S v Van der Linde

• Jurisdiction: South Africa
• Court: Gauteng Local Division, Johannesburg
• Judge: Nicholls J
• Judgment Date: 27 May 2016
• Citation: 2016 (2) SACR 377 (GJ)
• Hearing Date: 18 April 2016
• Docket Number: 12331/12
• Counsel: F Roets for the accused. M Oosthuizen for the state.

Nicholls J:

[1] The accused, Mr Ivan Don van der Linde, was arrested on F 30 August 2005 and tried in the regional court, Germiston, on 255 charges of fraud. After a protracted trial characterised by inordinate delays, the accused was discharged and acquitted at the end of the state's case in terms of s 174 of the Criminal Procedure Act 51of 1977 (the CPA).

[2] The state appealed this matter to the High Court in terms of s 310 G of the CPA and on 12 December 2013 the appeal was upheld. It was ordered that the trial start de novo before a different magistrate. On 12 December 2014 the matter was transferred to the High Court for trial. On 18 April 2016, the first day of this trial, the defence raised a point in limine. Essentially three points were argued: firstly that the order H of the appeal court was not competent; secondly, that the undue delays rendered the trial unfair; and, thirdly that the state was not entitled to charge the accused with additional charges of money-laundering.

[3] The point in limine was dismissed on 18 April 2016 and the trial proceeded forthwith.

I [4] The accused is charged now with the following counts:

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Counts 1 – 255, fraud, read with the provisions of s 51(2)(a) of the Criminal Law Amendment Act 105 of 1997 (the CLAA);

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count 256, forgery, read with the provisions of s 51(2)(a) of the CLAA;

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count 257, uttering, read with the provisions of s 51(2)(a) of the J CLAA;

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counts 258 – 262 and count 273 were withdrawn; A

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counts 263 – 326 (with the exception of count 273), money-laundering, in terms of s 4(b)(i) read with the provisions of ss 1 and 8 of the Prevention of Organised Crime Act 121 of 1998 (POCA); and

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counts 327 – 381, acquisition of the proceeds of unlawful activities, in terms of s 6(a) read with the provisions of ss 1 and 8 of POCA. B

[5] The accused tendered a written plea explanation in which he challenges the constitutionality and the fairness of the trial but states that despite severe prejudice to him he will nonetheless subject himself to this trial. Although in his plea explanation the accused categorically stated that he would not make any admissions, during the testimony of the first C witness, Mr Du Toit, a Sars investigator, the accused did indeed make certain admissions in terms of s 220 of the CPA, which form part of the record.

[6] The state's case is that the accused in this matter, Mr Van der Linde, acted as the accounting officer or representative of an accounting firm, D Ivan van der Linde & Associates, and acting in common purpose with Mr John Mmemo Nkosi who is now deceased, Mr Antonio Carlos Olim and Ms Fabienne Anne Francillon, operated a fraudulent VAT scheme. The accused was the mastermind behind the scheme to defraud Sars by claiming fraudulent tax refunds in respect of four entities during the E period June 1997 to March 2005. The accused's accounting firm was itself not registered for VAT and was used as a vessel to perpetrate the fraudulent VAT scheme against Sars.

[7] The first of the four entities is Andeltru CC t/a Trans Lebombo Exports (Andeltru), of which Mr Nkosi was the sole member. According F to sch A of the indictment, 86 VAT refunds were claimed in respect of Andeltru. The second entity is Siani Trade (Pty) Ltd t/a Johnny Paulos Liquor Merchants (Siani Trade), of which one Mr ADM de Gouveia (De Gouveia) was the sole director. According to sch B of the indictment, 17 VAT refunds were claimed in respect of Siani Trade. The third G entity is Limoges Impex Trading CC (Limoges), of which Ms Francillon was the sole member. This close corporation was previously known as Ivan Prop 10 CC and changed its name to Limoges shortly before registering for VAT. According to sch C of the indictment, 56 VAT returns were claimed in respect of Limoges. The fourth entity is Allied Charcoal CC t/a Cambia Commodity (Allied Charcoal), of which Laura Olim, H Mr Olim's elderly mother, was the sole member. According to sch D of the indictment, 94 VAT returns were claimed on behalf of Allied Charcoal.

[8] It is further alleged that Sars conducted several audits on the I respective entities from which it became apparent that the supplier's invoices substantiating the VAT refund claims were false. This is the basis for the forgery and uttering charges levelled against the accused.

[9] The accused, it is then alleged, laundered the proceeds of the fraudulent VAT refunds relating to Andeltru, Siani Trade and Allied J

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A Charcoal. The accused entered into agreement, relating to the acquisition of proceeds, with Mr Olim and Ms Francillon whereby the accused was to share in the proceeds of all the fraudulent refund payments paid out to the four entities.

[10] The primary witness for the state was Mr Morné du Toit, a criminal B investigator employed by Sars and stationed at the Sars office in Alberton. He commenced his testimony with an explanation of the VAT system, which he described as an indirect self-assessment system. The registration of a company as a VAT vendor occurs when its turnover exceeds a certain amount. At the time when the four entities were registered this threshold was R150 000 per annum. The registration C document for VAT which is submitted to Sars is the VAT101. The VAT registration documents for the four entities are exhs A1 – A4.

[11] Mr Du Toit explained that most entities submit VAT returns every second month but if an entity has a turnover, which at the time was over R1 million, it submits VAT returns on a monthly basis. At the request of D the accused's accounting firm, the VAT period for all four of the entities was changed to once a month instead of the bimonthly returns.

[12] Once an entity has been registered it will be allocated a VAT number and will have to submit VAT returns completed according to the VAT201 form. If sales are made within the Republic of South Africa these attract VAT of 14%, but if goods are exported they will E attract no VAT, the purpose being to incentivise exports to neighbouring countries. Where the input amount for VAT is higher than the output amount a VAT refund can be claimed. On the other hand when the VAT output amount is higher, a payment is then due to Sars. No supporting documents are F attached to the VAT201 form and it is based upon the honesty of the VAT vendor. However, the VAT vendor is required by s 11 to keep a record of all the supporting documents when a VAT refund is claimed.

[13] The veracity of the VAT refund can be checked by an audit done by Sars. According to Mr Du Toit, Sars does five types of audit. The first is G a telephone audit; the second is a routine audit of verification; the third is a routine visit where the vendors' premises are visited. The fourth is a refund audit where the Sars auditor looks at all sales documents, purchase documents and bank statements. If a transaction is zero-rated a request is made for export documents CCA1 as proof of payment. The fifth audit is an in-depth audit done on site.

H [14] A refund paid into a vendor's bank account in terms of a VAT201 form reflects as 'BIN-INK' together with the VAT number of the entity concerned. An irregularity in VAT returns is detected by the computer when it runs through the returns. When a risk is detected an auditor will then be allocated to that particular entity. During the I capturing of a VAT201 return a hard copy and a soft copy are generated. According to s 55 of the Value Added Tax Act 89 of 1991 all documents must be retained by Sars as well as the vendor for five years, although Sars still keeps a soft copy after five years.

[15] Mr Du Toit said the investigation of all four entities was triggered J when he investigated another company. He found the VAT201 returns for

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all the four entities stapled together. He checked the original VAT101 files A and found that previous audits had been conducted at the business premises of the accused. He then requested Mr Andrew van der Merwe, a VAT auditor employed by Sars, to have a look at these returns. He and Mr Van der Merwe verified the invoices by contacting and visiting the suppliers, who told them the tax invoices had been falsified. The accused was contacted as the accounting or public officer of the four entities and B was requested to submit all supporting documents for that tax period.

[16] Other possible suspects were investigated and it was found that Nkosi, the sole member of Andeltru, had passed away on 3 June 2002. De Gouveia of Siani Trade had disappeared and a very old lady, C Ms Laura Olim, was the director of Allied Charcoal. Ms Francillon of Limoges became a s 204 witness after the accused was arrested. Mr Olim entered into a plea bargain with the state and also became a s 204 witness.

[17] Mr Du Toit spent a significant amount of time explaining the D exhibits. He testified that the four entities claimed the VAT refunds as per schs A – D. Sars then paid out the refunds as per column 5 of the aforementioned schedules. His evidence was that he certified all the exhibits in the three court files which contain the original documents for the four entities. Where the original documents were not available, he made use of s 15(4) of the Electronic Communications and Transactions E Act 25 of 2002 duplicate originals that were printed from the Sars computer system.

[18] Although the admissibility of the s 15(4) documents was initially challenged on the basis that they amounted to inadmissible hearsay F evidence, after the evidence of two witnesses from Sars on the procedure that is followed when capturing these documents, the defence admitted the s 15(4) documents. Mr Roets, on behalf of the accused, confirmed during argument that the reliability of these documents was no longer in question. This being the case, it is unnecessary for me to deal with the...