Klein v Attorney-General, Witwatersrand Local Division, and Another

• Jurisdiction: South Africa
• Judge: van Schalkwyk J
• Judgment Date: 31 March 1995
• Citation: 1995 (3) SA 848 (W)
• Docket Number: 94/17496
• Court: Witwatersrand Local Division

Van Schalkwyk J:

The applicant has been indicted on several charges before the regional court in Johannesburg. The charges of fraud, theft, forgery and contravention of the Exchange Control Regulations arise out of two G separate transactions which are alleged to have occurred during April to June of 1993 and December 1992 to February 1993, while the applicant was the chief executive officer of Boumat Ltd and a director of Saficon Ltd. This application is brought for an order to have the proceedings in the regional court permanently stayed as well as for certain alternative and ancillary relief, including an order that the police docket in the H criminal prosecution be made available to the applicant.

The applicant, a South African by birth, had lived for some 16 years in the United States of America where he had conducted business as a management consultant. During 1992 he decided to return to South Africa and he then sought suitable employment. In due course he made contact I with Mr Sydney Borsook who was then the deputy chairman (on the point of taking over as chairman) of Boumat. The principal shareholding in Boumat is held by Saficon Investments Ltd and both companies are listed on the Johannesburg Stock Exchange. The majority shareholding in Saficon is held by Sakers Finance & Investment Corporation Ltd, which is also a listed public company. Sakers, in turn, is controlled directly or indirectly by J the Borsook and Mintzer families or

Van Schalkwyk J

A trusts. Borsook is described in applicant's founding affidavit as the driving force of Sakers, Saficon and Boumat.

David Gevisser, who was about to retire as chief executive officer of Boumat, was well known to the applicant. The appointment of a chief executive officer of Boumat was a matter of concern to Borsook because B Boumat had performed poorly and the share price had fallen. According to the applicant, Borsook informed him that he had the ultimate authority to decide on the successor to Gevisser. Applicant and Borsook discussed the remuneration package which, as Gevisser's successor, he was to receive. Borsook informed the applicant that it was his policy that the various chief executive officers of the companies within the Saficon group should C receive similar remuneration packages. It was agreed that the applicant would be employed at an annual salary of R480 000 and a written contract of employment was concluded between the applicant and Borsook, acting on behalf of Boumat.

The applicant says, however, that he had informed Borsook that the D proposed salary was insufficient to enable him to meet his financial obligations. These, he said, included alimony payments which he had incurred and which he was obliged to pay in the United States. He therefore informed Borsook that he would, in addition, have to receive what he described as 'a cash payment in the United States'. He says that Borsook had no objection to this arrangement and it was agreed between E them that such payment was to be made. Borsook has strenuously denied that any such underhand agreement was ever concluded between himself and the applicant.

There are, essentially, two transactions which are relevant to the charges against the applicant. The first (in the charge sheet though not in order F of time) relates to a consultancy agreement which was concluded between applicant, on behalf of Boumat, and Quantum Associates of the United States, represented by its president, Mr Frank Kinzie. It is alleged that the applicant instructed Kinzie to increase his budget proposals by $180 000 as the applicant was to receive personal compensation of that amount. Pursuant to this instruction Kinzie sent a final proposal to Boumat for G which he required payment of $540 000 instead of $360 000. The applicant applied for foreign currency to pay for the services of Quantum Associates in an amount of $540 000. During May to June 1993 the applicant instructed Kinzie to pay $90 000 of the first amount of $180 000 that Quantum Associates was to receive from Boumat, into the account of Klein H and Company Inc in the United States. On 8 June 1993 Boumat paid Quantum Associates the amount of $180 000. On 10 June 1993 the applicant repeated his request to Kinzie to pay an amount of $90 000 into the account of Klein and Company Inc. Kinzie, however, refused to comply with the request before receiving a written statement from someone other than the applicant, directing him to make the payment into the account of Klein and I Company Inc. On 11 June 1993 the applicant sent a letter purporting to be signed by Mr Peter Glendining, the chief financial officer of Boumat, confirming that payment of the amount of $180 000 was to be made as arranged with the applicant. It is common cause between the parties that the signature of Glendining on this document is a forgery which was J effected

Van Schalkwyk J

A by the applicant because, he explained, it was necessary to keep the confidence of the arrangement concluded between himself and Borsook. At the time he forged the signature of Glendining, Borsook was out of the country. As a result the amount of $90 000 was transferred into the account of Klein and Company Inc on 14 June 1993.

B The events described gave rise to the charges of fraud, the alternative charge of a contravention of the Exchange Control Regulations, the charge of theft and the charge of forgery.

On 6 July 1993 the applicant returned to South Africa from a visit to the United States. On his arrival at Jan Smuts Airport he was arrested by C members of the South African Police and presented with a charge sheet which related to the charges described above. At the time of his arrest his baggage was subjected to a search by Captain Welgemoed of the South African Police. No search warrant was presented to him and he states that the search occurred without his consent and against his express wishes.

D According to the first respondent he was informed on 28 June 1993 by Werksmans, the attorneys acting on behalf of Boumat, that they wished to lay a charge against the applicant and that they would assist in the investigations. On 30 June 1993 the matter was referred to the commercial branch of the South African Police and by 5 June 1993 the investigation E had progressed to such an extent that the first respondent was able to apply for a warrant for the arrest of the applicant. A warrant was issued by a magistrate and a provisional charge sheet was annexed to the warrant at the time when the applicant was arrested.

According to the first respondent, Welgemoed asked the applicant for F permission to search his baggage at the time of his arrest. Such permission was granted but Welgemoed could find nothing relevant to the investigation of the case. The applicant was then taken from Jan Smuts Airport to Welgemoed's office at John Vorster Square. In his office he informed the applicant that he wished to search his briefcase. He also told him that he had the right to do so. The applicant communicated with G his attorney who gave Welgemoed permission to search the briefcase and requested that Welgemoed should make copies of the documents which he intended to seize. The second respondent contends that the search of the briefcase occurred in the presence of the applicant and with his consent. Fifteen documents were seized and copies thereof were made available to H the applicant's attorney.

On the evening of 6 July 1993 an urgent bail application was made on behalf of the applicant, during which he gave evidence and was subjected to cross-examination. At that stage the applicant disclosed the nature of his defence to the averments contained in the provisional charge sheet. I The defences are those set out in the narrative of the applicant's case of which the essential details have been described. During the course of the bail application documents relevant to this application, which had been seized from the applicant's briefcase by Welgemoed, were put to the applicant under cross-examination. No objection was made by the applicant's legal representative to the production of the documents at J those proceedings.

Van Schalkwyk J

A The applicant appeared in court on 7 July 1993 and the case was transferred to the regional court. By 4 August 1993 the first respondent was in possession of all witness statements relevant to the charges contained in the indictment at that stage. There was only one statement of a formal nature which was still required.

After the applicant had been released on bail he received a letter, signed B by Borsook, on behalf of Boumat informing him that he had been suspended from his position as chief executive officer and as a director of the company and its subsidiaries. The applicant was also informed that a disciplinary hearing was to be convened. In response, the attorney then acting on behalf of the applicant addressed a letter, dated 8 July 1993, C to Boumat requesting that the hearing be postponed until the conclusion of the criminal trial. The applicant was however notified that the disciplinary enquiry was to proceed on 28 July 1993 under the chairmanship of Mr Kurt Hipper, who was the deputy chairman of Boumat. The applicant attended the hearing but raised certain preliminary objections, all of D which were overruled. The applicant then withdrew from the disciplinary hearing, which was conducted in his absence. On 4 August 1993 the applicant received a written notification of the outcome of the enquiry, which concluded that he was guilty on all the counts which had been preferred against him and that he was summarily dismissed from his employment with Boumat.

E The applicant was in possession of a computer which belonged to Boumat. He had exclusive use of the computer which he used for business as well as personal purposes. In his founding affidavit he describes the...