This week the National Prosecuting Authority (NPA) welcomed the Supreme Court of Appeal’s (SCA’s) ruling that assets obtained through the proceeds of crime could not be hidden in trusts, paving the way for these assets to be frozen and seized pending the finalisation of a criminal case.
The National Director of Public Prosecutions (NDPP) used the Prevention of Organised Crime Act 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.
The trio face allegations of corruption, money laundering and fraud involving about R1bn.
In 2022, a full Bench of the Gauteng High Court, Johannesburg, ruled in favour of the NPA’s challenge to the October 2020 ruling handed down by Judge Maletsatsi Mahalelo that then-Investigating directorate head Hermione Cronje had failed to disclose “material facts” when she successfully applied for the freezing of assets belonging to Regiments Capital’s directors.
Last week, in a landmark ruling by the SCA, the court said: “The Regiments Group had provided financial advisory services to state-owned entities such as Transnet and the Transnet Second Defined Benefit Fund (the Fund). The NDPP alleged that the Regiments directors, Dr Eric Anthony Wood, Mr Magandheran Pillay and Mr Litha Mveliso Nyhonyha, had engaged in unlawful activities that resulted in over R1 billion being paid to the Regiments Group, constituting the proceeds of crime. The Fund sued the appellants for some R848 million in losses which it allegedly suffered as a result of the Regiments Groups’ unlawful conduct. Although the appellants denied the allegations, they paid approximately R639 million in settlement of those claims.”
In a statement on Tuesday, NPA spokesperson Mthunzi Mhaga said it welcomed the recent judgment that thwarted the concealment of assets in trusts.
“The NPA welcomes the decision of the Supreme Court of Appeal that was handed down on 16 July 2024. Criminals and their associates cannot hide assets in trusts in an effort to put such assets beyond the reach of asset recovery processes targeting proceeds of crime,” NPA said.
Mhaga said: “The court held that the question is not who legally owns the property, but who controls it or has use or benefit.
“As the judge stated: Sophisticated criminals will rarely permit the benefits they obtain to be linked to them directly or hold their realisable assets in their own names.”
The three “delinquent directors” lodged an appeal against the seizure of property held by third parties, such as trusts, on behalf of accused people in a bid to evade the seizure of these assets and properties valued at millions of rand.
The NDPP argued in court that due to the charges of corruption, money laundering and fraud against the company and its directors, there was a need for their assets to be preserved, pending the finalisation of the criminal case.
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.”
Mhaga said the latest judgment was in line with global trends in the fight against corruption.
“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.
“In welcoming the judgment, advocate Ouma Rabaji-Rasethaba, head of NPA’s asset forfeiture unit, stated: ‘The NPA will relentlessly target ill-gotten gains and tainted assets, even where efforts are made to hide such in trusts and other vehicles. Those implicated in crimes must not be allowed to benefit financially from their crimes and use proceeds of their crime to fight back’,” the NPA stated.
Saturday Star