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.
Public Protector, Busisiwe Mkhwebane this week confirmed that she was investigating allegations of money laundering in relation to a donation made by Bosasa to President Cyril Ramaphosa’s campaign for ANC presidency. Money laundering is an extremely serious matter, and anyone convicted of money laundering faces a maximum fine of up to R100 million, or imprisonment for a period of up to 30 years. It is therefore important that such claims be investigated properly. However, the Public Protector is not the person to do so, as she does not have the legal authority to investigate money laundering exclusively involving two private entities.
If you steal millions or even billions of Rand (or illegally obtain millions of billions of Rand from a criminal enterprise), one of the biggest problems you are going to face is how to disguise the criminal taint attached to the funds. If you deposit the money (or have it deposited) directly into your bank account, even the toothless Hawks might notice and might begin to investigate. To avoid the danger of detection, you might try to launder the money by cycling it through various bank accounts, “family trusts”, or business entities, transferring it from one to the other until the money has been “cleansed”.
It is for this reason that the Financial Intelligence Centre Act (FICA) imposes strict reporting obligations on institution that receive such funds and penalises those who fail to report on the movement of such funds. This Act must be read in conjunction with section 4 of the Prevention of Organised Crime Act (POCA) which criminalises money laundering. To simplify slightly, you will be guilty of money laundering if you know or ought reasonably to have known that money is or forms part of the proceeds of unlawful activities and you deal with the funds in such a way that it:
has or is likely to have the effect of concealing or disguising the nature, source, location, disposition or movement of the said property or the ownership thereof or any interest which anyone may have in respect thereof.
I have no idea what happened with the R500 000 donation to Cyril Ramaphosa’s campaign fund – which was used to finance his run for the presidency of the ANC. In the absence of more information it is also not possible to say whether those who administered the fund had the intention to launder the money received from Bosasa (or perhaps from Bosasa boss, Gavin Watson, personally). But what is clear, is that the Public Protector does not have the legal power to investigate the money laundering aspect of this matter and if she does investigate it, she will, once again, be acting beyond the scope of her powers.
Let me explain why.
In terms of section 182(1) of the Constitution, the office of the Public Protector was established to investigate conduct in state affairs, or in the public administration in any sphere of government that is alleged or suspected to be improper or to result in any impropriety or prejudice. The office was not established to investigate alleged criminal acts committed by private entities that are in no way linked to state affairs or public administration.
The problem is that President Ramaphosa’s campaign to become president of the African National Congress (ANC) was in no way linked to state affairs or public administration as neither Bosasa, the ANC, or Ramaphosa’s ANC presidential campaign are part of the state, nor are they part of the public administration.
The money laundering aspect of the Public Protector’s “investigation” deals with one private person or business channelling money to another private entity and is therefore completely beyond the scope of the powers of the Public Protector. Just as the Public Protector is not empowered to investigate whether a crime was committed when a dodgy cousin donated money to me to run my Blog, she is also not empowered to investigate other transactions between private parties – even when a criminal offence might have been committed. It is the SAPS and the Hawks that are constitutionally empowered to investigate alleged crimes committed by private parties.
So much for the general principle. Let us now turn to section 6(4) of the Public Protector Act which sets out in more detail the investigative authority of the Public Protector. Section 6(4)(a) states that the Public Protector is authorised to investigate:
In addition, section 6(5) of the Public Protector Act also allows the office of the Public Protector to investigate various matters relating to maladministration in state owned enterprises. This means that where a state-owned enterprise channels money to a private person or entity, the Public Protector is entitled to investigate the matter in certain circumstances.
These sections restrict the powers of the Public Protector and she is not permitted to investigate matters not listed in section 6(4) and 6(5) of the Act, or not dealing with breaches of the Executive Members Ethics Code.
Two obvious conclusions can be drawn from the above. First, the Act does not explicitly permit the Public Protector to investigate the crime of money laundering as set out in section 4 of POCA. Section 6(4) only authorises the Public Protector to investigate certain offences created by the Prevention and Combating of Corrupt Activities Act, and then only if this relates to corruption relating to public money.
Second, the Act limits the powers of the Public Protector to matters connected to affairs of government, and/or to acts or omissions of person performing a public function, and/or with respect to public money, and/or with respect acts by civil servants. It does not empower her office to investigate suspected money laundering in a situation where money was channelled from one private entity to another and used for a private purpose.
(It is not in dispute that the Public Protector is empowered to investigate whether the President lied to Parliament as she is given this power by the Executive Member Ethics Act, and this article should not be read as disputing the fact that she has the legal power to investigate whether Ramaphosa lied to Parliament.)
The Public Protector has previously invoked the Supreme Court of Appeal (SCA) judgment in the case of The Public Protector v Mail & Guardian Ltd and Others (the so called “Oilgate” case) to justify the extension of her probe beyond the question of whether President Cyril Ramaphosa lied to Parliament about the Bosasa donation.
She correctly pointed out that the court in this case held “that the Public Protector should not be bound by or limited to the issues raised for consideration and determination by the parties but should investigate further and discover the truth and also inspire confidence that the truth has been discovered”.
In the Oilgate case the SCA noted that the powers of the Public Protector are circumscribed, but that she nevertheless has a duty to act proactively and has the power to seek information from any person to investigate one of the matters she is permitted to investigate in terms of the Public Protector Act. In other words, while the Public Protector cannot choose to investigate matters that she is not empowered to investigate by the Act, shecan proactively investigate matters that she is empowered to investigate in terms of section 6(4) and 6(5) of the Public Protector Act.
In the Oilgate case the then Public Protector held that he could not investigate a complaint about money from PetroSA (a state owned enterprise) being channelled through a private company into the coffers of the ANC because the money stopped being “public funds” when PetroSA transferred the money to the private company. The court rejected this argument because the essence of what was to be investigated was public money unlawfully being channelled from a state-owned enterprise to a private company and then on to the ANC. The court explained that:
The conversion of public money into private money occurs through a bilateral transaction of payment and receipt. I would be most surprised if the legislation envisaged that one side of that bilateral transaction of conversion may be investigated but not the other. To improperly pay public money, and to improperly receive public money, each seems to me to be quintessentially an ‘improper … act … with respect to public money’. I also see no immediate reason why the improper receipt of public money is not ‘improper … enrichment’ by a person resulting from an act in connection with the affairs of the public body.
The Oilgate judgment cannot assist the Public Protector in the money laundering matter because the alleged money laundering did not involve a transfer of public funds from a state owned enterprise or other public entity to a private entity – as was the case in the Oilgate scandal. In the Ramaphosa case, funds were transferred – allegedly first channelled through various other entities – from Bosasa/Watson (a private entity) to Ramaphosa’s campaign fund (another private entity).
Of course, Bosasa/Watson almost certainly acquired some of their money through corrupt means, but there is no causal nexus between any specific corrupt transaction and the donation to Ramaphosa’s campaign fund – unlike in the Oilgate matter. To paraphrase the Oil gate judgment, in this case there was no “conversion of public money into private money” through a transaction of payment and receipt. There was only private money (albeit private money probably acquired through corruption) being channelled to another private entity.
If there is any evidence of money laundering, it would be appropriate for the Public Protector to alert the SAPS or the Hawks to investigate the matter. If she insisted on investigating the matter herself, she would (once again) be acting unlawfully by exercising powers not bestowed on her office. This sharply raises the question of why the Public Protector would risk yet another humiliating court defeat about the overreach of her powers.BACK TO TOP