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.
This morning, almost a month after he embarrassed the government at Marikana mine by giving provocative speeches to the striking miners, Julius Malema was charged with money laundering. It is alleged that he contravened section 6 of the Prevention of Organised Crime Act (POCA). But why was Malema not prosecuted for corruption; what are the chances that the charge of money laundering will stick; and what sentence does he face if convicted?
Judging from the charge sheet, the state does not have sufficient evidence to link Malema directly to the payment of a bribe to anyone involved in the granting of tenders to one of the companies in which Malema has a stake. While several of Malema’s co-accused are indeed charged with corruption for offering or accepting bribes to secure tenders, Malema himself is “only” being charged with money laundering in terms of POCA. If he was indeed involved in criminal activity, he was astute enough to place some distance between himself and other perpetrators more closely involved in the offering of bribes.
It is therefore not surprising that Malema is not being prosecuted for either fraud or corruption, but only for money laundering in terms of POCA. POCA criminalises activities of any person who acquires, uses, or has possession of, property and who knows or ought reasonably to have known that it is or forms part of the proceeds of unlawful activities of another person.
Property is broadly defined in the Act to include “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”. This means that if Malema received shares or other benefits, cash payments or presents which were bought by the proceeds of crime or came from other unlawful activity and if he knew this or ought reasonably to have known it, he would face conviction for money laundering.
It is important to note that section 6 of the Act – in terms of which Malema is being charged – is even broader than might at first be apparrent. This is because it states that one commits a crime if one receives any benefit which is the proceeds of “unlawful activities”. Unlawful activities are not limited to activities which would constitute a criminal offence. This is because the Act defines such activities as “any conduct which constitutes a crime or which contravenes any law whether such conduct occurred before or after the commencement of this Act and whether such conduct occurred in the Republic or elsewhere”.
This means that where one has received money from a rigged tender or even a tender which was not corruptly awarded but was awarded unlawfully in contravention of the relevant legislative provisions, one might still be liable to be convicted for money laundering under section 6 of POCA.
What the state would have to prove to secure a conviction against Malema is therefore that he received, used or possessed money or some other rights or benefits which resulted from unlawful activities – either directly or indirectly – and that he knew or ought reasonably to have known, that these benefits were derived from unlawful activities.
To do so, the state would have to prove one of two things. First, it could prove that Malema in fact knew that the money paid into his Ratanang trust came from unlawful activities. According to the Act the state would be able to prove this by proving that Malema believed that there was a reasonable possibility that the money came from unlawful activities and that he had nevertheless failed to check whether this was so or not. If Malema argues before court that he never bothered to check where the money came from or why people were depositing all this money into his account because he could not be bothered, he would be admitting to one of the elements of the crime.
But even if the state would not be able to prove that Malema in fact knew that the money came from dodgy sources, he would nevertheless face conviction if it could be shown that he reasonably ought to have known or suspected that the money came from an unlawful activity. This will be the case if the state could show that a reasonably diligent and vigilant person having both the general knowledge, skill, training and experience that may reasonably be expected of a person in his or her position as well as the general knowledge, skill, training and experience that he or she in fact has would have suspected that the money paid into his trust came from unlawful activities.
So, it would not be possible for Malema to argue that he never knew where the money came from, that he never checked where it came from and was never concerned about whether the money came from lawful or unlawful sources. In other words, Malema would not be able to plead that while he might have been negligent in not checking, he did not have the intention to commit a crime. This is because in terms of the Act his mere negligence in failing to check where and why money was paid into his Trust would be sufficient to secure a conviction in terms of section 6 of POCA.
The broad scope of the various applicable provisions of POCA under which Malema is charged might suggest that Malema is a goner. After all, Malema will not be able to raise the defence set out in section 7 of POCA that he had reported knowledge or suspicion of the unlawful activity to the authorities. Does this mean that he is likely to be convicted and that he will face a maximum sentence of a fine not exceeding R100 million, or to imprisonment for a period not exceeding 30 years (as prescribed by section 8 of POCA)? Or will he receive the minimum sentence of 15 years as prescribed by the legislation on minimum sentencing?
The short answer is that one should never predict the outcome of a criminal trial. We have no idea what evidence the state has in its possession. Neither do we know how the various witnesses – including, potentially, Malema himself – will perform under cross examination on the witness stand. In any case, it is for the trial court and not for pundits to decide whether the state has proven its case against an accused beyond reasonable doubt.
Having said this, I would nevertheless make the following tentative observations without in any way prejudging the outcome of the case. Judging from the charge sheet, the various transactions under scrutiny were structured in such a way to put some distance between the alleged unlawful and criminal activity, on the one hand, and the Ratanang Trust which ultimately received the proceeds from this alleged unlawful or criminal activity, on the other. The Trust owns 50% of a company called Guilder Investments. Guilder investments in turn owned 33.3% of a company called On Point. On Point is the company who is alleged to have acted fraudulently in order to secure the tender which ultimately is alleged to have enriched the Ratanang Trust and hence Malema himself.
However, whether this distance between the Ratanang Trust and Malema himself, on the one hand, and any alleged fraudulent and corrupt activity, on the other, would protect Malema from conviction is not so clear. The state would have to show that at least some of the 16 payments made to the Ratanang Trust (payments which add up to just over R4.5 million) were the proceeds of unlawful activity and that Malema knew this or ought reasonably to have known this. If they can show that even one of these payments came from unlawful activities and that Malema ought reasonably to have known this, they would have secured a conviction.
It is impossible to say at this stage whether the state has the necessary evidence to secure such a conviction. However, given the very broad scope of POCA, given the fact that a conviction could be secured even if it is shown that Malema negligently failed to ask questions about whether any of these mysterious payments came from unlawful activity, and given the alleged close relationship between Malema and other of the accused allegedly more closely involved with On Point, there appears to be at least some reason to believe that this is – from a criminal law perspective at least – not an entirely trumped up charge.
Of course, this does not mean that Malema was not singled out for prosecution for political reasons or that many other politically more connected individuals might be protected from similar prosecution while Malema is made to face the music. But it does mean that Malema’s lawyer will have her work cut out for her.BACK TO TOP