In an attempt to evade prosecution for fraud charges amounting to R146 million in financial losses, a fund director's application to stop criminal proceedings against him was unsuccessful in the Western Cape High Court.
In the country’s first hedge fund investigation, former director and controlling mind of Evercrest Capital (Pty) Ltd, Marc van Veen, will have to face the music in court even though the matter dates back 16 years to 2007.
Van Veen has been diagnosed with a brain tumour, and in his court application it was submitted that “he is accordingly not able to properly adduce and challenge evidence as a consequence of his loss of certain faculties”.
Van Veen and his former financial fund company – whose clientele was comprised exclusively of institutional investors – currently stand arraigned on a variety of charges in the Bellville Specialised Commercial Crime Court.
They are charged with fraud and various other common law offences involving dishonesty, as well as having contravened the Protection of Funds Act, the Financial Advisory and Intermediary Services Act and the Inspection of Financial Institutions Act.
The charges are related to losses suffered in 2007 by the Evercrest Aggressive Fund, an investment vehicle described as a “hedge fund”, to the amount of R146 million and the investigation subsequently undertaken by the then Financial Service Board.
That investigation commenced in July 2007, and the inspection report was issued in final form in August 2008.
As a result of the investigation, Van Veen’s licence to practise as a financial services provider was withdrawn and he was prohibited from applying for a new licence for five years. He was also required to pay for the costs of the investigation – an amount of more than R366 000. He alleged that there was “no engagement” with him on the matter thereafter until he received the charge sheet in August 2019.
According to Van Veen, the losses incurred by the fund were not occasioned by his doing, but rather the result of the institutional investors’ decision at an inopportune time to exercise their contractual right to sell off the stock held by it and thereafter to liquidate it. He claims that had they not done so, they would eventually have realised a profit.
Van Veen’s legal team had approached the Western Cape High Court with an application to have the criminal proceedings against him permanently stayed, arguing that his deteriorating medical condition would preclude him from receiving a fair trial.
“As a consequence of this delay in prosecuting Van Veen together with his medical condition, he will suffer irreparable and insurmountable trial prejudice if the prosecution proceeds,” court documents read.
However, Judge Ashley Binns Ward in his judgment gave the State a tongue-lashing regarding the delay of the case. “The State’s explanation for the delay between 2009 and the end of 2018 in getting the case against the applicant trial ready is sadly redolent of the ineptitude and lack of diligence that media reports suggest were all too prevalent in many of our public institutions at the time.
“The excuses offered by the first respondent for the delay are weak and perturbing.
“If an accused person is found ...to be incapable of making a proper defence, the court seized of the criminal proceedings may in a case like the applicant’s – in which he does not stand charged with an offence involving serious violence – give any of the directions provided for in s 77(6)(ii) of the Criminal Procedures Act.
“Having regard to the psychiatrist’s report and the nature of the charges, it seems to me that the direction that could well be given in the current case would be for the applicant to be released unconditionally,” said Binns-Ward.
Attempts to get comment from Van Veen’s legal team were unsuccessful.
National Prosecuting Authority spokesperson Eric Ntabazalila said they noted the judge’s remarks.
“The matter was referred to the Bellville Commercial Crimes Unit on September 17, 2009. It was a voluminous and complex matter, being the first hedge fund investigation in the country. It took time to go through and there were extensive consultations held with the FSB before a case plan with preliminary investigations could be finalised.
“The matter unfortunately changed hands among three investigating officers who all had to bring themselves up to speed in this very complex case. We prepared the charge sheet in May 2019 and enrolled the matter on September 27, 2019. The time spent by the NPA on this matter is not the cause of the delays.
“We are happy that the application has been dismissed, which gives us an opportunity to continue with the prosecution of the matter,” Ntabazalila said.