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IN THE KWAZULU-NATAL HIGH COURT, PIETERMARITZBURG REPUBLIC OF SOUTH AFRICA

Case No: AR416/09

In the matter between

Mpumelelo Sipho Mkhize …....................................................Appellant

and

The State …..........................................................................Respondent

JUDGMENT

Delivered on: 23 September 2010

STEYN J

[1] The appellant has been convicted on a contravention of s 6 of the Prevention of Organised Crime Act, No. 121 of 1998¹ and sentenced to ten (10) years’ imprisonment. He appeals against the sentence imposed after leave was granted in terms of s 309B of the Criminal Procedure Act, 51 of 1977.²

[2] Mr Madonsela, on behalf of the appellant, submitted that the proceedings in terms of s 112(2) of the Act were also irregular and henceforth this Court should exercise its power to review the proceedings that related to the appellant’s conviction. The high-water mark of the appellant’s attack on the procedure followed is that the s 112(2) statement was a mere regurgitation of what was contained in the charge sheet.³ In order to consider whether this argument holds water it is necessary to look at the content of the s 112(2) statement. The statement reads as follows:

“I, the undersigned Mphumelelo Sipho Mkhize state as follows:

1.

I am legally represented and have been advised of my right.

2.

I have been informed of my right:

2.1 to be presumed innocent until proven guilty beyond a reasonable doubt;

2.2 to remain silent and not to testify during the proceedings; and

2.3 not to be compelled to give self incriminating evidence.

3.

I am in sound and sober senses and I am pleading guilty freely and voluntarily, without having been assaulted, threatened, forced or influenced in any manner by the police, the state’s representative, my legal representative or anyone else to do so;

4.

I have not been forced into pleading guilty and I have elected to do so after due consideration;

5.

I have been informed by my legal representative of and I understand the extent of the sentence which may be imposed upon me in the circumstances of this matter;

6.

I plead guilty to the alternative counts numbers 33 to 47 as per the charge sheet to which the charges are of money laundering (contravention of Section 6, Read with Section 1, 7A and 8 of the Prevention of Organised Crime Act 121 of 1998, further read with Section 1 of the Financial Intelligence Centre Act 38 of 2001 (Acquisition, Possession or Use of proceeds of Unlawful Activities), to the value of R1 765 380.02

7.

The facts on which I plead guilty are as follows:

1. On or about November 2004 I was employed by Standard Bank as a small business development officer. It was during this time when I was approached by Mr GMM Rodolo with a business proposal to manage his business venture. During this time, I intended to resign from Standard Bank with the intention to be self-employed as a business consultant. I hold a B.Com degree in Accountancy, Financial Management and Auditing.

2. I was advised by Mr Rodolo of the nature and extent of the powers he possessed at his place of employment, Mondi Business Paper SA Ltd. According to him, he was vested with the powers to decide which of his employer’s clients/companies would be preferred to render services for his employer. His duties included to oversee and authorize:

   1. What amounts would be paid,

   2. Where, how and when such companies would be paid.

3. He advised further that he was in dire financial constraints and intended to embark on a business venture (transporting and warehousing) in order to supplement his income. Initially, my role in this process was to advise how he would conduct his business without having to resign from his employment with Mondi Business Paper since he indicated that he required both the incomes in order to relieve himself fro his predicament.

4. I therefore advised Mr Rodolo that he would have to find an alternative person in whose name the company would operate in order to avoid a direct conflict of interest.

5. Mr Radolo decided to employ me as his Finance Manager and I was tasked with an instruction to find that alternative person and open the necessary banking accounts in the name of the company, which was given to me by Mr Radolo. (Transcape)

6. I knew Sihle Mthembu who had been unemployed and interested in venturing into business. I decided to introduce him to the opportunity even thought he never benefited from the scheme.

7. Mr Mthembu agreed to assist with the opening of banking accounts in the name of Transcape Services, and later in the name of Clips Distribution Services and Blake Contractors.

8. My instructions were to manage banking transactions for which I would be financially rewarded.

9. I knew that the whole scheme was illegal, and unlawful, because Rodolo was falsely invoicing Mondi for work that was not performed and that without my assistance Mr Rodolo would not have been successful in his plan, as the money so obtained was being channelled into accounts over which I had control.

10. Mr Rodolo would instruct me to make certain payments to him or myself from the existing banking account, and I do not recall any payment instructions to sub-contractors who carried out any transporting or warehousing services, as indicated to me in our first discussion of his business venture.

11. I admit that I assisted Mr Rodolo to launder the entire amount, and I received approximately R168 731.00 from Mr Rodolo’s fraudulent/fictitious business.

13. Despite my knowledge that Mr Rodolo was involved in

illegal and unlawful activities: I proceeded with the scheme and received money from such illegal and unlawful activities, I did this in order to benefit myself.

14. I was not involved in the actual forgery of invoices or Mondi Business Papers documents. Such was conducted by Mr Rodolo. My role was to only attend to the financial transactions once in the banking account, and in terms of Rodolo’s instructions. I admit that (sic) knew that Mr Rodolo was engaged in illegal and unlawful activities.

15. I admit that my actions to receive fraudulent monies contravene Section 6 of the Prevention of Organised Crime Act 121 of 1998. I reasonably knew or ought to have known that what I was doing was wrong. I accordingly admit that I am guilty of contravening Section 6 of Act 121 of 1998.”

It is evident from the statement, that the appellant unequivocally acknowledged his guilt to the said statutory offence. We are not persuaded by the submissions made by Mr Madonsela that there has been any irregularity or reason to interfere with the conviction. In fact the calculation error that exists results in a conviction on the same offence, based on the same conduct but results in an amount of R1 335 413, that constituted the proceeds of the said unlawful activities, committed by the appellant.

[3] Mr du Toit who acted on behalf of the respondent submitted that the learned Magistrate was not misdirected nor was any irregularity committed when the appellant was convicted. He conceded that there is an apparent calculation error that results in a conviction on R1 335 413.00 and not R1 765 380.02. He stated that the court a quo, quite correctly considered the following factors to be in aggravation of sentence:

1. That the appellant as an employee of Standard Bank was in a position of trust when he decided to assist Mr Rodolo;

2. That there is an increase in the prevalence of white-collar crimes committed by dishonest, educated, intelligent persons;

3. That money laundering is a serious offence;

4. That greed was the motivating factor; and

5. That the appellant was a key role player and showed no remorse.

[4] With regard to the submission on behalf of the appellant that he was merely lured into committing the crime and that he had played a minor role in the scheme, he responded and highlighted the following actions of the appellant that show that he was a key-role player:

1. It is the appellant who recruited Sihle Mthembu;

2. The appellant was fully aware that the scheme was unlawful;

3. It was also the appellant who controlled the accounts; and

4. Without the appellant’s ‘assistance’ the fraudulent scheme would never have succeeded.

Further to this he argued that the court a quo correctly disregarded the report of the social worker at the sentencing process, since it was flawed on the facts and showed biased. Ex facie the record it is clear from the evidence adduced that the social worker was selective in her consultations and that she failed to consult with either the victim or the state prosecutor. Her recommendation favoured the appellant and was not in accordance with the admitted facts before the court. Mr du Toit, however, conceded, rightly in our view, that the sentence of the appellant might be disproportionate, if measured against the sentence imposed on Mr Rodolo, who was sentenced to ten (10) years’ imprisonment of which four (4) years were suspended.

[5] Since Mr Madonsela argued that the court a quo lacked the required appreciation to distinguish between four separate offences, to wit money laundering as per section 4 of POCA, assisting in the proceeds of crime as per section 5 of POCA and acquiring proceeds of unlawful activities as per section 6 of POCA and theft.

In light of the aforesaid submission I consider it necessary to refer to the relevant provisions of POCA, which will show that Mr Madonsela confused not only the common law offences of fraud and theft but also the statutory offence that the appellant was charged with and convicted of with other criminal offences provided for in POCA. In fact what was required of him was to read the statutory offence section 6 with the definitions as contained in section 1 of POCA and section 1 of the Financial Intelligence Centre Act, 38 of 2001.

Legal framework

[6] Section 6 of POCA provides as follows:

“Acquisition, possession or use of proceeds of unlawful activities

Any person who –

(a) acquires;

(b) uses; or

(c) 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, shall be guilty of an offence.”

The following definitions as defined in terms of s 1 are also important:

“‘proceeds of unlawful activities’ means any property or any service advantage, benefit or reward which was derived, received or retained, directly or indirectly, in the Republic or elsewhere, at any time before or after the commencement of this Act, in connection with or as a result of any unlawful activity carried on by any person, and includes any property representing property so derived;”

“‘unlawful activity’ means 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.”

Section 1(2) is once more applicable since it defines the required knowledge of a person:

“(2) For purposes of this Act a person has knowledge of a fact if –

(a) the person has actual knowledge of that fact; or

(b) the court is satisfied that –

1. the person believes that there is a reasonable possibility of the existence of that fact; and

(ii) he or she fails to obtain information to confirm the existence of that fact.”

(My emphasis)

The part of the Financial Intelligence Centre Act No. 38 of 2001 that also finds application:

“‘money laundering’ or ‘money laundering activity’ means an activity which has or is likely to have the effect of concealing or disguising the nature, source, location, disposition or movement of the proceeds of unlawful activities or any interest which anyone has in such proceeds, and includes any activity which constitutes an offence in terms of section 64 of this Act or section 4, 5 or 6 of the Prevention Act. (sic)”

Had all of these provisions been considered, no challenge would have been directed at the conviction on any basis.

Ad sentence

[7] It is evident from the record that the sentencing judgment can hardly be labelled as eloquent or articulate, however, the duty of this court is not to judge whether the judgment is perfect but whether the court a quo was misdirected in its decision to impose the sentence of ten (10) years’ imprisonment.

[8] In National Director of Public Prosecutions v Mohamed N.O.⁴ Ackerman J stated:

“It is common cause that conventional criminal penalties are inadequate as measures of deterrence when organised crime leaders are able to retain the considerable gains derived from organised crime, even on those occasions when they are brought to justice. The above problems make a severe impact on the young South African democracy, where resources are strained to meet urgent and extensive human needs.”⁵

I align myself with the view that the South African democracy is at threat when it comes to organised crime. To understand the seriousness of the offence and also the aim of POCA one will have to consider the preamble which, in part, provides as follows:

“AND WHEREAS there is a rapid growth of organised crime, money laundering and criminal gang activities nationally and internationally and since organised crime has internationally been identified as an international security threat;

AND WHEREAS organised crime, money laundering and criminal gang activities infringe on the rights of the people as enshrined in the Bill of Rights;

AND WHEREAS it is the right of every person to be protected from fear, intimidation and physical harm caused by the criminal activities of violent gangs and individuals;

AND WHEREAS organised crime, money laundering and criminal gang activities, both individually and collectively, present a danger to public order and safety and economic stability, and have the potential to inflict social damage;

AND WHEREAS the South African common law and statutory law fail to deal effectively with organised crime, money laundering and criminal gang activities, and also fail to keep pace with international measures aimed at dealing effectively with organised crime, money laundering and criminal gang activities.”

(My emphasis)

In my view the Court a quo correctly emphasised the seriousness of the offence and the impact of the crime on society. Undoubtedly organised crime impacts on the economy, especially white-collar crime, which costs South Africa billions of rands every year since it affects business and public accounts.⁶

[9] The only question that remains, in my view, is whether the sentence imposed on Mr Rodolo for a similar offence under similar circumstances to renders the present sentence disproportionate for the crime which the appellant had been convicted.

[10] The powers of this court to interfere with a sentence imposed by a lower court are circumscribed. Marais JA eloquently in stated in S v Malgas⁷:

“A court exercising appellate jurisdiction cannot, in the absence of material misdirection by the trial court, approach the question of sentence as if it were the trial court and then substitute the sentence arrived at by it simply because it prefers it. To do so would be to usurp the sentencing discretion of the trial court. Where material misdirection by he trial court vitiates its exercise of that discretion, an appellate Court is of course entitled to consider the question of sentence afresh. In doing so, it assesses sentence as if it were a court for the first instance and the sentence imposed by the trial court has no relevance.”⁸

[11] I am persuaded by the submissions that it was inappropriate to have imposed upon the appellant a period of imprisonment for ten (10) years. In the result there is thus sufficient grounds for this court to interfere with the sentence imposed by the Court a quo.

[12] Since the court a quo misdirected itself when it failed to consider the inequality of the sentences of the appellant and his co-accused, this court is at large to consider the sentence afresh. I shall be mindful of all the personal circumstances of the appellant as listed before the court a quo, the factors in aggravation of the sentence and the societal interest in combating white-collar crime.

[13] Accordingly, the following order should be made:

1. The appeal succeeds against sentence.

2. The appellant is sentenced to ten (10) years’ imprisonment of which four (4) years is suspended for a period of five (5) years on condition that the appellant is not convicted of contravening section 6 of the Prevention of Organised Crime Act, No. 121 of 1998, committed during the period of suspension.

3. The sentence is antedated to 20 February 2009.

____________________________

Steyn, J

____________________________

Mnguni, J: I agree, it is so ordered.

Date of Hearing: 14 September 2010

Date of Judgment: 23 September 2010

Counsel for the appellant: Adv Madonsela

Instructed by: Hlela Attorneys, Durban

Counsel for the respondent: Adv du Toit

Instructed by: Director of Public Prosecutions, Pietermaritzburg

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