National Director of Public Prosecutions v Mohapi and Others (1754/2021) [2021] ZAFSHC 249 (30 September 2021)

IN

THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Case Number: 1754/2021

In the matter between:

THE

NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Applicant

and

MALIKOMO

LENAH MOHAPI 1st Defendant

SUPERIOR

QUALITY TRADING 2nd Defendant

SEIPATI

SYLVIA DLHAMINI 3rd Defendant

MOKHELE

GOODWILL MOHAPI 1ST Respondent

JUDGMENT BY: MOLITSOANE, J

HEARD ON: 19 AUGUST 2021

DELIVERED ON: 30 SEPTEMBER 2021

[1] On 22 April 2021 the applicant obtained provisional restraint orders in terms of sections 25 and 26 of the Prevention of Organised Crime Act, 121 of 1998 (POCA) against the defendants and the respondent. The first defendant is a sole member in the second defendant, a close corporation. At all material times hereto the third defendant was the Chief Financial Officer in the Free State Department of Agriculture and Rural Development (the Department).

[2] The applicant seeks confirmation of the provisional restraint orders granted but also requests that the order granted against the respondent be discharged.

[3] The first and second defendants do not oppose the confirmation of the rule nisi, but seek by way of a counter application that certain amendments be made to the provisional restraint order upon confirmation. The third respondent opposes the confirmation of the provisional restraint order and seeks that it be discharged with a punitive cost order.

[4] The answering affidavit of the second and third respondents was filed out of time. They seek condonation for the late filing of the said affidavit. The applicant does not oppose this condonation application and same was granted by this court.

[5] The version of the applicant is briefly as follows:

During April 2014 the Department invited tenders for the provision of services of an implementing agent. On 18 June 2014 the second defendant, represented by the first defendant signed a memorandum of agreement with the Department with the contract value not exceeding R200 million and with an implementing agent fee of 10% for a period of 24 months.

[6] The applicant contends that in support of their bid application, the first and second defendants submitted a fraudulent BBBEE certificate. This submission, so the argument goes, tainted the entire bidding process and rendered the award of the contract unlawful.

[7] It is the case for the applicant that the first and third defendants are and were friends before and during the award of the implementation contract to the second defendant. That the first and second defendants had a corrupt relationship with the third defendants in that the third defendant received undue and corrupt payments totalling R267 000, which were gratifications from the first and second defendants before, during and after the bid was awarded to the second defendant.

[8] It is further the case for the applicant that the first and second defendants fraudulently furnished the bid committee with a Curriculum Vitae(CV) without the permission of the owner of the CV. In this way, they used the qualifications and credentials of the owner of the CV to justify their appointment with the Department, while knowing that the second defendant did not have the requisite credentials to be awarded the contract.

[9] It is thus the contention of the applicant that the bid documents of the first and third defendant were forged and fraudulent and thus failed to meet the specifications and its assessment for the appointment was not an acceptable tender. The applicant contends that this, notwithstanding, the third defendant and other officials of the Department appointed the first and second defendants to carry out the services as the implementing agents. The contention is, therefore, that the award of the tender was made contrary to the procurement prescripts despite submission of fraudulent documents. As a result of the alleged unlawful procurement an amount of R249 million was paid to the second defendant between July 2014 and April 2017.It is thus contended that the third defendant and her other colleagues failed to stop the awarding of the contract nor did they terminate the contract with the second defendant at any stage, further, nor did the third defendant take any steps to put a stop to payments made to the second defendant.

[10] The purpose of a provisional restraint order is to preserve the property of the defendants and other realizable property so that in due course same may be realised in satisfaction of a confiscation order upon conviction in the criminal proceedings[1]. The objective of POCA is also to ensure that no convicted criminal should benefit from his crime[2].

[11] The jurisdictional requirements for the granting of a provisional restraint order are set as follows in section 25(1)(a) of POCA:

“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;”

[12] A confiscation order may only be made following the conviction of a defendant. Section 18(1) of POCA provides as follows:

“(1) Whenever a defendant is convicted of an offence the court convicting the defendant may, on the application of the public prosecutor, enquire into any benefit which the defendant may have derived from-

a) that offence;

b) any other offence of which the defendant has been convicted at the same trial; and

c) any criminal activity which the court finds to be sufficiently related to those offences,

and, if the court finds that the defendant has so benefited, the court 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 and the court may make any further orders as it may deem fit to ensure the effectiveness and fairness of that order.”

[13] Section 12(3) of POCA provides that a person has benefitted from unlawful activities “if he or she has at any time, whether before or after the commencement of POCA, received or retained any proceeds of unlawful activities.”

[14] The court considering whether to issue a restraint order is not required to satisfy itself whether a defendant is probably guilty of an offence and whether he probably benefitted from the offence or other unlawful activity. All that the applicant need to show is that it must appear to the court on reasonable grounds that there might be a conviction and a confiscation order. In NDPP v Rautenbach [3] the court held as follows:

“It is plain from the language of the Act that the court is not required to satisfy itself that the defendant is probably guilty of an offence, and that he or she has probably benefited from the offence or from other unlawful activity. What is required is only that it must appear to the court on reasonable grounds that there might be a conviction and a confiscation order. While the court, in order to make that assessment, must be apprised of at least the nature and tenor of the available evidence, and cannot rely merely upon the appellant’s opinion (National Director of Public Prosecutions v Basson 2002(1) SA 419(SCA) it is nevertheless not called upon to decide upon the veracity of the evidence. It need ask only whether there is evidence that might reasonably support a conviction and a consequent confiscation order (even if all the evidence has not been placed before it) and whether that evidence might reasonably be believed. Clearly that will not be so where the evidence that is sought to be relied upon is manifestly false or unreliable and to that extent it requires evaluation, but it could not have been intended that a court in such proceedings is required to determine whether the evidence is probably true.”

The court went on further to say:

“[51]….we are not called upon to decide whether the offences were indeed committed, nor even whether they were probably committed, but only whether there are reasonable grounds for believing that a Court might find that they were.”( my emphasis).

[15] It is thus legitimate at the restraint stage for the court to consider whether at later criminal proceedings, a confiscation order may be made against the defendant in terms of s18(1).

[16] It is common cause that the defendants have already been criminally charged and are due to appear in court before court in November 2021. In my view the first jurisdictional requirement in respect of the three defendants has been met and nothing more need be said.

[17] According to the applicant the first and second defendants submitted a fraudulent BBBEE certificate in support of their bid application. According to the evidence the verification of the said certificate was conducted by ABACUS BEE verification (Pty) Ltd (Abacus). The evidence reveal that Abacus was a company registered with SANAS. (South African National Accreditation System) until May 2016. It was apparently the only company responsible for the issuing of all Abacus BEE certificates with no other agents to do so.

[18] Abacus concluded in its verification of the BBBEE certificate attached to the bid application of the second defendant submitted to the Department that the certificate was invalid as it was never issued by Abacus as it was passed off to be.

[19] The first and second defendants do not oppose the confirmation of the provisional restraint order. This much can be seen from their counter application which is aimed at reducing the value of the realizable property to be restraint from R249 million to R24 950 520, being the maximum amount of benefit as the implementing agent’s fee as per the contract.

[20] The second respondent says they “will ….adduce facts to demonstrate to the Court that the provisional restraint order granted should be amended in the interest of justice, truth- and fairness before being made final”[4]. This clearly demonstrate that the second and third respondents do not oppose the confirmation of the rule nisi but seek that it be varied before being made final.

[21] Much as the first and second respondents do not oppose the confirmation of the restraint order they explained in detail why according to them the order should not be confirmed as is. It is unnecessary for me to traverse all the arguments of the second and third defendants regarding the bid itself in view of its non-opposition of the confirmation of the order. According to the first and second defendants the BBBEE certificate was not essential and no points were to be awarded if no valid certificate was supplied and it was not supplied. The advertisement required the bid to be accompanied by ‘Certified copy of B-BBEE certificate issued by accredited companies or a letter from the auditors.” The advertisement also indicated that those who did not submit their BBBEE status would not qualify for preference points for BBBEE but will not be disqualified[5].

[22] In this case what the first and second respondents conveniently fail to address is the reason for attaching the alleged invalid BBBEE certificate and the CV of someone unrelated to their bid. Clearly the advertisement indicated that although bidders would not be disqualified, those submitting the certificate would impliedly qualify for preference points.

[23] The submission of the CV of another person not associated with the bid was also meant to misrepresent the qualifications and credentials of the second defendant. The second defendant not only received the amount meant for the beneficiaries but also received fees for its services. On the face of it, it appears that the award of the contract was, inter alia, also influenced by the tainted BBBEE certificate as well as the CV submitted which culminated in the award of the implementation contract. The first and second respondents submit that the CV is not fraudulent. This defendants miss the point, the misrepresentation does not lie in the contents of the CV but in misrepresenting credentials and qualifications of the second respondent by passing off the owner of the CV as ‘one of them’ when in truth that is false. In my view the applicant has established that the first and second respondents may be convicted of the offences preferred and a confiscation order made against them.

[24] The third respondent on the other hand contends that the applicant has failed to show that the she will be convicted of the offences and that there is a reasonable possibility of a confiscation order being granted against her upon such conviction. It is further contended that the applicant failed to make allegations regarding the ‘benefit’ or the ‘proceeds of unlawful activities’ which the third defendant allegedly received from the offences or any alleged unlawful activities in respect of the charges. This submission has to be rejected out rightly as evidence of the flow of money was set out in detail in the founding affidavit.

[25] At all material times of the contract awarded to the second defendant the third defendant was a Chief Financial Officer of the Department. She was also a friend of the first defendant and they went on holidays together. It is undisputed that she received monies from the first and second defendants before and during the term of the contract to the second defendant. The applicant contends that the payments were corrupt gratifications which illustrate collusion on the part of the third defendant and the first and second respondents. The third respondent contends that the payments were primarily loans between friends and there was nothing untoward about them.

[26] The applicant has set out in detail the payments made by the first and second respondents to the third respondent. These payments totalled an amount of R267 000. Some of the payments received by the third defendant were in my view very suspicious as they were made shortly after the second defendant received monies from the second defendant. Save for the third defendant to say they were loans between the parties no evidence was given as to the terms of the loans and their repayment. With this in mind, it needs to be borne in mind that these are not criminal proceedings and this court does not expect the applicant to bring evidence that will show beyond a reasonable doubt that the third defendant will be convicted of the offences preferred.

[27] As indicated above the question is not whether the offences were committed nor even whether they were probably committed but just whether there are reasonable grounds for believing that the court might find that they were. The manner and the regularity of the payments by the first and second respondent tempts one to believe that that the court seized with the criminal proceedings may find that the offences were committed. The payments appear to have been made with an ulterior motive. In this way I am satisfied the applicant has discharged this onus.

[28] It has to be borne in mind that the confiscation order is aimed at the benefits which accrued to the defendants. It is apposite to refer again to Rautenbach[6] in which the following was said:

“Where there is good reason to believe that the value of the property that is sought to be placed under restraint materially exceeds the amount in which an anticipated confiscation order might be granted then clearly a court properly exercising its discretion will limit the scope of the restraint…”

[29] It is the contention of the applicant that the amount of R249 million remains the actual proceeds of crime. It is the case for the first and second applicant that as an implementing agent of the Department “at least 90% of the funds paid to it were held in trust on behalf of the Department for the benefit of the its beneficiaries. Only 10% of the amount was an actual fee[7].

The argument goes further to say:

“…it is common cause/undisputed that 90% of the amounts paid by the Department into the account of the defendants were subject to Detentio without animus possidendi.”

[30] It seems to me that the first and second defendant acknowledge that payments in the total amount of R249 million was made into the account of the second respondent. The first and second respondent wants this court to cap the value of the restraint order to 10% of the alleged gross value of the proceeds of the crime. In my view the court which will best be in a position to decide on that issue will be the court seized with the confiscation enquiry upon finalisation of all the evidence.

[31] The evidence before me does not establish what happened to the monies after they were paid to the second respondent. In my view the first and second respondent have failed to make up a case for the counter application. The applicant indicated that it did not seek any costs order. I make the following order:

ORDER

[36] In the circumstances I make the following orders:

a) The first and second defendants are granted condonation for the late filing of their answering affidavit.

b) The counter application is dismissed.

c) The provisional restraint order against the respondent granted on 22 April 2021 is discharged.

d) The provisional restraint orders against the defendants granted on 22 April 2021 is confirmed.

e) No order for costs is made for the condonation application, the counter application and the main application.

P.E.

MOLITSOANE

On Behalf of the Applicant: Adv. B Somaru

Instructed by: State Attorneys

11th Floor Fedsure Building

Charlotte Maxeke Street

Bloemfontein

On Behalf of 1st and 2nd Defendants: Mr J Dennison

Instructed by:

Molefi Thoabala Inc

On behalf of the 3rd Defendant : Adv. Edeling SC

Adv Jacobs

Both instructed by: Bokwa Inc

Bloemfontein.

[1] National Director of Public Prosecutions v Rautenbach 2005[1] AII SA 412(SCA) para 24.

[2] National Director of Public Prosecutions v Mohamed NO 2003(4) SA (CC) at para 16.

[3] NDPP v Rautenbach (supra) at para 27.

[4] Page 52 pf the paginated record at para 8.

[5] Annexure NM1 ,page 116 of the paginated record.

[6] Supra at para 56

[7] Para 25 of the first and second respondent Heads of Argument.