Programme Director,
The National Director of Public Prosecutions,
Deputy National Director of Public Prosecutions and Head of the Asset Forfeiture Unit,
Members of the Executive Committee of the National Prosecuting Authority,
Various presenters and facilitators,
Distinguished guests,
Colleagues and friends.
In January this year an article appeared in the Financial Mail, called “Ground for Weeds to Grow – Why international crime syndicates favour SA.” It looks at various factors and examines why international criminals find our country particularly attractive. And, according to the analysts, the answer is clear: South Africa is positioned on major trafficking routes, with a developed transportation infrastructure, weaknesses in border controls, numerous secondary airports and rare, sought-after resources such as abalone and rhino horn. This makes it, as the article states, “close to perfect for those looking for a place from which to run organised crime operations.”
And crime extends beyond our borders. Transnational organised crime has been described as a multidimensional and ever-increasing global threat. The World Bank has found that regions of the world which experience high rates of crime may lose as much as 14% of their GDP per annum.
These estimates include the effects of crime on productivity and domestic and foreign investment, as well as the impact on employment and consumption. Other social costs would add an additional 4.9% of regional GDP and would include the costs of loss life and health, police and criminal justice system expenditure and the cost of private security. Corruption may strip a country of a further 0.5-4% of GDP annually.
There are global trends in transnational organised crime. During the last 15 years the world has seen an exponential increase in transnational organised crime, thus clearly showing that these crimes know no borders.
Furthermore, economic and technological globalisation has enabled criminals to move from so-called "low-level" activities like drug trafficking, prostitution and illegal gambling to "corporate" activities, like migrant smuggling, environmental crime, bank fraud, and large-scale insurance fraud.
Internationally the globalisation of transnational organised crime has been facilitated by factors such as the fading of borders and inadequate guarding thereof, the increasing global economy and free-market movement of goods and increased trade and reduced border checks which provide cover and markets for trafficking illicit products.
Unanticipated new technological possibilities in traditional and electronic communication means that organised crime groups are now able to communicate covertly with relative ease and anonymity across jurisdictional boundaries. Technological advances have also facilitated large and rapid cash transactions in the layering stages of money laundering, while cheaper and faster transportation facilitate illicit trafficking.
These are the harsh realities that our law enforcement agencies have to face.
We are also seeing the world of crime evolve. Those of you who may have attended the 8th Annual Conference of the APA in Praia, Cape Verde, in October last year will recall that the Praia Declaration provides that crimes such as terrorism, drug trafficking, human trafficking, money laundering and environmental crime are becoming increasingly complex.
These crimes are having an increasingly corrosive effect on economic development and governance in Africa. Criminal enterprises and terror organisations are becoming progressively sophisticated, particularly in the utilisation of communications technology in conducting their activities, and the concealment and movement of finances for criminal acts. In the face of these challenges, Africa cannot allow itself to become a safe haven for criminals.
Despite these ever-increasing challenges, our Asset Forfeiture Unit continues to deliver with a high success rate. I know our Minister has highlighted the many successes of the AFU, the number of freezing and preservation orders and the amounts paid into CARA annually, so I will not repeat these here. Suffice to say that the AFU is a vital component in the fight against crime and is instrumental in the fight against corruption. It is one of the great success stories of our country’s law enforcement efforts.
When we passed the Prevention of Organised Crime Act in 1998 the aim was to provide measures for law enforcement agencies and the prosecuting authority to combat organised crime and money laundering. The primary features of the Act include provisions for the recovery of the proceeds of unlawful activity.
Chapter 5 provides for the forfeiture of benefits derived from crime in those cases where a person is convicted of an offence, while Chapter 6 focusses on property that has been used to commit an offence or which constitutes proceeds of crime. Although it provides for forfeiture of proceeds of and instrumentalities used in crime, it is not conviction based and may be invoked even where there is no prosecution. The Asset Forfeiture Unit was established in May 1999 to focus on the implementation of Chapters 5 and 6 of the Act.
Internationally there are broadly two types of confiscation methods used to recover the proceeds of crime, namely conviction-based and non-conviction-based forfeiture, often referred to as criminal and civil forfeiture respectively. Conviction-based forfeiture depends on securing a conviction in a criminal trial, but has the advantage that once a conviction is obtained, it is possible in some systems to invoke very wide forfeiture powers.
Non-conviction based or civil forfeiture is a purely civil process, independent of a criminal trial or a conviction. The state usually has to prove on a balance of probabilities that the property in question is proceeds or instrumentality of crime, in other words, property used to commit crime, such as firearms, immovable property or premises, a bank account, or even business, used to launder the proceeds of crime.
South Africa is one of a growing number of states having both types of forfeiture. To date, relatively few states have adopted laws providing for civil forfeiture – examples are the USA, Ireland, the United Kingdom, Italy, Australia, Slovenia, Ontario and other states in Canada. In our Prevention of Organised Crime Act, South Africa adopted a civil forfeiture model based on that of the USA.
On application by the National Director of Public Prosecutions, the High Court can make an order forfeiting property to the state that the court, on a balance of probabilities, finds to be "an instrumentality" of a crime, or the "proceeds of unlawful activities". As mentioned, the validity of such an order is not affected by the outcome of criminal proceedings. In other words, a suspected criminal can be acquitted in a criminal case, where the state has failed to prove its case beyond a reasonable doubt, but still nonetheless have his property forfeited to the state. This is one of the many benefits of civil forfeiture.
Money generated through the forfeiture of assets is deposited into a Criminal Assets Recovery Fund. Such monies are used as financial assistance to law enforcement agencies involved in combating organised crime, money laundering, criminal gang activity and crime in general, and to assist victims of crime. In the United States where similar civil asset forfeiture legislation has been in existence since 1970 forfeiture actions raise about $500 million for the state per year.
Many more states are currently considering civil forfeiture, as its benefits have become clearer and given its strong endorsement in the UN Convention against Corruption. Civil forfeiture is a further innovative use of civil litigation to deal with crime committed for profit.
Asset forfeiture has the power to disrupt or dismantle criminal organisations as it removes the proceeds of crime and other assets that are used to perpetuate criminal activity against our communities. Asset forfeiture programs are strengthened when nations effectively partner to disrupt transnational syndicates who commit crimes outside the borders of local law enforcement jurisdictions.
Civil forfeiture is a powerful weapon against crime, and especially against corruption. It is also useful in cases where the accused may have absconded and cannot be tried. Proceeds hidden with other persons or with other entities can still be forfeited as they remain proceeds of crime, even when they are passed on to another person or entity. However, it must be proved that it is still essentially the same property, which can be difficult when there are complex transactions.
Another advantage of civil forfeiture is that in many cases perpetrators have been reluctant to contest civil forfeiture cases since it involves making statements under oath that may be used against them in a criminal case. South African courts have held that evidence in civil litigation is not compelled and therefore there is no privilege against self-incrimination.
In addition, POCA may be applied retrospectively and can thus be used to recover proceeds that were acquired before the law came into force. Unlike in some other jurisdictions, POCA does provide for a defence for innocent owners who have acquired the property legally and for value.
Our courts have developed an impressive body of case law pertaining to asset forfeiture. When the AFU started, international experts warned that it should expect much litigation from rich and powerful criminals who are desperate to hang on to their ill-gotten gains and who could afford to employ the best lawyers to challenge the AFU. This has indeed proved to be the case and the AFU has been involved in intensive litigation since its inception. In many cases this means complexity in the investigations and protracted litigation.
Our courts, appreciating the objectives of civil forfeiture, have utilized the Constitution to cushion its effects on property and liberty rights by implementing the proportionality analysis. A three-staged approach has crystallised in practice by applying an approach incorporating instrumentality, exclusion and proportionality analyses.
The proportionality requirement was most recently in the spotlight in the Salie case in the Western Cape High Court. In this matter, the NDPP applied for an order declaring certain property, being 2 bank accounts, 3 immovable properties and a motor vehicle, forfeit to the State. The NDPP contended that the property were proceeds of unlawful activities, in this case, the keeping of a brothel and living off the proceeds of prostitution.
The question subsequently arose whether proportionality applies to the forfeiture to the State of the proceeds of unlawful activity under POCA as, prior to this case, the proportionality requirement was developed and applied in cases in which the NDPP has sought the forfeiture to the State of instrumentality of offences and not the proceeds of unlawful activities. The High Court concluded that proportionality is indeed a requirement for the forfeiture to the State of the proceeds of unlawful activity under POCA.
Ladies and gentlemen,
To conclude, the question as to whether or not crime pays has, over many decades, been the subject of many a debate. The all-important issue is how do we get the message out that crime does not pay. And herein lies the very success of asset forfeiture. As Michael Corleone said in The Godfather: “When they come, they'll come at what you love.” It means going after what criminals love most - money, wealth, assets and possessions.
Asset forfeiture means taking the profit out of crime. It means sending a message that crime does not pay. It means targeting criminals where they feel it most. It means taking from the perpetrator and giving back to the victim of crime.
The sterling work being done by the AFU assists in building safer communities. This is evident when one looks at some of the matters. In the well-known Van der Burg case the Court found in favour of the AFU and upheld a forfeiture order that was previously granted against a shebeen. The Van der Burgs, a married couple, had been running an illegal shebeen in contravention of the Liquor Act for several years from their home in Athlone in the Western Cape, where they have lived with their four children, some of whom were minors.
The couple had continued to run the shebeen despite several complaints by neighbours of the harmful effects that the shebeen had on the neighbourhood, and despite numerous police actions, including warnings, searches and seizures of liquor and arrests, and the AFU’s freezing order, granted earlier over the property. In addition, the shebeen was situated 30 metres from a primary school.
The Constitutional Court held that POCA was applicable to the offence of illegal selling of liquor. It also ruled that the forfeiture was not disproportionate, because nearly 60 police actions had failed to stop the applicants in their profitable and coordinated unlawful activities.
In April this year, we read about how the AFU raided a Durban businessman’s properties, seizing assets and cash worth about half a billion rand. A further sum of R100 million had also been frozen. This comes after an investigation revealed alleged irregularities in the development of a residential project at Phoenix.
In May we read about how a preservation order was granted against SuraPure Drinks, for allegedly conducting a business similar to a Ponzi scheme. There was apparently just over R60 million in SuraPure’s bank account, from the more than R170 million initially invested. In such a case, the action taken by the AFU is possibly the only chance that these investors have to recoup their money.
Last month, we read about how the AFU seized the property of a person in Gonubie, after the person’s sister allegedly stole R2, 5 million from the OR Tambo District Municipality’s coffers. That’s R2, 5 million that could have been used to provide much-needed services to the poor in the community. Funds which the AFU is now recovering.
Ladies and gentlemen,
I would like to take the opportunity to commend the AFU for its hard work and to congratulate it on its achievements. I also wish to extend our appreciation to other role-players, including the SAPS Asset Investigation Section, the SA Revenue Service, the Financial Intelligence Centre and the SA Reserve Bank, to name but a few.
In our constitutional democracy we often talk about freedom. Freedom is not only about political freedom or about civil and political rights. Freedom also means the freedom to live in a safe community and the freedom to live a life free from crime, violence and corruption. The work of the AFU significantly contributes to making this a reality.
I thank you!
