The recommendation for criminal charges is particularly applicable to Mr Anoj Singh and Mr Koko, who by false pretences led Eskom, through the officials who processed the R659 million payment, to believe that the R659 million payment was in the nature of pre-payment for coal, as was the R1.68 billion pre-payment, later converted into a guarantee, when in truth and fact they knew that the prepayment and the guarantee were needed to enable the Guptas to complete and save the sale of share transaction.
Earlier this week the Daily Maverickreportedin great detail (quoting from bank statements and text messages) on how Grand Azania – a company legally owned by Brian Shivambu – paid about R570 000 towards the cost of Floyd Shivambu’s wedding. Shivambu is the deputy leader of the Economic Freedom Fighters (EFF). The report suggested that Shivambu might be in breach of the Code of Ethical Conduct and Disclosure of Members’ Interest for Assembly and Permanent Council Membersand might also be guilty of money laundering. But what does the law actually say?
Grand Azania is a company legally owned by Floyd Shivambu’s brother, Brian. It is reported that the company received R6.16-million in loot from VBS Mutual Bank and a further R8.74-million in cash from at least 15 additional sources. Some of this additional cash flowed into the bank account of Grand Azania after Floyd Shivambu solicited money from, among others, businessman Lawrence Mulaudzi, sending him the following Watsapp message: “Heita… Please don’t forget to activate that intervention. Am in great need.”
It is unclear why donations of R8.74 million poured into Grand Azania’s bank account and what, if anything, the donors expected to receive in return. It is also unclear why donations from non-VBS sources benefiting Floyd Shivambu were not deposited directly into his own bank account.
As the bank statements reproduced in the Daily Maverick show that many of Floyd’s wedding expenses were paid from the Grand Azania bank account, the first legal question that arises is whether Floyd acted in breach of the Code of Ethical Conduct and Disclosure of Members’ Interest for Assembly and Permanent Council Members. (The Code should not be confused with the Executive Members Ethics Code, which applies only to members of the Executive.)
The Code outlines the minimum ethical standards of behaviour that South Africans expect of public representatives, including upholding propriety, integrity and ethical values in their conduct. The Code is enforced by the Joint Committee on Ethics and Members’ Interests as established by the Joint Rules of Parliament.
Section 5 of the Code requires MPs to declare conflicts of interest and prohibits MPs fromaccepting any reward, benefit or gift from any person or body where this may create a direct conflict of financial or business interest for an MP or where this is intendedto corruptly influence that Member in the exercise of his or her duties or responsibilities as a public representative.
It’s a matter of public record that the EFF defended VBS bank and demanded that the Reserve Bank take steps to save it (after previously questioning the bank for lending money to then President Jacob Zuma). It might be that this change of heart towards VBS Bank was a direct result of money flowing from VBS to the EFF, as well as to both Julius Malema and Floyd Shivambu.
This raises suspicions about a possible conflict of interest and about whether money flowed from VBS to the EFF and its two top leaders to try and buy their protection. But let us assume for the moment that there is not sufficient evidence to prove that these suspicions are justified, and assume that there is not sufficient evidence that a breach of section 5 occurred.
However, section 9.3 of the Code requires members of Parliament each year to declare all their financial interests, including:
One possibility is that Brian Shivambu is the owner of Grand Azania in name only, while Floyd Shivambu controls the company and its resources and therefore de facto has a direct financial interest in the company. This view is bolstered by the fact that money solicited by Floyd Shivambu from, among others, businessman Lawrence Mulaudzi was not paid directly to Floyd, but was rather paid into the bank account of Grand Azania before being dispensed to pay for various of Floyd Shivambu’s wedding expenses. If this is the case, the failure to declare this de facto financial interest in Grand Azania will amount to a breach of the Code.
A second possibility is that the facts do not provide sufficient evidence that Floyd Shivambu in fact has a direct financial interest in Grand Azania. If this is so, it would mean that Floyd received a “gift” from Grand Azania to at least the tune of R570 000. The money might have come from VBS and from other sources, including “friends” of Floyd, but it was dispensed via Grand Azania.
But nothing turns on whether one assumes the source of the money is Grand Azania or VBS and the various friends who deposited money into Grand Azania’s bank account, before the money was used to defray Shivambu’s wedding expenses. What would matter is that Floyd received “gifts” and that the “gifts” were not declared.
Now, it is important to note that if the “gifts” had been received from a family member – Floyd’s spouse, permanent companion or dependents – it would not have had to be declared. But the Code requires MPs to declare any other “gifts” received from friends (no matter how close) or from individuals who are not close family. This is why Shivambu’s response to Daily Maverick does not make legal sense. He stated that:“All the assistance I got for my wedding came from close family friends and there was no conflict of interest, none whatsoever.”
Section 9.3 of the Code does not require an MP only to declare gifts where a possible conflict of interest arises (that is dealt with by section 5 of the Code which I discussed above), so the section will be breached regardless of whether the gift created a conflict of interest or not. Section 9.3 of the Code also does not exempt an MP from declaring gifts because these were made by “close friends”. This means that the failure to declare the R570 000 received from Grand Azania to pay for wedding expenses would be in breach of the Code.
The second legal question that arises, relates to Floyd Shivambu’s alleged involvement in money laundering. Money laundering is a process by which criminals and the beneficiaries of crime or other unlawful acts hide or disguise the proceeds of their crime so that this appears to have originated from a legitimate source.
The Public Protector famously instructed the National Director of Public Prosecutions to investigate suspicions of money laundering on the part of President Cyril Ramaphosa by wrongly invoking the Prevention and Combatting of Corrupt Activities Act, instead of the Prevention of Organised Crime Act. The former Act does not regulate money laundering, while the latter does.
Unbeknownst to the Public Protector, money laundering is prohibited by section 4 of the Prevention of Organised Crime Act. This section sets out the various elements that must be proved to secure a criminal conviction for money laundering against an accused.
The first requirement is that the person charged with money laundering must have known or ought reasonably to have known that the money that was laundered formed part of the proceeds of unlawful activity. This means money laundering can only occur when it can be shown that the alleged perpetrator(s) knew or ought to have known that the money derived from a dirty source. In this case, what would have to be shown is that Floyd Shivambu knew or ought to have known that the money received from VBS via Grand Azania was the proceeds of unlawful activity.
Second, the implicated person must either have entered into an agreement or must have engaged in an arrangement or transaction with others relating to the money, or must have performed any other act in connection with the laundered money. It matters not whether the agreement was legally enforceable or not.
The most likely way to show that this second requirement had been met would be to prove that there was some kind of arrangement between the VBS looters, Brian Shivambu and Floyd Shivambu (or, alternatively, between the two Shivambu brothers) about how the dirty money should be dealt with. If such agreement was made, it was obviously not written down and I suspect it would be difficult to prove the existence of such an agreement unless one of the parties allegedly involved in the money laundering turned state witness or unless incriminating Whatsapp or other messages were uncovered.
The third requirement is that the agreement, arrangement or transaction mentioned in the previous paragraph must either have or must likely have had the effect of concealing or disguising the nature, source, location, disposition or movement of the laundered money or of enabling or assisting any person who has committed or commits an offence to avoid prosecution.
This requirement goes to the heart of the crime of money laundering. In effect, any attempt to conceal the origins of the dirty money, for example, by “laundering” it from one account to another and then to another (as occurred with the VBS money transferred to Grand Azania and then onwards to Floyd and his creditors) will meet this third requirement. It is important to note that the provision is extremely broad and even where it cannot be shown that the implicated persons had the intention to conceal the origins of the dirty money, the requirement will still be met as long as the agreement, arrangement or transaction likely would have had the effect of concealing the dirty origins of the money.
From the above it must be clear that it would not be easy to prove beyond reasonable doubt that Floyd Shivambu was guilty of money laundering as he is not the legal owner of Grand Azania. In the absence of proof that he made an informal agreement with his brother and VBS about how to deal with the VBS loot, the state may have some difficulty to prove his guilt. The situation is very different for Brian Shivambu who is the legal owner of Grand Azania and who is – from a formal legal perspective – responsible for the arrangements that led to the VBS loot being laundered into Grand Azania and beyond.
While it is unlikely that the Hawks will ever spend the time and resources to try and build a money laundering case against either brother, Brian Shivambu is at far greater risk than his brother Floyd of ever being charged and convicted for the crime of money laundering. It would, however, be rather ironic if the brother who benefitted far less from the dirty money received from VBS is prosecuted while his brother, who benefitted more, is not.BACK TO TOP