NPA welcomes SCA ruling that 'hidden' assets obtained through crime can be seized

The National Prosecuting Authority (NPA) welcomed the Supreme Court of Appeal (SCA) ruling that found that assets obtained through crime could not be hidden in trusts and could be frozen and seized pending the finalisation of a criminal case. 

This is after the National Director of Public Prosecutions (NDPP) used the Prevention of Organised Crime Act (Poca) against the directors of Regiments Group, Dr Eric Wood, Niven Pillay and Litha Nyhonyha, to seize property including assets held in trusts on behalf of the directors. They face allegations of corruption, money laundering, and fraud involving about R1bn.

The three directors lodged an appeal against the seizure of property held by third parties, such as trusts, on behalf of accused people.

However, the NDPP argued that Regiments Group and its directors would be prosecuted on charges of corruption, money laundering and fraud. Therefore, the purpose of freezing their assets was to preserve them, pending the finalisation of the criminal case. The NDPP said a restraint order on assets pending a trial had no “definite or dispositive effect”.

The SCA dismissed the appeal by the three directors, with judge Daisy Molefe saying: “Sophisticated criminals will rarely permit the benefits they obtain to be linked to them directly or hold their realisable assets in their own names.”

She said Poca legislation recognised this and answered questions of whether the directors benefited and if they held realisable property.

“If the legislation did not provide for the preservation of assets, the key purpose of Chapter 5 of Poca to ‘ensure that no person can benefit from his or her wrongdoing’ could not be achieved.”

Molefe said the question was not about who legally owned the property, but who controlled it or had use and benefit of it.

NPA spokesperson Mthunzi Mhaga said the judgment was in line with global trends in fighting money laundering and corruption while giving practical effect to the notion of beneficial ownership. This applied where something less than full ownership can be restrained and recovered and where the evidence justifies such action.

“This case is a demonstration of the NPA’s two-pronged strategy to ensure accountability and justice in respect of corruption and related crimes: asset recovery and prosecutions,” Mhaga said.

The head of the NPA’s Asset Forfeiture Unit, Ouma Rabaji-Rasethaba, said: “The NPA will relentlessly target ill-gotten gains and tainted assets, even where efforts are made to hide such in trusts or other vehicles.

“Those implicated in crimes must not be allowed to benefit financially from their crimes and use the proceeds of their crimes to fight back.”

The Regiments Group provided services to state-owned entities such as Transnet and Transnet's Second Defined Benefit Fund. The restraint order of their assets comes from alleged corrupt activities involving state-owned entities. The commission of inquiry into state capture found the company had been enriched.

Regiments Group had allegedly received a payment of more than R1b from Transnet due to alleged corruption and unlawful contracts.

The Transnet Second Defined Benefit Fund sued Regiments Group and its directors for R848m in losses due to the company’s alleged unlawful conduct. While Regiments Group and its directors had denied such allegations, they returned R639m in settlement of those claims.

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