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[2013] ZAWCHC 211
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S v Brown (CC 50/2010) [2013] ZAWCHC 211 (15 May 2013)
THE REPUBLIC OF
SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
WESTERN CAPE HIGH
COURT, CAPE TOWN
CASE
NO: CC 50/2010
DATE:
15 MAY 2013
In the matter
between:
THE STATE
And
JOSEPH ARTHUR
WALTER BROWN
JUDGMENT: 15 MAY
2013
VELDHUIZEN,J:
[1] Mr Brown you
have been convicted of two crimes of fraud and it is now my duty to
sentence you.
[2] You are 43 years
old. It is an important fact that you have no previous conviction of
any kind. The evidence shows that you
enjoyed a good upbringing. At
an early age you lost your father when he died in an attempt to save
the lives of others. A deed
for which he, posthumously, received the
Wolraad Woltemade gold class award. Your mother re-married and by all
accounts your step-father
is also a man of character who has set a
good example. Your mother, who passed away shortly after your arrest
some seven years
ago, subscribed to the Christian values and set a
good example to her children in her everyday life. You have two
children and
because your wife moved to Australia and because of your
bail conditions you have not seen them for the past five years which
I
accept is painful. I accept that you were scorned by your friends
and the public at large, even by your church. You were incarcerated
intermittently for a period of about 8 months. You have been through
trauma and personal suffering for the past 7 years.
[3] You testified
that you were arrested on more than 190 charges. Before us you were
initially indicted on all together nine charges.
Four counts of
fraud, two counts of theft, one count of contravening section 1(1)(a)
of the Corruption Act, No. 94 of 1992, one
count of contravening
section 3(b)(ii)(aa) and/or (bb) and/or (cc) and/or 3(b)(iv) or the
Prevention and Combating Corrupt Activities
Act, No. 12 of 2004 and a
contravention of
section 4(a)
and or
4
(b) of the
Prevention of
Organised Crime Act, No. 121 of 1998
. On the face of it these were
extremely serious charges which carry heavy penalties.
[4] Considering the
publicity which your case has received in the media, I think it
appropriate to make it clear what you have not
been convicted of. You
have not been convicted of having stolen money from investors or
pensioners or that you defrauded them.
You have not been convicted of
having stolen money from Fidentia or its subsidiaries. Your conduct
underlying your convictions
can in no way be described as a pyramid
scheme. I cannot overemphasize that the two counts of fraud that you
have been convicted
of are an extremely diluted version of the fraud
that the indictment alleges. The second count of fraud relates only
to fraud against
the shareholders of MATCO, not against widows and
orphans. These two counts of fraud pale when compared to the charges
in the indictment.
But it has been accepted by the prosecution that
you never had the intention to cause actual prejudice or damage. You
have only
admitted and been found to have intended potential
prejudice and your moral blameworthiness must accordingly be judged
in the light
thereof.
[5] The state
tendered the evidence of Mr Seedat from the Financial Services Board.
He was responsible for the initial investigation
into the affairs of
Fidentia. He testified that there was amongst other things a
shortfall of approximately R406M. His report was
handed over to the
Director of Public Prosecutions. If his findings are factually
correct then I find it astounding that you have
been brought to court
on only the nine counts listed in the indictment. I find it even more
astounding that the state saw fit to
accept your pleas of guilty on
the facts set out in the admissions you made in terms of section 220
of the Criminal Procedure Act,
51 of 1977. If the facts related by
this witness are correct then something is sorely wrong and I can
only think the prosecution
case has been poorly handled.
[6] Be that as it
may the facts before me are clear and I cannot sentence you on any
other basis. The State submits that section
51(2)(a) of Act 105 of
1997, often referred to as the Minimum Sentences Act, applies to the
two counts of which you have been found
guilty and pressed me to
impose a stiff term of imprisonment. The relevant part of this
section reads:
‘51(2)
Notwithstanding any other law but subject to subsections (3) and (6),
a regional court or High Court shall sentence
a person who has been
convicted of an offence referred to in –
(a) Part II of
Schedule 2, in the case of –
(i) a first offender
to imprisonment for a period not less than 15 years;’
Amongst the offences
listed in Part II of Schedule 2 is the crime of fraud ‘involving
amounts of more than R500 000.’
[7] On the fraud
described in count 2 you admitted that monthly statements over a
lengthy period were sent to TETA and that these
statements, to your
knowledge, did not reflect the true state of affairs. You admitted
that the representations contained in the
statement had the potential
to cause prejudice and you reconciled yourself with that fact. As far
as the fraud described in count
6 is concerned you admitted that you
induced MATCO to enter into an agreement by representing that
Fidentia had ready cash at hand
to pay the shareholders. Although as
stated by you Fidentia had sufficient assets which, if liquidated,
would have been sufficient
to meet the purchase price it in fact did
not have sufficient liquid funds to do so. The minority shareholders
were paid and through
the handing over of control of MATCO, funds
became available to pay the majority shareholder.
[8] Those in essence
are the facts which constitute the two crimes of which you have been
convicted. These two crimes, as you admitted
involve potential
prejudice and not actual prejudice and certainly do not ‘involve
amounts of more than R500 000. After you
made the admissions which I
mentioned and changed your plea the State simply closed its case. The
State with regard to both counts
accepted that your conduct entailed
potential prejudice and not actual prejudice. After we convicted you
the State lead evidence
which, if it be accepted, constitute crimes
which are far more serious. I cannot sentence you for crimes of which
you have not
been convicted. That would be wrong. I can only sentence
you for that of which you have been convicted. It is accordingly my
judgment
that section 51 of Act 105 of 1997 does not apply. I,
therefore, have an unfettered discretion to pass a sentence which is,
in
all the circumstances, just and fair.
[9] It is clear that
these crimes, when compared to the crimes with which you were
originally charged, do not carry the same high
degree of moral
blameworthiness. I do not think that a sentence emphasising the
rehabilitative purpose of sentencing is required.
I must emphasize
that the business world, like the rest of society, must be
scrupulously honest and fair in their business dealings,
and this
sentence must serve to deter other likeminded persons and also serve
as a punishment for you. At the end of the day society
demands that a
sentence be imposed which is fair and just, keeping in mind your
crimes and your personal circumstances.
[10] I have had the
benefit of written heads of argument from your counsel as well as
counsel for the state and I have given the
matter much thought. If I
have omitted to mention some facts in this judgment then it is not
because they were not considered or
not taken into account. In the
end, having balanced your personal circumstances, the needs of
society and the severity of the crimes
of which you have been
convicted, I have decided that the following sentences will meet all
the purposes of sentencing.
[11] On count 2 you
are sentenced to pay a fine of R75 000 or serve 18 months
imprisonment. A further 18 months imprisonment is
imposed but
suspended for a period of four (4) years on condition that you are
not again convicted of the crime of fraud committed
during the period
of suspension.
[12] On count 6 you
are also sentenced to pay a fine of R75 000 or serve 18 months
imprisonment. A further 18 months imprisonment
is imposed but
suspended for a period of four (4) years on condition that you are
not again convicted of the crime of fraud committed
during the period
of suspension.
A.H. VELDHUIZEN,
J
JUDGE OF THE HIGH
COURT