S v African Bank of South Africa Ltd and Others

• Jurisdiction: South Africa
• Judge: Gordon J
• Judgment Date: 16 August 1988
• Counsel: J A Swanepoel SC (with him L T J van Vuuren) for the State C Z Cohen SC (with him M C Goldblatt) for the first accused J N S du Plessis for the third and fourth accused J J A Bornman for the fifth accused
• Citation: 1990 (2) SACR 585 (W)
• Court: Witwatersrand Local Division

Gordon J:

The accused in this case appear on a number of charges of fraud and contravention of the Exchange Control Regulations, arising J from 105

Gordon J

A transactions of dealings in financial rands. The indictment is presented against five accused, who are charged jointly with the offences.

Accused No 1 is The African Bank of South Africa Ltd, hereinafter referred to from time to time as 'the bank'. Accused No 2 is the managing director of the bank, No 3 the general manager of the foreign exchange division of the bank, No 4 the general manager of the money B market division of the bank, No 5 the assistant general manager of the foreign exchange division of the bank.

Accused No 2, Mr Maubane, died prior to the hearing. The four remaining accused now appear as joint accused. The numbering of the accused appearing in the indictment will be retained, and this applies also to No 2, the deceased.

Accused No 1 was represented by its chairman, Dr Motsuenyane, alternating from time to time with other officials, with the consent of C all relevant parties. The representation in each case on behalf of the bank was purely nominal. No liability attached to any of these parties. The indictment is a lengthy document but must be read in full.

The charges are four in number, each involving 105 counts, being the 105 transactions referred to above. They nevertheless are separately D charged. Questions of splitting of charges would arise in certain circumstances, and this will be dealt with later.

The indictment alleges that the accused are guilty of the following crimes, and I read from p 2 of the indictment:

'1.

Fraud (counts 1-105).

2.

Contravention of reg 14A(1) read with regs 1, 14A(2) and 22 of E the Exchange Control Regulations, promulgated by Government Notice R 1111 of 1961, published in Government Gazette Extraordinary 123 of 1 December 1961, and amended from time to time (counts 106-210).

3.

Contravention of reg 2(2)(a) read with regs 1 and 22 of the said Exchange Control Regulations, as amended (counts 211-315).

4.

Contravention of reg 10(1)(c) read with regs 1 and 22 of the said Exchange Control Regulations, as amended (counts 316-420).' F

[The Court read further details of the indictment and proceeded as follows.]

Regulation 14A reads as follows:

'(1) No person shall, without permission granted by the Treasury or a person authorised by the Treasury and in accordance with such conditions as the Treasury or such authorised person may impose, buy, G receive, acquire or sell, deliver, dispose of or otherwise deal with any financial rand.

(2) For the purposes of this regulation "financial rand" means -

(a)

the local sale proceeds of South African assets owned by persons resident outside the Republic;

(b)

funds so designated by the Treasury or a person authorised by the Treasury. . . .' H

[The learned Judge then set out the detailed particulars to each charge and continued as follows.]

It will therefore be noticed that there are, in essence, four separate charges. The one is fraud, counts 1-105, which is subdivided into two portions. Two is a contravention of reg 14A(1), 3 is a contravention of reg 2(2)(a) and 4 is a contravention of reg 10(1)(c). I

As regards the relevant provisions of the Exchange Control Regulations, I have already read out reg 14A(1) and (2) which was referred to in the indictment. These regulations in their terms define the financial rand and the circumstances under which they may be dealt in, and in which they may not be dealt in.

The following further provisions may be referred to under the J 'definition of terms': an authorised dealer is defined as follows:

Gordon J

A '"authorised dealer" means, in respect of any transaction in respect of gold, a person authorised by the Treasury to deal in gold, and in respect of any transaction in respect of foreign exchange a person authorised by the Treasury to deal in foreign exchange. . . .'

I might mention that during the course of this judgment reference will be made to the term 'authorised dealer'.

B '"foreign currency" means any currency which is not legal tender in the Republic, and includes any bill of exchange, letter of credit, money order, postal order, promissory note, traveller's cheque or any other instrument for the payment of currency payable in a currency unit which is not legal tender in the Republic. . . .'

Under the heading 'Restriction on Purchase, Sale and Loan of Foreign C Currency and Gold', I will read out clause 2(2)(a) referred to in the indictment. It is as follows:

'An authorised dealer shall not buy, borrow or receive or sell, lend or deliver any foreign currency or gold except for such purposes or on such conditions as the Treasury may determine.'

It will be observed that s 2(2)(a) refers to an offence committed by an D authorised dealer. In these circumstances I should also refer to s 2(1), which reads as follows:

'Except with permission granted by the Treasury, and in accordance with such conditions as the Treasury may impose no person other than an authorised dealer shall buy or borrow any foreign currency or any gold from, or sell or lend any foreign currency or any gold to any E person not being an authorised dealer.'

So s 2(1) then in its terms would refer to a person other than an authorised dealer. I have read s 2(1), although it does not appear in the charge sheet, but reference will later be made to s 2(1) as well as to s 2(2)(a).

Then there is the further regulation referred to in the indictment. It F is s 10(1)(c). This reads:

'10(1) No person shall, except with permission granted by the Treasury and in accordance with such conditions as the Treasury may impose -

(a)

. . .

(b)

. . .

(c)

enter into any transaction whereby capital or any right to G capital is directly or indirectly, exported from the Republic.'

The accused pleaded not guilty to the charges.

[Statements handed in on behalf of accused Nos 1 and 5 were read. The Court proceeded as follows.]

Many volumes of documents were handed in as exhibits, amongst these H are the documents evidencing the 105 transactions. They were found on the bank's premises and elsewhere. These many documents are assembled in volumes and form an important portion of the exhibits in the case. A great deal of time and trouble went into the preparation of the exhibits; they were expertly assembled and, in the form presented, were of great assistance to the Court in this lengthy trial which lasted, I think, over 60 days. I would express my appreciation to those I responsible and would also like to remark upon the thorough and able presentation of their cases by counsel, and the competent heads of argument which were handed up.

During the course of the trial certain admissions were made by the accused, particularly in relation to the 105 transactions. I shall deal presently with these admissions, but I may say at this early stage that, in fine, there was no real dispute on the fact that the transactions J were carried out, on the methods

Gordon J

A employed in their carrying out, and indeed on the participation of accused 3, 4 and 5 in the carrying out of the transactions or, as I may on occasions refer to the transactions, in the scheme.

The documents for each transaction are assembled to correspond with each count. A covering page for each describes the presence or absence of the relevant document; where they are complete they would number B nineteen for each count. The volumes containing these documents are assembled under the letter (T).

The admissions made during the course of the trial, coupled with the evidence of the accused, would fortunately make it unnecessary to refer in detail to each of these documents. It is common cause, I repeat, that the documents are evidence of the transactions that were executed according to their tenor.

C I may also mention now, and this will be dealt with fully later, that the transactions were devised by accused No 3, and carried into effect by accused Nos 3 and 5, but soon to be joined, on his own evidence, by accused No 4.

In regard to transactions 7-105, the transactions amounted, in simple terms, to a purchase of financial rands from a firm of brokers in London by name Smith New Court, payment to them to be made in US dollars which D was made circuitously as follows; a purchase of US dollars locally from Santambank; payment was made in rands, which is our normal local currency, and conveniently hereafter referred to as commercial rands, to distinguish this from the specially created type of rand, the subject-matter of this trial, namely the financial rand. The US dollars were paid to Smith New Court through the US banks of African Bank and to African Bank and to the US banks of Smith New Court. The financial rands E reached the African Bank through African Bank's account with Trust Bank, and they came from Barclays Bank, Stock Exchange branch, Smith New Court's bankers here, and at the behest of Smith New Court.

Despite their being financial rands, they were deposited into the bank's commercial rand account at Trust Bank. From there they were dealt F with as commercial rands in accordance with the arrangements arrived at between the relevant parties, and this will be fully described later.

Counts 1-6, which is the first part of the first charge of fraud, whilst also involving financial rand transactions, were transacted in a slightly different manner from those in counts 7-105, hence their grouping under a separate subsection.

G As will appear later, the State abandoned the charge of fraud in regard to counts 1-6, but nevertheless seeks a conviction on corresponding counts under charges 2, 3 and 4 in respect of these transactions.

Counsel for the State has handed up a useful...