Asset forfeiture unit

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

2. LAW ENFORCEMENT AGENCIES

3. Asset forfeiture unit (AFU): Background Law: • The Prevention of Organised Crime Act 121 of 1998 (POCA) & Asset forfeiture provisions Procedure Investigations

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5. Part 1:BACKGROUND

6. Background: Introduction & mandate of the AFU • The Asset Forfeiture Unit (AFU) was established in May 1999 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 1998.)(POCA).

7. Background: Introduction & mandate of the AFU • 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.

8. Background: Introduction & mandate of the AFU • 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”)

9. Background: Introduction & mandate of the AFU • 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

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

12. 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

13. 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”

14. Asset forfeiture unit:enabling legislation & empowering provisions Does POCA apply to individual wrong doing or does it apply only to big organised crime matters? In NDPP v RO Cook Properties (Pty) Ltd2004 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.

15. Asset forfeiture unit:enabling legislation & empowering provisions In NDPP v RO Cook Properties (Pty) Ltd2004 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”

16. 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 ….

17. PROCEEDS OF UNLAWFUL ACTIVITIES 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;

18. PROCEEDS OF UNLAWFUL ACTIVITIES 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

19. AFU:enabling legislation & empowering provisions Read chapter 5 – Proceeds of unlawful activities: What Happens to the Profits of Crime? • Confiscation ordersgive 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.

20. AFU:enabling legislation & empowering provisions 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.

21. AFU:enabling legislation & empowering provisions 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

22. 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.

23. AFU:enabling legislation & empowering provisions (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.

24. 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”.

25. AFU:enabling legislation & empowering provisions (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.”

26. Asset forfeiture unit:enabling legislation & empowering provisions • “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”

27. Asset forfeiture unit:enabling legislation & empowering provisions (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.

28. Asset forfeiture unit:enabling legislation & empowering provisions (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.

29. Asset forfeiture unit:enabling legislation & empowering provisions (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.

30. Asset forfeiture unit:enabling legislation & empowering provisions 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.

31. Asset forfeiture unit:enabling legislation & empowering provisions 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”.

32. Asset forfeiture unit:enabling legislation & empowering provisions Proceeds of Crime = Gross v Net proceeds? Swanepoel v The State (DPP): The appellant pleaded guilty to section 37 of Act 62 of 1955. He received cobalt powder worth R480 000 and because his realisable property was valued at R340 613.50 the court made a confiscation order for R340 613.50. On appeal the appellant argued that the confiscation order should be limited to R38 500 since that was the value of his profit.

33. Asset forfeiture unit:enabling legislation & empowering provisions 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” .

34. Asset forfeiture unit:enabling legislation & empowering provisions Proceeds of Crime = Gross v Net proceeds? Shaikv 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.

35. Asset forfeiture unit:enabling legislation & empowering provisions Proceeds of Crime = Gross v Net proceeds? Shaikv 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.

36. Asset forfeiture unit:enabling legislation & empowering provisions Proceeds of Crime = Gross v Net proceeds? Shaikv 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.

37. Asset forfeiture unit:enabling legislation & empowering provisions Shaikv 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.

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39. Asset forfeiture unit:enabling legislation & empowering provisions 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

40. Asset forfeiture unit:enabling legislation & empowering provisions 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”

41. Asset forfeiture unit:enabling legislation & empowering provisions 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.

42. Asset forfeiture unit:enabling legislation & empowering provisions 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.

43. Asset forfeiture unit:enabling legislation & empowering provisions 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)

44. Asset forfeiture unit:enabling legislation & empowering provisions 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.

45. Asset forfeiture unit:enabling legislation & empowering provisions 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.

46. Asset forfeiture unit:enabling legislation & empowering provisions 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.

47. Asset forfeiture unit:enabling legislation & empowering provisions 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.

48. Asset forfeiture unit:enabling legislation & empowering provisions Read chapter 6 – Civil Recovery of Property: • Section 37 confirms that proceedings on application for a forfeiture order or a preservation orderare 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.

49. Asset forfeiture unit:enabling legislation & empowering provisions 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.

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