National Director of Public Prosecutions v Scholtz and Others (2027/2012) [2013] ZANCHC 48 (13 December 2013)

Key Facts

Issues

• The court evaluated whether the corporate veil of entities like Shosholoza Trust and Casee Trust could be pierced to hold individuals (e.g., Scholtz, Botha, Block) liable for the restraint order. This was based on evidence of intertwined ownership, nominee arrangements, and fraudulent conduct in establishing the Trifecta Group's operations. Precedents like Cape Pacific Ltd v Lubner Controlling Investments were cited to justify disregarding the separate legal personality of companies in cases of fraud or improper conduct.
• The court examined if the NDPP fully disclosed material facts in the founding affidavit, such as the existence of related civil and criminal proceedings (e.g., Case No 3735/2011 in the North Gauteng High Court) and a preservation order. The duty to disclose all facts that might influence the Court's decision was central, with references to cases like National Director of Public Prosecutions v Kyriacou, which highlighted the consequences of non-disclosure in ex parte applications.
• The court assessed if there were reasonable grounds to suspect that respondents (e.g., Trifecta Group, Scholtz, Block, Botes) benefited from criminal activities (fraud, corruption, money laundering) to justify a restraint order under s25(1)(a)(ii) of POCA. The analysis included reviewing the White Report, which detailed inflated lease agreements, circumvention of supply chain processes, and evidence of benefit through shares and payments to officials. The court concluded that a real possibility of confiscation justified the order.
• The court considered whether the National Director of Public Prosecutions (NDPP) was justified in approaching the Court ex parte to apply for a restraint order under s26(1) of POCA. This involved evaluating if the NDPP had a legal right to bypass ordinary procedural requirements and whether prior agreements or facts necessitated a different approach. The analysis referenced precedents like Theodore Wilhem Van den Heever v NDPP and emphasized the discretion of the NDPP to use ex parte applications in urgent cases.

Holdings

• The court found that the National Director of Public Prosecutions (NDPP) was justified in approaching the court ex parte due to the urgency and potential for irreparable harm if delayed. The interim order did not prejudice respondents as they had the opportunity to challenge it on the return date.
• The provisional restraint order was confirmed, and respondents were ordered to pay the costs of the application, including the curator bonis. The court concluded there were reasonable grounds to believe a confiscation order may follow after the criminal trial, citing fraud, corruption, and money laundering as potential convictions.
• The NDPP was held to have made a full and frank disclosure of material facts, including related civil and criminal proceedings, and no suppression of key information was established. The court rejected arguments that non-disclosure of a s34 order would have influenced the decision.

Remedies

• The Provisional Restraint Order issued on 30 November 2012 is confirmed. This order prohibits respondents from dealing with specified properties pending the outcome of criminal proceedings, ensuring assets are preserved for potential confiscation.
• Respondents are ordered to pay the costs of the application, including the costs of the curator bonis, jointly and severally. The costs are structured such that payment by one respondent absolves the others.

Legal Principles

• The judge confirmed the NDPP's provisional restraint order, functioning as a Mareva injunction, to prevent respondents from dealing with assets pending the criminal trial, ensuring asset preservation.
• The court applied the principle of presumptions in determining that there were reasonable grounds to believe a confiscation order might be made against the respondents, based on evidence of fraud and corruption.
• The judge emphasized the obligation of the NDPP to approach the court in utmost good faith, ensuring all material facts were disclosed in the ex parte application, which was found to be adequately met.
• The court applied the principle of substance over form by piercing the corporate veil of the Trifecta Group to address the underlying fraud and improper conduct, disregarding the formal structure to consider the actual benefit to individuals.

Precedent Name

• National Director of Public Prosecutions v Kyriacou
• Phillipus Johannes Botha v Minister of Constitutional Development and Another
• Government of the Republic of South Africa and Others v Von Abo
• National Director of Public Prosecutions v Basson
• Theodore Wilhem Van den Heever versus National Director of Public Prosecutions and 11 Others
• Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd and others
• Development Bank of Southern Africa Ltd v Van Rensburg and others NNO

Cited Statute

• Criminal Procedure Act
• National Prosecuting Act, No 32 of 1998
• Constitution of the Republic of South Africa Act, No 108 of 1996
• Prevention of Organized Crime Act, 121 of 1998

Judge Name

Passage Text

• The Provisional Restraint Order issued on 30 November 2012 is confirmed.
• I have carefully considered this matter and discovered that there were a lot of shenanigans, misrepresentations and obfuscation at destroying the paper trail... All that I need to be satisfied with is whether it appears to me, on reasonable grounds, that there might be a conviction followed by a confiscation order.
• I find that under the circumstances, and for the stated reasons, the applicant NDPP was justified in approaching the Court on an ex parte basis.