24 October 2008: Forfeiture of Property as an Effective Way to Fight Organized Crime in South Africa

The forfeiture of property found to be instrumental in the commission of crime is often touted as an effective way to combat organized crime in South Africa. However, proving instrumentality in court is in fact a complex procedure and not always successful.

Chapter 6 of the Prevention of Organized Crime Act (POCA) enables the National Director of Public Prosecution (NDPP) to seize property if it is found by the High Court to have been instrumental in committing an offence or to be the proceeds of ‘unlawful activities’. Property is regarded as instrumental to crime if used as a tool by which to commit a crime. ‘Instrumentality forfeiture’, as it is called, means the person who has the property is permanently deprived of it by court order. Some examples of property that has been lost on the grounds of being instrumental to crime include:

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a house in which drugs are manufactured (which in other words is used as a drug laboratory)
a motor vehicle that is used to transport the drugs or to deal in drugs
an aeroplane that is used to transport smuggled commodities
a motor vehicle driven by a drunken driver

The aim behind forfeiture is claimed to be to ensure that property is not used or re-used to commit crimes.

The standard of proof required by POCA is on a balance of probabilities. This means that the prosecution only needs to establish that the property was ‘probably’ used to commit the crime – in the sense that the offence would not have been committed if the property had not been available. This obviously makes the task of the prosecution easier. Beyond individual cases, it is argued that instrumentality forfeiture gives law-abiding society a weapon that is relatively easy to use to combat sophisticated criminal activities such as drug trafficking, smuggling, racketeering, and prostitution.

However, an analysis of some of the decisions by South African courts shows that the standard to prove instrumentality is put at a higher level than would appear to be envisaged by POCA. Courts tend to insist on a ‘sufficient connection’ between the forfeiture of the instrumentality of a crime and the main purposes of POCA. The purposes of POCA are to remove the incentive for crime and to deter criminals. Courts have emphasized that the fact that a crime is committed at a certain place does not by itself make that place an instrumentality of the offence. There has to be a direct link.

In the case of Kumarnath Mohunram and Shelgate Investments CC v National Director of Public Prosecutions and BOE Bank Limited (Law Review Project Intervening as Amicus Curiae) Mr Mohunram, who had lost his casino, appealed to the Constitutional Court (CC) against the judgment of the Supreme Court of Appeal. He argued that the casino was not an instrumentality for unlawful gambling, and its forfeiture would be disproportionate taking into account the punishment he had already received. The CC, having been satisfied that no link was shown to exist, on the facts taken as a whole, held that the forfeiture order was disproportionate and the conduct of Mr Mohunram did not warrant the forfeiture.

Similarly, in Singh v National Director of Public Prosecutions, Mr Singh appealed against a High Court order in respect of a building alleged to be an instrumentality of a drug dealing crime. In setting aside the order, the CC found that the link between the property and the offence was largely incidental or fortuitous and therefore set aside the High Court forfeiture order.

On the other hand, if it can be proved that there exists sufficient connection between the crime and the instrumentality, courts have upheld the orders. In Simon Prophet v The National Director of Public Prosecutions, the court ruled that it was beyond doubt that the house in which tik was manufactured had been organized, furnished and adapted or equipped to enable or facilitate the applicant’s illegal activities. It was therefore an instrumentality of a crime.

The courts require either live witnesses or surveillance from which to conclude that property is an instrumentality. If the prosecution or other investigative agency is not prepared to reveal their source, the chances of forfeiture are reduced.

Another grey area of the application of POCA relates to protecting third parties when forfeiture orders are made. Section 18 (2) of POCA requires the NDPP to notify all persons known to have an interest in property that might be forfeited. Any interested third party may oppose the application within fourteen days of notification, pleading to be an innocent party. The innocent owner’s defence and recourse to appeal provisions can be used to defeat the aims of POCA thereby and escape the long arm of law. It is not inconceivable that a criminal organization could use subsidiaries located in far-flung places precisely for this purpose.

In conclusion, the forfeiture of property considered to be proceeds of crime, rather than instrumentalities, appears to be more successful in South Africa, as the exploits of the Asset Forfeiture Unit (AFU) in the last five years show. No sensitive decisions need be taken as to whether or not to expose secretive sources of information. At the stage at which an application for forfeiture is made, it is easier to establish the link between the property and the crime. In addition, the prosecution only needs to show that the property was probably earned through crime.

The establishment of the AFU, combined with the activation of civil forfeiture and of the Criminal Assets Recovery Account, has opened up new ways of hitting organized crime syndicates where it hurts them most – in their pockets - thereby disrupting their activities. Ironically, forfeiture seems to be more effective where no one has been convicted of a crime than where there has been a conviction. In balancing it with the rights of a convicted criminal, new principles that occasionally negate initiatives to combat criminal profits and discourage recidivism, are developing.

Lea Mwambene, Intern, Organized Crime and Money Laundering Programme, ISS Cape Town