Mgoqi v S (CA&R 46/2017) [2020] ZAECGHC 33 (29 April 2020)

IN THE HIGH COURT OF

SOUTH AFRICA

(EASTERN CAPE DIVISION, GRAHAMSTOWN)

CASE NO. CA&R 46/2017

Date heard: 04 March 2020

Date Delivered: 29 April 2020

In the matter between:

BATHANDWA

MGOQI

Appellant

and

THE

STATE

Respondent

JUDGMENT

RUGUNANAN, J:

[1] The appellant stood trial in the Regional Court, East London on 41 counts dealing variously with contraventions of the Riotous Assemblies

Act,[1] the Regulation of Interception of Communication and Provision of Communication-related Information Act [2] (“RICA”), the Electronic Communications and Transactions Act [3] (“ECTA”) and one count of Fraud. The extensive detail in the indictment renders it impractical to repeat in this judgment

since the subject of this appeal concerns the appellant’s convictions on counts 2 to 11, counts 12 to 21 and counts 32 to 41. No convictions ensued for any of the alternative counts. The individual counts in each cluster attracted a sentence of 6 years’

imprisonment, all of which were ordered to run concurrently, in effect amounting to a term of 6 years’ imprisonment. The appeal is against the appellant’s convictions and sentence(s) and proceeded once condonation was granted to the appellant for the late filing of heads of argument. The appellant is presently on bail pending the outcome of this appeal.

[2] Before setting out the essentialia of the charges in each cluster, it is appropriate to detail the preamble to the charge sheet to offer context to the case that the State intended to put up against the appellant. Although the content of the preamble is disjunct, repetitive and cumbersome, the exercise, unavoidably, is necessary to forestall repeating the evidence of the main State witness and the ancillary witnesses.

THE

PREAMBLE TO THE CHARGE SHEET

“1. The accused either acted alone or with others unknown to the State [who] were members of a syndicate who acted in the execution of a common purpose to defraud by means of the use of forged or cloned bank credit and debit cards.

2. The State will allege that the common purpose existed, at the latest, immediately prior to the commission of the offences and continued for the duration thereof.

3. The main purpose of the accused and the aforementioned persons were to unlawfully obtain money from the bank accounts of bank customers by electronic means and / or to make purchases at various retail outlets.

4. It is alleged that the accused committed the offences set out in counts 1-42, the accused either acting alone or in the execution and / or furtherance of a common purpose with persons unknown to the State.

5. The complainants were at all relevant times in possession of their bank cards.

6. The accused and / or his accomplices were in possession of an electronic card reader/s or so called “skimming devices” and used the aforementioned electronic card reader/s.

7. When lawful cardholders were effecting transactions at ATMs and / or retail outlets when effecting payment for services they were ostensibly assisted by the accused and / or his accomplices and the electronic card reader/s was / were used to swipe their bank cards through the device/s in order to capture the data in the form of the electronic account information and confidential data that are encoded on the magnetic strips of the bank card of financial institutions.

8. The aforementioned data facilitates the forging of credit and / or debit cards of the financial institutions and / or facilitates fraudulent transactions with the details of these credit and / or debit cards.

9. The fraudulent transactions mentioned in the attached Schedule were executed by forging the said cards with the aforementioned data after the accused and / or his accomplices had used the electronic card reader/s to swipe the cards through when the cardholders were effecting transactions at an ATM and / or when paying for services

using the said card.

10. An Automated Teller Machine (hereinafter referred to as an “ATM”) is a computerised telecommunications device, situated in a public place. It enables customers to perform several banking operations without the assistance of a cashier or teller, such as to check account balances, withdraw cash, make deposits, pay accounts, obtain bank statements and effect cash transfers.

11. It permits bank customers to gain access to their accounts with a plastic card with a magnetic stripe (a bank card). The magnetic stripes of the bank cards are encoded with track data that inter alia include the bank card number. The bank customer is required to enter a personal identification number (hereinafter referred to as a “pin code”).

12. In order to transact with a bank via an ATM, a bank customer is required to insert his or her bank card into a card slot on the front of the ATM and to key in his or her pin code using the ATM’s numeric key pad. The bank customer inter alia communicates his or her account and / or card number and pin number via the ATM to the bank.

13. On the 22/2/2014 the accused made enquiries regarding the purchase of a cellphone at Incredible Connection Hemmingways, whilst the sales person perused his identity document he became nervous and ran out of the store leaving his identity book behind.

14. The accused was later arrested at the mall in possession of the cards as listed in the attached Schedule.”

THE

CHARGES

[3] Essentially, counts 2 to 11 concerned ‘unlawful interception of communication’ and were founded on contraventions of section 49 of RICA. These counts related to the broad allegation that on or about 22 February 2014 the appellant wrongfully and unlawfully intercepted or attempted to intercept or authorise or procure any person to intercept the banking accounts (identified by account numbers) listed in the schedule below. The alternatives to these counts stemmed from contraventions of section 86(1) of ECTA in that the appellant unlawfully and intentionally gained access to or intercepted data such as “client information” (encoded on magnetic strips of bank cards) of various international “financial institutions” specified in said schedule.

[4] For convenience the schedule is reproduced below.

Count* Description of card, printed/embossed on front of card Details captured on magnetic strip of card Bank details Not hot printed on front/rear of card Bank details Account number 2** Standard Bank B Mgoqi 527609000100162 Argentina Bank 15081011501518598358 3 Standard Bank B Mgoqi 5239340650700539 Teller A.S. Bank Norway 1507201023000981000 4 Standard Bank B Mgoqi 5451009004853937 National Westminister Bank, United Kingdom 14102011353600903064 5 ABSA Bank B Mgoqi 4342582998321042 Wells Fargo Bank USA 16111010000008840000 6 ABSA Bank B Mgoqi 4564727006970915 Westpac Bank Australia 15082014793101526340 7 ABSA Bank B Mgoqi 4940005058910583 Bank of Bilbao, Vizcaya, Argentina 17122011412327000566 8 First National Bank B Mgoqi 474476027338744 Bank of America 16021010000000000460 9 Nedbank B Mgoqi 4500030104403542 Canadian Imperial Bank of Commerce 16032010735181090501 10 American Express B Mgoqi 377121706822391 Nedbank AMEX 140720111073437300000 11 American Express B Mgoqi 371241183436006 American Express USA 180110114013285600000

* This should be read as “Card”

** The sequence of the card numbers ought to have commenced with #1 (not #2) ending vertically

down the column with card #10 (and not #11). This would accord with the content of Exhibit “A” which is an affidavit by the main witness for the State, Mark Momberg.[4]

[5] Counts 12 to 21 were contraventions of section 45 of RICA and related to the ‘prohibition on the manufacture, possession and advertising of listed equipment’. These counts were also founded on the broad allegation that on the abovementioned date the appellant did wrongfully and unlawfully manufacture, assemble, possess, sell, purchase or advertise listed equipment, namely “cloned cards” mentioned in the Regulations promulgated in Government Gazette No. 28371 of 29 December 2005 (“the Regulations”). The alternatives to these counts, also stemming from contraventions of ECTA specifically section 83(3), concerned the possession of devices such as “an electronic card reader” or “cloned bank cards” listed in the schedule, which devices were intended to overcome security measures for the protection of data by utilising the cards to contravene section 86(1) of ECTA.

[6] Counts 32 to 41 dealt with ‘forgery’, it being alleged that on the aforementioned date the appellant, did unlawfully and falsely and with intent to defraud, forge credit cards and / or debit cards to the prejudice or potential prejudice of certain financial institutions and / or the general public.

[7] All the abovementioned counts are based on incidents that occurred on the same date at Incredible Connection in Hemmingways Mall, East London where the appellant was apprehended and found in possession of ten (10) bank cards (alleged to have been cloned or counterfeit). The appellant was legally represented during trial. He pleaded not guilty to each count, including the alternatives. He specifically put in issue every allegation by the State and made no admissions in terms of section 220 of the Criminal Procedure Act [5] (“the CP Act”). More pertinently, in respect of counts 2 to 11 he denied that he intercepted the banking accounts as alleged, and in respect of the alternative counts he denied that he gained access to or intercepted data specifically relating to client information of any of the financial institutions listed in the schedule.

[8] Relevant to counts 12 to 21 the appellant denied that he was in possession of listed equipment namely, “cloned cards” because items described as “cloned cards” were not specifically referred to, nor described in the Regulations. Regarding the alternatives to these counts, he denied that he was in possession of any devices designed to overcome security measures for

the protection of data.

[9] On counts 32 to 41 the appellant denied that a “cloned card” (nondescript by Regulation) constituted a document that could be forged.

THE

EVIDENCE

[10] Five witnesses testified in the presentation of the State’s case among them the main witness, an expert, Mr. Mark Momberg (“Momberg”) on whose testimony the State placed significant store in seeking a conviction, and indeed, in persuading this Court that the appeal should fail.

[11] Before dealing with the evidence of Momberg, I set out the principles that in my view have an important bearing on the reliability of the factual information or data on which he based his opinion. The necessity to do so arises because of the approach adopted the appellant in contending that much of the factual information on which Momberg’s opinion is based, is hearsay, constituting as it did, a major limitation of the persuasiveness of his testimony. It followed that the limitation, viewed against the overall evaluation of the totality of the evidence, detracted from the onus to prove the appellant’s guilt beyond reasonable doubt.

[12] Expert witnesses stand on a different footing from ordinary witnesses. Their knowledge and experience places them in a unique position to testify on matters about which a Court is not competent to decide; and whilst in cases such as the present a Court needs and benefits from an expert’s opinion, the expert witness should not usurp the function of the Court. In the context of a criminal case that function is to determine whether on a conspectus of all the evidence any reasonable doubt that an accused is guilty, is excluded (S v Chabalala [6]). Whether testifying on facts observed by themselves or on facts furnished by other persons, expert witnesses may state their inferences only in so far as their special skill and / or experience may be applied to interpret or draw inferences from such facts (Ruto Flour Mills Ltd v Addelson (1)).[7] The position is no different when an expert is required to express an opinion on data, whether observed or supplied. A court is not bound to accept the opinion of an expert based on facts or data which have not been established (Menday v Protea Assurance Co Ltd).[8] The logical corollary is that a court is not bound to accept the opinion of an expert based on unproven facts or data supplied by other persons. This represents the substantial basis on which a decision on appeal must be made.

[13] I turn to a consideration of Momberg’s evidence and its evaluation. Mindful of the dangers of over simplification, it is not intended to deal with every aspect of his evidence except to limit this judgment to a consideration of those aspects which have influenced the outcome of these proceedings.

[14] Momberg’s evidence was introduced in the form of an affidavit, Exhibit “A”, in amplification to which he gave oral testimony. He is employed as a “Manager Fraud Investigations” at the card division of Standard Bank in Durban. His duties include the investigation, in various provinces of the country, of fraud committed using counterfeit bank cards. At the

time of the appellant’s trial Momberg had been an employee of 15 years’ standing. He is a former member of the South African Police Service. He holds the following professional qualifications: a National Diploma in Police Administration from Technikon RSA, a Diploma in Criminal Justice and Forensic Auditing from Rand Afrikaans University, and a Bachelor of Laws degree from UNISA. He is also a certified Fraud Examiner accredited to the Association of Certified Fraud Investigations and received training from the United States Secret Service.

[15] On 20 May 2014 he received a brown envelope containing ten (10) bank cards, two credit card vouchers and a brown wallet from the

investigating officer Detective Constable Chumani Mntumni with a request to analyse the cards and to establish their authenticity. [9] As is evident from the second column of the abovementioned schedule, each of the cards appeared to have been issued by various banks in the name of the appellant.

[16] Momberg’s examination of objective features on the cards such as, holograms, logos, colour, and embossing, led him to express the opinion that the cards were so manufactured because they did not conform to Mastercard and Visa specifications. His evidence further indicates that the card number embossed on the face of each bank card (i.e. the number in the third column of the schedule) belonged to the name of the bank in the fourth column.

[17] As for the magnetic strip on each card, the strip contains dual tracks of encoded data revealing the name of the appellant, the card number, the expiry date of the card, the bank account number that appears in the fifth column of the schedule, and the security pin code that authenticates the encoded data.[10] Significantly, Momberg’s evidence indicates that the card number embossed the face of a card (and encoded in the magnetic

strip) is linked to the bank account number in the fifth column of the schedule.[11] I will revert to this aspect of the evidence later in this judgment but would add that Momberg stated that the latter number represents the account from which funds are accessed.[12]

[18] Momberg explained that the process of counterfeiting the encoded data of a bank card entails the use of a skimming device. The original bank card is swiped through the device and the magnetic strip data is copied into the device. The copied data is then downloaded into a computer. The computer is connected to an encoding device. The encoding device facilitates the downloading of the copied data onto the magnetic strip of a new card (ordinarily a hotel access card or a defunct bank card). The result is a duplicate or clone of the original bank card (parenthetically, I pause to mention that Momberg did not state how the name of the appellant would have been encoded in the track of the magnetic strip). The clone or duplicate card will remain active until such time as the original bank card is cancelled or stopped.[13] Momberg thus concluded that the encoded data in the magnetic strip of each bank card occurs as the result of an unlawful interception in the production of a (manufactured) encoded counterfeit card.[14] In this regard Momberg expressed the opinion that a counterfeit also known as “cloned card” fell within the ambit of the term “listed equipment” as defined in the Regulations. In expressing his conclusion as to unlawfulness Momberg conceded that he merely drew an inference since he had no evidence that whoever obtained the data, had obtained it unlawfully. Doubtless, this included the appellant.

[19] It is unnecessary to explicate the further evidence by Momberg regarding the use of a cloned or counterfeit card communicating with a point of sale device[15] or an Automatic Teller Machine (ATM) save to state that, at a minimum, such evidence traversed the material contained in paragraphs 8, 10, 11 and 12 of the preamble to the charge sheet.

[20] I now revert to the link between the card number and the bank account number in the fifth column of the schedule. Momberg’s evidence indicates that he was able to establish this through a ‘Mastercard Bank Identification Number List’[16] This aspect of the evidence is where the substantial issue affecting the persuasive value and reliability of Momberg’s aforementioned conclusion, arises. The list was not mentioned in Momberg’s affidavit (Exhibit “A”), nor during his evidence in chief. It was never presented before the trial court. Its status, origin, content and authorship is unknown, in particular whether it is an international instrument or whether it was compiled by the banking sector in this country.

[21] In seeking refuge in the list, Momberg premised his conclusion on information that was supplied and not independently established. The accuracy of the information was never proven or authenticated through his own forensic knowledge or experience of its use in the industry he claims to investigate. Without confirmation or proof of the information in the list, Momberg’s evidence of the link between the card number and the bank account number in the fifth column of the schedule cannot be validated. The consequence is that he could not have concluded that an interception occurred in the manufacture of encoded counterfeit cards. His reliance on the list was perfunctory. He did not demonstrate how his experience or skill enabled him to process the information it contained to support the conclusion that the cards were encoded counterfeits. In the light of this finding Momberg’s evidence that the counterfeit cards fell within the definition of listed equipment as per the Regulations is rendered nugatory and no practical purpose would be served by considering that definition. Moreover, the belated

introduction by the State of an affidavit under section 236(1) of the CP Act deposed by an official at Nedbank,[17] which purported to prove ownership of one of the bank cards did not have the effect of retroactively curing, across the board, the substantial flaw in Momberg’s evidence.

[22] A further aspect of Momberg’s evidence that requires discussion concerns two credit card vouchers contained in the envelope given to him by the investigating officer. The vouchers were linked to the third bank card (appearing in the second column of the schedule) and were in respect of fuel purchased for the amount of R450 from a BP service station in Grabouw on 21 February 2014.

[23] While testifying, Momberg explained what the verification process for payment of funds through use of a bank card entailed. He stated that the process occurs through a period of at least 48 hours or perhaps three or four days in the case of a foreign card having been used. [18] In his affidavit, he expressed the opinion that the third card in question was used to effect payment. To my mind the vouchers are merely indicative of proof that that the bank card in question was used at a point of sale. They do not constitute proof that the service station actually received payment. It was incumbent on the State to have adduced evidence showing that the issuing bank (i.e. the National Westminster Bank, United Kingdom or even the account holder) suffered loss as a result of payment having been made through use of the relevant bank card. In this regard, no affidavit was adduced in terms of section 236A(2) of the CP Act to the effect that the accounting records of the issuing bank are reflective of a transaction. If this was not possible then the State ought to have obtained proof from the service station that payment was received for the fuel purchased.

[24] Having made the finding earlier that Momberg could not have concluded that any of the bank cards were counterfeit (and this finding includes the card used at the service station), and given the evidential shortcomings in the point of sale fuel transaction, I am reluctant to hold that it was the appellant who intercepted or attempted to intercept communication between the issuing bank and its client. The State did not adduce evidence that it was the appellant himself who used the relevant bank card, but sought to draw this inference because the vouchers were apparently found in the appellant’s wallet when he was apprehended. There

is no direct evidence of this finding and whatever evidence there may be, is extremely vague to enable such an inference to be drawn. The whole issue is clouded by the fact that the police officers who testified for the State, namely Warrant Officer Qoqile Nikelo and the investigating officer Warrant Officer Mntumni did not pertinently state that they had seen the vouchers.

[25] Warrant Officer Nikelo, testified that he searched the appellant after the latter was apprehended and found a brown wallet on his person. He went through the contents of the wallet and found “some cards in it”.[19] He maintained that there were 10 in number but could not explain why in his docket statement he indicated that 9 cards were found. [20] He went on to say that “there was no cash” in the wallet and on being asked if he found anything else he replied, “No, nothing else.” [21]

[26] The investigating officer Warrant Officer Mntumni who prepared the brown envelope for handing over to Momberg was also vague about the number of cards that were booked out for examination by the latter. He maintained that there were altogether 9 cards that were booked out. That however, is not the point. What is perplexing is that he made no mention about whether the vouchers were among the contents of the wallet, or whether they were inventorised as exhibits in the SAP 13. In point of fact the SAP 13 made no mention of such vouchers [22] and he readily admitted that he did not inspect or check what items were included in the envelope before handing it over to Momberg.

[27] Momberg, who received the brown envelope from the investigating officer could not say with certainty that when he opened the envelope he found the vouchers inside the wallet. Although one accepts that Momberg identified the vouchers, it would be speculative to suggest that the vouchers were indeed contained in the appellant’s wallet from which the inference may be drawn that it was he who had used the bank card to purchase fuel. Interestingly, there is no evidence as to whether or not a driver’s licence was found in the appellant’s wallet.

[28] I now proceed to deal with the question whether the State has proven the offence(s) of forgery. The definition and character of this offence is set out in LAWSA[23] as follows:

“Forgery is committed by unlawfully making a false document with intent to defraud to the actual or potential prejudice of another. It is a species of fraud. In forgery the misrepresentation takes place by way of the falsification of a document. Apart from this, all the requirements of the crime of fraud must be present, such as the intent to defraud and the actual or potential prejudice. However, whereas fraud is completed only when the misrepresentation has come to the notice of the representee, forgery is completed the moment the document is falsified. If the document is then brought to the attention of others, a separate offence is committed, namely uttering the document. Because the person falsifies the document is in most cases also the one who offers it to another, it has become customary to charge that person with both forgery and uttering, which are nevertheless two distinct offences.” (my own emphasis in bold)

[29] In convicting the appellant for forgery the Magistrate did so on the basis that a plastic bank card constituted a document. This is evidenced by his reasoning that “[A] plastic bank card which does not belong to you with your name printed on it and signature on the back is clearly forgery”.[24] It is unnecessary to express a view on the correctness or otherwise of this finding. What was clearly overlooked by the Magistrate is that, by definition, the case for the State failed in one fundamental respect, namely that the intent to defraud was not proven. Neither Momberg’s evidence, nor the evidence by Warrant Offers Mntumni and Nikelo, or the evidence by Ms Evangeline Theunissen and Mr Sibongiseni Ncamzana, respectively a sales consultant and a security official employed at Incredible Connection, establishes the requisite element of the offence.

[30] It is also considered unnecessary to traverse the evidence of the latter witnesses. Ncamzana’s evidence bears no relevance to any of the charges that are the subject of this appeal, and referring to Theunissen, the Magistrate correctly found that the State did not charge the appellant with any offence relating to his interaction with her. As such, and for present purposes the content of paragraphs 3 and 13 of the preamble is irrelevant.

CONCLUSION

[31] The technical novelty and complexity of the evidence by the main witness Momberg is intriguing. One might easily be seduced into accepting it without critical analysis. Respectfully, this is exactly what the Magistrate did. The evidence was cursorily analysed at the expense of overlooking the crucial aspects, as shown in this judgment, where the State’s case was deficient. In point, Momberg’s evidence ought to have been subjected to the scrutiny postulated by the case authorities referred to hereinabove.

[32] Tellingly, nowhere in the testimony given by Momberg (or any of the other witnesses) has the appellant been directly implicated, or persons mentioned with whom the appellant might have enjoined in a common purpose. Furthermore, the legislation in terms of which the appellant was charged did not create presumptions to assist the State in proving the offences in question. In convicting the appellant the Magistrate erred.

[33] In respect of counts 2 to 11 pertaining to unlawful interception of communication, the Magistrate erred in concluding that the appellant’s wallet contained an invoice that incontrovertibly constitutes evidence of a successful transaction with the relevant

bank card.[25] As shown hereinabove, the evidence concerning the presence of vouchers in the appellant’s wallet is speculative and there is no direct evidence indicating that it was the appellant himself who utilised the bank card to purchase fuel.

[34] Regarding counts 12 to 21 concerning the prohibition on the manufacture, possession and advertising of listed equipment, no evidence was led to traverse these elements of the offences. Accordingly, the Magistrate erred in finding that “the counterfeit bank cards found in possession of the accused serve as instruments to unlawfully access communications from a computer.”[26] This finding could not have been made had the Magistrate appreciated that Momberg’s evidence (as shown above) did not establish that the bank cards were counterfeit, and where such proof was lacking the appellant could not have been found to have been in possession of listed equipment as per the Regulations.

[35] On counts 32 to 41 relating to forgery, it was, for reasons already dealt with not competent to have convicted the appellant and the Magistrate accordingly erred in doing so.

[36] In each of these instances pertaining to the various counts, the Magistrate appeared to have been influenced by the fact that the appellant did not testify in his own defence. Given the extraordinary nature and momentum of the evidence it is understandable that the inclination to have done so could not have been resisted. The onus, however, was at all times on the State to prove guilt beyond reasonable doubt. At the conclusion of the State’s case the

record reflects that the lack of cogency in its evidence was such that the appellant elected not to testify in his own defence.

[37] In the result the following order issues:

(i) The appeal against the convictions on counts 2 to 11, counts 12 to 21 and counts 32 to 41 is allowed.

(ii) The convictions and sentence(s) imposed by the Magistrate are set aside.

_____

S. RUGUNANAN

JUDGE

OF THE HIGH COURT

I agree. It is so ordered.

S. X. MAPOMA

ACTING

JUDGE OF THE HIGH COURT

Appearances:

For Appellant: Adv. N. J Sandi

Instructed by Bangani Attorneys

c/o Mngangatho Attorneys

Makhanda / Grahamstown

For Respondent: Adv. W.P. Jaftha

Office of the National Director of Public Prosecutions Makhanda / Grahamstown

***NB: Sipho requested to notify parties telephonically due to lockdown

[1] Act No. 17 of 1956

[2] Act No. 70 of 2002

[3] Act No. 25 of 2002

[4] Record:158-169

[5] Act No. 51 of 1977 as amended

[6] 2003 (1) SACR 143 (SCA) paragraph [15]. The full extract reads: “to weigh up all the elements which point towards the guilt of the accused against all those which are indicative of his innocence, taking proper account of inherent strengths and weaknesses, probabilities and improbabilities on both sides and, having done so, to decide whether the balance weighs so heavily in favour of the State as to exclude any reasonable doubt about the accused’s guilt”

[7] 1958 (4) SA 235 (TPD) at 237C

[8] 1976 (1) SA 565 (ECD) at 570E

[9] Exhibit “A” page 161, see also record 15:5-19

[10] Record 17:17-18:17

[11] Record 18:14-23

[12] Record 18:18-23

[13] Record 9:6-10:11

[14] See the explanation in Exhibit “A” relevant to the analysis undertaken of each bank card.

[15] Record 13:25

[16] Record 44:6-25

[17] Record 102:14-16; 103-105:1-9; and Judgment 136:20-23;

[18] Record 38-40

[19] Record 93:11

[20] Record 93:10-94:3

[21] Record 94:4-6

[22] Record 51:22-24

[23] Volume 11, third edition, paragraph [374]

[24] Judgment 138:11-13

[25] Judgment 136:18-20

[26] Judgment 137:7-10