Pierre de Vos, Constitutionally Speaking – 24 April 2018
Last week Afriforum issued a threat that it will pursue a private prosecution of Economic Freedom Fighters (EFF) leader, Mr Julius Malema, on charges of money laundering, racketeering and corruption. The threat is a fundraising tactic, as Afriforum solicits money largely from conservative white people who view Mr Malema with fear and suspicion. However, the announcement was misleading as Afriforum will almost certainly not be permitted to prosecute Mr Malema privately (and Afriforum must know this). Whether Mr Malema has a case to answer is, however, less clear.
If you have an Afrikaans sounding surname and own a cell phone, the chances are that you have received an overexcited text message from Afriforum begging you for money. These messages usually say something like: “Stop Plaasmoorde!” (“Stop farm murders!”), or “Stop Kwotas! (“Stop Quotas!” – in the appointment of sporting teams). The messages then ask you to donate R10 to the specific Afri-forum campaign.
Afriforum says on its website that it fights for the rights of “minorities” who need to get “their voice back”. This is not entirely true as it does not fight for all “minority” groups. (Using the language of “minorities” is itself a telling demonstration of the conservative brand of identity politics embraced by Afriforum.) The organisation predominantly fights to protect the interests of relatively privileged white Afrikaners (at least of those white Afrikaners who are likely to donate money to the organisation). As far as I am aware, it is not running any campaign to fight for LGBTI rights, the rights of the Khoi-San, the rights of poor rural women, or any other marginalised and vulnerable group in South Africa.
Because former President Jacob Zuma has resigned from office (and Mr Julius Malema is no longer perceived by Afriforum supporters as an ally in the fight to remove Zuma from office), it makes financial sense for Afriforum to be seen to want to prosecute Mr Malema. The problem is that Afriforum is not being honest with the public, as it is not going to be able to launch a private prosecution against Mr Malema – even if the National Prosecuting Authority (NPA) decides not to prosecute him.
As I have explained before, the Criminal Procedure Act (CPA) only allows for private prosecutions in very limited circumstances. First the NPA must have issued a nolle prosequi certificate to confirm that it has decided not to prosecute. This the NPA has, so far, not done in the Malema case. The case was struck from the roll because of delays, but the NPA has made no decision on whether to re-enrol the case and to proceed with the prosecution.
Second, in terms of section 7(1) of the CPA, Afriforum would only be able to launch a private prosecution if it represented a: “private person who proves some substantial and peculiar interest in the issue of the trial arising out of some injury which he individually suffered in consequence of the commission of the said offence”.
While Afriforum’s Kallie Kriel laid the original charge against Mr Malema, this does not mean he personally suffered an injury because of the alleged money laundering, racketeering or corruption. For Afriforum and Mr Kriel to be successful, he would have to show that he personally lost money because of the alleged money laundering, racketeering or corruption, something he (or Afriforum as his legal representative) is not likely to be able to do.
This does not necessarily mean that Mr Malema might not have a case to answer. However, it is not possible at this point to determine with any certainty how strong the case against Mr Malema is.
It is common cause that Mr Malema had been assessed by SARS to pay income tax, with interest, on the amount of R 18 192 295.36 for the tax years 2005 to 2011 tax years. A compromise was later reached to pay the amount of R7 259 953.79 to SARS for taxes owed to it.
While this is a large amount of money, this in and of itself does not prove that Mr Malema received money in a corrupt manner and is in breach of the Prevention and Combatting of Corrupt Activities Act. There is simply not enough known publicly to make any credible assessment on the matter and I decline to do so here. Similar problems arise in trying to assess whether there is any winnable case of racketeering against Mr Malema.
More evidence is available to assess whether the NPA would have any chance of securing a conviction for money laundering against Mr Malema, as the charge of money laundering directly relates to adverse findings made by the Public Protector in her Report “On the Point of Tenders”. (Click here to read the entire Report of the Public Protector.)
Money laundering is prohibited by, amongst others, section 4 (read with sections 1 and 8) of the Prevention of Organised Crime Act (POCA) of 1998. Section 4 is a complex provision, but in essence it prohibits a person who knows or ought reasonably to have known that property is or forms part of the proceeds of unlawful activities, from entering some agreement about that property which has the likelihood of concealing or disguising the nature, source, location, disposition or movement of that property or the ownership or any interest in that property.
The Public Protector Report stems from various complaints lodged with that office alleging that Mr Malema, improperly benefitted from money deposited into the bank account of the Ratanang Family Trust by business enterprises in return for his facilitation of the awarding of contracts to these entities by departments of the Limpopo Provincial Government.
At the centre of the investigation (conducted by then Public Protector, Thuli Madonsela) was a tender awarded by the Limpopo Department of Roads and Transport to a company entitled On-Point Engineers. On-Point Engineers has one share holder, Guilder Investments, which in turn has two equal shareholders, the Gwangwa Family Trust and the Ratanang Family Trust. The sole beneficiary of the Ratanang Family Trust is Mr Malema’s son. Originally, Mr Julius Malema was the sole Trustee. His grandmother, who is 83 years old, was later added as a Trustee.
The Public Protector found that the awarding of the tender to On-Point was unlawful, improper and constituted maladministration. Because of many misrepresentations made in the bid documents submitted by On-Point, the Public Protector also found that On-Point had committed the crime of fraud. (Although Mr Malema was one of two shareholders of the company who owned On-Point, it is not clear whether, and if so to what extent, he was involved in the preparation of this fraudulent tender document as he was not legally involved in the company when it was drafted.)
On-Point claimed in its bid document that it had been in business for a total of “9 years”. This was false. On-Point was only established as a company approximately one month before the bid was submitted. The bid document furthermore incorrectly stated that On-Point had six permanent employees, an annual turnover of R2 million and assets to the value of R 400 000. Furthermore, On-Point’s bid did not include an original valid Tax Clearance Certificate as required.
Despite these disqualifying aspects of the bid, On-Point was awarded the tender, which was the only source of income for On-Point. The Public Protector found that this decision:
leaves a lot of questions to be answered regarding the relationship between the HOD [Head of Department] and some or all of the departmental players that took part in the bid process and On-Point. That On-Point was given preferential treatment is without doubt. The unanswered questions are further compounded by the fact that evidence suggests that On-Point knew about and started preparing for the bid some time prior to September 2009.
It is important to note that the Public Protector did not make a finding on the possibility that such relationship(s) may be in violation of the Prevention and Combating of Corrupt Activities Act. Instead, she referred the matter to the Hawks for further investigation.
There was a second problem with the manner in which On-Point conducted business. The Public Protector found that On-Point committed the crime of corruption in contravention of section 12(1) of the Prevention and Combatting of Corrupt Activities Act by entering into kickback agreements with service providers. On-Point dished out work to service providers in exchange for these kickbacks. In one such case, it resulted in double payments made by the Department in respect of designs in the amount of R4 272 890.
The sole shareholder in On-Point was Guilder Investments, and Mr Malema was given 50% of the shares of Guilder Investments. Guilder Investments did not pay any money to Mr Malema or to his Ratanang Trust. Instead the money was paid by On-Point as follows:
On-Point paid more than R2 million directly to the Ratanang Family Trust from November 2010 to May 2012 in the form of “dividends” and loans. The amount of R1 million withdrawn 5 days after one of the kickbacks was paid under the back-to-back agreements, is further accounted for in the bank statements as having been paid towards the Ratanang Farm. Further amounts of R160 000 and R100 000 are reflected as having been paid in respect of the “Sandton Property” and “Sandowns Property”, respectively.
After perusing the relevant documents, the Public Protector noticed that an amount indicated as a loan paid to the Ratanang Family Trust on 4 January 2011, was referenced on the bank statement as “Sandton Property”. Similarly, an amount stated to be a loan of R100 000 paid on 28 March 2011 is indicated on the bank statement as “Sandowns Property”. The bank statements also contain a payment of R1 000 000 made on 4 May 2011 under the reference “Ratanang Farm”.
Although it is known that Mr Malema at the time had purchased a property in Sandton and it was reported that he paid more than half the R3.6-million purchase price for that home in cash, the Public Protector did not make any findings about whether cash from On-Point was laundered through the Ratanang Trust to help pay for the Sandton property.
However, the Public Protector did find that because the awarding of the contract to On-Point was based on deliberate misrepresentation and non-compliance with procurement prescripts, its shareholders, including the Ratanang Family Trust, benefitted improperly by means of the payments of “dividends” and other payments made to it by On-Point. As a Trustee of the Ratanang Family Trust, Mr Malema was therefore also put in an advantageous position as his family was supposed to benefitted from it. The Public Protector therefore concluded as follows:
As the main source of income of On-Point during this period was the payments made to it by the Department in terms of the agreement and On-Point owed its existence as a profitmaking establishment that could declare regular dividends thereto, the Ratanang Family Trust as one of two shareholders of Guilder Investments (as the holding company), accordingly benefitted improperly from the unlawful, fraudulent and corrupt conduct of On-Point and maladministration of the Department.
While the Constitutional Court held in Economic Freedom Fighters v Speaker of the National Assembly and Others; Democratic Alliance v Speaker of the National Assembly and Others that the remedial action imposed by the Public Protector would – depending of the context and language used – be binding, this does not mean that the NPA would merely have to produce these findings in the criminal court to have Mr Malema convicted. The NPA could make use of the evidence gathered by the Public Protector but would have to prove the case against him anew and would have to show proof beyond reasonable doubt. It would also have to show that Mr Malema knew or ought reasonably to have known that the money received by the Ratanang Trust was from the proceeds of unlawful activities.
The findings contained in the Public Protector’s Report on the criminal activities of On-Point Engineering (which was never challenged in court and thus stands) and the fact that The Ratanang trust received money from this company of which he was indirectly half the owner, raise serious questions about Mr Malema’s honesty. But whether the state would ever be able to prove any of the charges against him if it decides to prosecute him remains unclear.