In an important judgment delivered by the High Court in the case of Duncan Ernest Korabie v The Judicial Commission of Inquiry into allegations of State Capture, Corruption and Fraud in the Public Sector, including Organs of State, the court held that the State Capture Commission's findings and recommendations cannot be reviewed and set aside under PAJA.
In terms of a settlement agreement that was concluded between the Richtersveld community, the South African Government and Alexkor (a state-owned company), a piece of land and its mineral rights were given back to the community.
A company called the Richtersveld Mining Company ("RMC") was formed. RMC, in turn, partnered with Alexkor a Pooling and Sharing Joint Venture ("PSJV") to explore the land and mining rights.
Independent contractors who were appointed after a tender process rendered services to PSJV. The tender process was supposed to be fair, equitable, transparent, competitive and cost-effective as required by Section 217 of the South African Constitution.
Mr Korabie claims that he was requested on 9 December 2014 to attend a tender committee meeting and he met with Rafique Bagus, the chairperson of the tender committee, who was also a representative of Alexkor on the board of PSJV together with Dr Roger Paul, Mervyn Carstens, Zarina Kellerman (Alexkor's chief legal advisor) and Raygen Phillips (PSJV's secretary).
Before the start of the meeting, Mr Bagus allegedly called Mr Korabie and Dr Paul aside and informed them that only one tenderer, Scarlett Sky Investments 60 (Pty) Limited ("SSI") provided for local beneficiation of the diamonds and a concomitant significant community investment.
During the meeting, members of the tender committee were provided with documentation relating to the bidders. None of these bidders impressed Mr Korabie. Only SSI provided for appropriate social investment and direct community benefits. Mr Korabie was not entirely convinced that SSI should be appointed and raised a number of queries relating to SSI's bid. The meeting was adjourned on the understanding that a due diligence would be conducted on the bidders.
On 17 December 2014, Mr Korabie received a call from Dr Paul who advised that Mr Bagus had recommended that SSI be appointed. Later the same day, Mr Korabie also received a call from Mr Bagus, who again recommended that SSI be appointed. Mr Korabie suggested to Mr Bagus the possibility of a conditional appointment of SSI, subject to a due diligence being conducted.
Mr Korabie received an invitation to attend a tender committee meeting, which was scheduled for 23 January 2015. Mr Bagus tried to place the appointment of SSI on the agenda of this meeting, in order to persuade the committee to approve the appointment of SSI as the successful bidder. Mr Korabie claimed that he objected to such an appointment before a due diligence process had been completed and a final recommendation had been made to the tender committee. Mr Korabie's view carried the day and Mr Bagus was compelled to withdraw his proposal that SSI be immediately appointed.
During March 2015, Mr Korabie learned that PSJV had appointed SSI through a round robin resolution passed in February 2015. Mr Korabie disputed that he agreed to this and maintained that he only agreed to a conditional appointment of SSI, pending a due diligence investigation.
Mr Korabie later conducted his own investigation and discovered that SSI was a shelf company until shortly before its bid was submitted. Soon after the submission of SSI's bid, Kuben Moodley and Daniel Nathan were appointed as directors of SSI.
SSI had no track record in the diamond industry and it was not a diamond licence holder, which was one of the prerequisites for tendering for the services required by PSJV.
According to Mr Korabie, no monies were paid to the Communal Property Association as agreed and there was also no investigation by the Audit and Risk committee of Alexkor (as had been promised at the meeting).
On 18 January 2021, Mr Korabie received a letter from the Commission enclosing a Rule 3.3 notice. The Commission recorded that it came to its attention that information and evidence that was relevant to the Commission's investigation was in Mr Korabie's possession and/or under his control. The Commission urgently requested access to this information.
On 2 March 2021, Mr Korabie received a call from an investigator at the Commission. The investigator indicated that he was aware that Mr Korabie wished to testify before the Commission and the investigator asked if Korabie received a request for information from the Commission.
This was the last time that Mr Korabie heard from the Commission and he claimed that he was later alerted by an acquaintance that his name was mentioned in the Commission's findings and a directive was given that a further investigation should be launched against him and others in relation to the tender that was awarded to the SSI.
This led to Mr Korabie instituting an urgent application in the WCHC wherein he sought:
- the reviewing and setting aside of the adverse findings and the recommendations made in relation to him;
- an order directing the State Capture Commission to publish a correction within ten days of the date of the order.
The court noted that the State Capture Commission's recommendations described earlier were equally applicable to Paul and Bagus, as members of the tender committee. Accordingly, the court found that Dr Paul and Mr Bagus had a direct and substantial interest in the relief claimed by Mr Korabie and they may be prejudicially affected by the relief sought by Mr Korabie. The court concluded that the joinder of Mr Bagus and Dr Paul to the application was a matter of necessity and the failure to join them as parties to the application constituted a non-joinder. The court reiterated the legal position that where a party may have a direct and substantial interest in the litigation and was not joined, the court would not deal with the matter.
The court had to consider whether the State Capture Commission's recommendations constituted administrative action. It reiterated that for a decision to constitute administrative action, which can be challenged under PAJA, it must have a direct legal effect. "Direct" refers to decisions that are final. "External" refers to decisions that not only affect the decision maker. "Legal" is a reference to rights being affected
The court quoted with approval the Supreme Court of Appeal's judgment in Corpclo 2290 CC t/a U-Care v Registrar of Banks. In this case, the SCA stated that a decision to investigate and the process of investigation, which excludes a determination of fault, would not adversely affect the rights of the appellants in a manner that has a direct and external effect. Therefore, the Registrar of Banks' decision did not constitute administrative action. This approach was also adopted by the Constitutional Court in Viking Pony Africa Pumps (Pty) Limited t/a Tricom Africa v Hydro-Tech Systems (Pty) Limited and Another.
The WCHC concluded that the State Capture Commission's findings did not constitute an administrative act as defined in PAJA. Firstly, the State Capture Commission recommended an investigation into whether there was a breach of fiduciary duties. This decision is not final and could not be said to constitute a decision adversely affecting Mr Korabie's rights. The State Capture Commission, secondly, recommended that law enforcement agencies conduct further investigations as may be necessary in order to assess whether prosecution for fraud or a contravention of Section 214(b) of the Companies Act had occurred. The WCHC found that this decision was also not final and did not have a direct external legal effect.
Thirdly, the State Capture Commission recommended that law enforcement agencies conduct such further investigations as may be necessary to determine if there should be a possible prosecution of Mr Korabie and others for contempt of court. The court found that this too was not a final decision that had a direct external effect and therefore an application to review and set aside the State Capture Commission's recommendations in regard to Mr Korabie under PAJA, was unsuccessful.
The WCHC highlighted that the recommendations of the Commission referred to above, did not amount to decisions to investigate. They merely constituted a recommendation to investigate. These recommendations may not be accepted and they may not be acted upon. They are therefore neither final nor can they be said to adversely affect Mr Korabie's rights.
The court also placed emphasis on the doctrine of ripeness: a complainant should not go to court before the offending action or decision is final or ripe for adjudication. In terms of this doctrine, there is no point in wasting a court's time with half-formed decisions whose shape may change or where no decision was actually taken. The doctrine of ripeness ensures that courts address issues which have crystallised and do not have to deal with prospective or hypothetical issues.
Ultimately, because of the doctrine of ripeness, the lack of prejudice suffered by Mr Korabie and the checks and balances in place in the form of further investigations and/or court proceedings, Mr Korabie's application was dismissed.
This judgment may make it difficult for Minister Mantashe, Mike Mabuyakhulu and other members of the ruling party that were implicated in the Zondo report, from successfully reviewing and setting aside the findings and recommendations of the Commission. It may also have a bearing on Dr Surve and the Sekunjalo entities' application to review and set aside certain of the Mpati Commission's findings and recommendations.
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