Who do you trust?
Public confidence in South Africa’s law enforcement agencies has been so thoroughly undermined by the constant political interference and manipulation of the police and prosecuting authorities – even, dare we say, the judiciary – that when a senior member of the governing party is arrested and charged with corruption, we do not celebrate this as a victory of good over evil; our trust has too often been betrayed. Instead, we are immediately suspicious: maybe he is corrupt, but why him? What is the political agenda? Which political faction’s interests are being served? The well-timed arrest of has-been ANC leader S’bu Ndebele for events that took place several years ago is a case in point. (See Will the axe fall? and Gold at end of World Cup rainbow in this issue.)
In parallel – and equally undermining of those institutions – is the cynical greed of major segments of the legal profession, who are now widely perceived as no more than a particularly well-paid branch of organised crime. Barry Sergeant makes the point in his account of recent history of various gold-mining companies that remain listed on the JSE with the protection of some of SA’s largest – and richest – law firms. (See Scamming for gold in this issue.)
You need not take our word for it. Three years ago the East Rand Organised Crime Unit began an investigation not unrelated to various Noseweek reports about frauds involving two related JSE-listed property funds, Resilient and Fortress, and some of their directors. (See noses136&137.)
An East Rand magistrate had issued subpoenas requiring various banks and brokers to make their records available for inspection in order to track the financial dealings of the suspects. But over the past three years the suspects and their bankers have launched several court applications to suspend or set aside the subpoenas, stalling the investigation for all that time. They wanted the subpoenas set aside because the police officer who applied for the subpoenas is known to use such warrants for corrupt purposes. They knew this because their own attorneys, Werksmans, had previously used him for such corrupt purposes, they brazenly stated.
Taking all this into account, Acting Judge Cassim felt called upon to preface his ruling with an assessment of the current state of law enforcement in South Africa. Some extracts: “The judicial system and in particular the administration of criminal law, is in tatters… The leadership within the current NDPP is in turmoil… It is no secret that the government of the day considers it necessary to staff public positions with its supporters under the guise of transformation…”
Recently, the Supreme Court of Appeal observed that there may be merit in the perception that wealthy people, armed with the arsenal of lawyers and other forms of assistance that only money can buy, are better placed in dealing with criminal charges and avoiding conviction and… incarceration.
The judge refused to set aside the subpoenas but there is still no sign that the police investigation has resumed.
The late Eric Liefeldt, for many years senior partner at one of Cape Town’s more eminent law firms and a former chairman of the Law Society of the Cape of Good Hope and of the Association of Law Societies, was an avid reader of Noseweek. He declared to all and sundry, without shame, that he didn’t bother reading De Rebus (the Law Society’s magazine) as he found out all he needed to know about the legal profession in these pages. It is in that spirit that we offer all the lawyers, both professional and amateur among our readers, the following case for consideration and debate:
Two years ago Noseweek reported that the Western Cape High Court was to be called upon to establish the constitutionality of a collaboration between South African and US prosecutors in asset forfeiture proceedings that followed criminal cases launched in both South Africa and the United States in 2001 (nose174).
Defendants in the cases were Arnold Bengis and his company, Hout Bay Fishing Industries (Pty) Ltd, which subsequently went into liquidation. The cases related to over-fishing and sanctions-busting and made world headlines when Bengis entered into a plea and sentence agreement with the South African government.
In 2004 Bengis launched two separate high court applications seeking compensation from the South African government, the ministers of Justice and Fisheries, as well as various officials, for damages that he says he suffered as a result of the South Africans not sticking to their side of the plea bargain.
He wants his legal costs in the US case reimbursed – US$11.35 million (about R189m) – as well as the $22.5m (about R375m) he was ordered by the US court to pay in restitution, based on evidence by South African officials.
He also wants an order declaring that the respondents acted unlawfully, unconstitutionally and in bad faith in their dealings with the US government. In South Africa, in terms of a plea bargain concluded in 2001, Bengis paid fines of R40m and certain of the company’s assets were forfeited to the state.
Bengis says a letter from the National Director of Public Prosecutions at the time, Bulelani Ngcuka, led him to believe the agreement would bring finality to all criminal and related proceedings. However, the South Africans did not keep their side of the bargain and proceeded to participate actively in his prosecution in the US.
In 2006, while imprisoned in the US (he served three-and-a-half years of a four-year term), the South African government asked Bengis to give evidence against other fishing companies in South Africa. When he refused, they upped their efforts in the USA to secure a R260m restitution order, which they got in June 2013, contrary, he argues, to the terms of the settlement reached in South Africa in 2001.
The two applications are finally to be heard in the Western Cape High Court on 2-4 February.
The legal issues are complicated but, in a nutshell, in order to qualify for restitution under US law, South Africa had to show that it had a property right in the over-caught fish. When the South African government’s argument that it owned the fishing resources in our stretch of ocean failed (after Bengis’s advocate, Gilbert Marcus pointed out that, like all wildlife, fish is res nullius (belongs to no-one), South Africa presented an alternative argument, namely, that because HBFI had conducted their fishing operations secretively, the South African government was unaware of the over-fishing and therefore lost the right to “declare forfeited” to the state the over-caught fish. The right to forfeiture is a property right that entitles the state to restitution.
Bengis’s legal team’s counter-arguments include:
1. The right to “declare forfeited” has to follow a conviction in a South African court and there had not been – nor could there be – any such conviction;
2. Forfeiture had already been dealt with in terms of the plea bargain agreement; and, more importantly,
3. In terms of the Ngcuka letter, the various parties could not be prosecuted for any further offences related to the 2001 Scorpions’ investigation codenamed “Titanic”.
Strangely, Advocate T Prins SC, who was head of the Scorpions in the Western Cape at the time and is now the head of investigations at Deloitte Forensics in Gauteng, denied in the strongest terms in an affidavit filed in November last year that he had any knowledge of the existence of a Ngcuka letter and that there was nothing prohibiting the further prosecution of Bengis.
It was only once evidence was presented in the form of a covering telefax from Advocate Prins himself to Bengis’s attorneys, dated 30 April 2002, to which the Ngcuka letter was attached along with the inscription “Attached please find letter as discussed”, that he explained in a subsequent affidavit that he had suffered a cerebral-vascular accident in June 2003 which impaired certain aspects of his memory.
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