National Director of Public Prosecutions v Carelse and Another (1801/2014) [2014] ZAECGHC 77 (11 September 2014)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO: 1801/2014

DATE HEARD: 04/09/2014

DATE DELIVERED: 11/09/14

NOT REPORTABLE

In the matter between:

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS

APPLICANT

and

GARY CARELSE

1ST RESPONDENT

ANDRE BEZUIDENHOUT

2ND RESPONDENT

Prevention of Organised Crime Act 121 of 1998 – application for confirmation of restraint order – conflict of fact – application of Plascon-Evans rule – version of second respondent exculpatory – no evidence adduced against first respondent implicating him in offences

– applicant failing to establish reasonable belief that respondents may be convicted and hence be liable for confiscation

order to be made against them – application dismissed with costs.

JUDGMENT

PLASKET J

[1] In this application, the applicant, the National Director of Public Prosecutions (the NDPP), seeks the confirmation of a restraint order issued by Revelas J against property of the respondents in terms of s 26 of the Prevention of Organized Crime Act 121 of 1998 (POCA).

[2] The application is not opposed by the first respondent, Gary Carelse, but it is opposed by the second respondent, Andre Bezuidenhout. In the cases of both respondents the property restrained, to a value of R369 354.50, was their pension interest.

[3] The facts that gave rise to the application arose in the King William’s Town Accounting Store of the Department of Correctional Services, where both respondents worked.

[4] It came to the attention of the Senior Personnel Officer of the Department that staff within the Accounting Store had altered the bank account details of suppliers of goods and services. In addition, it was alleged, the respondents paid money into the accounts of suppliers who were not owed anything by the Department and who were then requested to pay back the money to them on the basis of the payments having been made by mistake. They also, so it was alleged, pretended that the bank details of suppliers had been changed on the Department’s system and entered new false bank account numbers into which the Department’s funds were paid and then withdrawn by them.

[5] In this way they were alleged to have defrauded the Department of an amount of R369 354.50. The respondents were charged with conspiring to commit fraud and fraud, alternatively, theft in the Regional Court, East London.

[6] Section 25(1) of POCA sets out the circumstances in which a high court may grant a restraint order. It provides:

‘(1) A High Court may exercise the powers conferred on it by section 26(1)-

(a) when-

(i) a prosecution for an offence has been instituted against the defendant concerned;

(ii) either a confiscation order has been made against that defendant or it appears to the court that there are reasonable grounds for believing that a confiscation order may be made against that defendant; and

(iii) the proceedings against that defendant have not been concluded; or

(b) when-

(i) that court is satisfied that a person is to be charged with an offence; and

(ii) it appears to the court that there are reasonable grounds for believing that a confiscation order may be made against such person.’

[7] Section 25(1)(a) applies in this case. It is not in dispute that the first requirement has been met – a prosecution had been instituted against the defendants. Similarly, it is common cause that the third requirement has also been met – the proceedings have not been concluded.

[8] What is in issue as between the NDPP and Bezuidenhout is whether the NDPP has established the second requirement. (The NDPP bears the onus of establishing this requirement as against Carelse too.) This calls for some clarification. Section 25(1)(a)(ii) of POCA refers to a confiscation order having been made, which is not the case in this matter, or it appearing to the court that ‘there are reasonable grounds for believing that a confiscation order may be made . . .’.

[9] In terms of s 18(1) of POCA, a confiscation order may be made once a person who has derived a benefit from the commission of an offence has been convicted. In this case it is, I think, apparent that if the respondents are convicted as charged they will in all likelihood have derived a benefit from the fraudulent scheme I have described above.

[10] The real issue is whether the NDPP has, on the papers, established reasonable grounds for believing that Carelse and Bezuidenhout will be convicted – the first jurisdictional requirement for a confiscation order.

[11] Reasonable grounds for believing that something will happen implies that ‘there are grounds, or facts, which give rise to, or form the basis of, the belief’[1] and this entails an objective enquiry.[2] In this case it entails an enquiry as to whether the facts, properly determined, lead to an objectively justifiable belief that the respondents may be convicted.

[12] In terms of s 13 of POCA applications for either confiscation orders or restraint orders are civil proceedings and the rules of evidence that apply in civil proceedings apply to them, as does the civil onus of a balance of probabilities.

[13] These being motion proceedings and there having been no application for a referral to oral evidence in respect of Bezuidenhout’s

case, the facts must be determined in accordance with the Plascon-Evans rule.[3] In other words, the facts upon which the NDPP’s entitlement to the relief claimed are to be decided are the facts averred by the NDPP that have been admitted (or have not been denied) by Bezuidenhout together with the facts averred by Bezuidenhout.[4]

[14] There is a rider to the rule. That is that bare denials and uncreditworthy denials do not raise genuine disputes of fact and that if a respondent’s version is ‘so far-fetched or clearly untenable’ a court may be justified in rejecting it on the papers and accepting the applicant’s version, as long as it is satisfied of its ‘inherent credibility’.[5] In Wightman t/a JW Construction v Headfour (Pty) Ltd & another,[6] Heher JA dealt with what a party is required to do in order to raise a genuine dispute of fact. He said:

‘A real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed the fact said to be disputed. There will of course be instances where a bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him. But even that may not be sufficient if the fact averred lies purely within the knowledge of the averring party and no basis is laid for disputing the veracity or accuracy of the averment. When the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer (or countervailing evidence) if they be not true or accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty in finding that the test is satisfied.’

[15] I have set out the basic features of the fraudulent scheme. Statements made by various people are attached to the founding papers in order to attempt to implicate the respondents in the operation of the scheme.

[16] Mr Andre Vernon Castle, the Regional Head: Finance and Supply Chain Management in the Department in East London deposed to an affidavit in which he lodged a complaint about the ‘alleged fraudulent activities’ in the Accounting Store. He referred to an audit that unearthed certain information, including that the credentials of certain officials had been used to alter or replace the bank account numbers of some of the Department’s suppliers. He then set out the details of a number of fraudulent transactions. On the basis of the usernames and passwords used to alter the bank accounts of suppliers, he concluded that Bezuidenhout and three others (excluding Carelse) had been responsible. (It is not clear to what extent Castle’s allegations are based on what was ascertained by the auditors, and hence hearsay, and to what extent he had direct knowledge of the facts to which he deposed.)

[17] Mr Lucky Caleb Mdutyana is a Senior Financial Investigator in the Asset Forfeiture Unit. In his affidavit he set out how the fraudulent scheme was discovered and how it worked. He relied, however, on the statements of others. He referred to various witnesses who made statements and attached their statements to his affidavit.

[18] The first of these was Ms Babalwa Majiya. She stated that some time after having been asked for a quotation for the supply of goods to the Department, she was contacted by Bezuidenhout who informed her that money had been paid into her account in error. He asked her to draw the money and give it to him. She did so. Mr Luzuko Magenuka made a statement about a similar incident but he was not able to name or identify the person who approached him except by the nickname of Topsy. Ms Nwabisa Joyce Guga also had money deposited into her account, having been approached by Topsy. This occurred on a number of occasions. She withdrew money from her account on each occasion and gave it to Topsy. The identity of Topsy is not stated by any of the witnesses but, based on what follows, it may be Carelse.

[19] Mr Norman Malone is a Senior Correctional Officer. In his statement he said that Carelse came forward to volunteer information about the fraudulent scheme. Malone’s statement is to the effect that Carelse admitted collecting money from certain of the other deponents to statements but said that he had done so on the instructions of Bezuidenhout and had handed the money to Bezuidenhout on each occasion. The statement of Ms Nomphelo Victoria Kwayimani, a Deputy Director in the Department, who was also present at the meeting with Carelse, is to much the same effect.

[20] Although, in both of these statements there is mention of Carelse being willing to make a statement, and Malone stated that he took a statement from Carelse, that statement is not part of the papers. As a result, the only evidence against Carelse is that of Magenuka and Guga and his admission that he collected money from them. His explanation for his actions, as recorded in Malone’s statement is, however, exculpatory in the sense that he said that he collected the money on the instructions of Bezuidenhout and gave the money to Bezuidenhout.

[21] The evidence that implicates Bezuidenhout is the statement of Majiya that he informed her that money had been paid into her account erroneously and had collected money from her on one occasion. For the rest, what is recorded in the statements of Magenuka, Guga, Malone and Kwayimani in respect of Bezuidenhout is inadmissible hearsay evidence.

[22] In his answering affidavit, Bezuidenhout denied having been involved in any unlawful activities and with changing, tampering with or manipulating the accounts of suppliers. He also denied that: (a) he deposited funds into bank accounts of suppliers who were not owed money, pretended that the cash was mistakenly paid to them and approaching them to get them to withdraw cash; (b) he asked those suppliers to withdraw cash and hand it to him; (c) he pretended that bank account details of suppliers had been changed on the system and that he entered new fraudulent bank account numbers; (d) deposited money into fraudulent bank accounts and withdrew cash for his own benefit; and (e) defrauding the Department of R369 354.50.

[23] He gave the following detailed explanation of how, he says, the office functioned and his role in it:

‘I never made any payments without supporting documents to support the legitimacy of the payments.

For every payment that I made I had supporting documents.

I deny being involved in any criminal activity. My name appears on every document which is for payment to the suppliers because I was the payments clerk.

I was the only payments clerk. I had people who were assisting me. They were Ms LV Cakwebe who was a capturer and postering clerk and Ms NY Gysman who was an ordering clerk.

I trained Ms LV Cakwebe to be my reliever on payments.

My password was known to Ms LV Cakwebe and my supervisor Mr S Mnkile. Ms Cakwebe did not have a password for payment and she was using my password for issuing of stock and payments.

She had a password for capturing invoices and other things. My PH Supervisor Mrs Van Wyk who was our head logistics also had my password.

She also had 3 people working for her who also knew my password. Mrs Williams and Mr Carter also knew my password.

My Supervisor Mr Mnkile created my password. He knew all the passwords of the people at [logistics] and also knew my password because he created it and I was also working at logistics.

It was common practice to share our passwords for work purposes. If my password was used in the commission of a crime, it could be used by someone who wanted to falsely implicate me in crimes I did not commit.’

[24] He proceeded to say that he had discovered overpayments that had been made to three suppliers ‘after finance had made payment to them’ and that he brought this to the attention of his supervisor who instructed him to telephone the suppliers. He then gave the following account:

‘I phoned them and they were a bit arrogant to me. I asked them to speak to my supervisor. He phoned them. He informed me that one lady would come to the office to pay the money back which was an overpayment. I informed my supervisor to ask that lady to pay the money at finance department if I was not there because she said she was not in town but was on her way to the prison.

My supervisor asked me to go to the other lady, whose name I do not know, to collect money from her which was an overpayment.

It was in a brown envelope. I took it and counted it. I wrote the amount on the letter I gave her to the effect that I had received the money from her which was for the overpayment made. She asked for change and I told her that she must come to the prison and I would give it to her and that I could not give her money from my own pocket.

I also told her that she was not the only one to whom an overpayment was made. I even told her on the phone that there were 3 other people on whom an overpayment was made.

I took the money to my supervisor and he was with Mr Khozana.

I left for Stutterheim thereafter. The third one was a shop where we used to buy stationery and they would credit us until the next order was placed and they would just deduct the amount of the over payment.’

[25] Finally, he concluded by saying that if there were people involved in criminal activities, he was not part of them and that he did not owe ‘the Applicant or anybody the amount of R369 354.50 because I never received any money involved in criminal activities’.

[26] From the above, it is clear that Bezuidenhout’s denial of complicity in criminal conduct is not a bare denial. He has engaged with the allegations made against him, such as they are. Even if it might be said that his version has certain curious features, I do not believe it can be said that it is so far-fetched or clearly untenable to justify its rejection on the papers. Furthermore, Mr Mbilini, who appeared for the NDPP did not seek to persuade me that Bezuidenhout’s version should be rejected on the papers.

[27] Once it is accepted that his version must prevail, it follows that the restraint order cannot be confirmed as against him but must be discharged. I say this because his version is exculpatory. Whether it survives cross-examination when he is tried is another matter. In these proceedings where issues of credibility and probability cannot be determined on the papers, it cannot be concluded that the NDPP has established reasonable grounds for believing that Bezuidenhout may be convicted and hence that a confiscation order may be made: on Bezuidenhout’s facts, an objectively justifiable belief that he may be convicted cannot be formed.

[28] The same applies to Carelse. Even though he has not filed an answering affidavit, the evidence against him, such as it is, does not establish a culpable involvement in the fraudulent scheme on his part.

[29] I make the following order:

(a) The application for the confirmation of the restraint order made against both respondents is dismissed.

(b) The restraint order is discharged.

(c) The applicant is directed to pay the second respondent’s costs.

_____________________

C Plasket

Judge of the High Court

APPEARANCES

Applicant: M Mbilini instructed by NN Dullabh and Co

First respondent: No appearance

Second respondent: J Kincaid instructed by Mili Attorneys

[1] Minister of Law and Order & others v Hurley & another 1896 (3) SA 568 (A) at 577I.

[2] At 579E-H.

[3] National Director of Public Prosecutions v Salie & another [2014] 2 All SA 688 (WCC) para 58.

[4] Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634E-I; National Director of Public Prosecutions v Zuma [2009] ZASCA 1; 2009 (2) SA 277 (SCA) para 26.

[5] Plascon-Evans at 634I- 635C; NDPP v Zuma para 26.

[6] Wightman t/a JW Construction v Headfour (Pty) Ltd & another [2008] ZASCA 6; 2008 (3) SA 371 (SCA) para 13.