THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Not reportable
Case no: 297/06

In the matter between:

BARRY STEPHEN HASLAM

APPELLANT

and

THE STATE

RESPONDENT

Coram:                  CLOETE,  CACHALIA JJA et  THERON AJA
Heard:

8 MARCH 2007
Delivered:
28 MARCH 2007

Summary:

Criminal law - Fraud – Adequacy of proof. State failed to prove the
mechanics of the fraud therefore cannot impute intention to the appellant. Appellant’s version
reasonably possibly true.

Neutral citation: This judgment may be cited as HASLAM v THE STATE
[2007] SCA 33 RSA

________________________________________________________________

THERON AJA/…..

[1] The appellant, a senior and experienced banker, was charged with and
convicted  in the Magistrates’ Court, Johannesburg, of ten counts of fraud and
sentenced to ten years’ imprisonment. His appeal to the Johannesburg High
Court was dismissed. He now appeals to this court, with the appropriate leave,
against his conviction and sentence.

[2] The evidence presented at the trial was in essence the following: The
appellant was employed as a relationship manager by Nedcor Bank Limited
(Nedcor) at its Fox Street branch. In that capacity he was responsible for the
accounts of various clients. Until the end of September 1998, the appellant, in
his capacity as  relationship manager, had a mandate to approve credit facilities
up to a limit of approximately R150 000. With effect from October 1998, the
credit lending mandate of all relationship managers was withdrawn. All credit
applications had to be channelled to the credit department for investigation,
consideration and approval.

[3] The appellant was, inter alia, responsible for the accounts of Moonstar
Commerce & Industry (Pty) Ltd (Moonstar) and Emperor Fisher International
(Emperor Fisher), the latter company being owned by Mr Zhang (Zhang). Mr
Theuns Botha (Botha) was the managing director and sole shareholder of
Moonstar and for a period assisted in the management of Emperor Fisher. Both
companies were involved in importing raw materials and goods from China into
South Africa.

[4] During 1999, Botha, on behalf of Moonstar, applied to Nedcor for credit
in the form of letters of credit. According to the evidence, a letter of credit is an

irrevocable and autonomous payment instrument issued by a bank which is
particularly favoured for use in international transactions as a payment
mechanism by importers of foreign goods. Once a letter of credit has been
issued an independent contract is established between the issuing bank and the
foreign beneficiary in terms of which the bank is obliged to make payment in
accordance with the letter of credit. Global Business Centre (Global), a unit
within Nedcor, was primarily concerned with the processing and issuing of
letters of credit.

[5] Moonstar’s applications for letters of credit were submitted to the
appellant and it is common cause that the appellant signed the credit application
forms at the bottom right corner in the space marked ‘approved
(relationship/credit officer’s signature)’. He also inserted his signature number
on seven of the forms and his relationship number on a few others. Either
number would enable an employee of Nedcor to determine the appellant’s
position within the bank using the bank’s computer network.

[6] During the period January 1999 to June 1999, ten letters of credit (which
form the subject of the ten counts of fraud) were issued by Global in favour of
Moonstar. At least three of these letters of credit were for the benefit and use of
Emperor Fisher.

[7] Snyman, a credit manager in the employ of Nedcor, who had managed the
credit portfolio of the appellant’s clients, testified about the bank’s procedure in
respect of applications for letters of credit. Snyman said that the appellant, in his
capacity as relationship manager, would receive such applications and submit

each application, together with a motivation, to the credit department. In the
absence of a motivation, Snyman would return the application to the appellant. It
is common cause that the appellant had not attached motivations to any of the
ten application forms under consideration.

[8] It is further common cause that the application forms in respect of the
letters of credit had not been presented to and approved by the credit department
prior to being issued by Global. At the time, the personnel at Global were
unaware of the withdrawal of relationship managers’ credit mandate despite the
fact that such withdrawal had been well publicized within Nedcor. Global,
accepting that the applications met Nedcor’s credit requirements, issued the
letters of credit applied for. It is common cause that Nedcor’s risk in respect of
the letters of credit, was not secured.

[9] Moonstar’s account with Nedcor went into overdraft. It was unable to pay
its debts, including the debt to Nedcor which arose in consequence of Nedcor
making payment pursuant to the letters of credit. Moonstar was liquidated on 25
January 2000. Nedcor suffered considerable financial loss, the actual amount of
which was not proved.

[10] Central to the state’s case is the appellant’s signature on the ten
applications for letters of credit. The evidence presented by the state sought to
show that by signing the applications next to the word ‘approved’, the appellant
effectively placed himself in the position of a bona fide credit manager and by
implication, misrepresented to Global that he had the mandate to approve letters
of credit and that he had completed all the functions and duties of a credit

manager.  In this manner the signing of the letters of credit by the appellant
constituted a misrepresentation which Global, to the prejudice of Nedcor,  had
acted upon.

[11] The appellant testified that he had appended his signature to the
documents simply to allow the applications to be processed by the credit
department and that Snyman would have disregarded his (appellant’s) signature
for purposes of the department’s decision, as the credit decision was that of
Snyman alone. The appellant stated that he did not intend to bypass the credit
department. According to the appellant his workload had increased
tremendously in consequence of the withdrawal of his credit lending mandate.
Post October 1998 he was required to motivate each and every application for
credit. In respect of applications for specialist products, such as letters of credit,
he would simply ensure that these were put into the system in order to be
processed by the relevant department. It was in fact his burdensome workload
which prompted him to seek alternate employment. It is common cause that the
appellant resigned on 25 May 1999 and left the employ of Nedcor on 25 June
1999 to take up a position with Standard Charter Bank.

[12] The trial court considered the evidence presented by the state sufficient to
justify the conviction of the appellant. The appellant’s version was found to be
inherently improbable. In support of this finding as to the improbability of the
appellant’s version, the trial court stated that it could not accept that an
experienced banker such as the appellant would ‘have just rubber stamped’
Moonstar’s applications for letters of credit. The trial court criticised the

appellant for failing to attach a motivation to the application forms or a note
indicating that he had not considered the merits of each application. The trial
court concluded that the appellant, by appending his signature to the application
forms, had intended to induce Global to believe that Nedcor’s normal credit
lending requirements had been complied with.

[13] On appeal, the high court also found the appellant’s version
‘unacceptable’. The high court further found that the credit department had been
by-passed, and that the appellant ‘did not direct the applications’ through the
appropriate channels ‘in all probability with the intention to circumvent’ the
bank’s credit procedure. It is these findings which the appellant takes issue with
in this appeal.

[14] The crime of fraud consists of unlawfully, and with intent to defraud,
making a misrepresentation which causes actual prejudice or which is
potentially prejudicial to another.1  It is alleged in the charge that the appellant
unlawfully and fraudulently misrepresented that:
(a)
he had authority to approve applications for letters of credit; and/or
(b)
he had complied with Nedcor’s normal lending requirements in approving
the letters of credit; and/or
(c)
he had acted within his lending mandate; and/or
(d)
there were sufficient facilities and/or security in place to ensure
repayment of the letters of credit; and/or

1 See S v Campbell 1991 (1) SACR 503 (NM) at 505b-c and JRL Milton South African Criminal Law and
Procedure Vol 2, 3 ed (1996) p 702.

(e)
he had acted within the normal scope of his duties by approving the
letters of credit.
In this matter, it is difficult to appreciate how the state could succeed in proving
the guilt of the appellant without showing that:
(a)
the appellant was involved in a course of conduct which, to his
knowledge, would and did involve the making of a false representation to
Global; and
(b)
the appellant had knowledge that Global was unaware of the change in the
credit mandate system and would have issued the letters of credit on the
basis of his signature alone.

[15] I turn now to consider whether the bypassing of the credit department was
brought about in consequence of any deliberate and intentional act or omission
on the part of the appellant. The only person who could explain how the
documents ended up with Global was Ms Huey Botha, the wife of Botha, who
had been employed by Nedcor as a foreign representative. In that capacity she
acted as translator/facilitator for the bank’s Chinese speaking clients. According
to her testimony she either received the application forms directly from the
appellant or they were left in her office. This is in stark contrast to the
appellant’s testimony that the application forms were dispatched to Ms Botha
via the bank’s internal messenger system. Ms Botha said that once she received
the application forms it was her responsibility to deliver them to Global. The
procedure she adopted does not accord with the procedure testified to by
Snyman and the appellant. According to Snyman and the appellant the normal

procedure was that the applications were to go from the relationship manager to
the credit department.

[16] It is necessary to record that the trial court made adverse credibility
findings against the Bothas. It considered Botha to be a fairly convincing
witness but one who had only partially told the truth. The trial court adopted the
view that it could rely on Botha’s evidence only where it was corroborated or
not in dispute. It however found Ms Botha to be a ‘very bad witness’ and
concluded that ‘very little evidential weight’ could be attached to her testimony.

[17] In my view, the principal deficiency in the state’s case is its failure to
establish the  mechanics of the fraud. If the state is unable to prove the
mechanics of the fraud - how the application forms got from the appellant to
Global, without being channelled through the credit department - on what basis
can it be found that that was the consequence intended by the appellant? There is
no evidence to suggest that the appellant knew that Ms Botha would not follow
standard procedure and instead deliver the application forms directly to Global.
There is in fact evidence to suggest the contrary. Ms Botha testified that the
appellant had not given her specific instructions regarding the application forms.
Botha’s testimony is that the appellant had advised him (Botha) that the
applications for letters of credit would follow the bank’s normal procedures. On
the evidence it cannot be found that the appellant intended to or took any steps,
whether by action or inaction, to cause any of the applications for letters of
credit to bypass the credit department and the contrary finding by the high court
in paragraph [13] above cannot be supported.

[18] I turn to the second issue, namely, whether the appellant knew that Global
was unaware of the change in the credit mandate system. The appellant’s
uncontested evidence is that he had never been to Global’s premises and that he
was not known by the personnel at Global. This evidence was confirmed by the
staff at Global.  It is common cause that the withdrawal of the credit mandate of
relationship managers was well publicized within Nedcor. It is surprising that
Global, which is not an independent entity, but a division within Nedcor, was
unaware of the changes in the bank’s credit policy. There is not a shred of
evidence to support a finding that the appellant knew or could safely have
assumed that Global was oblivious of the change.

[19] It is trite that in a criminal matter the state must establish the guilt of the
accused beyond reasonable doubt and that where the explanation of the accused
is reasonably possibly true, then an accused is entitled to be acquitted. In S v
Shackell2 after restating the standard of proof in criminal matters, Brand AJA
stated that it is permissible for a court to test an accused’s version against the
probabilities but hastened to caution that an accused’s version ‘cannot be
rejected merely because it is improbable; it can only be rejected on the basis of
inherent probabilities if it can be said to be so improbable that it cannot
reasonably possibly be true.’ (Emphasis added.) The appellant gave an account
as to why he had appended his signature to the application forms and although it
may be contended that this was not the norm or the most practical way of

2 2001 (4) SA 1 (SCA) para 30.

ensuring that the applications were processed, or even that the appellant may
have been negligent, it is not possible, from that evidence, together with the
evidence led by the state, to make the quantum leap in logic, as did the
magistrate, that by signing the application forms, the appellant had ‘intended to
pretend to Global that credit vetting was done’.

[20] I turn now to consider the evidence relating to ‘gifts’, ‘a job application’
and ‘a trip to China’, all of which, according to the trial court, were
circumstantial factors, pointing towards the guilt of the appellant. The
appellant’s evidence was that he had received gifts from Zhang, such as wine
and royal jelly which were all below the value of R500 and in terms of the
bank’s policy did not have to be declared. Botha was not in a position to dispute
this and there is no reason to believe that the appellant was being untruthful.
Botha in his evidence suggested that the appellant had received cash from Zhang
(R5000 per month). This evidence was also disputed by the appellant. Zhang
was not called as a witness and in the view of the approach adopted by the
magistrate, Botha’s uncorroborated evidence has to be disregarded.

[21] The appellant did not make a ‘job application’ to either Moonstar or
Emperor Fisher. According to the evidence, Botha had made an offer to the
appellant after the latter had indicated his intention to leave the employ of
Nedcor and after the appellant had signed the first letter of credit application
form. It is in any event extremely improbable that the appellant with his
credentials would have considered for a moment taking up employment with
either of the companies, and the suggestion that he may have been induced by

the offer of employment to commit the frauds is so far fetched that it may be
rejected out of hand.

[22] It is common cause that after resigning from the employ of Nedcor, the
appellant accompanied Botha, Zhang and certain other delegates, one of whom
was a high ranking official from the National African Chamber of Commerce
and Industry (Nafcoc), on a trip to China. It is also common cause that Botha
paid for the air tickets. The importance of the trip to China was overstated by
both the trial and high court.  First, the appellant, by reason of his expertise in
the banking industry, was invited to be a member of the delegation. Secondly,
the trip occurred subsequent to the appellant leaving Nedcor. Thirdly, upon the
appellant discovering that Botha had misrepresented to their Chinese
counterparts that the appellant was still employed by Nedcor, he immediately
cut short his trip to China. This response, on the part of the appellant, does not
support the high court’s finding of the existence of a ‘special relationship’
between Botha and the appellant.

[23] In my view, there is nothing improbable in the explanation put forward by
the appellant. It seems improbable that the appellant, a senior, highly respected
and sought after banker, would, for no apparent personal gain (apart from the
negligible gifts already mentioned) put his successful banking career on the line
for a simple and unsophisticated series of frauds, which could and should easily
have been detected.

[24] The appeal succeeds and the appellant’s convictions and sentences are set
aside.

L V Theron

Acting Judge of Appeal

CONCUR:

CLOETE JA

CACHALIA JA

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:
Wednesday 28 March 2007

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

Haslam v The State

In a judgment today the Supreme Court of Appeal has set aside
the apellant’s conviction of ten counts of fraud.

The appellant was employed as a relationship manager by Nedcor
Bank Limited (Nedcor) at its Fox Street branch. In that capacity he
was responsible for the accounts of various clients. Until the end of
September 1998, the appellant, in his capacity as  relationship
manager, had a mandate to approve credit facilities up to a limit of
approximately R150 000. With effect from October 1998, the credit
lending mandate of all relationship managers was withdrawn. All
credit applications had to be channelled to the credit department
for investigation, consideration and approval.

The appellant was, inter alia, responsible for the accounts of
Moonstar Commerce & Industry (Pty) Ltd (Moonstar). During 1999,
Botha, on behalf of Moonstar, applied to Nedcor for credit in the
form of letters of credit. Global Business Centre (Global), a unit
within Nedcor, was primarily concerned with the processing and

issuing of letters of credit. Moonstar’s applications for letters of
credit were submitted to the appellant and it is common cause that
the appellant signed the credit application forms at the bottom right
corner in the space marked ‘approved (relationship/credit officer’s
signature)’. He also inserted his signature number on seven of the
forms and his relationship number on a few others. During the
period January 1999 to June 1999, ten letters of credit (which form
the subject of the ten counts of fraud) were issued by Global in
favour of Moonstar. It is further common cause that the application
forms in respect of the letters of credit had not been presented to
and approved by the credit department prior to being issued by
Global.
Moonstar’s account with Nedcor went into overdraft. It
was unable to pay its debts, including the debt to Nedcor which
arose in consequence of Nedcor making payment pursuant to the
issue of the letters of credit. Moonstar was liquidated on 25
January 2000. Nedcor suffered considerable financial loss.

The SCA, in a judgment by Theron AJA in which Cloete JA and
Cachalia JA concurred, held that there was no evidence to support
a finding that the appellant intended to or took any steps, whether
by action or inaction, to cause any of the applications for letters of
credit to bypass the credit department.

The SCA further held that there was nothing improbable in the
explanation put forward by the appellant that he signed the
application forms simply to allow the applications to be processed
by the credit department. The court reasoned that it was
improbable that the appellant, a senior, highly respected and
sought after banker, would, for no apparent personal gain (apart
from the negligible gifts already mentioned) put his successful
banking career on the line for a simple and unsophisticated series
of frauds, which could and should easily have been detected.

--ends--