to give away
10% of the second accused’s
shares to a trust benefitting Ms Botha’s relatives despite her
having never been aware
of any such intention beforehand.
[170]
All of this is inherently improbable. It does not explain why even if
Mr Scholtz felt obliged to implement the plan he
had insisted
upon from the outset of benefitting persons who would help the
business grow, he ultimately chose just close family
members of Ms
Botha. Nor does it explain the delay of several years after the
scheme was hatched until the plan was implemented.
But the facts
speak louder than words. The obvious explanation of why Ms Botha
acted as she did to the advantage of companies
in the Trifecta group
was that she knew her actions would benefit either herself or an
entity in which she would have a direct
or indirect interest through
the 10% share being held in the Shosholoza Trust. This is consistent
with what Mr Scholtz said in
his affidavit. As the beneficiaries of
the entity Ms Botha ultimately nominated, the Jyba Trust, were all
were close members of
her family, the inference is irresistible that
she had either them or her own interests at heart in concluding the
various leases
– and on terms more favourable to the Trifecta
companies than those that had been tendered.
[171]
Importantly, had Ms Botha’s interest in the leases been known
they would probably not have been concluded. Treasury
Regulations
16A8.3 and 4, provide, inter alia:
‘
16A8.3 A
supply chain management official or other role player –
(a) must recognise
and disclose any conflict of interest that may arise;
(b) . . .
(c) may not use
their position for private gain or to improperly benefit another
person.
. . .
16A8.4 If a supply
chain management official or other role player, or any close family
member, partner or associate of such official
or other role player,
has any private or business interest in any contract to be awarded,
that official or other role player must
–
(a) disclose that
interest; and
(b) withdraw from
participating in any manner whatsoever in the process relating to
that contract.’
[172]
This explains why the 10% share of the business scheme (or more
correctly the second accused which became its ultimate repository)

remained vested in the Shosholoza Trust until Mr Breda met his
untimely fate. Had the interest of Ms Botha been disclosed,
the
leases could not have been concluded.  As appears from the bid
documents, auditors had to certify who the individuals
were behind
bids, including the beneficiaries if trusts were involved in
submitting bids. Had Ms Botha had an interest in a trust
that was a
party to a bid, it would have had to have been disclosed with the
consequence that the bid would have been disqualified.
For this
reason it was necessary to obscure her interest by retaining the
share in which she had an interest in the name of the
Shosholoza
Trust. Once Mr Breda had died, however, that state of affairs could
no longer continue and the 10% share had to be allocated
to a
beneficiary. Ms Botha couldn’t be seen to accept it and so
she and Mr Scholtz agreed to the creation of the Jyba
Trust to
benefit her close relations.
[173]
These conclusions are the result of inferential reasoning, drawn from
the known facts, but no other reasonable inferences
can be drawn from
that which is known. It may well be that initially Ms Botha herself
was the intended beneficiary of the 10% and
that certainly seems a
strong probability. But one cannot exclude that she may have intended
to benefit another entity in which
she had an interest. It matters
not. She acted as she did to the detriment of the provincial coffers,
and clearly made herself
guilty of corruption.
[174]
Of course the charge on count 8 is the mirror image of Ms Botha’s
corruption. In an attempt to avoid the consequences
of her actions,
Mr Scholtz testified that the affidavit had been drafted by counsel
in the stressful circumstances of having to
oppose an urgent
application, and did not accurately reflect what he had said.
According to him, he had mentioned that there would
be a 10% holding
in a BEE entity but not that such entity would be a nominee of
Ms Botha. He said that he had pointed this
inaccuracy out to
counsel who had prepared the affidavit, whom he alleged told him that
the issue was irrelevant and need not be
changed as there was time
pressure to file the affidavit.  In support of these allegations
he relied upon the testimony of
his attorney, Mr Naude, who
confirmed that Mr Scholtz had not been happy with the way the
affidavit had been drafted
on this issue.
[175]
The affidavit concerned was drafted by counsel, Mr B Swart SC, who
had been elevated to the status of senior counsel shortly
before and
was himself being led in the matter by another senior counsel, Mr M
Maritz SC, who settled the affidavit. It was the
product of several
days’ work, and was prepared after counsel had consulted with
Mr Scholtz. Mr Swart emphatically denied
that any inaccuracy had
been pointed out to him, and stated that if it had he would neither
have said it was irrelevant nor left
it uncorrected.
[176]
The court a quo believed him. It found the contrary evidence of
Mr Scholtz and Mr Naude to be ‘pathetic’.
This
was a factual finding, made by a court which enjoyed the benefit of
seeing the witnesses and is thus not lightly to be interfered
with by
this Court on appeal. Moreover what was said in the affidavit
provides the basis of a logical explanation for the 10% share
having
been retained in the Shosholoza Trust for several years during which
Ms Botha as HOD of the Department went out of
her way to
advantage Trifecta at every turn. There is no reason for this court
to conclude that the court a quo erred in reaching
the decision it
did on this issue.
[177]
The 10% shareholding in the second accused which ultimately found its
way into the ownership of the Jyba Trust was clearly
a gratification
given as a
quid pro quo
for Ms Botha’s assistance in concluding the various leases. The
inference is irresistible that she acted as she did as she
had been
promised a gratification in the form of a shareholding in the scheme
if she did so.
[178]
Mr Scholtz tried to avoid the obvious consequences of this by falling
back on his default contention that he had left the
daily running of
the business up to Mr Breda, that all he had done was arrange
the finance and that he had not participated
in or had knowledge of
any negotiations relating to the conclusion of the leases. I accept
Mr Scholtz, was based primarily at his
office at his home in Pretoria
and that he seldom ventured to the Northern Cape. However, one cannot
lose sight of the fact that
what he and Mr Breda swiftly built up was
a multi-million rand business, and it seems highly unlikely that
Mr Scholtz, a canny
businessman, would entrust everything to Mr
Breda, a far less experienced business person – and indeed one
who had through
lack of confidence asked him to be his mentor in
business affairs. Even if he was not actively involved in negotiating
the leases
as he said, and despite having sung Mr Breda’s
praises and qualities as a businessman, it is extremely improbable
that Mr
Scholtz would not have learned of Ms Botha’s
involvement in the conclusion of a series of leases on good terms for
the business
in which he was investing great wads of money. And as
appears from his affidavit in the previous matter, he was from the
outset
aware that Ms Botha was the person who was going to
nominate the entity that would receive the 10% shareholding of this
successful
enterprise he had helped create.
[179]
In these circumstances, it would be extending the bounds of credulity
to accept that Mr Scholtz was obliviously unaware of
all the
negotiations relating to the various leases. It is significant in
this respect that the letter from Rand Merchant Bank
on which so much
reliance was placed by his defence to show that the bank had insisted
upon a ten year lease for the Summerdown
Place building in Kuruman,
was sent by telefax to both Mr Scholtz and Mr Breda, a clear
indication that Mr Scholtz was closer to
the action than he was
prepared to admit. Even if he did not have detailed knowledge of the
day to day interactions between Mr Breda
and Ms Botha, he must
have known in essence that Ms Botha had acted to the advantage
of the Trifecta group in concluding the
leases. This also explains
why immediately after the death of Mr Breda he took steps to
ensure that the 10% share was moved
out of the Shosholoza Trust for
the reasons already dealt with in relation to Ms Botha’s
corruption. It was, after all, at
his insistence that the trust was
created.
[180]
Be that as it may, Mr Scholtz caused the transfer of the 10% of the
shares in the second accused to the Jyba Trust in consequence
of an
arrangement or understanding reached with Ms Botha during 2005. Mr
Scholtz had personal knowledge of this arrangement, as
he himself
said in his affidavit. Despite his allegations to the contrary, the
purpose of the 2005 arrangement was not the participation
of a BEE
group in the Trifecta group of companies. This is apparent not only
from the failure to implement a BEE scheme before
Mr Breda died but
Mr Scholtz’s failure to mention any such intention in his
affidavit where he merely referred to Ms Botha
as a close friend of
Mr Breda and a person ‘influential in political circles’.
[181]
If not broad based BEE participation, what then was then was the aim
and purpose of the 2005 arrangement? The following factors
loom large
in the search for the answer of this question. First, as I have said,
after the 2005 arrangement Ms Botha consistently
went out of her way
and took considerable risks to ensure that the leases were concluded
with the Trifecta group of companies and
on the most favourable
terms. Second, her nominee received 10% of the shares in the ultimate
beneficiary of these leases, namely
the second accused, the holding
company of the Trifecta Group. Third, in his evidence at the trial,
Mr Scholtz falsely denied that
an arrangement to understanding had
been reached with Ms Botha.
[182]
In the circumstances the only reasonable inference is that, to the
knowledge of Mr Scholtz, the 10% shareholding in the second
accused
constituted a gratification that had been promised to Ms Botha during
2005 in order for her to assist in securing leases
for the Trifecta
group of companies. On this basis, alone, Mr Scholtz is guilty of
corruption on this count. For that measure,
so are the other Trifecta
companies, the second to the seventh accused, to the extent of their
involvement, and it was not suggested
otherwise in argument before
us.
[183]
The further issue which then arises is whether guilt in respect of
the other gratifications specified in the charge has also
been
proved. The first of these was a sum of R15 000 paid in cash to
Ms Botha. She alleged it was a donation to the ANC. She
alleged that
whilst the party was preparing for its 198
th
national celebrations in Kimberley during January 2010, she had a
telephonic discussion with Ms Buizer during which she asked for
a
donation. This was forthcoming when Mr Daan Malan, a building
contractor who was doing renovations on her house and whose company

was employed by the Trifecta group to do refurbishment of buildings,
arrived at her house and gave her R15 000 in cash which
he said
it come from Ms Buizer. According to her, she handed this money over
to Mr Herman Willemse, the ANC provincial bookkeeper,
for use in
preparing for the conference.
[184]
In any event, in a letter marked for the attention of Mr Scholtz
and dated 29 December 2009, Ms Botha wrote to Trifecta
Holdings
Kimberley, expressing her thanks on behalf of the ANC for the support
and donation. Mr Willemse was also called to
corroborate this.
There were some differences between his version of the events and
that of Ms Botha and, importantly, this sizeable
donation in cash was
never recorded in the ANC’s books of account as it ought to
have been, and this, according to Mr Willemse,
was because everything
was in a rush. One is left with the sneaking feeling that Mr
Willemse’s evidence was false and that
he was attempting to
protect another ANC colleague.
[185]
The court a quo certainly felt so. The learned judge held that the
R15 000 was not intended for the coffers of the ANC
but for Ms
Botha, and that Mr Willemse did not record the money simply
because it was not given to him. She held that the
letter signed by
Ms Botha purporting to be from the ANC thanking Trifecta for the
donation, which had surfaced late in the day,
had been manufactured
to justify the cash payment she had received.
[186]
This payment is certainly shrouded in suspicion. Mr Scholtz
exonerated himself and said that he knew nothing about it. But
it
could not have been made at the instance of Mr Breda who died nine
months earlier, and who else would have authorised the payment
of
such a large sum by Trifecta Holdings? Furthermore, when Mr T S
White, the forensic auditor employed to analyse the paper
-
trail
of the leases and the amounts paid relating thereto, testified about
this sum being paid, it was never put to him that it
was a donation.
Ms Botha’s letter of thanks only surfaced during the
evidence of Mr Scholtz, who testified much later.
Conspicuous by her
absence was Ms Buizer who made the money available and should have
been able to throw light on the matter but
for some reason was not
called (Mr Scholtz testified that she had left his employ under a
cloud of having misappropriated substantial
sums of money, but that
ought not to have necessarily prevented either the prosecution or
defence from using her as a witness).
[187]
One may have one’s suspicions in regard to this payment, but it
is not necessary to reach a final decision on the matter
as, at the
end of the day, the State conceded during argument before us that its
evidence had fallen short of establishing beyond
a reasonable doubt
that Mr Scholtz had been aware of the payment, and that he should be
given the benefit of that doubt. This concession
was properly and
correctly made.
[188]
That brings me to final gratification relied upon by the State,
namely, the cost of renovations to Ms Botha’s house
in
Kimberley effected by Mr Malan during the period September 2009 to
September 2010 whilst working as Trifecta’s subcontractor
and
paid for by Trifecta. During about August or September 2009, Mr Malan
was approached by Ms Angelique Botha, the niece
of Ms Botha, who
was employed by Trifecta as an administrative clerk in Kimberley, and
asked whether he would do renovations at
Ms Botha’s residence.
He later spoke to Ms Botha and told her to speak to Mr Scholtz
as he did not perform private
work but regarded himself as bound to
work for Trifecta. Ms Botha therefore asked Mr Scholtz if
he was prepared to assist
her in financing the renovations of the
house. He agreed, and did so knowing that financial institutions had
refused to render
Ms Botha assistance. He explained his willingness
to help as Ms Botha told him that she would be able to repay a loan
as she had
left the service of the provincial government in order to
become a Member of Parliament and was due to receive a substantial
severance
package.
[189]
It appears that Mr Scholtz was prepared to carry Mr Malan’s
charges for doing this work as a loan. At the outset it
was envisaged
that it would be a loan in the vicinity of R500 000 but, as time
progressed, the amount escalated to well over
a R1 million. After Ms
Botha had become a Member of Parliament, the Joint Committee on
Ethics and Member’s Interests considered
a complaint against
her, seemingly that the money spent on her house had been a corrupt
gratification. This led to Ms Botha producing
a purported loan
agreement between herself and the second accused, purportedly reduced
to writing and signed in Cape Town on 10 March
2010. In a
subsequent agreement signed by them on 20 June 2011 it was agreed
that Ms Botha still owed R771 348.68 in respect
of improvements
done to her residence.
[190]
Whether the first agreement had been falsified became an area of
considerable investigation during the trial. It led to the
court a
quo insisting upon a forensic examination being carried out on the
computer of Mr Naude, the attorney that I have mentioned.
He was the
author of the loan agreement, a copy of which was produced in court,
and alleged that the hard-drive of the computer
on which the original
had been drafted had crashed. It was also contended that the loan
agreement that was produced was a recent
fabrication and that
Mr Naude’s computer had been loaded with software designed
to prevent forensic examination.
[191]
All of this related to an enquiry if there had in fact been a loan
agreement or whether the renovations were performed by
Mr Malan on
behalf of the second accused as a gratuitous and corrupt
gratification and the loan agreement produced in court was
a
subsequent false document.  In the light of the view that I take
of this matter, it is not necessary to reach a final decision
on this
point. Even if the cost of the renovations were regarded as a loan,
it would still have amounted to a gratification if
it was advanced
and received in circumstances which satisfied the requirements of the
offence of corruption as envisaged in s 4
of the PCCA Act.
[192]
Nevertheless, sight must not be lost of the fact that the renovations
were done for Ms Botha after she had left the employ
of the
provincial government. And like the payment of R15 000 mentioned
above, this was well after the leases referred to
in count 8, in
respect of which gratifications contended for were allegedly
advanced, had been concluded. In these circumstances,
even if it is
accepted that the R15 000 paid and the renovations done flowed
from a relationship of corruption, there is nothing
to show that
these two amounts were paid and received as gratifications in respect
of leases that had been concluded, in most instances,
years before.
Indeed, on a similar basis of reasoning to that set out above in
respect of Mr Block on count 15, they are more likely
to have been
gratifications paid and received as part of an on-going corrupt
relationship where it was accepted by both sides that
one hand would
wash the other, so to speak, in respect of other favours already made
or anticipated in the future.
[193]
The State, however, limited itself to gratifications advanced to and
accepted by Ms Botha for her actions in the conclusion
of the
earlier, specific leases mentioned in count 8. The charge on this
count did not relate to the conduct of a general, on
-
going
corrupt relationship between Ms Botha and her co
-
accused.
Had that been the charge, the result may well have been different;
but they cannot be convicted of a corruption with which
they were not
indicted.
[194]
Consequently, although Mr Scholtz and the second to seventh accused
were correctly found guilty of corruption on count 8,
and their
convictions on that count must stand, it does not embrace the R15 000
paid in cash to Ms Botha nor the renovations effected
to her
immovable property.
Counts
34 and 35
[195]
These are charges of money laundering brought under
ss 4
and
6
of the
Prevention of Organised Crime Act 121 of 1998
. It is unnecessary to
detail the reasoning of the court a quo and why it convicted the
first, second and third accused on count
34 and the first, third,
eighth and ninth accused on count 35. Suffice it to record that the
reasoning was somewhat disjointed,
and
counsel
for the State, correctly in my view, conceded that their guilt on
these counts, had not been established and that the appeal
in their
respect should therefore succeed. That will be reflected in our order
and nothing more needs to be said in relation thereto.
Sentence
[196]
The second to seventh appellants having failed to obtained leave to
appeal against their sentence, the appeal in respect of
sentence is
thus limited to the charges of corruption on which Mr Scholtz (count
8) and Mr Block (count 15) have been convicted.
Corruption is an
offence contained in
Parts 1
and
2
of Chapter 2 of the PCCA. Each
count involved an amount far in excess of R500 000. That being
so,
Part II
of the Second Schedule to the Criminal Law Amendment Act
105 of 1997 prescribes a minimum sentence of 15 years’
imprisonment
unless there are substantial and compelling reasons
justifying a lesser sentence.
[197]
In that regard, as has been regularly stated, the legislature
intended there to be a severe, standardised and consistent response

where offenders commit these offences. Accordingly, whilst the courts
have a residual discretion to decline to pass the prescribed
minimum
sentence, they should only do so where there are circumstances
present which provide truly convincing reasons for a lesser
sentence
– see eg
S v Malgas
2001 (2) SA 1222
(SCA);
2001 (1) SACR 469
(SCA) paras 8 and 25. The
court a quo determined that there were no such circumstances in the
case of either Mr Scholtz or Mr Block
and, accordingly, imposed the
prescribed minimum of 15 years’ imprisonment. It is against
these sentences that they appeal,
contending that the court a quo
erred in its conclusion in that regard and that there were in fact
substantial and compelling circumstances
justifying the imposition of
a lesser sentence.
[198]
In considering this issue, the severity of the offences in respect of
which they were convicted must not be underestimated.
In an affidavit
filed in the matter of
South
African Association of Personal Injury Lawyers v Heath & others
[2000] ZACC 22
;
2001 (1) SA 883
(CC);
2001 (1) BCLR 77
(CC) (
Heath
),
the Minister of Justice, the fourth respondent in the matter, is
reported to have said:
[12]
‘
It is a
regrettable and notorious fact that the levels of crime in South
Africa are unacceptably high. One aspect of crime which
requires
special investigative measures relates to corruption and unlawful
conduct involving State institutions, State property
and public
money. Very often, such conduct is perpetrated by public servants and
State officials.’
[199]
Like bribery, which it encompasses, corruption is ‘a corrupt
and ugly offence . . . an insidious crime difficult to
detect and
more difficult to eradicate’ which ‘if unchecked or
inadequately punished by the courts, have a demoralising
effect on
business standards and fair trading’. (I adopt the phraseology
of this Court in
S v Kelly
1980 (3) SA 301
(A) at 313E-F.) Those comments, unfortunately, are
still apposite today. And, as was said in
Heath
para [4]:
‘
Corruption
and maladministration are inconsistent with the rule of law and the
fundamental values of our Constitution. They undermine
the
constitutional commitment to human dignity, the achievement of
equality and the advancement of human rights and freedoms. They
are
the antithesis of the open, accountable, democratic government
required by the Constitution. If allowed to go unchecked and

unpunished they will pose a serious threat to our democratic
State.’
Similarly,
this Court in
Shaik
observed that corruption ‘eats away at the very fabric of our
society and is the scourge of modern democracies’, and

that:
[13]
‘
The
seriousness of the offence of corruption cannot be overemphasised. It
offends against the rule of law and the principles of
good
governance. It lowers the moral tone of a nation and negatively
affects development and the promotion of human rights. As
a country
we have travelled a long and tortuous road to achieve democracy.
Corruption threatens our constitutional order.
We must make every
effort to ensure that corruption with its putrefying effects is
halted. Courts must send out an unequivocal
message that corruption
will not be tolerated and that punishment will be appropriately
severe.’
[200]
That the legislature intended corruption to be severely treated is
not only reflected in the legislation relating to prescribed
minimum
sentences but also by s 26 of the PCCA which provides that a person
convicted of an offence referred to in, inter alia,
Parts 1 and 2 of
that Act – which includes corruption – is liable upon
conviction ‘to imprisonment up to a period
for imprisonment for
life’.
[201]
The argument on behalf of the first accused, as I understood it, was
that the court a quo had erred or misdirected itself
in not properly
taking into account the value of the assets forfeited to the State by
order of the court a quo pursuant to an application
under the
Prevention of Organized Crime Act 121 of 1998 (POCA). Section 18(1)
of POCA provides that a court convicting an offender
of certain
offences may inquire into any benefit which the offender may have
derived from the offence and that, if it finds that
there has been a
benefit so derived, may ‘in addition to any punishment which it
may impose in respect of the offence make
an order against the
defendant for the payment to the State of any amount it considers
appropriate’.
[202]
Pursuant to these provisions, the court a quo made a confiscation
order against the first to seventh accused. Operating as
a civil
judgment, it obliges them jointly and severally, the one paying the
other to be absolved, to pay to the Treasury sums totalling
in excess
of R60 million. It was argued that the effect of this order, taken
together with the first accused’s personal circumstances,

resulted not only in there being substantial and compelling
circumstances justifying a sentence less than that prescribed but
that a non-custodial sentence would have be appropriate (a fine of R5
million together with a period of correctional supervision
was
suggested).
[203]
In considering this argument, it must be remembered that the purpose
of a confiscation order under s 18 of POCA is to remove
the incentive
for crime by stripping offenders of the proceeds of their
misdemeanours, and not to punish them – see eg
National
Director of Public Prosecutions & another v Mohamed
NO
& others
[2002] ZACC 9
;
2002 (4) SA 843
(CC) paras 15 and 16 and
National
Director of Public Prosecutions v Gardener & another
2011 (1) SACR 612
(SCA) para 19. As this Court went on to say in
Gardener
:
[14]
‘
It is plain
that confiscation and sentence are to be treated separately –
for good reason. The purpose of sentencing is to
punish an offender
for his or her criminal wrongdoing. The severity of a sentence is
primarily intended to reflect the defendant's
culpability in relation
to the offence for which he or she is being punished. The main
purpose of a confiscation order is
to deprive offenders from
deriving any benefit from their ill-gotten gains. The achievement of
this purpose may have a punitive
effect, but this is not its
rationale. The severity of a sentence, therefore, generally ought not
to have a bearing on the exercise
of a court's discretion whether to
make a confiscation order . . . .’
[204]
It may be argued that if  the sentence imposed on an offender is
generally to be disregarded in considering whether a
confiscation
order should apply, the converse should also apply so that a
confiscation order should generally be disregarded when
sentence is
considered. In my view, however, an inflexible rule to that effect
would be unjust, especially in a case such as this
where the effect
of the amount of the confiscation order is substantial. Thus I must
take into account the fact that compensation
orders have been made.
But as the rationale of a confiscation order is to deprive an
offender of the benefits of his or her offence,
it would be wrong to
place undue emphasis upon it as a factor relevant to sentence.
[205]
All this really means is that as opposed to a case in which a loss
has been suffered, the loss will have been recovered if
the
confiscation order leads to a successful recovery. So whilst it may
to that limited extent remain a factor to be taken into
consideration
together with all other factors relevant to the imposition of
sentence, standing alone it should in no way be determinative
of
whether a prescribed minimum sentence ought not to be imposed. That
is all the more so in a case such as this where the sentence

prescribed, reflecting the severity of the crime, is a lengthy period
of imprisonment.
[206]
Life has visited personal tragedy upon the first accused. His late
wife, who passed away in January 2013, was ill for a long
time and
had been virtually immobilised due to her sickness for years prior to
her ultimate demise, during which period he cared
for her, hand and
foot. During the course of the trial he lost his son in a tragic
farming accident. For all of this one has great
sympathy for him. But
imposing sentence is not a matter of maudlin sympathy. It is doing
what is just having regard to all the
relevant circumstances.
[207]
The first accused is a successful businessman who, it is clear from
the record, built up a number of successful enterprises
as is
evidenced by there being some 120-130 people employed in the various
businesses in which he is involved and runs. A sentence
of
imprisonment will disqualify him from being a company director in the
future. He is now a man in his late fifties, having been
56 years of
age when sentence was argued in September 2016.
[208]
Despite the natural sympathy one has for a man who suffered the
tragic loss that he has, I am not persuaded that the personal

circumstances of the first accused, taken together with the fact that
a substantial confiscation order has been made, justifies
a finding
that there are convincing reasons for the imposition of a sentence
less than that prescribed as a minimum. Successful
business people
should set the standard by acting properly, not corruptly. Corruption
in the sphere of government contracts is
an on-going blight upon our
constitutional democracy, and those who offend must expect the full
might of the law to be brought
down on them. Even though the
conviction on count 8 does not embrace either the renovations
effected to Ms Botha’s home nor
the payment of the sum of
R15 000, I am not persuaded that the prescribed sentence imposed
by the trial court is shockingly
inappropriate as was argued on
behalf of the first accused. The appeal against the sentence of 15
years’ imprisonment imposed
on the first accused in respect of
his conviction on count 8, must fail.
[209]
Turning to the appeal of the ninth accused (the eighth appellant) Mr
Block, much of what I have said above applies in his
case with equal
force. In his case, as well, a confiscation order was issued, albeit
in a much lesser sum of R1 364 673.20.
He was also ordered
to pay a further sum of R123 047.82 relating to fees and
disbursements incurred by a curator appointed
by the court.
[210]
Mr Block is now some 50 years of age (he was 48 years old at the time
of sentence in the court a quo), married, with four
dependent
children, two of whom are minors.  His counsel’s statement
that he maintains his elderly parents and extended
family, that he
has partially lost the use of his right arm as a result of a motor
vehicle accident and that he suffers from high
blood pressure, were
not disputed. Nor was it disputed that after having been detained for
a short period of time when he was 18
years of age, he initially left
South Africa but returned in 1987, obtained an Executive Development
Certificate from the University
of Cape Town and was involved in
community development projects for many years. He rose to achieve
high office in the ANC having
acted as the head of that party in the
Northern Cape, and was a member of the Executive Council for the
Northern Cape, both in
the Department of Roads and later in the
Department of Education and then the Department of Finance.
[211]
In the light of all of this and the confiscation order, it was argued
on behalf of Mr Block that a fine of R1 million, coupled
with a
suspended sentence of imprisonment, would be an adequate propitiation
for his corruption conviction. I cannot agree. Mr
Block was a
political leader who achieved high political office. Unfortunately,
he used his status to corruptly enrich himself.
If there is any
prospect of fighting the endemic corruption which exists in this
country, it is for our political leaders to set
the example and not
to misuse public offices to corruptly obtain personal wealth. That is
what Mr Block did, and it is necessary
for an unequivocal message to
be sent out that corruption on the part of politicians, especially
those holding high office, will
not be tolerated and that punishment
for those who act as Mr Block has done in this case will be severe –
see in this regard
S v Shaik
para 223. Furthermore, as already
stressed in regard to Mr Scholtz, the fact that a confiscation order
has been made is in itself
not a special and compelling circumstance
justifying a sentence more lenient than that prescribed. In all these
circumstances,
the appeal by Mr Block against his sentence for
corruption on count 15 must fail.
Summary
and conclusion
[212]
For the reasons set out above:
In case 428/17
:
(a) the first to
seventh accused were correctly convicted of corruption on count 8,
and their appeal in that respect must fail;
(b) the appeal of
the first accused in respect of his conviction of corruption on count
16 is to be upheld, and the conviction and
sentence imposed on that
count set aside;
(c) the appeal of
the third accused in regard to its conviction of corruption on count
16 is to be dismissed;
(d) the appeals of
the first, second and third accused against their conviction of money
laundering on count 34, as well as the
appeals of the first and third
accused of money laundering on count 35, are to be upheld, and the
convictions and sentences imposed
upon them in respect of those
counts set aside.
In case 635/17
:
The appeal of the
first appellant against his sentence of 15 years’ imprisonment
on count 8 must fail.
In case 491/17
:
(a) The ninth and
tenth accused were correctly found guilty of corruption on count 15,
and their appeal on that charge must fail.
(b) The appeal of
the ninth and tenth accused in respect of their conviction of money
laundering on count 35 is to be upheld, and
such conviction and
sentence set aside.
In case 636/17
:
The appeal of the
ninth accused against his sentence of 15 years’ imprisonment
imposed for corruption on count 15 must be
dismissed and such
sentence confirmed.
[213]
Regretfully, one final matter needs to be mentioned. I must express
my disquiet about the conduct of Mr Naude, the attorney
who I have
mentioned. I have deliberately refrained from making definite factual
findings in regard to certain of his actions in
this matter as to do
so without hearing him would be unfair. Nevertheless, from the
evidence on record it seems that he may well
have been a party to the
fabrication of evidence, particularly in regard to the loan agreement
purportedly concluded by Mr Scholtz
with Ms Botha, as well as the
attempted obstruction of the court a quo’s inquiries in regard
to that issue. And here I mention
his contention that the hard drive
of his computer had crashed and the allegation that he had loaded his
computer with software
designed to frustrate a forensic examination
such as that ordered by the court a quo. Moreover his testimony on
certain aspects
conflicted with that of senior counsel, Mr Swart,
whose evidence was believed by the trial court. A court is entitled
to have absolute
trust in the credibility of its practitioners and
the sum of all these factors leads to the unfortunate suspicion that
Mr Naude
did not honour that trust. I put it no higher than that, but
even on his own version of events he was a party to an affidavit from

his client being placed before court which his client had told him
was not accurate. In the circumstances I have no option other
than to
refer copies of the record of this appeal and this judgment to the
Law Society of the Northern Provinces for it to investigate
the
matter and take such action as it deems fit.
[214]
It is ordered as follows:
A
In case numbers
428/17 and 635/17
:
1 The appeal of the
first appellant against his conviction of corruption on count 16 is
upheld and such conviction and the sentence
imposed on that count are
set aside.
2 The appeals of the
first, second and third appellants against their conviction of money
laundering on count 34, as well as the
appeals of the first and third
appellant against their conviction of money laundering on count 35,
are upheld and such convictions
and the sentences imposed in respect
thereof are set aside.
3 Save as the
foresaid, the appeals of the first to seventh appellants are
dismissed and their convictions, as well as the sentence
of 15 years’
imprisonment imposed on the first appellant in respect of count 15,
confirmed.
B
In case numbers
491/17 and 636/17
:
1 The appeals of the
eighth and ninth appellants (the ninth and tenth accused) against
their convictions of money laundering on
count 35 are upheld, and
their convictions and sentences on that count are set aside.
2 Save as the
foresaid, the appeals of the eighth and ninth appellants against
their conviction on count 15 and the eighth appellant
against the
sentence of 15 years’ imprisonment imposed on that count are
dismissed, and that sentence is confirmed.
C The Registrar of
this court is directed to forward a copy of both this judgment and
the record to the Law Society of the Northern
Provinces for it to
consider possible disciplinary action in the light of para 213 of the
judgment.
_____________
L
E Leach
Judge
of Appeal
Appearances
For
First – Seventh Appellants: MMW van Zyl SC
For
Eighth & Ninth Appellants: S Joubert SC
Instructed
by: (First – Seventh) WA du Plessis Attorneys c/o Mjila &
Partners Attorneys, Kimberley
(Eighth
& Ninth) Mjila & Partners Attorneys, Kimberley
Claude Reid
Attorneys, Bloemfontein
For
Respondent: P Serunye (with him B Mdlalose and S Hanise)
Instructed
by: Director of Public Prosecutions, Kimberley
Director
of Public Prosecutions, Bloemfontein
[1]
‘Regulations in terms of the
Public Finance Management Act,
1999
: Framework for Supply Chain Management, GN R1734,
GG
25767, 5 December 2003.’
[2]
But using the letterhead of Trifecta Trading 434 (Pty) Ltd.
[3]
Shaik
para 73.
[4]
C R Snyman
Criminal
Law
6 ed 2014 at 403.
[5]
The definition is as follows:
‘
gratification’,
includes –
(a)
money, whether in cash or otherwise;
(b)
any donation, gift, loan, fee, reward, valuable
security, property or interest in property of any description,
whether movable
or immovable, or any other similar advantage;
(c)
the avoidance of a loss, liability, penalty,
forfeiture, punishment or other disadvantage;
(d)
any office, status, honour, employment, contract of
employment or services, any agreement to give employment or render
services
in any capacity and residential or holiday accommodation;
(e)
any payment, release, discharge or liquidation of any
loan, obligation or other liability, whether in whole or in part;
(f)
any forbearance to demand any money or money’s
worth or valuable thing;
(g)
any other service or favour or advantage of any
description, including protection from any penalty or disability
incurred or apprehended
or from any action or proceedings of a
disciplinary, civil or criminal nature, whether or not already
instituted, and includes
the exercise or the forbearance from the
exercise of any right or any official power or duty;
(h)
any right or privilege;
(i)
any real or pretended aid, vote, consent, influence or
abstention from voting; or
(j)
any valuable consideration or benefit of any kind,
including any discount, commission, rebate, bonus, deduction or
percentage.’
[6]
C R Snyman
Criminal
Law
5 ed (2008) at
410-411.
[7]
See further J Burchell
Principles
of Criminal Law
4 ed
at 782.
[8]
Selebi
para 112.
[9]
Selebi
para 41.
[10]
See further Snyman fn 5 at 411.
[11]
Incorrectly spelled as ‘Miles’ in the record.
[12]
Heath
para 3.
[13]
Schaik
para 223.
[14]
Paragraph 23.