THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case no: 731/10
No precedential significance

In the matter between

FJ SEWELA
Appellant

and

THE STATE
Respondent

Neutral citation: FJ Sewela v The State (731/10) [2010] ZASCA 159
(01 December 2010)

Coram:

Cloete, Ponnan and Bosielo JJA

Heard:

25 November 2010
Delivered:
01 December 2010
Summary:
Bail – Refusal of – Appeal against – onus in terms of s 60 (11)
(b) of the Criminal Procedure Act 51 of 1977 – failure by the
appellant to prove that the interests of justice permit his release
on bail – s 65 (4) of the CPA.

ORDER

On appeal from: South Gauteng High Court (Johannesburg), (Mabesele AJ
sitting as a court of appeal).

The appeal is dismissed.
__________________________________________________________________

JUDGMENT
__________________________________________________________________

BOSIELO JA (Cloete and Ponnan JJA concurring):

[1] This is an appeal against a judgment of the South Gauteng High Court
(Mabesele AJ), in which the court dismissed an appeal by the appellant against the
refusal by the regional magistrate sitting at Wynberg to grant him bail pending his
trial.

[2] The appellant was arrested on 24 October 2009.  There are three co-accused
in this matter, one of whom is the customary wife of the appellant (accused 3).
They are charged with five counts of fraud and the appellant will be charged with
money laundering in contravention of s 5 of the Prevention of Organised Crime
Act, 121 of 1998 (‘POCA’).  In essence, the state alleges that all the accused,
acting in concert changed bank account numbers of other people or entities and
created fictitious bank accounts into which they diverted large sums of money

from the South African Revenue Services (SARS). The five accounts involve a
total amount exceeding R77 million.

[3] It is not in dispute that, given the nature of the charges against the appellant,
his bail application falls to be dealt with in terms of s 60 (11) (b) of the Criminal
Procedure Act 51 of 1977 (CPA).  This section provides:
‘S 60 (11) Notwithstanding any provision of this Act, where an accused is charged
with an offence referred to —
(b) in Schedule 5, but not in Schedule 6, the court shall order that the
accused be detained in custody until he or she is dealt with in accordance
with the law, unless the accused, having been given a reasonable opportunity
to do so, adduces evidence which satisfies the court that the interests of
justice permit his or her release.’
This section therefore saddles the appellant with the onus to prove, on a balance of
probabilities, that it is in the interests of justice that he be released on bail, failing
which he must be detained in custody.

[4] At the bail hearing before the regional magistrate, the appellant elected to
present his evidence in the form of an affidavit.  In opposing the bail application,
the state also relied on affidavits, amongst others by the investigating officer, Mr
Mahlangu and Mr Schoeman, a manager in the Anti-Corruption and Security
Special: Project Unit at SARS.

[5] The following important facts emerged from the appellant’s affidavit:
5.1
the appellant was born on 23 July 1965;

5.2
the appellant has been staying with his wife at his wife’s home at 53
Wandel Street, Woodmead, Sandton for the past five years;
5.3
the appellant owns property at 15 Conway Street, Kelvin, Sandton,
which is fully paid for.  The estimated value thereof is R3,5m;
5.4
the appellant is married and has four children aged 17, 12, 9 and 6
respectively;
5.5
the appellant has movables to the value of R300,000,00;
5.6
the appellant is the registered owner of an Audi Q7 motor vehicle
which is fully paid up;
5.7
the appellant has a B.SC degree;
5.8
the appellant is a shareholder in a number of companies;
5.9
the appellant is the sole member of Oxy Trading 847 CC;
5.10 the appellant has a pending case of fraud at Phokeng Magistrate
Court, Rustenburg involving approximately R1,3m;
5.11 although the appellant admitted payment of R8m into Oxy Trading’s
account, he denied any involvement in the fraudulent activities forming part
of the charges;
5.12 the appellant has no previous convictions;
5.13 the appellant undertook, should he be granted bail, to attend court at
all times, comply with all bail conditions, not to communicate with or try to
influence or intimidate state witnesses, not to conceal or destroy any
evidence and not to undermine or prejudice the objectives or proper
functioning of the criminal justice system, including the bail system.

[6] The salient features which I have gleaned from the affidavits filed on behalf
of the respondent which are directly relevant to the bail proceedings are:
6.1
that the appellant is allegedly involved in a crime syndicate which has
targeted SARS and which has committed substantial frauds;
6.2
the modus operandi involved the identification of a duly registered
company which was due to receive a refund; the syndicate registered a
fictitious duplicate company at the Companies and Intellectual Property
Registration Office; the bank details of a legitimate company were altered to
those of the fictitious company; the refunds due by SARS were then
fraudulently diverted from the legitimate company and channelled into the
bank account of the fictitious company; various bank accounts were used to
distribute the money;
6.3
there were five such transactions involving the actual loss to SARS of
some R50, 949, 743, 80 and a potential loss of R26 798 102, 13 which form
the subject matter of  the charges against appellant;
6.4
members of the South African Police Service are in possession of
exhibits which directly link the appellant, and his wife (accused 3) to a
fictitious company SBC International Management Service (Pty) Ltd, which
fraudulently received a refund of R31 600 946, 89 from SARS which was
destined for SBC International Management Service Inc.;
6.5
during a prior search and seizure at the appellant’s home at 15
Conway Street, Kelvin, some electronic equipment allegedly used in the
commission of these offences was found and confiscated by SAPS;
6.6
further exhibits which appear to link the appellant to the frauds
including SBC blank letterheads, copies of an SBC audit file, bank

statements of the fictitious SBC and enquiries on SBC letterheads about
payments of refunds were also found at 53 Wandel Avenue, Woodmead, the
house occupied by the appellant and his wife;
6.7
the police are in possession of documents proving that appellant used
R498 000, 00 from the fictitious bank account of SBC International
Management Service (Pty) Ltd to pay for a BMW X5 at Lyndhurst Auto;
6.8
SBC International Management Service Inc lost R31 600 946,89
which was  fraudulently diverted into the fictitious bank account of SBC
International Management Service (Pty) Ltd over which the appellant had
control.

[7] It was contended on behalf of the appellant that his personal circumstances
are such that the interests of justice permit his release on bail, particularly the fact
that he is a South African citizen, married with children and that he has valuable
assets both movable and immovable inside the country.  Furthermore, it was
submitted that his consistent attendance of his trial at Phokeng Magistrates’ Court
which has been pending since April 2008 is clear and irrefutable testimony that,
should he be released on bail, he will honour his bail conditions and attend trial.
Although Mr Grovè, who appeared for the appellant, conceded that the respondent
has a prima facie case against the appellant in the current case as well as the one
pending in Phokeng, he urged us to remain mindful of the presumption of
innocence operating in favour of the appellant.

[8] On the other hand, it was submitted on behalf of the respondent that this is a
very serious matter and that the respondent has a strong prima facie case against

the appellant which in the event of conviction, exposes the appellant to the
possibility of a very long term of imprisonment.  Mr Simpson, who are appeared
for the respondent, submitted that the strength of the state’s case required an
answer from the appellant.  He referred in particular to two transactions involving
the purchase of the BMW X5 and the house at Kelvin by the appellant.
Concerning the explanation by the appellant that the R8m which he admitted to
have received, Mr Simpson submitted that the contract of service on which the
appellant relied was vague in its terms and did not avail him. Relying on S v
Mathebula 2010 (1) SACR 55 (SCA) he argued that even though the present
appeal falls to be decided in terms of s 60 (11) (b) it involving a Schedule 5
offence, the evidence incriminating the appellant is so strong that he should have
said more to show that the interests of justice permit his release on bail.  He
submitted further that except for the contract of service between Tiespro and
Tiffany Trading, there are no other documents such as receipts or tax invoices
which evidence the receipt by the appellant’s close corporation of R8m for services
rendered under this contract.

[9] This State alleges that this case involves a syndicate or enterprise acting in
the furtherance of a common purpose with the primary objective of defrauding
SARS by unlawfully diverting huge sums of money to be paid by SARS as refunds
to legitimate tax payers to the accounts controlled by the syndicates.  Importantly,
the appellant admits that some R8m of this tainted money was paid into the
account of his close corporation, OXY Trading 847, from Tiespro 102 (Pty) Ltd.
However, he alleges that he did not know that the R8m was the proceeds of crime.
According to the appellant these were legitimate payments lawfully made to

Tiffany Trading for services rendered by his close corporation.  The appellant has
however not furnished any documentary proof in the form of either a valid
contract, tax invoices or receipts to prove this alleged transaction.  In essence there
is no acceptable proof that appellant’s close corporation (Tiffany) rendered any
services to Tiespro 102 (Pty) Ltd which justified the payment of R8m into his
account.  The failure by the appellant to produce supporting documents casts grave
doubt on his explanation.  We are aware that documents were seized when the
police raided the appellant’s offices but that should not have prevented him from
making the simple statement that such documents exist.

[10] On the other hand there is evidence that some documents pertaining to SBC
International Management Services (Pty) Ltd which, as I have said was a company
used in this fraud, were found at the appellant’s home which he shares with his
wife.  Coincidentally there is also evidence that the appellant’s wife (accused 3)
also received some R4,2m from fraudulent transactions involving SBC
International Management Services (Pty) Ltd.  Importantly, the State alleges that
there is evidence that appellant received through OXY Trading 847 an amount of
approximately R6,5m not from Tiespro but through an electronic transfer from
SBC and Sun Micro System.  This evidence called for an explanation by the
appellant.  He failed to provide any acceptable explanation.

[11] One other important fact which, in my view, militates strongly against the
appellant being granted bail is the fact, which he admits, that he has a pending case
of fraud involving approximately R1,3m in the magistrates’ court, Phokeng.  It is
worth noting that the same modus operandi was used in the Phokeng case to divert

money destined for a legitimate account to a fictitious one.  A s 204 witness
implicates the appellant as the kingpin of this scheme.  The fact that the current
offences were allegedly committed whilst the fraud case in Phokeng was pending
suggests that the appellant either has a propensity to commit fraud or is
disrespectful of law and order.  In determining whether an applicant for bail, may,
if released on bail commit further offences, a court, not being blessed with some
prophetic foresight, can legitimately rely on the past alleged conduct of such an
applicant.  The appellant’s alleged conduct points to a possibility which cannot be
said to be remote or fanciful that he is likely to continue to commit further crimes
should he be released on bail.  To release the appellant on bail under these
circumstances would, to my mind, not be in the interests of justice as it is likely to
seriously undermine the criminal justice system including the bail system itself.  I
have no doubt that it will seriously undermine and erode the confidence of the right
thinking members of society in our criminal justice system.  See s 60 (4) (d) of the
CPA.

[12] Both the regional magistrate and the high court found that the appellant had
failed to prove, on a preponderance of probabilities, as is required by s 60 (11) (b),
that the interests of justice permit his release on bail.  I cannot find any fault with
this conclusion.  It is trite that the powers of an appeal court to interfere with the
decision by another court to refuse bail are circumscribed by s 65 (4) of the CPA.
It is not as if the court of appeal has carte blanche.  A court of appeal can only set
aside such a decision if it is satisfied that it is wrong.  S v Barber 1979 (4) SA 218
(D) and S v Faye 2009 (2) SACR 210 (TK).

[13] When all the evidence is considered and weighed against the appellant’s
personal circumstances, I am satisfied that the appellant failed to prove that the
interests of justice permit his release on bail, S v Botha en `n ander 2002 (1) SACR
222 (SCA) para 20.  In fact the contrary is true.  Accordingly, I am of the view that
the court a quo was correct in upholding the magistrate’s decision to refuse to grant
the appellant bail.

[14] The appeal is dismissed.

________________
L O Bosielo
Judge of Appeal

APPEARANCES:

For Appellant:

N Potgieter

N Grovè

Instructed by:

Nardus Grovè Attorneys:   Johannesburg

Symington & De Kok:
Bloemfontein

For Respondent:

A Simpson

Instructed by:

Director Public Prosecutions:  Pretoria

Director Public Prosecutions:  Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

01 December 2010

STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.

Sewela v The State (731/2010) [2010] ZASCA 159 (01 December 2010)

The Supreme Court of Appeal today dismissed an appeal brought against the dismissal by
the court a quo of an appeal brought against a decision by a regional magistrate to refuse to
release the appellant on bail pending his trial.

The appellant is charged together with four others on five counts of fraud and money
laundering in contravention of s 5 of the Prevention of Organised Crime Act 121 of 1998
(‘POCA’).  The State alleges that the appellant is part of a syndicate which fraudulently
intercepts money from South African Revenue Services (SARS) intended as legitimate
payment to legitimate taxpayers and divert it to fictitious bank accounts controlled by the
syndicate.

The State alleges further that the five charges involve an amount exceeding R77m.  There
are serious allegations by the State that approximately R31m of this amount was paid into a
fictitious account of SBC International Management Service (Pty) Ltd over which the appellant
has control.  The appellant admitted that an amount of R8m was paid into the account of his
close corporation, Tiffany Trading 847 CC.  The appellant failed to adduce satisfactorily
evidence that this payment was legitimate.

Furthermore, the State alleges that the appellant has a case of fraud pending at the Phokeng
Magistrates’ Court involving approximately R1,3m.  What this means is that the appellant got
involved in these five counts of fraud whilst he was released on his own recognisances in

respect of the Phokeng fraud.  According to the State a similar modus operandi was used in
both cases.

The SCA found that as this bail application was governed by s 60 (11) (b) of the Criminal
Procedure Act, 51 of 1977, this being a Schedule 5 offence, that the appellant bore the onus
to satisfy the court that the interests of justice permitted his release on bail.  Both regional
magistrate and the court a quo had found that the appellant had failed to prove that the
interests of justice permitted his release on bail.

Based on the evidence, the SCA found that the State had a strong prima facie case against
the appellant, and that the appellant failed to discharge the onus resting on him.

The SCA found that the strength of the State’s case coupled with the appellant’s past conduct
were such that the release of the appellant on bail would undermine and erode the public’s
confidence in the criminal justice system including the bail system itself.

Finally the SCA found that as the appellant had failed to prove that the court a quo was wrong
in denying him bail, that it could not interfere with that judgment.  The SCA dismissed the
appeal.