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IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION PRETORIA)

1. REPORTABLE: YES / NO.

2.  OF INTEREST TO OTHER JUDGES: YES / NO.

3. REVISED.

   11 August 2020

                                                                        CASE NUMBER: 78587/2018

 

In the matter between:

 

MAMPHE DANIEL MSIZA                                                         APPLICANT

 

and

 

ADVOCATE TERRY MOTAU SC (N.O)                                    FIRST RESPONDENT

 

THE PRUDENTAL AUTHORITY OF SOUTH                           SECOND RESPONDENT

 THE SOUTH AFRICAN RESERVE BANK

 

JUDGMENT

TLHAPI J:

 

INTRODUCTION

 

[1]        The applicant seeks to review and set aside and have declared as prejudicial

and unconstitutional, adverse findings made against him in an investigation which

was commissioned by the second respondent. The first respondent was appointed to

conduct such investigation. The applicant invoked the provisions of section 33 and

38(a) of the Constitution read with the provisions of PAJA. The relief sought is the

following:

 

“1.        It is declared that the adverse findings and/or negative remarks and/or

conclusions made by the first respondent against the applicant in the

report titled “THE GREAT BANK HEIST” are prejudicial to the applicant

and unconstitutional.

 

2.         The adverse findings and or remarks and/or conclusions made by the

first respondent against the applicant in the report “THE GREAT BANK

HEIST” are reviewed and set aside.

 

3.         The following finding/remarks/conclusion in paragraph 80 of the first

respondent’s report is expunged /deleted from the record:

 

“It is clear that Msiza intervened on numerous occasions when his

political influence was required. I have little doubt that Matsepe, despite

his self-importance and bluster, in fact works for Msiza.”

 

4.         It is directed that the following paragraphs are expunged/deleted from

the first respondent’s report and the first respondent should take such

steps necessary to expunge/delete the following paragraphs from the

report:

 

            4.1       paragraph 72

            4.2       paragraph 73

            4.3       paragraph 80

            4.4       paragraph 81

            4.5       paragraph 90 ”

 

[2]        The first respondent is cited in his official capacity and the application was

opposed, only the second respondent deposed to an answering affidavit.

                     

[3]        Having received the record of proceedings in terms of Rule 53 of the

Uniform Rules of Court the applicant amended its notice of motion and filed an

amended notice of motion and supplementary affidavit in terms of Rule 53(4).

Paragraphs 1 – 4 of this notice of motion are similar to the initial one and the

following prayers were added:

 

“5.        It is declared that the first respondent’s failure to afford the applicant

the right to procedural fairness (audi) prior to the release of the report

titled “THE GREAT BANK HEIST” is unlawful and unconstitutional.

 

            6.         It is declared that the findings, remarks and conclusions made by the

first respondent against the applicant in the reports are unlawful and

unconstitutional.

 

7.         It is declared that the first respondent’s failure to afford the applicant

opportunity to be heard during the investigation phase is unlawful and

unconstitutional in that it violated the applicant’s rights in terms of

section 34 of the Constitution.

 

            8.         It is declared that the first respondent’s failure to file the full (un-

redacted) record is unlawful and unconstitutional in that it violated the

applicant’s rights in terms of section 34 of the Constitutional.

 

            9.         The first respondent is directed to make a public written apology to the

applicant.”

 

BACKGROUND

 

[4]        VBS Mutual Bank (“VBS”) was established in 1982 and initially operated as

the Venda Building Society which had various branches in Limpopo. The financial

services it offered consisted mainly of taking deposits from ‘retail depositors, burial

societies, and served the communities around Limpopo. During 2014 VBS changed

its traditional reliance on small depositors and it adopted a strategy where large short

term deposits from municipalities were accepted in a scheme titled the “commission-

agent” scheme. Deposits made by municipalities into VBS ‘’attracted payment of a

“commission” or “consultation fee” to those individuals responsible for soliciting such

deposits, be it municipal officials or consultants. VBS received deposits of some

R3.4 billion from municipalities.

 

[5]        As a result of the scheme and mismanagement within VBS, an amount of

about R2 billion was siphoned from accounts held with the bank. Upon the

recommendation of the second respondent the Minister of Finance placed VBS

under curatorship. This was occasioned by a liquidity crisis faced by VBS over a

period of eighteen months before such curatorship. VBS was unable to repay

deposits made with it when legally obliged to do so. As a consequence of the

curator’s report the first respondent was appointed in terms of section 134 of the

Financial Sector Regulation Act 9 of 2017 (“FSR ACT”).

 

[6]        The first respondent’s mandate was to investigate certain allegations of

impropriety in the VBS Bank and, powers for investigation were conferred in terms

of section 136 of the FSR Act coupled with section 139, which obliged a person to

cooperate with the investigation. The investigations took various forms and, in the

process certain individuals from within VBS and outside were interviewed. They were

the source of information which revealed the names of certain individuals in the

activities which were being investigated. The applicant was mentioned in the report

compiled by the first respondent and his complaint is against certain content in the

report relating to him.

 

[7]        Apart from being a businessman, the applicant avers that he has been a

member in good standing of the African National Congress (“the ANC”) for a period

spanning 35 years. He was appointed to certain positions of the ANC in the Limpopo

Province, as a member of the ANC’s PEC in 2014; as Provincial Treasurer replacing

the late Ms Thembi Nendomudzi in 2015 and he was re-elected into the same

position during 2018. After taking up the position as Provincial Treasurer, in late

2016 or early 2017 he was introduced to senior executives of the VBS bank, in

particular the Chairman thereof by His Excellency King Toni Ramabulana Mphephu.

It was at this meeting where the Chairman gave a presentation of the Bank’s profile,

its track record as a bank which affirmed mainly black owned businesses and, at

times advancing bridging finance to entrepreneurs to enable them to execute on their

involvement in ventures with government entities such as municipalities. The Bank

also provided short term loans to municipalities which were in financial distress.

 

[8]        The applicant contends that he was immensely impressed by this portrayal of

a growth trajectory and a vision of launching black people ‘as serious players in the

financial services sector.’ It was also from 2014 when municipalities started investing

with VBS Bank. Prior to 2017 neither the Auditor -General (“AGSA”) which annually

audited the municipalities nor Treasury, which received monthly budget statements

from municipalities in term of section 7 of the Municipal Finance Management Act 56

of 2003 (“MFMA”), regarded these investments as unlawful. In as far as the Vhembe

District Municipality was concerned the Provincial Treasury of the ANC and

COGSTA had seconded to municipality the Chief Financial Officer and Municipal

Manager who made investments with VBS Bank. The applicants stated that he made

a conscious decision to support this emerging Black Bank and took out a bond for an

immovable property, which loan he is presently servicing.

 

[9]        The applicant contended that section 136 to 140 of the FSR Act was intended

to ensure fairness in the investigation and, in the gathering of evidence from those

supplying about those individuals allegedly implicated in such improper conduct. This 

he contended obliged the first respondent to observe the rules of natural justice to

afford anyone implicated, the opportunity to appear in person to deny of admit the

allegations in the evidence so gathered.

 

[10]      This application was launched as a result of adverse findings/remarks and

conclusions drawn by the first respondent, as appeared in his report annexed as

“MDM1.” The applicant contends that the said report was scandalous and, as a

result he has suffered serious reputational damage as a citizen of the Republic, as a

father, husband, political figure, a businessman. The report also caused untold

distress to his family friends and colleagues. His wife and children have been

tormented by the false defamatory claims and he fears for his personal safety. The

findings, that he was ‘the “kingpin of the “so called Commission agent” scheme and

that one Kabelo Matsepe worked for him, that he had used his political influence on

numerous occasions were false.

 

[11]      The applicant contended that reference to him as ‘kingpin’ who has ‘facilitated

bribes to municipal officials with no ‘shred of empirical evidence’  infringed his

constitutional right to freedom of trade as a businessman and, he has a ‘reasonable

apprehension of the prospect of financial ruin and loss of confidence by financiers

and potential business partners if the adverse remarks/ findings are not expunged.

The first respondent should have foreseen that a damage to his good name would

affect his standing as a businessman and dent his standing as a political figure. As a

result of the report and negative media coverage he has been subjected to attack by

some individuals in the veterans’ league and youth league of the ANC in Limpopo;

and to scrutiny by the integrity commission of the ANC; there were groups who

picketed outside the head office of the Province in Limpopo, all calling for his

resignation and /or his expulsion.  The applicant stated that he was disappointed by

the transgressions at the VBS bank and, he felt that his trust and confidence in what

would have been a great success story was betrayed by the conduct of some of the

executives at VBS.

 

 

THE VBS INVESTIGATION REPORT

 

[12]          The report was published on 5 October 2018 on the website of the Reserve

Bank. The applicant avers that for a few days thereafter the first respondent was

engaged in giving audio and visual interviews in the media and that he accessed

some of them. He was particularly perturbed by one interview held with Steven

Grootes on SAFM on 12 October 2018. He contends that as investigator and having

submitted his report to the second respondent the first respondent could not ex post

facto justify his report on his findings, he was functus officio.

 

Impugned paragraphs of the report

 

[13]      According to the applicant his name was mentioned in the report and an

insinuation made as a wrongdoer in the subheading “the commissions and bribes

paid” and the first respondent, in his interview with Steven Grootes confirmed that

the applicant was implicated.

 

[14]      Paragraphs 67 deals with the evidence of Mr Ramavhunga which reflects on

Banks paying commissions to middlemen who bring business to the bank, however, 

the first respondent fails to mention whether he rejects the notion that middlemen

were paid a commission by big banks for soliciting deposits from a “client” and, that

such commissions do not constitute a bribe. Gundo Wealth Solutions (“Gundo”) was

one such middleman for the VBS Bank and for other banks such as Standard Bank,

Sanlam, Liberty, Absa Bank and First National Bank. The applicant contended that

the first respondent in his interview with Steven Grootes wished to embellish his

report by stating that the commissions were bribes. It is not clear whether the first

respondent suggested in this interview that other institutions were paying bribes

through commission earned by Gundo. Furthermore, there were other VBS

middlemen referred to in the report and the first respondent does not explain why he

singled out only one going by the name Matsepe, as having received commissions

and, the report does not mention how many municipalities Matsepe had introduced

and was paid a commission.         

 

Irrationality

 

[15]      At paragraph 72 the first respondent states that following upon a publication in

the Citizen on 22 May 2018, Mukhodobwane, although stating that he was in fear for

his life, he reluctantly named applicant as the kingpin in the commissions scheme.

At para 80 the first respondent accepts Mukhodobwane’s version despite evidence

at para 74 by Matsepe which tells the story on how he was introduced to VBS. This 

showed that applicant was not instrumental in introducing Matsepe to VBS. Instead

Matsepe’s introduction to VBS came about when his intervention was sought by the

Municipal Manager of Capricorn District Municipality (“Capricorn”) in a matter about 

the release of certain monies invested by Capricorn with VBS. In paragraph 78 the

report states that Matsepe was introduced by one Matodzi to do consulting for the

VBS and, this entailed introducing other municipalities at a commission calculated at

2% per annum per transaction. It was Matsepe’s company, Moshate Investments

Group (Pty) Ltd (“Moshate”) which was contracted as the middle man. The applicant

contends that the first respondent has not reported on anything which linked him to

VBS and Matsepe and the municipalities which made investments with VBS.

Therefore, the finding that Matsepe worked for him, and that he, applicant, played a

significant role in soliciting these deposits and that he used his political influence,

was irrational.

 

Paragraphs 81 -91

 

[16]      It is recorded by the first respondent at para 81 that according to the evidence

of Ramavhunga, Matsepe was introduced by the applicant (Msiza). This contradicts

Matsepe’s own evidence. No explanation is given why Ramavhunga’s evidence is

preferred.

 

[17]      The applicant contends that nowhere in the details relating to the bribes paid

to municipal officials as appears in para 82 to 86 is his name mentioned or is he

implicated. The applicant denies knowledge of these transactions. After the Limpopo

Elective Conference of June 2018 he released a media statement. The statement

was specifically incorporated into the founding affidavit. It details among other things 

his response to the allegations and his complaint about not having been given

opportunity to state his version by the first respondent and the media.

 

[18]      The applicant states that he knows Matsepe, that they originate from the

same area Ga-Sekhukhune and that they conducted business together which

precedes Moshate’s involvement with VBS. Moshate and VBS’ relationship is

regulated by a contract which was alluded to by the first respondent in para 78. He

denies any financial interest with Moshate, he denies that Matsepe worked for him.

The findings and remarks regarding commission agent scheme and of him being the

kingpin were irrational and fall to be set aside.

 

WhatsApp messages

 

[19]      The applicant contends that the whatsapp messages retrieved from 

Matsepe’s phone dealt with in paras 88 to 90 of the report were messages

exchanged between Matsepe and other persons other than himself, therefore any

remarks or findings reliant upon these messages amounted to inadmissible evidence

and such findings were irrational.

 

Procedurally unfair conduct / Sections 6(2)(c) and 6(2)(a)(i)(ii) of PAJA

 

[20]      The applicant contends that the first respondent’s remarks /findings and

conclusions in his report fall to be reviewed and set aside in terms of the sections

relied upon of PAJA stated above and in terms of the Constitution. The first

respondent failed to observe the audi alteram partem rule.

                                            

[21]      The applicant contends that the first respondent failed to ensure that he was

procedurally fairly treated as required by section 33 of the Constitution, and section 3

of PAJA. The first respondent failed to comply with the FSR Act in as far as it related

to him in particular sections 136 and 139, which empowered the first respondent to

invite persons and to collate evidence. Furthermore, the first respondent was biased

against him as appeared in the answers he gave ex post facto, to questions posed

by Steven Grootes on  SAFM on 12 October 2018. The applicant refers to three

questions about (i) what the first respondent found against the applicant and what

role he played;(ii) if he thought applicant had broken the law; (iii) the reason why

applicant was not interviewed.

 

[22]      The applicant contended that the first respondent had conceded that he had

consciously decided not to afford him an opportunity to be heard. He maintained that

the content of the replies to the questions given by the first respondent were not in

his report and; the outcome of the investigation was therefore ‘’ predetermined and

motivated by political consideration.’’ The excuse given that he would be answerable

to the prosecuting authorities fails to take cognizance of the damaging nature of the

remarks and findings.

 

SUPPLEMENTARY AFFIDAVIT

 

The incomplete record

 

[23]      The first respondent filed his reasons and record in terms of Rule 53 of the

Uniform Rules of Court on 11 December 2018. The applicant contended that the

record was redacted, in particular in respect of those portions which related to him. A

request was made for a complete record and the missing pages were identified. In

reply by the respondents’ attorneys he was informed that he had no entitlement to

the redacted portion of the record, inclusive of the missing pages of the transcript,

because they did not relate to him and that they had no relevance to the matter.

 

[24]      He contended that it was inconceivable that where the entire investigation

was geared at finding wrongdoings in persons like himself who is described as being

the kingpin, that the redacted parts would have nothing to do with him. The applicant

contends that the content of the letter was untrue and the denial to the complete

record without any justification was prejudicial to him and, violated his right to access

to information as entrenched in section 32 (1) of the Constitution.

 

[25]      According to the applicant there was no basis in law for the respondent to file

a redacted record. It was not for the first respondent to determine what was relevant

or not to him to exercise his rights. His right to access to the record had nothing to do

with the Promotion of Access to Information Act 2 of 2000 but it stemmed from Rule

53 read with sections 32, 33 and 34 of the Constitution.

 

The first respondent’s reasons.

 

[26]      The first respondent’s reasons and the transcript of the record which were

filed do not explain or give reasons why despite his name being referred to on

several occasions, he was not entitled to defend himself. The applicant contends that

he had to be afforded an opportunity to rebut any oral or documentary evidence

placed before the first respondent, before negative findings against him were made.

He maintained that it was not within the prerogative of the first respondent to suggest

that his evidence or representations would not have carried weight. He contended

that the obligation to be given an opportunity to rebut evidence against him arose as

soon as the first respondent became aware that he was being implicated by

witnesses and documentary evidence. If the first respondent was pressed for time,

he would have at the very least made written representations for consideration by

him. His basic Constitutional right to procedural fairness as enshrined in section 33

of the Constitution and section 6 of PAJA was thereby infringed. He was advised that

he was not obligated to respond to such negative findings and that they carried no

weight. Therefore, any belated attempt to justify the findings had to be rejected by

the court.  

 

[27]      The applicant reiterated the prejudice and suffering endured by him personally

and by members of his family, the daily public torment, harassment, as a result of the

negative findings and reference to him as the kingpin of the scheme. He was

continuously being subjected to unfair and extremely negative media coverage and

public platforms where he is referred to as the VBS looter. His reputation as a hard

working businessman has been destroyed.  It was very painful to see the ANC

integrity commission adopting the same attitude of denying him the opportunity to be

heard, thereby forcing him to step down from his position with the ANC without due

process. This was despite the presence of many leaders in the ANC who still hold

office while facing allegations of serious impropriety. The applicant alleged a political

conspiracy behind the continued attack against him and questioned the reasons for

the investigation.

 

[28]      According to the applicant, had he been approached by the first respondent

he would have co-operated in order to give explanations, such as those pertaining to

the history behind his business and family association with Mr Matsepe and, the

reasons behind the nominal payment to his bond account from one of Mr Matsepe’s

entities. He denied having taken any money from VBS nor did he receive any

payment from any source not due to him. No reasons were furnished why the

evidence of those witnesses who did not implicate him was rejected. The applicant

contended that the first respondent’s findings and remarks were irrational, not borne

out by the evidence and instead were ‘deducted from inferences and innuendoes.”

 

[29]      The answering affidavit was deposed to by Mr Kuben Naidoo Deputy

Governor of the South African Reserve Bank and Chief Executive Officer of the

second respondent. He was responsible for the appointment of the first respondent

to conduct the investigation into VBS. The first respondent had to establish certain

facts and to follow up with recommendations on steps to be taken. He had to

establish whether or not:

 

“business was conducted to defraud depositors or any creditors of the bank or

any other fraudulent conduct;

VBS’ business conduct involved questionable and/or reckless business

practices or material non-disclosure, with or without the intent to defraud

depositors and other creditors; and

there had been any irregular conduct by VBS shareholders, directors,

executive management, staff, stakeholders and/or related parties;”  

 

Interviews as contemplated in section 136 of the FSR Act were conducted with

several individuals; the forensic investigators analysed documents and data stored

on cell phones, computers, financial transactions and bank statements of those

implicated in the misappropriation to funds, as well as the analyses of documents

obtained during search and seizure operations at the VBS’ offices and branches.

 

[30]      As a consequence of the investigation the first respondent compiled a report

in which he concluded that there was large scale looting of monies deposited with

the bank; bribes were paid to directors of VBS and other parties; VBS went on a

drive to attract substantial deposits from municipalities and state entities, which

included payments of commissions to those responsible for soliciting the said

deposits; the banking systems of VBS were manipulated to create fictitious deposits

in favour of Vele Investments Limited (“Vele”), its associates and related parties; and

overdrawn facilities running into millions of Rands enjoyed by Vele’s associates were

obliterated and, the said associates went on a massive spending spree at the

expense of VBS’ depositors. Overall, 53 persons were identified in the investigation

as having ‘’gratuitously” received payment from VBS to the tune of R1 894 923 674.

 

[31]      The prima facie findings made of involvement against the applicant, as

recorded in the report were based on information provided by certain individuals. The

information is alleged to be supported by cogent documentary evidence, including

bank statements which reflect amounts received by the applicant or companies

associated with him. In the report it was suggested that the applicant was implicated

in the commission agent scheme and it is said that the WhatsApp messages sent

between the applicant and Mr Matsepe confirm receipt of monies emanating from  

the municipalities and the distribution of payments to consultants and municipalities.

 

[32]      Of importance and material to the complaint says Mr Naidoo, is to draw a

distinction between the said inferences or prima facie conclusions and statements

made to the investigator. Furthermore, he does not persist or expand his complaints

based on bias, rationality and reasonableness in the supplementary affidavit. He has

also not responded to the substance of the prima facie findings and reasons for them

to make substance of his complaint as one challenging procedural fairness, by

attacking the alleged incomplete record.

 

The Record of Complaint

 

[33]      It is contended that this complaint was without merit and should have been

raised in terms of Rule 30 or Rule 30A of the Uniform Rules of Court, on the basis

that the record filed was irregular or that it failed to comply with the requirements of

Rule 53. Further, it is stated that the applicant accepted the record as it stood. He

failed to object to the adequacy of the record and filed his supplementary affidavit

instead. The applicant has also not suggested that Rule 53 was inadequate to

protect his constitutional rights, it was contended that he was barred by the principle

of subsidiary to rely directly on section 32 or 34 of the Constitution and the provisions

of section 7 of PAJA.

 

[34]      According to Mr Naidoo there was compliance with the requirements of Rule

53 and that in terms thereof, applicant was entitled to the record and reasons

underpinning the impugned statements. He contended that the applicant was not

entitled to any documentations and statements not related to him and, that there

were no constitutional violations entailed in this approach. He contended that even if

the record was incomplete it was reasonable and justifiable under the law of public

interest and privilege to limit access because (i) the investigations had triggered

criminal investigations and follow-up proceedings against those implicated, (ii) any

disclosures might prejudice the investigations and proceedings and compromise

witnesses (iii) the second respondent was entitled to safeguard itself against risks

associated with disclosure.  It was contended that the applicant was therefore not

entitled to the relief sought in prayer 8 of the amended Notice of Motion.

 

The Review Relief

 

[35]      It is contended that the review relief is not properly sought and/or cannot be

completely granted in that the relief sought was incompetent, as it seeks to expunge

statements made to the investigator during interviews with individuals mentioned

therein, as well as WhatsApp messages and or conversations made in their

respective capacities. Their recordal and production does not entail the exercise of

public power or administration or involve the exercise of a discretion that can be

reviewed. It was not contended that the statements were not made during interviews

and that the transcript of WhatsApp messages were not disclosed to the investigator,

and if the complaint was against the disclosures and making of statements, then his

recourse was against those responsible but not by way of review. Furthermore, that

the investigator’s prima facie views and conclusions ‘had no direct external legal

effect’ that would render them reviewable as administrative action or at all.’    

 

[36]      It was stated that the prima facie views were non-binding and there was

always indication in the report that acts of criminality had been discovered in the

affairs of VBS which had to be referred to prosecution and, recommendations were

made for further investigation by law enforcement authorities for crimes reported.

If the recommendations were accepted by the authorities, then an investigation by

them according to their statutory and constitutional mandates would follow. It was

contended that if any proceeded against the applicant, he would only then have an

opportunity to vindicate his rights. The impugned statements were therefore not

reviewable under PAJA or the doctrine of legality. However, should the impugned

statements be found to be reviewable that would only be the case under the doctrine

of legality, which entails issues on rationality, bias and lack of constitutionality. It was

further contended that the applicant had other remedies available in seeking

damages for defamation against the person interviewed or the Authority if the law

permitted the latter. Consequently, the relief under 1,2,3 and 6 of the amended

notice of motion stands to be dismissed.

 

Rationality and reasonableness of impugned statements

 

[37]      The second respondent addressed the content of the information collected

during the investigation and on which it states there were rational and reasonable

grounds for making the impugned statements. The second respondent invites the

applicant to deal with these issues and evidence in his replying affidavit. The

impugned statements were with regard to:

 

·     The applicants mortgage facility and his interest in Moshate: Mojovax (Pty)

Ltd  (“Mojovax”) is a company where the applicant and his wife are

directors. A mortgage was obtained from VBS for R9,5 million and it is

alleged that the process of the grant of the facility was hurried by the CEO

of VBS, Ramavhunga because “its very important that we are diligent

about this, its for the Limpopo treasury TG”, e.g no proper application was

made and an incomplete application form was found during the course of

investigation. Furthermore, it is contended that there was evidence which

was revealed from the bank statements of Moshate that the applicant was

associated with Matsepe and that he had an interest in Moshate.

Moshate’s bank statements reveal that soon after it was paid by VBS,

payment was by Moshate to Mojovax. These payments were made

intermittently between 11 July 2017 to 29 March 2019. A further

connection is said to be established in the emails and WhatsApp

messages between VBS treasurer Mukhodobwane and Matsepe

           

 

·      The applicants involvement in the scheme: It was contended that the

WhatsApp messages between the applicant and Matsepe and between

the latter and other municipality employees, mayors and managers; the

evidence in the interviews of Ramavhunga and Nemabubuni and Matsepe

the evidence of;

 

Bias and the unfair Procedure

 

[38]      It is contended that the applicant failed to set out the basis for the alleged bias

nor set out the grounds on which such bias was apprehended.

 

It was stated that the investigation did not constitute administrative action but

was at most the exercise of public power. In as far as the procedure was

concerned, the investigation was a preliminary step which did not attract legal

consequences. Section 136 of the FSR Act did not obliged the investigator to

interview every person mentioned or implicated in the course of investigation.

 

Furthermore, it was contended that the applicant failed to prove that the

failure to afford him a hearing rendered the findings and impugned statements

irrational, they were merely recommendations that further investigations had

to be conducted and, the failure the afford the applicant a hearing during the

investigation did not infringe any constitutional rights.

 

[39]      In reply the applicant stated that he had not sought any order against the

second respondent and, that the allegations in the answering affidavit did not fall

within the personal knowledge of Mr Naidoo. His evidence amounted to hearsay.

The first respondent had not filed a confirmatory affidavit.

 

[40]      The applicant denies that the findings were related to evidence either oral of

documentary obtained from the witnesses only. He reiterates his right to have been

called to rebut any ‘prima facie finding’ against him. The findings against him were

conclusive and even if prima facie they were hurtful and had the effect of damaging

his dignity and reputation and those findings were clearly stated in paragraph 37 of

the answering affidavit.  He gave an example of the conclusions reached about

Moshates’s payment of some of Mojovax bond repayments, that he would have

explained that those payments were for setting up Matsepe’s company BAUBA 911

and other operations. The applicant contended that the second respondent had

misconstrued the issues. He reiterated that the challenge was not against what was

said by those interviewed, that is, the recorded evidence, it was against the findings,

remarks and conclusions arrived at by the first respondent without ?????/

 

THE ISSUES

 

[41]      Primarily, the issue is whether the paragraphs complained about which

contain what is described as findings, remarks and conclusions are reviewable under

the Constitution and PAJA, on the basis that the first respondent had made adverse

findings against the applicant without affording him an opportunity to be heard.

Another issue is whether the applicants right to access to information was infringed 

under section 32 of the Constitution and thus hampered his desire to vindicate his

constitutional rights through this application thereby undermining section 34 of the

Constitution. Furthermore, applicant contends that the issues complained about are

not within the personal knowledge of the second respondent and, that an attempt by

the second respondent in the answering affidavit to answer those allegations

amounted to hearsay and were therefore inadmissible. The remaining orders sought

will depend upon a finding on these issues.

 

THE INVESTIGATOR’S MANDATE (FIRST RESPONDENT)

 

[42]      The first respondent was appointed as one who had the appropriate skills by

the second respondent (the financial sector regulator), in terms of sections 134 and

135 of the Financial Sector Regulation Act 9 of 2017 (“the FSR Act”), to exercise as an investigator any power or perform any duty in terms of the Act. He was given

wide powers, to mention but a few, being the power to investigate as provided for in

sections 136, which includes the power to collect information; to require any person

who is reasonably believed to have information to provide same either orally, under

oath or affirmation; to produce documentation, to take possession and retain such

documents, and, which includes the right of an individual who is being questioned to

have legal representation. Section 137 provides for search and seizure with or

without consent and also by means of a warrant for purposes of securing any

information that may assist in the investigation. The first respondent exercised these

powers on behalf of the second respondent. Evidence and documents including

WhatsApp messages were secured from those employed by VBS and information

was according to the record also obtained from individuals who were not in the

employ of VBS.   

           

 Are the findings, remarks and conclusions reviewable

           

[43]      It was contended for the applicant that the findings, remarks and conclusions

were reviewable under sections 6(2)(a(i)(ii) of PAJA and the Constitution, primarily

on the basis that the first respondent had made adverse findings against the

applicant without affording him an opportunity to be heard. On the other hand. it was

contended for the second respondent that the findings, remarks and conclusions

were merely a recordal of witness statements and, a summation of WhatsApp

messages and bank statements which did not constitute decisions to be reviewed or

set aside under PAJA or the doctrine of legality. In this regard it was contended for

the second respondent that the first respondent merely expressed a prima facie view

and made recommendations neither of which were binding on the Authority. In order

to answer the above question the following one below needs to be considered.

 

Can the applicant insist upon a procedurally fair procedure and does the FSR Act

contemplate the involvement of the applicant in the investigation stage?

 

[44]      It was contended for the applicant that the first respondent had failed to

comply with the procedure in the FSR Act by failing to afford the applicant his

right to be heard.  The second respondent contends that the applicant does not have

a general right to be heard and that there is a general misconception that it is a

requirement of natural justice to afford interested parties the right to be heard during

an investigation.

 

[45]      It was contended for the applicant that the requirement for a fair procedure

had been endorsed in a plethora of decisions of our courts including the

Constitutional Court. In Pharmaceutical Manufacturing Association of SA & Another:

In Re Ex Parte President of the Republic of South Africa and others 2000(2) SA 674

(CC) at para 85 Chaskalson P stated:

 

“           It is a requirement of the rule of law that the exercise of public power by

the Executive and other functionaries should not be arbitrary. Decisions

must be rationally related to the purpose for which the power was

given, otherwise they are in effect arbitrary and inconsistent with the

requirement. It follows that in order to pass constitutional scrutiny the

exercise of public power by the Executive and other functionaries must

at least, comply with this requirement. If it does not, it falls short of the

standards demanded by our Constitution for such action”

 

[46]      In Masetlha v President of the Republic of South Africa & another 2008(1) SA

566 (CC) para 75  is stated that the audi alteram partem principle derives from the

tenets of natural justice which are rules of fair procedure, “It is inspired by the notion

that people should be afforded a chance to participate in the decision that will affect

them and more importantly an opportunity to influence the result of the decision.”

 

[47]      In Albutt v Centre for the Study of Violence and Reconciliation & others

2010 (3) SA 293 (CC) the court stated the following about the right of the victims of

apartheid crimes and where the President, was considering a special dispensation

for pardon to applicants convicted of politically motivated offences: para [17]:

 

“What was in issue there was whether the decision to exclude the victims of

these crimes from participating in the special dispensation process was

irrational. Ngcobo CJ confirmed that under the rule of law, the test to be

applied was whether the President’s decision to undertake the process

without affording the victims opportunity to be heard, was rationally related to

the achievement of the objectives of the process. If not, the decision could not

pass constitutional muster.”

 

[48]      Counsel for the second respondent places reliance on what was described as

the “core of the definition of administrative action” as laying emphasis as to what

should only be considered as constituting ‘administrative action (a decision)’ as

discussed in paragraph [22] in Greys Marine Hout Bay (Pty) Ltd and Others v

Minister of Public Works and others [2005] ZASCA 43; 2005 (6) SA 313 (SCA). I do not understand

Nugent JA to mean that ‘administrative action’ is limited to such conduct as defined

in PAJA only. In paragraph [21] Nugent JA defined administrative action as follows:

 

“Administrative action means any decision of an administrative nature

made…..under an empowering provision [and] taken……by an organ of state,

when exercising a power in terms of the Constitution or a provincial

constitution, or exercising a public power or performing a public function in

terms of any legislation, or [taken by] a natural or juristic person other than an

organ of state, when exercising a public power or performing a public function

in terms of an empowering provision, which adversely affects the rights of any

person and which has a direct or external legal effect.”

 

[49]      Section 33 of the Constitution imposes a duty on the state to give effect to

lawful, reasonable and procedurally fair administrative action and as given effect to

in PAJA. In both instances this is a requirement that has to be fulfilled where, the

action or decision has the potential to adversely affect the rights of an individual. It

also gives a right to reasons for such decision. Conduct that has the capacity to

adversely affect the rights of an individual can be equated to administrative action.

The Constitution in terms of section 2 thereof is the Supreme law in South Africa

and any conduct that infringes the legal rights entrenched in the Constitution would

be inconsistent therewith and therefore invalid and reviewable. Section 3(1) of PAJA

provides that “administrative action which materially and adversely affects the rights or

legitimate expectation of any person must be procedurally fair.”

 

[50]      In our new constitutional order, where individual rights are entrenched in the

constitution, an individual would have a right to insist upon such right being applied

and recognized in as far as it relates to him or her. It is therefore trite that the both

the Constitution and PAJA protects the individual against unfair administrative action.

 

[51]      It was contended for the applicant that the first respondent made definite

findings which cannot be said to be mere recommendations. It was contended for the

second respondent, relying on Viking Pony Africa Pumps (Pty) Ltd t/a Tricom Africa v

Hidro-Tech Systems (Pty) Ltd   2011 (1) SA 327  that it was “unlikely that an

investigation which excludes a determination of culpability could itself affect the

rights of any person in a manner that has a direct and external legal effect.” The

facts in my view are distinguishable because in Viking no proper investigation by a

competent, skilled person appointed by the City was conducted to investigate the

complaint. The question of a direct and external legal effect did not therefore arise.

 

[52]      As to the meaning of ‘a direct and external legal effect’ I look to Nugent JA’s

definition in Greys Marine supra at para [23] where he stated the following: 

 

“While PAJA’s definition purports to restrict administrative action to decisions

that, as a fact, adversely affect the rights of any person’. I do no think that the

literal meaning could have been intended. For administrative action to be

characterised by its effect in particular cases (either beneficial or adverse)

seems to me to be paradoxical and also finds no support from construction

that has until now been placed on s 33 of the Constitution. Moreover, that

literal construction would be inconsistent with s 3(1) which envisages that

administrative action might or might not affect rights adversely. The qualification,

particularly when seen in conjunction with this requirement that it must have a ‘direct

and external legal effect, was probably intended rather to convey that administrative

action is action that has the capacity to affect legal rights, the two qualifications in

tandem serving to emphasise that administrative action impacts directly and

immediately on individuals.”  

 

[53]      The submission advanced by counsel for the applicant in his reliance on

Magidiwana and Others v President of the Republic of South Africa and Others

(37904/2013) [2013] ZAGPPHC, is in my view what is discussed by Makgoka J from

paragraphs [33] – [37] of the judgement. In paragraph [36] he stated:

 

“Of course, all of these were in the context of procedural fairness inside the

proceedings of committees or commissions, which is not the case in the present

application. However, I can see no reason why they should not be applicable with

equal force, to a case such as the present, where, similarly, the rights of persons

including those of the applicants are potentially in danger of infringement. The

common denominator is the recognition that, committees and commission like the

Marikana commission have the power to make far-reaching findings and

recommendations, which carry the potential prejudice to rights of individuals and

corporations, the bearers of which are entitled to protect, even at that investigative

stage.”

 

Makgoka J cites with approval the position crisply summed up in LAWSA vol.2 part 2

para 169. Although it is the position prevailing in a commission of enquiry, I am of the

view that it aptly describes the position prevailing which the applicant is concerned

about where it is stated in the LAWSA extract quoted:

 

            “……..In addition, a commission’s report may accuse or condemn persons who may

then be subjected to civil or criminal proceedings. The whole process, it has

been held, is potentially prejudicial to a person’s rights of personality.”

 

At paragraph [37] Makgoka J stated:

 

“In the context of the present application, it is of no consequence that the

commission is not of a judicial or quasi-judicial nature. That does not, in my

view, place the Commission outside of the scope of s, 34 of the Constitution,

At conceptual level the general proposition that the proceedings of

commissions of enquiry fall outside of the scope of s. 34 at the outset, is, to

my mind, an over-simplification of a complex situation involving constitutional

rights and a distinct possibility of those rights being adversely affected by the

outcome of the commission.”

 

Even if Magidiwana supra concerned a commission of enquiry and that here we are

dealing with an investigation, it is important in the interests of justice to extend the

principle of the rule of law and rules of natural justice even to those individuals who

are suspected like in this instance of wrongdoing by the investigator, being the

individual’s right to be heard before adverse findings, remarks and conclusions are

made in investigations such as the one envisaged in sections 136 and 137 of the

FSR Act. There is not merit whatsoever in the argument that the affected individual

shall have the opportunity in proceedings which might be engaged in the future to

clear his or her name; or that he or she may have recourse to a claim for damages.

 

[54]      It was contended for the applicant that a case had been made out in terms of

PAJA as well as the Constitution. While it was contended for the second respondent

that the investigation and the findings that followed did not amount to administrative

action, it was conceded that at most public power was exercised. From the above

case law it is evident that public power is reviewable and, whether an administrative

action stems from the PAJA or the exercise of public power both entail a requirement

that a fair procedure which encompasses a right to be heard. For example, the

content of the WhatsApp messages with the name of the applicant may have caused

or resulted in a suspicion that the applicant had a role in the impropriety at VBS, as

an investigator the source, and content had to be verified and no explanation is given

why the version on the applicant was not obtained. An investigator in the position of

the first respondent, was in my view obliged to ensure that the rule of law, the rules

of natural justice were observed as provided for in section 33 of the Constitution and

section 3 of PAJA. It is a duty placed on him as the investigator even if the Authority

would not have implemented any of his recommendations after receiving his report.

 

[55]     In my view where an investigator knows or is expected to foresee that his

findings, remarks and conclusions will have consequences for the party on whose

behalf an investigation is conducted and for the party against whom findings will be

made, he is obliged to listen to both sides and, the partly who is likely to be affected

by adverse finding is entitled to demand the right to be heard before an adverse

remark or finding conclusion or decision is made against him or her. The advantage

that the first respondent had is that he came into the picture when the curator had

already investigated some of the irregularities at VBS, the first respondent was

expected to expand his investigation to involve also those individuals who colluded

with the employees at VBS and who could give more information on such activities.

Several people who were interrogated were not employees of VBS like Mr Matsepe.   

 

[56]      According to the applicant findings were made which adversely affected him.

This was not directly disputed by the second respondent. The second respondent

instead invited the applicant to respond in his replying affidavit, which was not an

appropriate proposition to make. In my view, it is like asking the applicant to now

present the answers which he could have given to the first respondent during

investigation, without the benefit of having his evidence being evaluated together

and at the same time with all the evidence of the witnesses before adverse findings

and recommendations were made to the second respondent. At this point the first

respondent was functus officio he could not be engaged now by the second

respondent to give clarity on any version given in a replying affidavit. Another

question is what would happen if the response in reply requires another response,

how would the issue of disputed facts be resolved as a result of such invite by the

second respondent. Would the second respondent consider the reopening of an

investigation to address these concerns. These are issues which were not

addressed in the application. In any event such invite does not cure the complaint,

which was a failure on the part of the first respondent invite the applicant to respond

to the allegations made against him before any report on the investigation was

presented to the second respondent.     

 

Does the redacted record amount to an infringement of the applicants right to

access to information in terms of section 32 of the Constitution and to an

infringement of section 34 of the Constitution.

 

[57]      Section 32 of the Constitution provides for access to information that is

required to exercise or protect any right and, national legislation had to be enacted to

give effect to the rights under this section. Section 34 of the Constitution provides

that everyone has a right to have any dispute that can be resolved by application of

law decided in a fair public tribunal. In terms of Rule 53 the report and record in the

form a transcript and other documents were provided to the applicant.

 

[58]      It is common cause that after receipt of the record the applicant engaged the

respondent by way of correspondence to the attorneys of the respondents with a

request to be provided with a full record. There was acknowledgment that the record

had been redacted, with an explanation that the redacted portion did not relate to the

applicant.

 

[59]      The second respondent contends that an order declaring that its failure to file

a full unredacted record unlawful and unconstitutional is without merit. The second

respondent raises several issues among which is the failure to identify which

information ought to have been in the record was excluded. Three other issues were

raised in response to the applicants attempt to invoke section 32 and 34 of the

Constitution. These are articulated in counsel’s heads of argument. First is the

applicant’s failure to issue notices in terms of Rule 30 and or Rule 30A of the

Uniform Rules of Court and an application to compel if the defect is not rectified. The

second is that the applicant accepted the record and filed a supplementary affidavit

which showed that the applicant suffered no prejudice as a result of the form in

which the record was filed. The third was that there was no complaint that the Rule

53 was inadequate to protect the applicant’s constitutional rights. The applicant’s

reliance on sections 32 or 34 of the Constitution cannot arise because of the

principle of subsidiarity and the provisions of section 7 of the Promotion of Access to

Information Act 2 of 2000,” (“the PAIA”)

 

[60]      I prefer to deal first with the redacted record in as far as it related to the

evidence of the witnesses evinced in the transcript. I am not in a position to deal with

the other formal documents because, except for demand for the missing pages the

applicant has not identified which if any in particular have not been provided. With

regard to the transcript there exists pages where the content has been blocked out,

there the applicant has failed to demonstrate how he was prejudiced thereby in

relation to this application. I agree with the second respondent that the correct

approach would have been to follow the Rule 30 and or Rule 30A notices route

before filing the amended notice of motion and supplementary affidavit

 

[61]      In his supplementary affidavit the applicant contended that this request for an

unredacted record had nothing to do with a request under PAIA. However, his

counsel relies on Brummer v Minister for Social Development and Others 2009 (6)

SA 323 (CC) and the pronouncement by Ngcobo J, of the need for “an open and

transparent government and the free flow of information concerning the affairs of the

state,” that everyone had a right to access  any information that is held by the state.

The facts were distinguishable in that Brummer, a journalist had applied for access

to information to enable him access to information held by the respondent which was

intended for reporting on it. His application was a challenge to the limitation in the

period for launching an application for access imposed in section 78(2) of the PAIA.

He contended that such limitation violated his right to access to information and

access to court in terms of section 32 and 34 of the Constitution.   

[62]      In this matter the applicant did not launch an application for access to

information in terms of PAIA. I am more inclined to be in agreement with counsel for

the second respondent, that the issue raised of access to information had more to do

with the application of the principle of subsidiarity and, he relied on the application of

the principle as espoused in My Vote Counts NPC v Speaker National Assembly and

Others  (CCT 121/14)   [2015] ZACC 131. In that matter the majority and minority

judgements endorsed the application of the doctrine of subsidiarity articulated in

paragraph [160]. The application of the doctrine where access to information was

sought, was that litigant should not be allowed to rely directly on a fundamental right

contained in the Constitution, where legislation had been enacted to deal with the

issue in terms of the Constitution and to give effect to that right, unless there was a

challenge to the constitutionality of the legislation. As I understand it, a litigant cannot

in a Rule 53 review directly engage a right in section 32 of the Constitution without

going through PAIA.

 

[63]      As I see it, and given the complexities in the procedures in PAIA, I would still

agree that the Rules 30 and or 30A to be more appropriate because the litigation

had already commenced and it is alleged that the second respond failed to comply

with the Rule 53 by rendering a complete record to enable the applicant to comply

with Rule 53 (4). If this approach had been adopted, the court would in its discretion

have ordered the second respondent to provide all information necessary and

relevant to the impugned decision to enable him to exercise his right in terms of

section 34 of the Constitution, failing which the second respondent would be in

contempt. In these circumstances I would therefore not pronounce that the rendition

of an incomplete record was unlawful and unconstitutional where applicant relied on

section 32 of the Constitution.  

  

Does an attempt by the second respondent to answer to the allegations amount to

hearsay where the first respondent failed to file an answering or confirmatory

affidavit / the expunging of the impugned findings/ an apology

 

[64]      My view is that the application really concerns the violation of a right to a fair

procedure by the first respondent and the failure by the second respondent to file a

complete record. I am not called upon to evaluate the truth or not in the affidavits or

to consider the justification of the contents of the report by the second respondent in

the answering affidavit. Dealing with the truth or not of the facts will require me to

determine whether disputes of fact arise, which in my view should be discouraged as

a situation that may result in a review application such as the present one. However,

where adverse findings remarks and conclusions have been drawn from facts where

the applicant has not been given an opportunity to state his side, albeit, in an

investigation, I have already dealt with my finding that such right does exist and

should have been recognized and applied.       

 

[65]      In considering expunging of the impugned findings, remarks and conclusions

from the reports would in my view present problems in that the evidence presented

orally and documentary remain. The evidence as I see it covers a wide range of

issues. The report has been published on the website of the second respondent and

has received wide circulation. An order reviewing and setting aside should suffice.

Another consideration is that the appropriateness of the investigation by the second

respondent was required as of law. It cannot be denied that the evidence unravelled

might most probably give answers to the impropriety at VBS or give credence to

impropriety as presented to the second respondent, which might culminate in

processes by law enforcement agencies and probably civil proceedings against

those found to be involved.  

 

[66]      The request for an apology is not one that can in my view be considered in

review proceedings.

 

CONCLUSION

 

 

[67]      In considering the order I intend granting I take into account the extensive

issues which were the subject of investigation and, the impossibility of extracting a

complete complement of those findings remarks and conclusions complained about.

I shall confine myself to those specifically identified in the notice of motion. I am

therefore constrained to limiting my order to certain of the prayers only.     

 

 

ORDER

 

 

[68]      In the result I make following order.

 

1.    The adverse findings, remarks and conclusions by the first respondent in

the report titled “THE GREAT BANK HEIST” contained in paragraphs 72;

73; 80; 81 and 90 are reviewed and set aside  

 

2.    The first respondent’s failure to afford the applicant the right to procedural

fairness (audi) prior to the release of the report titled “THE GREAT BANK

HEIST” is unlawful and unconstitutional and violated the applicant’s right in

terms of section 34 of the Constitution.

 

3.    The second Respondent is ordered to pay the costs including  costs of two

Counsel where engaged.

 

 

 

TLHAPI VV

(JUDGE OF THE HIGH COURT)

 

 

MATTER HEARD ON                                        :           27 FEBRUARY 2020

JUDGMENT RESERVED ON                           :           27 FEBRUARY 2020

ATTORNEYS FOR THE APPLICNT                 :           MALULEKA INC.

ATTORNEYS FOR THE ESPONDENTS          :           WERKSMANS ATT.

 

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