When the first indications of a significant accounting fraud scandal emerged in December 2017, Markus Jooste ("Jooste'') resigned from Steinhoff International Holdings NV (''Steinhoff''). As a result, investors lost over R200 billion and accordingly, Jooste was linked to contravening the Exchange Control Act 9 of 1933 (''the Act''). The South African Reserve Bank (''SARB'') alleges that Jooste used companies within the Steinhoff group to enrich himself.
Consequently, in October 2022, the Western Cape High Court granted SARB an order to seize more than R1.4 billion of assets owned by Jooste, his wife and his family trust: the Silveroak Trust (''the Affiliates''). The ex parte application, which is the application brought by SARB wherein no notice was given to Jooste, in which a preservation order was granted to attach various assets of the Affiliates, which includes inter alia any and all documents and books that will assist the SARB in further investigations against Jooste. The ex parte order was also granted without Jooste or any of the other Respondents cited being privy to the hearing.
Further to the above, the preservation order permits the attachment as well as the preservation of evidence and is not a substitute for possessory or proprietary claims. The Affiliates will have the right to the usage and enjoyment of the assets but will not be allowed to dispose of any of the assets. Furthermore, the preservation order allows for the daily operations of businesses as well as the maintenance of the attached assets to proceed, as the assets are preserved until such a time that they need to be realised.
In terms of Regulation 19(1) of the Exchange Regulations the court made the order. Regulation 19 reads:
''19. (1) The Treasury, or any person authorised by the Treasury, may order any person to furnish any information at such person's disposal which the Treasury or such authorised person deems necessary for the purposes of these regulations and any person generally or specifically appointed by the Treasury for the purpose may enter the residential or business premises of a person so ordered and may inspect any books or documents belonging to, or under the control of such person.
(2) If any person makes any statement in any information furnished in compliance with such an order which is in conflict with any other statement previously made by him in giving information required in connection with the subject matter of such order, he shall be deemed to have made an incorrect statement in terms of Regulation 22 and may, on an indictment, summons or charge alleging that he made the two conflicting statements, be convicted of making an incorrect statement in contravention of the said Regulation 22 upon proof of the two statements in question and without proof as to which of the said statements was incorrect, unless he proves that when he made each statement he believed it to be true.''
Additionally, Auction Alliance (Pty) Ltd v Estate Agency Affairs Board and Others (4850/2012) [2012] ZAWCHC 92 (21 June 2012)ad paragraph 16 stated that:
'' ... the absence of express statutory authority was no bar to the acceptance of Anton Piller orders as part of the court's judicial practice and that the court has the discretion whether to grant an Anton Piller order or not, and if so, on what terms dealing with the proposition that South African Courts do not have the jurisdiction to grant an order for the attachment of documents and other things to which no right is claimed except that they should be preserved for and produced as evidence in an intending court case between the parties..."
Furthermore, Section 25 (1)(b)(i) of The Prevention of Organised Crime Act 121 of 1998 ("POCA") states that the High Court may grant a restraint order even though prosecution against a suspected individual has not yet been instituted. The court must be satisfied that the suspected individual is to be charged with an offence.
Moreover, asset forfeiture is an integral part of the fight against corruption with the aim of taking the profitability away from economically motivated crimes. The preservation order was obtained as a result of excellent cooperation by a top-notch team from the SARB's Financial Surveillance Department's Compliance and Enforcement Division which commenced investigations into the exchange control irregularities at Steinhoff in early 2018.
The purpose of the preservation order is to interdict, restrain and prohibit the Affiliates, from dealing in any manner with the funds held in the name of the Affiliates, as well as disposing of the property (i.e., dissipating assets) which is subject of the litigation and can be realised at a later stage. The application was brought on the basis that the Affiliates had benefitted or had been enriched as a result of a Jooste and others contravening the regulations.
Socialite, Berdine Odendaal, who is believed to be the "mistress" of Jooste, has brought an application in the High Court to unfreeze her bank account, as she is alleged to have unlawfully benefitted over R60.5m from Mayfair Speculators (Pty) Ltd, a company which Jooste is a director of. Consequently, the money in the said accounts as well as billions of rands in assets are currently preserved pending the finalisation of the forfeiture in terms of Regulation 22B of the Exchange Regulations, without the risk of any of the Affiliates dissipating any of the assets.
Forensic Experts, Cyanre, the Digitial Forensic Lab (Pty) Ltd together with the supervising attorney, Mr. Daniel Rossouw, were appointed with the objective to recover cash unlawfully transferred out of South Africa. Since a search may infringe upon the related person's rights to dignity as well as privacy as envisaged in Sections 10 and 14 of the Constitution of the Republic of South Africa, 1996 ("the Constitution"), the forensic experts as well as the supervising attorney are required to display a great deal of caution, strict regard to decency and order in executing their functions by solely executing the search consonant with the mandate of the court order.
This order has highlighted the effectiveness of legislation as well as the different avenues available for state entities to attach and preserve assets without the risk of the assets being dissipated. SARB is fortunate to be able to rely on Regulation 22C which provides for the recovery of any money or goods, irrespective of whose possession it is in, when that person has benefitted or been enriched as a result of a third party contravening the regulations. The SARB may thereafter block and attach such assets. Integral to this section, SARB is able to attach assets which are not directly proceeds of the original crimes.
If Steinhoff or other persons or entities were used to commit transgressions of the Exchange Control Regulations, the SARB can recover those assets from the people and companies or trusts who benefitted and were enriched from the illegal activities. Even if these assets were not really purchased with money unlawfully gained from Steinhoff, they may be forfeited to the state if the SARB can prove its allegations. If Jooste is found guilty, a confiscation order will be granted, regardless of whether Jooste is still in possession of the proceeds.
In the cases of Mohunram v NDPP 4 SA 222 (CC) 237 and Prophet v NDPP 2005 2 SACR 670 (SCA) it was held that, in relation to asset forfeiture, South Africa has a two-policy rationale. The first is that the gains from unlawful activity should not accrue and accumulate to those who have committed the said unlawful activity and as a consequence, they should not be accorded the right to property as stipulated in Section 25 of the Constitution. The second rationale is that the state as a matter of policy is endeavouring to suppress the conditions that lead to unlawful activities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
