National Director of Public Prosecutions v Ramlutchman

• Jurisdiction: South Africa
• Judge: Bosielo JA, Mathopo JA and Van der Merwe JA
• Judgment Date: 09 December 2016
• Citation: 2017 (1) SACR 343 (SCA)
• Docket Number: 677/15 [2016] ZASCA 202
• Hearing Date: 22 November 2016
• Counsel: M Govandasamy SC (with R Naidoo) for the appellant. V Gajoo SC (with J Howse) for the respondent.
• Court: Supreme Court of Appeal

Mathopo JA (Bosielo JA and Van der Merwe JA concurring):

[1] The respondent, Ishwarlall Ramlutchman, was convicted in the Durban Regional Court sitting as the Special Commercial Crimes Court (the regional court) of 21 counts of fraud and one count of corruption. The fraud charges were taken together for the purposes of sentence and he was fined R500 000 or 10 years' imprisonment. A B further five years' imprisonment was imposed and suspended for five years. In respect of the corruption charge, the respondent was sentenced to five years' imprisonment which was suspended for five years.

[2] The common-cause facts giving rise to the convictions and sentences, as C gleaned from the statement in terms of s 112(1) of the Criminal Procedure Act 51 of 1977 (the CPA) handed in by the respondent at the regional court, can be summarised as follows: In 2006 the respondent became aware of opportunities available through registration with the Construction Industry Development Board (CIDB) and decided to apply for a CIDB grading in order D to tender for projects advertised by the Department of Public Works KwaZulu-Natal (DPW KZN). By operation of law, it was necessary for contractors tendering for DPW KZN contracts to register with the CIDB and obtain a grading. The CIDB grading awarded to a contractor determines the size and value of the DPW KZN contracts for which he could qualify. As the E respondent sought the assistance of a person who had previously obtained a CIDB grading or who had assisted contractors in obtaining a CIDB grading in this regard, he approached Pat Singh, an accountant, and Sandile Ntuli of Sinamandia, a construction company. The respondent then requested the above persons to make the necessary arrangements to obtain a grading F of 7GB or 7CE for him, which would entitle him to tender for large projects. When the respondent made this request he knew that neither he nor his alter ego, AC Industrials Sales & Service (AC), met the requirements for a 7GB or 7CE grading, in that he did not have the required track record, nor did he have any qualified professionals in his employ. It is undisputed that the G respondent knew that his conduct was unlawful, and that, but for the higher grading, he would not have qualified for large tender contracts. As a result of this fraudulent grading, the respondent succeeded in securing 16 construction contracts in respect of which the total amount of R52 190 224,88 was paid to the respondent.

[3] As a result of the respondent's convictions and sentences the H National Director of Public Prosecutions (NDPP) applied to the regional court to confiscate the amount of R52 million in terms of s 18 of the Prevention of Organised Crime Act 121 of 1998 (POCA). Section 18(1)(a) deals with circumstances under which a court may I grant the confiscation order. It 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 — J

Mathopo JA

(a)

A that offence;

. . .

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 B fairness of that order.'

[4] In brief, the section provides that, after convicting a person of an offence, a court may on application by a public prosecutor enquire into whether a benefit has been derived from that offence or from related C criminal activity, and if the court finds that a benefit has arisen it may make an order for the payment to the state of any amount it considers appropriate.

[5] Acting in terms of s 18(3) of POCA the regional magistrate initiated an enquiry into the question whether the respondent has received a benefit D from the offences of which he had been convicted. The purpose of the enquiry, which is twofold, is that the court first has to determine whether to make an order against the defendant for the payment to the state of an amount of money it considers appropriate. And secondly, it must determine the appropriate amount to be paid. A confiscation order is a civil judgment for payment to the state of an amount of money E determined by the court, and is made by the court in addition to a criminal sentence. The order that a court may make in terms of ch 5 is not for the confiscation of a specific object, but an order for the payment of an amount of money to the state.

[6] Section 12(3) of POCA provides that for the purposes of ch 5 —

F 'a person has benefited 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'.

'Proceeds of unlawful activities' are in turn broadly defined in s 1 of POCA G 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 this Act, in connection with or as a result of any unlawful activity carried on by any H person, and includes any property representing property so derived'.

[7] In the exercise of its discretion to make a confiscation order a court must have regard to the main objects of the legislation, which is to strip criminals of the proceeds of their criminal conduct. To this end the legislature has, in ch 5 of POCA, provided an elaborate scheme to facilitate such stripping. This chapter deals with the making of confiscation orders I by a criminal court at the end of a criminal trial. The purpose of ch 5 is to ensure that no person can benefit from his or her wrongdoing. This court in National Director of Public Prosecutions v Rebuzzi 2002 (1) SACR 128 (SCA) (2002 (2) SA 1) held that the primary object of a confiscation order is not to enrich the state, but rather to deprive the J convicted person of ill-gotten gains. The function of the court in this

Mathopo JA

scheme is to determine the benefit from the scheme, its value in A monetary terms and the amount to be confiscated.

[8] As a result of the application for the confiscation order the NDPP and the respondent agreed to a draft order before the regional magistrate, regulating further conduct of the application for the confiscation order. The...