Kimberley - Sentencing arguments in the Trifecta case will begin in the Northern Cape High Court on Thursday, almost a year after the CEO of Trifecta Investment Holdings (Pty) Ltd, Christo Scholtz, and former ANC provincial chairman, John Block, were convicted on charges of corruption and money laundering.
Both were found guilty in October 2015 of unduly benefiting from six government leases that were concluded with the Trifecta group of companies, for offices situated in Kimberley, Douglas, Upington, Springbok and Kuruman.
Consensus was finally reached between the State and the defence that an amount of R60 million from Scholtz and his companies should be surrendered to the Asset Forfeiture Unit.
The amount is based on R6 million in net rentals and R54 million in capital gains that were derived from the leases.
The original figure calculated by the State was reduced. The prosecution had claimed that the accused had benefited from profits to the amount of R759 million.
A dispute arose over the confiscation of Scholtz’s assets in May, when the Asset Forfeiture Unit issued a draft order for R580 million while he was only prepared to surrender R12 million.
The Asset Forfeiture Unit previously came to an agreement to confiscate assets to the value of R2.7 million belonging to Block and his company, Chisane Investments (Pty) Ltd.
Senior State Advocate Hendrik van der Linde, from the Asset Forfeiture Unit, on Wednesday stated that the agreement of R60 million was reached on a “substantial amount” that was based on the global net profit of the rental agreements and the added financial advantage.
“It was established that the defendant received a direct benefit as a result of the proceeds of crime as a result of the increase in the value of the buildings.”
He also pointed to the seriousness of the offence committed.
“Crimes of this nature are closely associated to organised crime and are also harmful to the political and economic climate and ethical values of the country.
“Leases were entered into in a corrupt manner and were tainted from the start. The accused were found to be directly linked, where there was non-compliance with the tender process.
“A steady stream of income was secured through the inevitable increase in the value of the buildings, such as the Du Toitspan and old Kimberlite hotel buildings. Profits were derived from the amounts paid by the state for the lease of the property. As a result of these corrupt leases procured by the defendants, they also secured added value to their properties.”
Van der Linde indicated that State witnesses had previously assessed that the net rental profits were in the region of R12 million, although this could not be proven due to the absence of relevant documentation.
Van der Linde explained that the “remarkable” escalation in the value of all these properties from the initial purchase price, compared to the selling price of the buildings, could not be attributed to ordinary fluctuations in the property market
“The increase in value had something to do with the leases that were added to the property. The entire proceeds of the leases should be confiscated. According to the State’s forensic expert, Trevor White, the long leases entered into with government departments and the sale of the buildings resulted in further benefits.”
He said that the State had decided not to pursue the prosecution of the additional Trifecta leases, which had not formed part of the trial, after their application to lead oral evidence had been denied.
Legal representative for Scholtz, Advocate Jaap Cilliers SC, believed that the State had not made reference to any direct evidence in their argument to confiscate his client’s assets.
“The properties as well as the amounts of the leases were provided to the State, where State witnesses had indicated that it was offered at fair, market-related prices.
“The State is not entitled to seize any assets, as government departments received the full value and lawful services that they paid for through a proper process.”
He stressed that it would be disproportionate to the crime to confiscate Scholtz’s property.
“The purpose of a confiscation order is to prevent a convicted person from benefiting from ill-gotten gains, rather than enriching the State. The accused were acquitted on all fraud charges. Where are the proceeds of the crime?”
Cilliers indicated that should his client’s assets not be seized by the State, it did not imply that Scholtz would go “unpunished”.
“It does not mean that the accused will get off.
“There is no suggestion in the court findings that the amount in any of the agreements was increased because of the corrupt relationship.
“Mr White, under oath, agreed to an alternative sum of R500 million since he accepted that the defendants did not have R759 million worth of assets.”
He added that the six leases under question only amounted to R200 million as the balance included the R500 million of additional leases that were concluded with Trifecta and State departments, that did not form part of the evidence before the court.
“Therefore the net profit received from the relevant lease agreements is R6 million.”
Cilliers argued that the capital gains were not relevant to the confiscation order.
He pointed out that the accused were in no way to blame for any of the delays in the trial, which spanned over a period of four years.
“All parties did their utmost to save time in reaching an agreement in the confiscation application. The only delay was caused by the illness of the late Yolanda Botha, a co-accused.”
Judge Mmathebe Phatshoane on Wednesday reserved judgment on the confiscation order and instructed counsel to proceed with arguments in mitigation of sentencing on Thursday.
She expressed frustration that, almost a year after the accused were convicted, the court was no closer to finalising the matter.
Senior State Advocate Peter Serunye added that the prosecution was ready to proceed with sentencing procedures.
“The parties have agreed to a settlement amount pertaining to the confiscation order. As much as the accused are entitled to a fair trial, they also have a right to have the matter finalised. Further delays may pose an injustice for the accused.”
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