The Prevention of Organised Crime Act: The Proving of “Instrumentality” in Cases of Obscured Use of Intangible Things

• Jurisdiction: South Africa
• Pages: 182-202
• Date: 27 May 2019
• Published date: 27 May 2019
• Citation: (2016) 27 Stell LR 182
• Author: Paul Nkoane

THE PREVENTION OF ORGANISED CRIME

ACT: THE PROVING OF “INSTRUMENTALITY” IN

CASES OF OBSCURED USE OF INTANGIBLE

THINGS

P Nkoane*

BCom LLB

1 Introduction

The objective of the enactment of the Prevention of Orga nised Crime Act

121 of 1998 (“POCA”) was to combat organised cr imes, including cr imes

committed i n the nancial sector. POCA is thus also aimed at combating tax

immorality and racketeering activit ies. The reg ulation of the nancial se ctor

facilitates the achievement of su ccess in the ght against cr imes committed

in that sector.1 Many nancial crimes, money laundering included , are largely

committed in the nancia l sector as most of the transactions are processed with

the aim of legitimising the il l-gotten gains of criminal activ ity2 or to cover up

the nature of the proper ty to be used or used in com mission of illicit activities.3

The modern offender wil l no doubt adopt more sophisticated tech niques

than the gem car riers of India or the Knights Templar. However, his objectives

and essential modus operandi will be the same − to obscure the source and thus

the nature of the wealth in q uestion and the modus operandi will inevita bly

involve resorting to tra nsactions, real or imag ined, designed to con fuse the

observer and confound the e nquirer.4

Even with inherently complex schemes, a recent plethora of decisions

indicates that in usi ng POCA, the courts have succeed ed in dealing with

* I would like to tha nk the anonymous r eferees for their invalu able comments; they a re indeed custodi ans

of the right to aca demic freedom .

1 The law insist s that all financial i nstitutions comply w ith Financial Intelligen ce Centre Act 38 of 2001

(“FICA”) regulations. T he long title of th is act suggest s that the act wa s promulgated a s part of the

government’s fig ht against mon ey launderi ng. FICA provides for the establish ment of an anti-mo ney

launderi ng regulator y body and introduces mech anisms ai med at preventi ng money launder ing. This

essentiall y compels compliance by ins titutions that mig ht otherwise be exploite d for money laundering

purposes.

2 A BSA Bank Ltd v Fras er 2006 2 SACR 158 (SCA) paras 2 and 30. It can b e argued th at illegitim ate

monetary s chemes and money lau ndering ar e likely to be comm itted with the u se of financi al institut ions.

See also note 1 above.

3 It is p alpable that cri minals could us e financial i nstitutions t o shelter illicit prop erty. For instanc e, money

may be deposite d into bank accou nts mainly to set tle payments of bribe s or for payments to inc ite others

to commit cr iminal ac tivities. I n this situat ion, the money before the transfe r is final ised, repre sents

instru mentality of an offe nce, and after th e transfer, it repres ents proceeds of un lawful activ ities.

4 BA K Rider “Fei Ch’ien Laun dries: The P ursuit of Flyi ng Money (Par t 1)” (1992) 1 Journal of International

Planning 7 7.

182

(2016) 27 Stell LR 182

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organised crime.5 Nonetheless, it is perhaps e qually inevitable that owing t o

the all-pervasive int ricacies of some of the transact ions, the use of POCA

would be in vain.6

The courts are often confr onted with difculties when assigned to compare

property to the instrume ntality of an offence. In truth, any forum might nd

itself swimmi ng against the tide, mainly so, when it bids to match intangibles

with “instr umentality of an offence”, part icularly in sophisticated de alings.

Proceeds of unlawf ul activities are fa irly easy to disting uish and the cour ts,

generally, bear lit tle difcult y when tasked to forfeit property, which was

obtained unlawf ully, or restore parity, whichever is the case.7 However, it

is hugely problematic to prove instrume ntality where proper ty is suspect ed

to have been concerned i n the commission of a crime.8 This difculty stem s

essentially from the te chnicalities associat ed with interpr etation in general

and various stat utory imperatives.9

The aim of this ar ticle is consequently to analyse the corolla ries that must

stem from illegal use of proper ty critically. It follows that this art icle is not

destined to embody a cas e note for NDPP v Seevnarayan (“Seevnarayan”)10

which is relatively old, though it provides deep-rooted aut hority that

necessitates analysis even tod ay. Contrariwise, this ar ticle intends to probe

the term “in strument ality” withi n the matrix of the Seevnarayan case a nd to

recommend other inte rpretative routes.

This exposition fu rthermore evaluates the America n Civil Asset Forfeiture

principles to establish what the t erm “instr umentality” ent ails, as the American

forfeiture s cheme in uenced POCA.11 This evaluation of the American

forfeiture scheme will pr imarily cent re on the use of the in rem ction, and

what the theory of inst rumental ity entails in civil for feiture cases. The ai m

is to gain proper knowledge of how America f rames and applies forfeitu re

5 A K ruger Organise d Crime and Proceed s of Crime in South Afr ica (2008) 9 indicates the s uccess in the

employment of POCA si nce its promulgation a nd JD Mujuzi “Ten Years of the South A frican Prevent ion

of Organised C rime Act (1999–2009) W hat Case Law Tells Us” ( 2010) O pen Societ y Foundation fo r

South Afric a Criminal Justice Init iative Occasional Pa per Series VI

uploads/2012/09/CJI_Occasional_Paper _6_Prevention_of_Organised_Crime_Act1pdf> (accessed

01-10-2012) discusses the success i n the use of POCA over a period of te n years.

6 Se e NDPP v RO Cook Pr operties ( Pty) Ltd; NDPP v 37 Gillespi e Street Dur ban (Pty) Ltd; NDPP v

Seevnarayan 2004 2 All SA 491 (SCA) where the NDPP was u nable to forfeit the appar ent tax evasion

proceeds.

7 S v S haik 2008 5 SA 354 (CC); NDPP v Cunningham 2012 2 SACR 591 (WCC) paras 141-164: in this

case, the cou rt held that proceeds of un lawful activitie s held in a trust for the benef it of innocent third

parties or d istributed to t hem were subject to a re straint order, th us also to forfeitu re. It is to be noted that

in forfeiting p roceeds of unlawf ul activities the po ssessor’s involvement in comm ission of an offence is

immaterial.

8 Se e National Direc tor of Public Prosecut ions v Braun 2009 2 SACR 390 (WCC) and N DPP v RO Cook

Propertie s (Pty) Ltd; NDPP v 37 Gillespie St reet Durban (Pt y) Ltd; NDPP v Seevnara yan 2004 2 All SA

491 (SCA).

9 N DPP v RO Cook Propert ies (Pty) Ltd; NDPP v 37 Gill espie Stree t Durban (Pt y) Ltd; NDPP v

Seevnarayan 2004 2 All SA 491 (SCA) paras 21, 27 and 32.

10 2004 2 All SA 491 (SCA).

11 See NDPP v Van der Mer we 2011 3 All SA 635 (WCC) 648 and NDPP v RO Cook Propert ies (Pty) Ltd;

NDPP v 37 Gillespie Str eet Durban (Pty) Ltd; N DPP v Seevnarayan 20 04 2 All SA 491 (SCA) 500, 504,

506 and 510.

THE PREVENTION OF ORGANISED CRIME ACT 183

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