Fraudster’s assets can’t be seized

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Businessman Ishwarlall Ramlutchman, chatting to his attorney Phila Magwaza outside the Commercial Crime Court yesterday, after the court decided he could keep his millions. Photo: Siyanda Mayeza

Durban - The State cannot confiscate a cent from Richards Bay businessman Ishwarlall Ramlutchman, who has been convicted of fraud and corruption.

On Thursday a Commercial Crime Court acting magistrate, Nalini Govender, ruled against the State and chastised the Asset Forfeiture Unit for failing to do its job properly.

Govender dismissed an application brought by the State to ask for his assets, to the value of R52 million, to be confiscated as “proceeds of his crime”.

Ramlutchman, who owns AC Industrials Sales and Services, admitted last month to defrauding the provincial Department of Public Works by tendering for contracts using false documents.

He was convicted of 21 counts of fraud and one count of corruption. He was given two suspended sentences and a fine of R500 000.

Ramlutchman’s company was awarded contracts for work on 14 schools and two hospitals between May 2006 and August 2008 based on false Construction Industry Development Board gradings.

The gradings, which were obtained using false documents, determine the scale and value of the contract companies may tender for from the government.

The confiscation order sought by the State was unusual as it sought to confiscate the value of the contracts involved and not profits obtained.

It argued that if it had not been for his fraudulent activities, Ramlutchman would not have been awarded the contracts.

Ramlutchman opposed the order and argued that it would be “ridiculous” to ask for the total value of the contract as he had completed the buildings and handed them over to the Department of Public Works.

In her judgment Govender said the State’s argument had been flawed and it was “illogical” to seek a confiscation order of the full value of the tender.

“It was reckless to seek this order knowing that the work was completed and the projects were handed over. If granted it would mean that the department would have got the buildings without paying a cent and when the defendant (Ramlutchman) outlayed funds.”

Govender added that case law showed the legislation dealing with confiscation of assets from convicted criminals dealt with “profits” and the State had failed to establish what profit Ramlutchman had made from the projects.

In his papers Ramlutchman said he could not provide an exact value of his profits from the projects but said it had been less than 10 percent of the contract value.

Govender said that profits which Ramlutchman obtained from the contracts should have been ascertained by a “simple accounting exercise”.

“South African Revenue Services tax returns and audited statements could have been easily obtained and the State could have launched an investigation to ascertain what profit was made. There was no report handed in to the court and no explanation on why it was not done. The State has not provided satisfactory evidence.”

She said there was no clear evidence before the court to show that a profit was made and she could not make a confiscation order in any amount.

“If an order is made without the court knowing what the profit was, it would run the risk of making an order more than the profit amount, which is in contravention of the legislation.”

The Mercury

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