Asset forfeiture unit 2019 Certificate in Forensic Investigation Techniques, Saturday 31 August 2019.

Asset forfeiture unit 2019 Certificate in Forensic Investigation Techniques, Saturday 31 August 2019

AREA OF RESPONSIBILITY
LAW ENFORCEMENT AGENCIES INSTITUTION AREA OF RESPONSIBILITY Directorate of Priority Crimes Investigation (DPCI – Hawks) serious and organised commercial crime Anti Corruption Task Team corruption Commercial Crimes Court and Commercial Branch prosecution led investigation of commercial crime with cases heard before the specialised commercial crime court Detective Branch less serious fraud Asset Forfeiture Unit follow and seize the proceeds of crime Special Investigation Unit recovery in commercial crime offences involving government officials South African Revenue Services – Investigation Unit tax evasion and related offences

Asset forfeiture unit (AFU):
Background Law: The Prevention of Organised Crime Act 121 of (POCA) & Asset forfeiture provisions Procedure Investigations

Part 1: BACKGROUND

Background: Introduction & mandate of the AFU
The Asset Forfeiture Unit (AFU) was established in May in the Office of the National Director of Public Prosecutions to focus on the implementation of Chapters 5 and 6 of the Prevention of Organised Crime Act, 1998(Act No. 121 of )(POCA).

The AFU was created in order to ensure that the powers in the Act to seize criminal assets would be used to their maximum effect in the fight against crime, and particularly, organised crime.

The Unit does not prosecute, but works closely and in parallel with the prosecution and the police investigation officers. The Unit comprises State advocates and financial investigators from the South African Police Service, the Directorate of Priority Crime Investigations (“Hawks”) and members of the Special Investigative Unit (“Cobras”)

Mafia, Gangs, Drug cartels, Human Trafficking, Slave traders etc Stop criminals benefitting from crime Spending the money for other purposes: Law enforcement purposes Victims of crime

Part 2: Prevention of Organised Crime Act 121 of 1998 (POCA)

AFU: enabling legislation & empowering provisions
POCA deals with the PROCEEDS OF UNLAWFUL ACTIVITIES – confiscation, restraint & realization of assets and eventual forfeiture thereof. Chapter 5 = Proceeds of Unlawful Activities Chapter 6 = Civil Recovery of Property

Asset forfeiture unit: enabling legislation & empowering provisions
NDPP v Mohamed (CC) 2003 discussed the background to POCA: “The rapid growth of organised crime, money laundering, criminal gang activities and racketeering has become a serious international problem and security threat, from which South Africa has not been immune. It is often impossible to bring the leaders of organised crime to book, in view of the fact that they invariably ensure that they are far removed from the overt criminal activity involved. Prior to the Act, South Africa’s common and statute law failed to keep pace with international measures aimed at dealing effectively with these problems. Hence the need for the measures embodied in the Act”

Does POCA apply to individual wrong doing or does it apply only to big organised crime matters? In NDPP v RO Cook Properties (Pty) Ltd 2004 the SCA rejected the restrictive interpretation given by Griesel J in the lower court to the term proceeds of unlawful activities and rejected his suggestion that POCA was intended to combat organised crime, money laundering and criminal gang activities.

In NDPP v RO Cook Properties (Pty) Ltd 2004 the court held: “We cannot agree with this construction which radically truncates the scope of this Act. It leaves out portions of the long title as well as the ninth paragraph of the preamble. These show that the statute is designed to reach far beyond organised crime, money laundering and criminal gang activities. The Act clearly applies to cases of individual wrong-doing”

PROCEEDS OF UNLAWFUL ACTIVITIES
NB Read chapter 5 – Proceeds of unlawful activities: “proceeds of unlawful activities”, means any property or part thereof or any service, advantage, benefit or reward which was derived, received or retained, directly or indirectly, in connection with or as a result of any unlawful activity carried on by any person, whether in the Republic or elsewhere, except for purposes of Chapter 5 ….

NB Read chapter 5 – Proceeds of unlawful activities: ….except for purposes of Chapter 5 where it means— (a) any unlawful activity carried on by any person; or (b) any act or omission outside the Republic which, if it had occurred in the Republic, would have constituted an unlawful activity, and includes any property representing property so derived;

NB Read chapter 5 – Proceeds of unlawful activities: “property” means money or any other movable, immovable, corporeal or incorporeal thing and includes any rights, privileges, claims and securities and any interest therein and all proceeds thereof

Read chapter 5 – Proceeds of unlawful activities: What Happens to the Profits of Crime? Confiscation orders give the court the right to confiscate any ill-gotten gains, whereas Restraint orders stop suspects from getting rid of any property or profits while they are being investigated.

NB Read chapter 5 – Proceeds of unlawful activities: Section 13 confirms that proceedings on application for a confiscation order or a restraint order are civil proceedings, and are not criminal proceedings. Thus the rules of evidence applicable in civil proceedings apply to proceedings on application for a confiscation order or a restraint order. Thus on a balance of probabilities.

NB Read chapter 5 – Proceeds of unlawful activities: Section 18(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— (a) that offence; (b) any other offence of which the defendant has been convicted at the same trial; and (c) any criminal activity which the court finds to be sufficiently related to those offences

Afu: enabling legislation & empowering provisions
(a) Confiscation Orders Sec18 Whenever a convicted person is found to have benefited from a crime, the court may issue a confiscation order, instructing them to repay the State an appropriate amount, in addition to any punishment imposed for the offence.

(a) Confiscation Orders Sec18 If it is found that a defendant did not have legitimate sources of income to explain their ownership of property, then that property will be considered as an ill-gotten gain. Also, if the defendant provides false information, or no information, then any property connected will be considered to be a benefit derived from unlawful activity.

Afu: enabling legislation & empowering provisions
(a) Confiscation Orders Sec18 In the matter of Shaik v S the Constitutional Court examined the ninth clause of the preamble of POCA which says: “no person convicted of an offence should benefit from the fruits of that or any related offence legislation is necessary to provide for a civil remedy for the restraint and seizure, and confiscation of property which forms the benefits derived from such offence”.

(a) Confiscation Orders Sec18 “In my view, it is this clause in the preamble which points most directly to the key purpose of chapter 5: to ensure that no person can benefit from his or her wrongdoing. That this is the primary purpose of chapter 5 has also been recognised by the Supreme Court of Appeal, which held in NDPP v Rebuzzi that “[t]he primary object of a confiscation order is not to enrich the State but rather to deprive the convicted person of ill-gotten gains.”

“From this primary purpose, two secondary purposes flow. The first is general deterrence: to ensure that people are deterred in general from joining the ranks of criminals by the realisation that they will be prevented from enjoying the proceeds of the crimes they may commit. And the second is prevention: the scheme seeks to remove from the hands of criminals the financial wherewithal to commit further crimes. These purposes are entirely legitimate in our constitutional order”

(b) Restraint Orders Sec26 If the court puts a restraint order on a person’s property, that person cannot deal with the property in any way. This means they cannot sell the property, give it way or transfer ownership. The court can also issue provisional restraint orders, which have immediate effect and which call upon the person to present a case for why the order should not be made final.

(b) Restraint Orders Sec 26 In certain circumstances, a police official may seize the realisable property to prevent it being disposed of or removed. When a High Court has issued a restraint order, it may also appoint a curator bonis to take charge of the property.

(b) Restraint Orders Sec 26 Such order may also be imposed on immovable property, preventing it from being mortgaged or sold without the consent of the High Court.

NB Read chapter 5 – Proceeds of unlawful activities: Thus confiscation orders apply when a person has been CONVICTED and the restraint order applies when a person has been CHARGED although it is possible that he has not yet been convicted.

In the recent matter of NDPP v Ramlutchman (677/15) [2016] ZASCA 202 (9 December 2016) the court held that: “The purpose of chapter 5 is to ensure that no person can benefit from his or her wrongdoing. This court in National Director of Public Prosecutions v Rebuzzi (94/2000) [2001] ZASCA 127 (23 November 2001) held that the primary object of a confiscation order is not to enrich the State, but rather to deprive the convicted person of ill-gotten gains”.

Proceeds of Crime = Gross v Net proceeds? Swanepoel v The State (DPP): The appellant pleaded guilty to section 37 of Act 62 of He received cobalt powder worth R and because his realisable property was valued at R the court made a confiscation order for R On appeal the appellant argued that the confiscation order should be limited to R since that was the value of his profit.

Proceeds of Crime = Gross v Net proceeds? Swanepoel v The State (DPP): In analysing the meaning of value of proceeds of unlawful activities in section 19 of POCA the appeal court held that “the subsection does not refer to any profit made …..It follows that the Act is concerned with the gross proceeds and not with the net balance received or retained or derived by him” .

Proceeds of Crime = Gross v Net proceeds? Shaik v S (CC): The appellant was found guilty of corruption. The proceeds of his corruption were the shares he bought in a company and dividends declared. He took a loan to buy the shares and later repaid the loan from dividends declared.

Proceeds of Crime = Gross v Net proceeds? Shaik v S (CC): He argued that the word benefit in section 18(1) should be interpreted to limit the broad language of the definition of proceeds of crime in section 1 to apply only to nett proceeds of crime . In other words the cost of buying the shares must be subtracted from the value of the shares.

Proceeds of Crime = Gross v Net proceeds? Shaik v S (CC): The Constitutional Court held that it is not possible in light of this definition to give a narrow meaning to the concept of benefit in section 18 for that concept is based on the definition of proceeds of unlawful activities. That definition goes far beyond the limited definition proposed by the appellants.

Shaik v S (CC): Proceeds” is broadly defined to include any property, advantage or reward derived, received or retained directly or indirectly in connection with or as a result of any unlawful activities. A further difficulty with the appellant’s argument is to be found in section 18(2). That section expressly contemplates that a confiscation order may be made in respect of property that falls within the broader definition, and is not limited to a nett amount.

Read chapter 6 – Civil Recovery of Property: Section 38 – preservation order Not conviction based; even if found not guilty – see section 50(4) Instrumentalities of an offence or proceeds of crime

The definition of instrumentalities in section 1: “instrumentality of an offence' means any property which is concerned in the commission or suspected commission of an offence at any time before or after the commencement of this Act, whether committed within the Republic or elsewhere”

Read chapter 6 – Civil Recovery of Property: The definition of instrumentalities in section 1: The words ‘concerned in’ in the definition must be interpreted in order that the link between the crime that has been committed and the property used renders the latter functional to the commission of an offence.

Read chapter 6 – Civil Recovery of Property: The definition of instrumentalities in section 1: The property must be instrumental, have a clearer or close enough relationship or reasonably direct link to or play a reasonably direct role or facilitate or make possible in a substantial way the commission of crime. In the final analysis each case must be decided on its own facts after having regard to the entire picture.

Read chapter 6 – Civil Recovery of Property: Instrumentalities of an offence (must be listed in Schedule 1 of POCA) i.e. Cars or vehicles used in Drugs Trafficking, Kidnapping, Stock theft, Illegal hunting of rhino i.e. Houses or buildings used in Brothels, Drug house, Drug lab i.e. Ship (theft case getaway – preserved in Cape Town harbour with a value of R30m)

Read chapter 6 – Civil Recovery of Property: Preservation of Property S 38. (1) The National Director may by ex parte application apply to a High Court for an order prohibiting any person, subject to such conditions and exceptions as may be specified in the order, from dealing in any manner with any property.

Read chapter 6 – Civil Recovery of Property: Preservation of Property S 38 (2) The High Court shall make an order referred to in subsection (1) if there are reasonable grounds to believe that the property concerned— (a) is an instrumentality of an offence referred to in Schedule 1; or (b) is the proceeds of unlawful activities.

Read chapter 6 – Civil Recovery of Property: Preservation of Property If there are sufficient grounds for believing that property is an ill-gotten gain or is linked to a crime, an application can be made to the High Court to stop a person from having dealings with that property. If the application is approved, a preservation of property order is issued. Preservation order shall expire 90 days after the date.

Read chapter 6 – Civil Recovery of Property: Forfeiture of Property If a preservation of property order has been issued, an application may be made to a High Court to have all property subject to such an order forfeited to the State. Any person who has an interest in the property may appear in court to oppose the forfeiture order or to ask for the order to be changed.

Read chapter 6 – Civil Recovery of Property: Section 37 confirms that proceedings on application for a forfeiture order or a preservation order are civil proceedings, and are not criminal proceedings. Thus the rules of evidence applicable in civil proceedings apply to proceedings on application for a forfeiture order or a preservation order. Thus on a balance of probabilities.

Read chapter 6 – Civil Recovery of Property: Section 58: Offence may form the basis of multiple orders The fact that a preservation of property order or a forfeiture order has been made on the basis of an offence referred to in Schedule 1 in which a specific person has been involved does not prevent the making of another or other preservation of property orders or forfeiture orders on the basis of the same offence.

Read chapter 7 – Criminal Assets Recovery Account (CARA): Establishment of Criminal Assets Recovery Account S 63. There is hereby established in the National Revenue Fund a separate account to be known as the Criminal Assets Recovery Account.

Read chapter 7 – Criminal Assets Recovery Account (CARA): Establishment of Criminal Assets Recovery Account S 64. The Account shall consist of— (a) all moneys derived from the execution of confiscation and forfeiture orders contemplated in Chapters 5 and 6…

Section 78: Liability Any person generally or specifically authorised to perform any function in terms of this Act, shall not, in his or her personal capacity, be liable for anything done in good faith under this Act.

Part 3: PrOCEDURES

Asset forfeiture unit: PROCEDURE
Civil in nature – burden is on a civil standard Process is by way of application (not action). What is the difference? Ex parte - full disclosure In camera Motion court 90 days Curator bonis

Part 4: INVESTIGATIONS

Asset forfeiture unit: INVESTIGATIONS
Follow the money + Subpoena Investigation Surveillance Search & seizure Rubbish bin SAPS SIU Private forensic firms

SIU The SIU has been established in terms of the Special Investigating Units and Special Tribunal Act, Act No 74 of (SIU Act). Its primary mandate is to recover and prevent financial losses to the state caused by acts of corruption, fraud and maladministration.

SIU Where criminal conduct is uncovered, it will bring the matter to the attention of its partners in the South African Police Service (SAPS), as well as the National Prosecuting Authority (NPA). It works closely with them to ensure that there is an effective investigation and prosecution.

The SIU is a public entity with powers of investigation and litigation. Following the issuing of a presidential proclamation by the President, the SIU has powers to subpoena, search, seize and interrogate witnesses under oath. The SIU can take civil action to correct any wrongdoing it uncovers in its investigations.

For example, the SIU can obtain a court order to compel a person to pay back the wrongful benefit received and thus recover the money for the state. The SIU also works with the department concerned to cancel contracts when proper procedures were not followed.

The SIU mandate includes: Conducting the civil recovery of state assets and public money Supporting disciplinary processes arising out of investigations Referral of criminal matters found in the course of investigations to appropriate law-enforcement agencies Provision of an advisory service on systemic improvements in relation to business

DPCI The Directorate for Priority Crime Investigation has been established as an independent directorate within the South African Police Service in terms of Section 17C of the South African Police Service Act, 1995 as amended

DPCI The Directorate for Priority Crime Investigation is now responsible for the combating, investigation and prevention of national priority crimes such as serious organized crime, serious commercial crime and serious corruption in terms of Section 17B and 17D of the South African Police Service Act, 1995 as amended.

The end

Asset forfeiture unit 2019 Certificate in Forensic Investigation Techniques, Saturday 31 August 2019.

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Asset forfeiture unit 2019 Certificate in Forensic Investigation Techniques, Saturday 31 August 2019.

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