Corrupt official’s house can be forfeited, Constitutional Court rules

The Constitutional Court has ruled that property which constitutes the proceeds of unlawful activities is not protected by the Constitution. This means that forfeiture orders against such property do not amount to the arbitrary deprivation of property.

In terms of section 25(1) of the Constitution, every person has the right not to be deprived of their property arbitrarily. The Prevention of Organised Crime Act (POCA) however, empowers the National Prosecuting Authority (NPA) to obtain a forfeiture order if the property is likely to be the proceeds of unlawful activities. The NPA need not prove that you have committed the crime in question; it only has to establish that it is more likely than not that the property constitutes the proceeds of crime.

The question is whether a forfeiture order infringes the constitutional right to property and if so what recourse a person has against the NPA.

Background: the corrupt government official

The case concerned a forfeiture order against the property of the late Yolanda Rachel Botha, a former government official. Botha was the head of the Department of Social Development in the Northern Cape for eight years, from 2001 until 2009). During this time, she assisted Trifecta, a construction company, to get contracts worth billions of rands. In exchange, Trifecta provided renovations to her home worth R1,169,068, and she entered into a “loan agreement” with Trifecta which required her to pay only R500,000 for the renovations.

In 2010, she was elected to Parliament and her activities came under the spotlight. She argued that she had received no benefit because she had paid for the renovations. However, a parliamentary committee found that she had breached the Code of Ethics in two respects: by benefitting from a corrupt relationship with Trifecta, and by misleading Parliament.

Botha then attempted to pay for the “loan”, paying R411,055. The NPA charged her with tender corruption and related offences and sought a civil forfeiture order. Botha challenged this in court, arguing that this infringed her right not to be arbitrarily deprived of her property.

But the Kimberley High Court found that Botha’s property constituted “the proceeds of unlawful activities” and ordered forfeiture of the entire property.

The Supreme Court of Appeal (SCA) also found that the property constituted the proceeds of unlawful activities. But it pointed out that the NPA had sought forfeiture of the value of the renovations as opposed to forfeiture of the entire property. So the SCA deducted the amount which Botha had paid Trifecta in determining the amount of property to be forfeited.

The Constitutional Court

The Constitutional Court had to determine whether the Constitution protects property, which is the proceeds of unlawful activities, from arbitrary deprivation, and if not, how much property Botha would have to forfeit.

A majority of the court (Justices Chris Jafta, Mbuyisela Madlanga, Nonkosi Mhlantla, Mogoeng Mogoeng, and Leona Theron) found that it was not necessary to consider whether property acquired as a result of crime is protected by section 25(1) of the Constitution. All that must be determined is whether the forfeiture order was arbitrary, the court said.

POCA requires that before a forfeiture order is made, a person who has an interest in the property to be forfeited must have the opportunity to appear at a hearing to oppose the application. Alternatively, they may request that the court exclude their interest in the property from the forfeiture order. The fair procedure coupled with the legitimate purpose it advances, means that forfeiture in terms of POCA is not arbitrary, the court said. So, POCA provides a fair procedure before there is a forfeiture and it also provides sufficient reason for deprivation.

A minority of the Court (Acting Judge Margaret Victor, with Justices Sisi Khampepe and Johan Froneman concurring) found that even property which is the unlawful proceeds of crime would be “property” protected by the Constitution. They argued that in terms of section 25(1) of the Constitution “lawfulness” is not a prerequisite for the protection of property.

They also pointed out that the law protects a person from arbitrary state interference. The judges illustrated this point with an example. Could a police officer remove his neighbour’s car (which had been stolen) without following procedures? In the judges’ view the answer would be no, though they pointed out that this did not mean that unlawfully acquired property would enjoy the same measure of protection as lawfully acquired property.

But the majority said it would be illogical to consider Botha’s unlawful proceeds to constitute property in terms of section 25(1) since she had no right to the property in question. They pointed out that section 25(1) does not create property rights, but protects existing ones. Here, Botha had no existing rights that merited protection. For these reasons, the proceeds of unlawful activities do not constitute property in terms of section 25(1), they said.

The ruling

All the judges agreed that Botha should forfeit the entire amount she received for the renovation: R1,169,068. Here, the majority of the court agreed with the reasons given by the minority, which found that the loan agreement was merely a front and the entire amount should be forfeited.

So the court ruled that Botha’s estate must pay the full amount into the criminal assets recovery account of the South African Reserve Bank within six months of the court order. If Botha’s estate fails to make payment, then the property in Kimberley must be sold by public auction to recover the amount that is due.

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