National Director of Public Prosecutions v Mokhesi and Others (3679/2020) [2021] ZAFSHC 247; 2022 (1) SACR 383 (FB) (21 September 2021)

IN THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Case Number: 3679/2020

In the matter between:

THE NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS Applicant

and

NTHIMUTSI MOKHESI 1st Defendant

MAHLOMOLA JOHN MATLAKALA 2nd Defendant

PHEAGANE EDWIN SODI 3rd Defendant

BLACK HEAD CONSULTING(Pty) Ltd 4th Defendant

DIAMOND HILL TRADING 71(Pty) Ltd 5th Defendant

605 CONSULTING SOLUTIONS (Pty) Ltd 6th Defendant

SELLO JOSEPH SYDNEY RADEBE 7th Defendant

MASTERTRADE 232 (Pty) Ltd 8th Defendant

ABEL KGOTSO MANYEKI 9th Defendant

ORI GROUP (Pty) Ltd 10th Defendant

THABANE WISEMAN ZULU 11st Defendant

SARAH MATAWANA MLAMLELI 12th Defendant

MAREDI BERNARDINE SUSAN MOKHESI 1st Respondent

KHOMBISILE ZULU 2nd Respondent

BASE PROPERTY HOLDINGS (Pty) Ltd 3rd Respondent

MASEKO DOROTHY MOBU 4th Respondent

LIKEMO FAMILY TRUST 5th Respondent

LIATILE MACHOANE MOKHESI 6th Respondent

MONAMELA KATLEHO MOKHESI 7st Respondent

KEKELETSO REABETSOE MOKHESI 8th Respondent

TLAKS FAMILY TRUST 9th Respondent

DINEO KELEBOGILE MATLAKALA 10th Respondent

KHAUTA AARON MALOKA 11th Respondent

JUDGMENT BY: MOLITSOANE, J

HEARD ON: 05 AUGUST 2021

DELIVERED ON: 21 SEPTEMBER 2021

[1] On 30 September 2020 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 second defendant (hereinafter referred to as (‘Matlakala’) as well as the 9th, 10th and 11th respondents (the respondents’). The 9th respondent is a trust in which the 10th and 11th respondents are trustees thereof.

[2] Matlakala and the respondents oppose the confirmation of the provisional restraint order. The rule nisi granted with the provisional orders has been extended on numerous occasions to the date of this judgment.

[3] It is common cause that Matlakala and the respondents filed their answering affidavit out of time. As a preliminary issue, they seek condonation for the late filing of their answering affidavit. This condonation application is opposed by the applicant.

[4] Before dealing with the condonation application it is necessary to make reference to this procedural aspect. It appears that the applicant had without leave of this court filed a fourth set of an affidavit styled ‘Explanatory Affidavit’. At the beginning of these proceedings, Matlakala and the respondents objected to the admission of that document. The applicant has since abandoned the admission of the document in evidence. Nothing more need thus be said about it.

[5] Reverting to the condonation application. It is settled law that the applicant seeking condonation is required to give a full and candid explanation for the delay. In Melane v Santam Insurance Co Ltd[1] the court dealing with the test for condonation said:

“In deciding whether sufficient cause has been shown, the basic principle is that the Court has a discretion, to be exercised judicially upon a consideration of all the facts, and in essence it is a matter of fairness to both sides. Among the facts usually relevant are the degree of lateness, the explanation therefor, the prospects of success and the importance of the case. Ordinarily these facts are interrelated, they are not individually decisive, save of course that if there are no prospects of success there would be no point in granting condonation. Any attempt to formulate a rule of thumb would only serve to harden the arteries of what should be a flexible discretion. What is needed is an objective conspectus of all the facts. Thus a slight delay and a good explanation may help to compensate prospects which are not strong. Or the importance of the issue and strong prospects of success may tend to compensate for a long delay. And the respondent’s interests in finality must not be overlooked.”

[6] It is settled law that condonation is not a mere formality and is not to be had ‘merely for the asking.’[2] The provisional restraint order together with the main application was served on Matlakala and the respondents on 2 October 2021. The answering affidavit was thus due on 3 November 2020. The explanation for the late filing of the answering affidavit is attributed to lack of funds on the part of Matlakala.

[7] On 3 October 2020 Matlakala also representing the remaining respondents consulted with his legal representatives about this application. According to him the issue of costs was discussed and he further had to collate information in order to respond to the application. Prior to consulting with his legal representatives about this matter, on 2 October 2020 he had appeared in the lower court where he was released on bail of R50 000. He asserts that upon his release on bail, most of his asserts were restraint in terms of this order. On 11 November 2020 he managed to pay a deposit in order to oppose this application. Counsel was briefed, which brief culminated in the answering affidavit being filed on 25 November 2020.

[8] The condonation application is opposed on the basis that Matlakala and his wife were gainfully employed at the time of the service of the provisional restraint order. In my view, that Matlakala and his wife were gainfully employed does not detract from the fact that both were arrested and appeared in the lower court for bail application. Matlakala was legally represented and according to him he had to pay his legal representatives for the service. He had further to pay R50 000 to be released on bail. It is undisputed that at the time of his release most of his asserts had been attached as a result of this provisional restraint order. These events clearly set him back a few steps financially.

[9] The condonation application is further opposed on the basis that Matlakala could have approached the curator bonis or this court for payment of reasonable legal expenses. This assertion does not take into account that at this time Matlakala had already approached legal representatives for assistance. To approach the curator bonis or this court would also invariably require money which he already had indicated that he did not have when he approached his legal representatives to oppose this application.

[10] It thus cannot be gainsaid that following service of the provisional restraint order Matlakala lacked the necessary finances to instruct legal representatives to consult and draw opposing affidavit within the time set out in the rules. I am satisfied that he has explained the reason for the delay over the entire period sufficiently and how it came about to purge his default. Failure to file the answering affidavit within the prescribed period was not due to any negligence on his part. Over and above what I discuss below the respondents also have prospects of success on the merits and condonation is hereby granted.

[11] The 10th and 11th respondents take issue with their citation as a preliminary point. They are cited as beneficiaries of the 9th respondent (the Trust) and thus in their personal capacities. This issue in my view ought to be dismissed. The parties though wrongly cited in their personal capacities are before court as they have substantial interest in the outcome of these proceedings. That they were wrongly cited as beneficiaries and not as trustees would only become relevant should this court order costs against them.

[12] The following are background facts. The Free State Department of Human Settlement (FDHS) approached its counterpart Gauteng Department of Human Settlement (GDHS) with a request to participate in its existing contract concerning the audit, assessment, handling, removal and disposal of hazardous asbestos contaminated rubble. This participation was sought apparently in terms of Treasury Regulation 16A.6.6(the regulation) which allows one organ of state to participate in the contract of another organ of state without following an open, transparent and competitive bidding process.

[13] On 4 August 2014 GDHS informed FDHS that its contract was coming to an end on 31 August 2014. GDHS further suggested to the latter to follow a competitive procurement process. FDHS did not participate in the contract of GDHS by the time it ran its course on 31 August 2014.

[14] On 1 October 2014, FDHS appointed Blackhead Consulting JV, an entity comprised of Black Head Consulting(Pty) Ltd and Diamond Hill trading 71(Pty) Ltd (Black Head JV), to carry out the project as requested in the participation of the GDHS contract. This project became colloquially known as the Asbestos project. This appointment paved the way to the conclusion of a contract between the FDHS and Black Head Consulting JV valued at R255 million. The amount of R230 million was paid to Black Head Consulting JV pursuant to this agreement and the balance is the subject of pending litigation between FDHS- and Black Head Consulting JV in this court.

[15] It is contended on behalf of the applicant that Blackhead Consulting JV never intended to perform in terms of the contract and subcontracted the performance of the work for a contract price of R44 208 856.79 to an entity known as Master Trade 232 (Pty) Ltd which in turn also subcontracted the performance of the work to ORI GROUP (Pty)Ltd for R21 391 489.30. The work was never completed and as a result it is contended by the applicant that the expenditure incurred by the FDHS was irregular for the purposes of the Public Finance Management Act,1 of 1999 (the PFMA).

[16] It is the case for the applicant that the employees of the State including Matlakala failed to act to end the contract of Black Head JV pursuant to the finding of the Auditor General to the effect that the expenditure was irregular. The applicant contends that Matlakala colluded with the first and eleventh defendants to unlawfully award the Asbestos project to Black Head Consulting JV. But for the collusion, so it is contented, R230 million would never have been paid from the coffers of the FDSH. The applicant contends that Matlakala aligned himself with the unlawful activities of Black Head Consulting JV and he and other employees of the State assisted to perpetrate the unlawful and fraudulent scheme and enabled the commission of fraud, corruption and money laundering in the Asbestos project.

[17] Matlakala opposes the confirmation of the provisional restraint order on the basis that the jurisdictional requirements for the granting of the final restraint order have not been met. He contends, firstly, that there exist no reasonable grounds to believe that a confiscation order may be granted against him. Secondly, he contends that the applicant has failed to set out facts indicating that he benefited from the alleged unlawful activities forming the subject of this matter. Thirdly, he contends that the property under provisional restraint order is not a benefit as envisaged in POCA.

[18] 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;”

[19] Matlakala and the respondents have since been charged with various offences including fraud and money laundering. The applicant has set out in detail the alleged involvement of Matlakala in the commission of these offences. At the time of the alleged commission of these offences, Matlakala held the position of Director: Supply Chain Management in the FDHS. The applicant need only satisfy the court that a prosecution had been instituted against the defendant concerned.[3] That a prosecution has been instituted against Matlakala and the respondents is not in dispute and thus this first jurisdictional requirement has been met.

[20] Matlakala is of the view that the applicant relies on allegations of fraud and money laundering that cannot be sustained. In this regard he is of the view that there are no reasonable prospects that he will be convicted of any offence with which he has been charged. He thus contends that there are no reasonable grounds to believe that a confiscation order may be made against him.

[21] In order to satisfy the court that there are reasonable grounds for believing that a confiscation order may be made against a defendant concerned in terms of section 18(1) of POCA, the applicant needs to show that the defendant may be convicted; that the court may find that the defendant benefited from the unlawful activities as specified in this section; and that the court may make a confiscation order in the exercise of its discretion in terms of the said section.

[22] It cannot, in my view be contentious that no open and transparent process was undertaken in the appointment of Blackhead Consulting JV and its appointment was by way of an unsolicited bid. It cannot, further, in my view be further contentious that no deviation from the regulation was sought by the FDHS when Blackhead Consulting JV was appointed to proceed with the Asbestos Project. First, at the time of the appointment of Blackhead, the contract of GDHS had ran its course and was no longer in existence. FDHS could therefore not ‘participate’ in a contract which no longer existed. Second, the regulation provides that:

“The accounting officer or accounting authority may, on behalf of the Department, constitutional institution or public entity, participate in any contract arranged by means of a competitive bidding process by any other organ of state, subject to the written approval of such organ of state and the relevant contractors.”

[23] Black Head Consulting (Pty) Ltd was a party to the contract in Gauteng. The Black Head Consulting JV was not a party to such contract. Even if the contract still existed, it is my considered view that the joint venture, not being a party to the Gauteng contract could not give a written approval as required by the regulation for the FDHS to participate in the Gauteng contract. Participation in the Gauteng contract, if it is relied upon, lends credence to the suspicion that it was done against the spirit of the PFMA and was in all likelihood, unlawful.

[24] Although I do not have the benefit of the evidence in a trial at this stage, I would find it difficult to accept that Matlakala, having allegedly played a pivotal role in the awarding of the contract to Black Head Consulting JV and holding such a senior position, could not have been aware of the adverse findings of the Auditor General. It is for this reason that he also stands accused of contravening the provisions of s34(2) of POCA. In my view this court, in the adjudication of whether to confirm the provisional order or not, is not required to satisfy itself whether a defendant is probably guilty of the offences preferred against him. What is required is that the court must be satisfied on reasonable grounds that later there might be a conviction and a confiscation order made against the defendant concerned. A conviction is thus a sine qua non for a confiscation order.[4]

[25] In NDPP v Rautenbach [5] 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.”

[26] Section 12(3) of POCA, provides that a person has benefited from unlawful activities “if he or she has at any time, whether before or after the commencement of this Act, received or retained any proceeds of unlawful activities.” ‘Proceeds of unlawful activities” in turn are defined broadly in s1 of POCA as:

“Any property or any service, advantage, benefit or reward which was derived, received or retained, directly or indirectly, in the republic or elsewhere, at any time before or after the commencement of the act, in connection with or as a result of any unlawful activity carried on by any person, and includes any property representing property so derived.”

[27] The confiscation order is aimed at the benefits which accrued to the defendant. It has been held that the primary object of a confiscation order is not to enrich the State, but instead to deprive the convicted person of ill-gotten gains.[6]

[28] Matlakala denies that he benefited for the purposes of POCA, either directly or indirectly from the offences alleged against him. It is contended by the applicant he ([Matlakala]) benefited from the proceeds of unlawful activities for the purposes of POCA in the following way:

a) “That he obtained advantages, benefits or rewards as a result of his unlawful actions in awarding the Asbestos Project to the Black Head Consulting JV in the form of retaining his employment within government and not facing disciplinary proceedings at the instance of the first defendant, being Head of Department; and

b) By way of associating himself with, and enabling, the other defendants, in particular the first and eleventh defendants, he acted in accordance with the doctrine of common purpose and benefitted jointly and severally with them, and ultimately the Black Head Consulting JV, from the benefits they received. In acting with common purpose, he jointly benefitted with his co accused from his crimes.”[7]

[29] The applicant bears the onus to prove that Matlakala received or retained a benefit from the alleged unlawful activities which form the subject matter of this case. Counsel for the applicant urged me to embrace the broader definition adopted by the court in S v Shaik & Others[8] where the court dealing with the interpretation of the word ‘benefit’ held that a person will have benefited from the unlawful activities if he or she has received or retained any proceeds of unlawful activities. I have no qualms in adopting the said broader definition but not to the extent that the applicant seeks.

[30] In my view the applicant has failed to establish that the Matlakala benefitted from the unlawful activities alleged. The applicant adduces no evidence at all of the benefit Matlakala is alleged to have received or retained. The applicant only makes the following allegation in establishing the alleged accrual of benefit:

“I respectively submit that on the strength of the evidence in the Affidavit by Mradla a summary of which is set out above, the Defendants benefitted from unlawful activities, inter alia the crime of fraud, corruption, and money laundering joint and severally, because they acted in common purpose and with the ultimate aim of swindling the DHS.” [9]

[31] It has to be borne in mind that the deponent to the founding affidavit relies wholly on the affidavit of Mradla for the allegations he makes. Mradla does not deal with the issue of the benefit Matlakala might have derived from the Asbestos project. Only in reply[10] does the applicant make any reference to the benefit by saying ‘the fact that an accused person may not have personally received all or some of the money is immaterial when determining benefit….”

The difficulty with this statement is that it is not the applicant’s case that Matlakala or any third party on his behalf received any monies at all. The evidence as adduced in the applicant’s case does not establish by any inkling that any direct or indirect financial benefit for that matter accrued to Matlakala. There is no flow of any monies from anyone associated with the Asbestos project to Matlakala or any third party alleged to be holding same for him. This much is also conceded by the applicant.

[32] To say that Matlakala received a benefit as there were no professional consequences against him and that he kept his Senior position as a Director of the Department is in my view expanding the definition far beyond what Shaik above envisaged. In my view ‘benefit’ envisages a quid pro quo type of a situation. The give and take type of a situation. One does something in return of getting something that benefits him/her.

[33] Matlakala is an employee. The issue of disciplinary measures against him are and remain the prerogative of the employer. He has no control over them. If the employer does not take any disciplinary steps against an employee, such inaction cannot be placed at the door step of the employee as a benefit unless there is proof that the employee was complicit and influenced that no action should be taken against him. The evidence in this case does not establish that. There is no evidence to prove that Matlakala received any benefit from the unlawful activities alleged in this case.

[34] The second submission is that Matlakala benefitted jointly with the other defendants from the unlawful activities committed with common purpose. In my view the fact that I made a finding that the applicant failed to establish that Matlakala derived any benefit merits no further attention to the issue of common purpose. There is no such evidence in the affidavits filed on behalf of the applicant. In any case, as pointed out by the applicant, plain reading of the singular wording in s18(1) seems to prohibit a defendant to be found guilty of a crime by application of the doctrine of common purpose. It is my considered view that there exists a reasonable possibility that a confiscation order will not be made against Matlakala and the respondents.

[35] Lastly Matlakala contends that the assets attached in terms of the provisional restraint order are not ‘benefits’ for the purposes of POCA. In this regard he discusses the origin of their procurement, like pensions. The submissions of Matlakala are not correct. There is ample authority to show that assets which are subject to a restraint order need not come from illegitimate sources in order to obtain a confiscation order.[11] The origin or source of the assets for the purposes of a restraint order is irrelevant. I can find no reason not to find that costs should follow the course.

ORDER

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

a) The 2nd defendant, the 9th, 10th and 11th respondents are granted condonation for the late filing of their answering affidavit.

b) There is no order as to costs in respect of the condonation application.

c) The provisional restraint order against the 2nd defendant, the 9th, 10th and 11th respondents granted on 30 September 2020 is discharged with costs.

P.E. MOLITSOANE

On Behalf of the Applicant: Adv Cassim, SC

Instructed by: State Attorneys

11th Floor Fedsure Building

Charlotte Maxeke Street

Bloemfontein

On Behalf of Defendants

and Respondents: Adv Mazibuko

Instructed by:

Matlho Attorneys

02nd Floor,Metropolitan Building

96 Henry Street, Bloemfontein

[1] 1962(4) SA 531 (A) at C-E page 532.

[2] Uitenhage Transitional Local Council v South African Revenue Service 2004(1) SA 292 (SCA) at para 6.

[3]Section 25(a)(i) pf POCA.

[4] NDPP v Alexandre and Others 2001(2) SACR 1(T) at page 7-H.

[5] NDPP v Rautenbach 2005(4) SA 603(SCA) at par 27.

[6] National Director of Public Prosecutions v Rebuzzi (94/2000) [2001] ZASCA 127(23 November 2001) at par 19.

[7] Page 37 of the Applicant’s Heads of Argument.

[8] 2008(2) SACR 165 (CC).

[9]Page 71 of the Founding Affidavit para 47.

[10] Page 1422 of the Replying Affidavit of the Applicant para 93.

[11] National Director of Public Prosecutions v Mcasa and Another 2000(1) SACR 253(Tk) at 268 and National Director of Public Prosecutions v Rautenbach(supra) .