THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 827/2011

In the matter between:

MARIA JOHANNA PRINSLOO

FIRST APPELLANT
HERBERT HENRY PRINSLOO

SECOND APPELLANT
MARIA JOHANNA LEMSTRA

THIRD APPELLANT
GERRIT LEMSTRA

FOURTH APPELLANT
WILLEM JACOBUS PELSER

FIFTH APPELLANT
IZABEL ENGELBRECHT

SIXTH APPELLANT

and

THE STATE

RESPONDENT

Neutral citation: Prinsloo & others v State (827/11) [2015] ZASCA 207 (4 December 2015)

Coram:
Brand JA and Fourie and Eksteen AJJA

Heard:
18 November 2015

Delivered:
4 December 2015

Summary: Criminal Law – unlawful multiplication scheme conducted in contravention of
various statutory provisions and the common law ─ whether such activities constituted a
pattern of racketeering activity in contravention of sections 2(1)(b), 2(1)(e), 2(1)(f) and 4 of
the Prevention of Organised Crime Act 121 of 1998 (POCA) ─ elements to be proved by the
State to secure convictions under relevant provisions of POCA ─ whether dolus or culpa
required ─ proper approach. Sentence ─ whether interference by court of appeal is justified.

___________________________________________________________________

ORDER
___________________________________________________________________

On appeal from: North Gauteng Division of the High Court, Pretoria (Pretorius J and
assessors sitting as court of first instance):

The first accused
(i) Counts 77176-86246
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside and the following substituted therefor:
„Skuldig aan een klagte van die oortreding van artikel 42 van die Koöperasiewet 91 van
1981.‟

(ii) Counts 197708-199747
The appeal is upheld and the convictions and sentence imposed on these counts are
set aside.

(iii) Counts 200664-218636
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside and the following substituted therefor:
„Skuldig aan een klagte van die bedryf van „n skadelike sakepraktyk.‟

(iv) Count 218683
The appeal against the conviction on this count is upheld to the extent that the order
of the trial court is set aside and the following substituted therefor:
„Skuldig aan diefstal ten bedrae van R91,1 miljoen.‟

(v) Save as aforesaid, the appeal of the first accused against her convictions and the
sentences imposed, is dismissed.

The second accused
(i) Counts 77176 to 86246
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside and the following is substituted therefor:
„Skuldig aan een klagte van die oortreding van artikel 42 van die Koöperasiewet 91
van 1981‟
(ii) Counts 197708 to 199747:
The appeal is upheld and the convictions and sentence imposed on these counts are
set aside.
(iii) Counts 200664 to 204797
The appeal is upheld and the convictions and sentence imposed on these counts are
set aside.
(iv) Counts 204798 to 218636
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside and the following is substituted therefor:
„Skuldig aan een klagte van die bedryf van ‟n skadelike sakepraktyk.‟
(v) Count 218637
The appeal is upheld and the conviction and sentence imposed on this count are set
aside.
(vi) Save as aforesaid the appeal of the second accused against his convictions and
sentences imposed is dismissed.

Accused 3
(i) Counts 48 to 949; counts 144337 to 188910; and counts 197708 to 199747
The appeal is upheld and the convictions and sentences imposed on these counts
are set aside.
(ii) Counts 200664 to 218636
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside and the following is substituted therefor:
„Skuldig aan een klagte van die bedryf van ‟n skadelike sakepraktyk.‟
(iii) Save as aforesaid the appeal of accused 3 against her convictions and the
sentences imposed is dismissed.

Accused 4
(i) Counts 77176 to 86246
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside  and the following is substituted therefor:
„Skuldig aan een klagte van die oortreding van artikel 42 van die Koöperasiewet 91
van 1981‟
(ii) Counts 197708 to 199747
The appeal is upheld and the convictions and sentence imposed on these counts are
set aside.
(iii) Counts 200664 to 218636
The appeal against the convictions on these counts is upheld to the extent that the
order of the trial court is set aside and the following is substituted therefor:
„Skuldig aan een klagte van die bedryf van ‟n skadelike sakepraktyk.‟
(iv) Count 218637
The appeal is upheld and the conviction and sentence imposed on this count are set
aside.
(v) Count 218683
The appellant is sentenced to 10 years‟ imprisonment on this count and it is ordered
that the sentence is to run concurrently with the sentence imposed on counts 2 and
3.
(vi) Save as aforesaid the appeal of accused 4 against his convictions and the
sentences imposed is dismissed.

Accused 5
(i) Counts 144337-188910
The appeal is upheld and the convictions and sentences imposed on these counts
are set aside.

(ii) Count 218653
The appeal against the conviction is upheld to the extent that the order of the trial
court is set aside and the following substituted therefor:
„Skuldig aan die oortreding van artikel 75(1)(a) van die Inkomstebelastingwet 58 van 1962.‟

(iii) Save as aforesaid, the appeal of accused 5 against his convictions and the
sentences imposed, is dismissed.

Accused 6
(i) Counts 144337-188910
The appeal is upheld and the conviction and sentences imposed on these counts are
set aside.

(ii) Count 218682
The appeal is upheld and the conviction and sentence imposed on this count are set
aside.

(iii) Counts 54534-59033
The typographical error in the summary of the trial court of the counts in respect of
which accused 6 was acquitted, is corrected to reflect the acquittal of accused 6 on
counts 54534-59033.

(iv) Save as aforesaid, the appeal of accused 6 against her convictions and the
sentences imposed, is dismissed.

(v) Count 218657 ─ The State‟s appeal
The appeal of the State against the sentence imposed on this count is upheld. The
sentence is set aside and the following substituted therefor:
„Aanklag 218657 ─ Bedrog ─ 12 jaar gevangenisstraf.‟

___________________________________________________________________

JUDGMENT
___________________________________________________________________

Fourie and Eksteen AJJA:

Introduction

[1] In 1919 Italian immigrant Charles Ponzi of Boston, Massachusetts, United
States of America, devised a scheme by which he enticed some 11 000 Bostonians
to invest approximately US$20 million with him, promising exceptionally high rates of
return within a short period of time by purchasing international reply coupons from
other countries and then redeeming them in the US for postage stamps. Initially he
was able to pay these exorbitant returns to previous investors by simply drawing
from the capital investments received from subsequent investors. However, seeing
that the scheme was not based upon any viable underlying economic enterprise, it
eventually had to collapse when no more investors could be persuaded to make
further investments. Hence, schemes of this nature have, down the years, become
known as Ponzi schemes.

[2] This appeal has its origin in a similar scheme which had been conducted
during the period 1 March 1998 to 22 May 2002, initially only within the Vaal Triangle
area 60 kilometres south of Johannesburg, but was later also countrywide. The
scheme was initiated by the first appellant, but subsequently the second to sixth
appellants became involved at different times and in different capacities. It is
common cause that during the four years of its existence, approximately R1,5 billion
was invested in this scheme and upon its demise scores of investors had lost all
their money and were left destitute. The State contended that, what the appellants
had conducted, was a Ponzi or multiplication scheme, and in view thereof a plethora
of criminal charges were preferred against them. In fact, the final indictment
contained no less than 218 683 charges.

[3] The appellants, to whom we will conveniently refer as „the accused‟, were
arraigned on these charges in the North Gauteng High Court, Pretoria and their trial
commenced before Pretorius J and two assessors on 27 July 2009. The accused
pleaded not guilty to all the charges, but after hearing evidence, Pretorius J, on 8
June 2010, found each of them guilty on a large number of the counts preferred
against them. We will in due course refer to the specific counts, but should mention
that the accused were found not guilty on some 1 000 counts. They were
subsequently sentenced to terms of effective imprisonment, ranging from 25 years to
5 years. We will also in due course return to the sentences so imposed.

[4] The accused are appealing, with the leave of the court a quo, against such
convictions and sentences. The State, also with the leave of the court a quo, appeals
against the sentence imposed on accused six in respect of count 218 657.

Dramatis Personae
[5] The first accused was the main role player in the scheme. She initiated the
scheme in 1998, and it is common cause that, at all times, she was at the forefront of
this enterprise.

[6] The second accused joined the scheme in the first half of 2001and acted as a
public official or an office bearer of two entities utilised to conduct the scheme. He
married the first accused in December 2001. They were divorced during the course
of the trial.

[7] The third accused is the daughter of the first accused. She joined the scheme
in April 1998 and acted as a public official or an office bearer of four of the entities
involved in the scheme.

[8] The fourth accused is the husband of the third accused and the son-in-law of
the first accused. He joined the scheme in January 1999 and acted as a public
official or an office bearer of three of the entities utilised to conduct the scheme.

[9] The fifth accused is the son of the first accused. He joined the scheme in July
1998 and acted as a public official or an office bearer of two of the entities utilised to
conduct the scheme.

[10] The sixth accused is the niece of the first accused. She joined the scheme in
October 1998 and acted as a public official or an office bearer of two of the entities
utilised to conduct the scheme.

Chronology of relevant events
[11] The accused did not (and could not in view of the uncontested objective
evidence) seriously contest the notion that the scheme operated by them was in fact
a Ponzi scheme. The evidence clearly showed that the underlying cash loan

businesses conducted by the first accused, never generated sufficient income to
meet or sustain the interest payments to be made to investors. In the result
investors‟ capital was used to satisfy the interest commitments. The essence of the
business of the scheme was the taking of deposits, initially at a return of 20 per cent
per month but later mostly at a return of 10 per cent per month. As a matter of
course, the scheme was therefore insolvent ab initio and constituted a Ponzi
scheme.

[12] We do not consider it necessary for purposes of this judgment, to engage in a
detailed summary of all the events giving rise to the charges preferred against the
accused. This laborious task had been undertaken by the trial judge who produced
an exceptionally detailed judgment of 1 159 pages. We will merely refer to the
events constituting the factual matrix necessary for the consideration of the appeals
brought by the respective accused.

[13] Reverting to the nature and extent of the scheme, it appears that the first
accused commenced her cash loan business in March 1998 under the name and
style of Finsure Consultants. Investments were procured from the public at an initial
return of 20 per cent per month. In October 1998, the business was converted to a
close corporation styled MP Finance CC t/a Finsure Consultants. The first accused
was the only member, but on 29 December 1998, the members‟ interest was
restructured so that she held 60 per cent and the third and fifth accused, 20 per cent
each.

[14] In the period between 1 March 1998 and 28 February 1999 deposits by
investors of R1,57 million were received, whilst R1,4 million was owed to the
investors in interest. This was not reflected in the financial records of the close
corporation for the 1999 tax year. They reflected a gross income of R176 478 only
with a nett profit of R10 608 before tax.

[15] On 29 February 2000 deposits were held in an amount of R20,65 million. The
interest commitment for the period between 1 March 1999 and 29 February 2000,
was R14,9 million. This was yet again not reflected in the financial records of the

close corporation, which reflected a gross income of R1,7 million with a nett profit of
R4 530 before tax.

[16] Following an inspection by the Department of Trade and Industry (the DTI) on
10 May 2000, the first accused represented in writing to the DTI that:
(a) all investors were repaid on 11 and 12 May 2000;
(b) the investors were family members and friends who were shareholders and paid
dividends based on profits; and that
(c) there were only 33 investors who invested a total amount of R682 750.

[17] However, as it transpired subsequently, members of the public who had
invested in the scheme, did not receive payment of their investments and on 13 May
2000 the total value of these investments was approximately R37 million.

[18] During May 2000, a new entity entered the fray, namely, a company by the
name of Madikor Twintig (Pty) Ltd (Madikor). On 18 May 2000, documentation was
lodged with the registrar of companies, appointing the first, third, fifth and sixth
accused as directors of Madikor.

[19] In the period between 10 May 2000 and 17 January 2001, 2 450 deposits to
the value of R131 million were received from members of the public by Madikor.
While „investments certificates‟ were issued for deposits received in Finsure
Consultants and MP Finance CC, „share certificates‟ were issued for deposits
received by Madikor. However, during the period June 2000 until April 2002, investor
statements were issued in the name of „MP Financial Services‟. These statements
listed all investments by and payments to investors, irrespective of the entity used or
the fact that an investment in one entity may have been converted to an investment
in another.

[20] On 25 October 2000 an enquiry was made by the South African Reserve
Bank (the SARB). This resulted in a written response by the attorneys of the first
accused on 11 December 2000, in which it was -
(a) acknowledged that deposits were taken in contravention of the Banks Act 94 of
1990 (the Banks Act); and

(b) undertaken that deposits received would be repaid by 15 January 2001, of which
proof would be submitted to the SARB in January 2001.
A list of 105 investors of the amount of R2 996 700 was attached to this letter.
However, it is common cause that, on 11 December 2000, there were in fact 2 461
active investments with a total value of more than R126 million, while the underlying
business of the scheme at no stage realised sufficient profit to service the resulting
debt payable to these investors at a rate of R13,4 million per month. Needless to
say, investors were not repaid as had been undertaken in the letter addressed to the
SARB.

[21] On 19 March 2001 an application for membership dated 30 January 2001,
was filed on behalf of MP Finance SACCO with the Savings and Credit Co-operative
League (SACCOL). It appears from the application that an inaugural general
meeting of MP Finance SACCO was held on 15 January 2001, where it was decided
that the first accused would act as its chairperson and the third accused as
treasurer. The fourth accused signed the application as „member‟. However, on 26
March 2001, SACCOL refused the application for membership.

[22] Notwithstanding the refusal of the application lodged by MP Finance SACCO,
deposits were taken from investors in the name of this unregistered entity. It is
common cause that, in 2001, registered savings and credit co-operatives were only
allowed to take deposits up to a maximum of R9,9 million. However, during the
period between 1 January 2001 and 21 August 2001, 5 483 deposits to the value of
R308,5 million by investors were taken by the unregistered entity, MP Finance
SACCO.

[23] On 4 June 2001, a shelf company was converted to a public company and
renamed Martburt Financial Services Ltd (Martburt), in which 10 000 ordinary shares
were issued. Of these 6 000 were allocated to the first accused and 1 000 to each of
the second, third, fourth and fifth accused. The latter four accused were also
appointed as directors of Martburt. Although the sixth accused was never officially
appointed as a director, she was held out to be one in the documentation of
Martburt. A draft prospectus made provision for 2 000 shares with a nominal value of

R1 each, linked to debentures of R4 999, to be issued to the public for a total
amount of R10 million.

[24] However, during the period between 4 June 2001 and 31 October 2001,
approximately 4 500 deposits from investors to the value of R290,9 million were
taken by Martburt. In addition, 3 451 debentures to the value of R155,7 million were
issued in Martburt‟s name and 841 investments to the value of R44,3 million were
transferred from Madikor and MP Finance SACCO to Martburt.

[25] On 6 June 2001 inspectors appointed in terms of s 11(1) of the South African
Reserve Bank Act 90 of 1989, inspected the business of Martburt. A legal
representative of Martburt then admitted that deposits were taken in contravention of
s 11(1) of the Banks Act. It was represented to the inspectors that between R10
million and R12 million was owed to investors. This was untrue. On 6 June 2001 the
actual amount owing in respect of approximately 5 890 investments was in the order
of R320 million. The explanation proffered on behalf of Martburt was that the draft
prospectus „legalised‟ the taking of deposits. This was also untrue since the R10
million to be raised through the issue of debentures would not have covered the
R320 million owed to investors. At that meeting of 6 June 2001, an instruction was
given by the inspectors that no further deposits may be taken from the public.

[26] The following day the inspectors instructed the first accused to repay deposits
under the control of the managers appointed in terms of s 83(1) of the Banks Act.
The first accused represented to the inspectors that R10,7 million was owing to
investors, while at that stage the amount owing in respect of approximately 6 006
investments, was approximately R325 million. When confronted with the fact that not
all investors were reflected on the investors‟ list dated 7 June 2001, it was
represented to the inspectors on 10 July 2001 that R11,6 million was owed to the
investors. This was another blatant untruth. As at 10 July 2001, approximately R362
million was owed to investors. On 1 August 2001, the amount owed to investors
exceeded R375,1 million.

[27] After the meeting of 6 June 2001, investors‟ files were removed from the
principal place of business at Madikor Building and, over the next year, the files were

again moved, also to the farm of the sixth accused. Various agents were appointed
to deal with payments to investors and with new investments.

[28] As from 1 August 2001, deposits were further taken in the name of the entity
M & B Co-Operative, with membership certificates being issued to investors. An
application for registration of M & B Co-Operative dated 25 September 2001, was
lodged with the registrar. According to the application, the second accused would be
the chairperson and the fourth accused a director of the co-operative. However, the
application was never approved and M & B Co-Operative was never registered. That
notwithstanding, 9 071 deposits of the value of R542,7 million were taken in the
name of this entity during the period between 1 August 2001 and 1 March 2002. In
addition, 92 investments in other entities to the value of R6,1 million were transferred
to this non-existent entity.

[29] During late 2001 to the beginning of 2002 a company named Africa‟s Best
173 (Pty) Ltd was converted to a public company with its name changed to Krion
Financial Services Limited (Krion). This was yet another vehicle utilised for the taking
of deposits from investors. Moreover, investments made in previous entities were
converted to investments in Krion. A registered prospectus was issued for Krion and
100 000 N-Ordinary shares1 valued at 1c each were offered at a premium of
R999.99 from 5 March 2002 to 4 June 2002. Therefore, R100 million could
potentially be raised should this offer be fully subscribed. It should be borne in mind,
however, that the R100 million which had to be raised in this manner would still have
been insufficient to cover the amount of R796,2 million owed by the scheme to
investors as at 8 February 2002. As it turned out, Krion received 8 797 applications
for 908 600 shares to the value of R58,4 million from new investors and receipts
were issued for a further R57 million with no corresponding applications for shares. It
followed that a total amount of R115,4 million was received by Krion in respect of
new investments of which only R24,3 million found its way to the Krion bank
account.

1 N-Ordinary shares are the same as ordinary shares, except that they give shareholders minimal or
no voting rights. They often trade at a discount to Ordinary shares and although they are likely to cost
less, they pay out the same dividends as Ordinary shares. See information on the Johannesburg
Stock Exchange website in this regard at www.jse.co.za, accessed on 27 November 2015.

[30] The total value of investments in Krion (including conversions, new
investments and money received without corresponding application for shares)
amounted to R965 million. It will be recalled that only 100 000 shares to the value of
R100 million were issued in terms of the prospectus, with the result that the offer
was over-subscribed by R865 million. Therefore, R865 million ought to have been
repaid to potential investors after the closing of the offer on 4 June 2002. But, on that
date only R3,7 million was left in the Krion bank account. It would appear that the
balance of the investments placed with Krion was used to pay investors in respect of
investments made with other entities involved in the scheme.

[31] The inevitable result of the aforegoing was the liquidation of all the entities
which formed part of the scheme, during June 2002. The different entities were
treated as one for purposes of liquidation and joint liquidators were appointed for the
„MP Finance Groep BK‟.

[32] It is convenient at this stage to briefly summarise the purchase and or transfer
of assets in the names of various trusts. The individual transactions are relevant to
certain charges preferred against the accused, to which we will return. Four trusts
were involved and we proceed to summarise the acquisitions made by each of them.

The PT Vennote Familie Trust
[33] The fourth accused was the settler and donor of this trust established on
23 August 1999. He also acted as a co-trustee of the trust.

[34] The following assets, most of which were immovable properties, were
purchased in the name of the trust:
(a) 6B Delius Street, SW 5, Vanderbijlpark, purchased on 17 November 1999 for
R380 000.
(b)
2B Delius Street, SW 5, Vanderbijlpark, purchased on 1 December 1999 for
R1 019 685 million.
(c) Ardenwold Gasthaus and Waenhuis Danssaal, purchased on 19 April 2000 for
R330 000.

(d) Remaining Extent of Extent 7 of the farm Van Wyk, no 584, purchased on 19
April 2000 for R400 000.
(e) Extent 13 of the farm Van Wyk, no 584, purchased on 19 April 2000 for
R100 000.
(f) Small Holding 52, Ardenwold Agricultural Holdings, purchased on 10 October
2000 for R305 000.
(g) Grootvaal Properties (Pty) Ltd, the shareholding of which was purchased on
10 October 2000 for R1 731 215. The company owned the building utilised as head
office by the scheme, later known as the Madikor Building. The first, third, fifth and
sixth accused were appointed as directors of the company with effect from
11 November 2000.
(h) Moneyline 399 (Pty) Ltd, the shareholding of which was purchased on
11 October 2000 for R1 546 135. The company owned section no 9 in the sectional
development known as Maraldi. The first accused was appointed as a director of the
company with effect from 11 October 2000 and third, fifth and sixth accused from
7 November 2000.
(i) Moneyline 385 (Pty) Ltd, the shareholding of which was purchased on 11 October
2000 for R900 000. The company owned section no 11 in the development known
as Maraldi. The first accused was appointed as a director of the company with effect
from 11 October 2000 whilst third, fifth and sixth accused were thus appointed from
7 November 2000.
(j) Extent 14 of the farm Van Wyk, no 584, which was purchased on 28 March 2001
for R150 000.
(k) Section no 6 Baltimore Mansions, Vanderbijlpark, which was purchased during
May 2001 for a purchase price which, with interest, amounted to R915 025.
We should add that the first and fourth accused represented the trust in concluding
several of the aforementioned agreements of purchase.

Jakia Trust
[35] This trust was established on 3 July 2001. The sixth and seventh accused,
Hendrik Engelbrecht, the latter being the husband of the former – both acted as
trustees. The following assets were purchased in the name of the trust:
(a) Extent 8 of farm Parkerton, which was originally purchased on 23 February 1999
in the name of the seventh accused for R874 455. On 19 April 2002, the mortgage

bond registered over the property was cancelled and the property was transferred to
the trust.
(b) Extent 1 of the farm Midden, which was originally purchased on 16 August 1999
in the name of the seventh accused for R588 000. On 19 April 2002 the mortgage
bond registered over the property was cancelled and the property was transferred to
the trust.
(c) Extent 3 of the farm Parkerton , which was originally purchased on 14 August
2000 in the name of the seventh accused for R300 000. On 19 April 2002 the
mortgage bond registered over the property was cancelled and the property was
transferred to the trust.
(d) Extent 4 of the farm Parkerton, which was originally purchased on 4 December
2000 in the name of the seventh accused for R268 800. On 19 April 2002 the
property was transferred to the trust.
(e) Farm Salomina‟s Rust and farm Morgenzon, purchased on 7 August 2001 for
R1,4 million.

[36] For the sake of completeness we should mention that the seventh accused
was also found guilty and sentenced on two of the preferred charges against the
accused, but has not sought leave to appeal.

Anja Boerdery Trust
[37] This trust was founded on 3 July 2001 and sixth and seventh accused acted
as its trustees. The following assets were purchased in its name:
(a) Farm Verwachting, purchased on 7 August 2001 for R1 020 331.
(b) Farm Ausker‟s Dale and farm Erfdeel, purchased on 22 October 2001 for
R334 189.

Izarich Trust
[38] The trust was founded on 3 July 2001, and sixth and seventh accused acted
as its trustees as well. The following assets were purchased in its name:
(a) Extent 1, 2 and the Remaining Extent of the farm Altyddaar 630, originally
purchased on 13 November 2001 in the name of the seventh accused for R1,1
million. On 3 April 2002 the property was transferred to the trust.

(b) The Remaining Extent, and the Remaining Extent of Extent 1, of the farm
Klapperrandjie 394, purchased on 15 June 2001 for R940 000.
(c) Portion 10 of Erf 2408 Uvongo, originally purchased on 6 January 2001 in the
name of accused 6 for R600 000. On 3 April 2002 the property was transferred to
the trust.
(d) Extent 2 of the farm Bulskop 363, purchased on 13 January 2002 for R410 000.
(e) Erf 1244 Shelly Beach, purchased on 1 March 2002 for R650 000.
(f) Remainder of Erf 1241 Shelly Beach, purchased on 1 March 2002 for R1,35
million.
(g) Remainder of the farm Sweet Home 479, purchased on 3 May 2002 for R1,040
million.

[39] The cumulative total of the aforementioned assets acquired by the various
trusts had been virtually R18 million. The purchase considerations were paid from
the funds deposited by investors of the scheme in the names of the various entities
utilised in conducting the scheme. There were no loan agreements concluded
between the trusts and those entities.

The convictions and sentences
[40] The accused were not criminally charged for operating the Ponzi scheme, as
suggested by counsel for the first accused in her heads of argument. What they
were charged with, are offences committed by them in the process of conducting the
scheme. These included various statutory and common law offences, as we will in
due course show. We proceed to deal separately with the specific counts on which
each accused had been convicted and the sentences imposed in respect thereof.

First accused
Counts 1 and 2
[41] It is convenient to consider counts 1 and 2 together, as they encompass
offences concerning racketeering activities under s 2 of the Prevention of Organised
Crime Act 121 of 1998 (POCA). Such activities are defined under a „pattern of
racketeering activity‟, which means the planned, on-going, continuous or repeated
participation or involvement in any offence referred to in Schedule 1 of POCA, and
includes at least two offences referred to in Schedule 1 of which one of the offences

occurred after the commencement of POCA and the last offence occurred within ten
years after the commission of such prior offence referred to in Schedule 1.

[42] Count 1 is a charge framed under s 2(1)(f) of POCA, which provides that:
„Any person who manages the operation or activities of an enterprise and who knows or
ought reasonably to have known that any person, whilst employed by or associated with that
enterprise, conducts or participates in the conduct, directly or indirectly, of such enterprise‟s
affairs through a pattern of racketeering activity, shall be guilty of an offence.‟

[43] The first accused is the only accused charged under s 2(1)(f) of POCA and,
as Bozalek J held in S v De Vries & others 2009 (1) SACR 613 (C) para 380, the
State, in order to prove count 1, must prove the following elements:
(a) that an „enterprise‟ existed;
(b) that the accused managed the operations or activities of the enterprise;
(c) that a „pattern of racketeering activity‟ took place; and
(d) that the accused knew or should reasonably have known that a pattern of
racketeering activity took place.

[44] Count 2, which was preferred against all the accused, is framed under
s 2(1)(e) of POCA, which reads as follows:
„Any person who, whilst managing or employed by or associated with any enterprise,
conducts or participates in the conduct, directly or indirectly, of such enterprise‟s affairs
through a pattern of racketeering activity, within the Republic or elsewhere, shall be guilty of
an offence.‟

[45] In S v Eyssen 2009 (1) SACR 406 (SCA), Cloete JA explained the essential
difference between the offence in ss (e) and that created in ss (f), as follows in para
5:
„The essence of the offence in ss (e) is that the accused must conduct (or participate in the
conduct) of an enterprise‟s affairs. Actual participation is required (although it may be direct
or indirect). In that respect the subsection differs from ss (f), the essence of which is that the
accused must know (or ought reasonably to have known) that another person did so.
Knowledge, not participation, is required. On the other hand, ss (e) is wider than ss (f) in that
ss (e) covers a person who was managing, or employed by, or associated with the

enterprise, whereas ss (f) is limited to a person who manages the operations or activities of
an enterprise. . . .‟

[46] In considering both counts 1 and 2, it has to be borne in mind that „manage‟ is
not defined in POCA and therefore bears its ordinary meaning, which in this context
is: „1 [To] be in charge of; run. [Or] 2 Supervise staff. [Or] 3 [To] be the manager of a
(sports team or a performer).‟ See the Concise Oxford English Dictionary 10 ed
(2002) sv „manage‟.

[47] The word „enterprise‟ is defined in s 1 of POCA as follows:
„. . . includes any individual, partnership, corporation, association, or any other juristic person
or legal entity and any union or group of individuals associated in fact, although not a juristic
person or legal entity.‟
As stated by Cloete JA in Eyssen para 6, it is difficult to envisage a wider definition.
A single person as well as every other type of connection between persons known to
the law or existing in fact are included.

[48] With regard to count 1, it is common cause that the first accused managed
the operation or activities of the scheme. It was her brainchild and at all relevant
times she was at the forefront of its day to day activities. The court a quo aptly
described her as „die dryfveer en moederbrein van die onderneming‟. It was not
disputed by her that the activities conducted through the various entities utilised by
the scheme, constituted an „enterprise‟ as defined in s 1 of POCA. The evidence
showed that the accused were all consciously associated for the purpose of
conducting the scheme for their common benefit. The first accused also did not
seriously dispute the finding of the court a quo that a „pattern of racketeering
activities‟ as defined in s 1 of POCA, had taken place in conducting the business of
the scheme. As will become clear in due course, a multitude of offences referred to
in Schedule 1 of POCA had been committed by the accused in conducting the
scheme through its various entities, which offences had occurred prior to and after
the commencement of POCA and within a ten year period as prescribed by POCA.

[49] The remaining element that the State had to prove for a conviction of the first
accused on count 1, is that, whilst managing the operations or activities of the

scheme, she knew or ought reasonably to have known that a pattern of racketeering
activity took place. The submission on behalf of the first accused at the trial and on
appeal, was that a contravention of s 2(1)(f) of POCA requires mens rea in the form
of intention (dolus) and that negligence (culpa) is not a sufficient form of mens rea
for a contravention of the provision.

[50] The court a quo rejected this submission and held that negligence is a
sufficient form of mens rea for a contravention of s 2(1)(f). However, it appears from
para 1222 of the judgment that the court a quo, in fact, held that the first accused
„het sonder twyfel geweet dat hulle (the second to sixth accused) in diens van die
onderneming was en dat hulle deelgeneem het aan die onderneming se sake deur
hierdie patroon van rampokkery‟. This amounts to a finding that the first accused had
the necessary mens rea in the form of intention. In our view, the evidence
overwhelmingly supports a finding that the first accused had the necessary mens rea
in the form of dolus. In managing the affairs of the scheme by leading from the front,
she had been fully aware that the affairs of the scheme had been conducted through
a pattern of racketeering activity. Apart from common law crimes such as theft and
fraud having been committed in the furtherance of the business of the scheme, a
multitude of statutory offences were also committed and the excuse of the first
accused that she had not been aware of the unlawfulness of such conduct, does not
only ring hollow, but was correctly rejected as false beyond any reasonable doubt.

[51] We are further of the view that, in any event, the wording of POCA and in
particular s 2(1)(f) makes it clear that culpa is a sufficient form of mens rea for a
contravention of this subsection. In S v Arenstein 1964 (1) SA 361 (A) at 366C-D, it
was reiterated that the degree of blameworthiness required for a culpable violation of
a statutory prohibition must in the first place be sought in the language used by the
lawgiver. In the absence of any words expressly indicating the particular mental state
required, the degree of mens rea must depend on that foresight or care which the
statute in the circumstances demands.

[52] The offence in terms of s 2(1)(f) is committed by a person managing the
operation or activities of an enterprise and who knows or ought reasonably to have
known that the enterprise‟s affairs are conducted through a pattern of racketeering

activity. The plain wording of the subsection requires mens rea in the form of either
dolus or culpa. As explained by Albert Kruger in Organised Crime and Proceeds of
Crime Law in South Africa (2008) at 148, the words „ought reasonably to have
known‟ introduce the element of reasonableness, which must be assessed
objectively. No subjective intent or dolus eventualis is required. The question is
whether the fictional reasonable person, the diligens paterfamilias, would have
known. See also Jonathan Burchell Principles of Criminal Law 4 ed (2014) at 874.

[53] The view that culpa would suffice for a contravention of s 2(1)(f), is
underscored by s 1(3) of POCA which states:
„For the purposes of this Act a person ought reasonably to have known or suspected a fact if
the conclusions that he or she ought to have reached are those which would have been
reached by a reasonably diligent and vigilant person having both─
(a) the general knowledge, skill, training, and experience that may reasonably be expected
of a person in his or her position; and
(b) the general knowledge, skill, training and experience that he or she in fact has.‟

[54] In our view there is also no doubt that, in the present circumstances, the first
accused ought reasonably to have known that the scheme‟s affairs were conducted
through a pattern of racketeering activity. Therefore, we find that the first accused in
any event had the necessary mens rea in the form of culpa for a contravention of s
2(1)(f) of POCA.

[55] At the hearing of the appeal, counsel for the first accused raised a legal
contention which had not been canvassed at the trial. She submitted that s 2(1)(f) „is
aimed primarily at punishing persons who control others, whilst knowing they are
committing crimes, [but] refrain themselves from engaging in criminal conduct‟.
Therefore, the submission continued, the first accused could not be convicted of
contravening s 2(1)(f) as she had personally participated in the activities of the
scheme. Put differently, counsel submitted that, where an accused is shown to have
personally participated in the conduct of an enterprise through a pattern of
racketeering activity, he or she „does not fulfil the definition of s 2(1)(f)‟.

[56] In our view, the intention of the legislature, as gathered from the plain wording
of POCA, is to hold those involved in organised crime liable for the different roles
played by them in the conduct of an enterprise‟s affairs through a pattern of
racketeering activity. These include managing (s 2(1)(f)) and personal participation in
(s 2(1)(e)), the affairs of the enterprise. As commented by Bozalek J in De Vries at
397-398, there appears to be no good reason why a person who both manages and
participates in the affairs of the enterprise directly, should only be liable for one of
the two roles.

[57] We are in agreement with counsel on behalf of the State that, in construing
the provisions of POCA, and in particular s 2(1)(e) and (f), a liberal or broad
construction is to be preferred. This would be in accordance with the broad
objectives of POCA set out in the preamble thereto. In National Director of Public
Prosecutions & another v Mohamed NO & others 2002 (4) SA 843 (CC) paras 14-16
the Constitutional Court, with reference to its preamble, emphasised the importance
of POCA to curb the rapid growth of organised crime, money laundering, criminal
gang activities and racketeering which threatens the rights of all in the Republic and
presents a danger to public order, safety and stability, thereby threatening economic
stability. To curtail the ambit of s 2(1)(e) and (f), as suggested by counsel for the first
accused, would, in our opinion, be contrary to the intention of the legislature.

[58] Further, with regard to the intention of the Legislature, we should emphasise
that the South African Legislature was strongly influenced by models of organised
crime legislation in the USA (see Burchell op cit at 873 fn 1), in particular the RICO
statute (Racketeer Influenced and Corrupt Organisations Statute enacted as Title IX
of the Organised Crime Control Act of 1970). In S v De Vries & others 2012 (1)
SACR 186 (SCA) para 43, this court stressed the „considerable assistance‟ to be
gained from the jurisprudence of the United States dealing with RICO, in interpreting
POCA. In Sedima, SPRL v Imrex Co 473 US 479 (1985) at 497-498, the US
Supreme Court emphasised that, by reason of RICO‟s „expansive language and
overall approach‟, the statute „is to be read broadly‟.

[59] Apart from the above, we, in any event, see no reason why the legislature
would have intended to restrict the prosecution of persons under s 2(1)(f) of POCA

solely to those managers who have not dirtied their hands by personal acts of
participation in the conduct of the affairs of the enterprise. Such a construction would
lead to an absurdity, where the manager of a multi-billion rand racketeering
enterprise who has had minimal personal active participation, would only be liable for
the minimal participation role under s 2(1)(e) and not under s 2(1)(f) for the extensive
managerial role played in a highly successful criminal enterprise.

[60] We therefore conclude that this submission of counsel for the first accused is
without merit. It follows, in our view, that the court a quo correctly found the first
accused guilty on count 1 and that her appeal in this regard should fail.

[61] This brings us to count 2, ie the contravention of s 2(1)(e) of POCA. What the
State was required to prove is that, whilst managing an enterprise (the scheme) the
first accused directly or indirectly participated in the conduct of the scheme‟s affairs
through a pattern of racketeering activity. As emphasised above, this court in Eyssen
at 409c-d (para 5) held that the essence of the offence referred to in s 2(1)(e) is
actual participation (be it direct or indirect) in an enterprise‟s affairs, as opposed to
knowledge, not participation, which is the essence of an offence in terms of s 2(1)(f).

[62] In dealing with count 1 above, we have already found that an enterprise (the
scheme through its various entities) existed which was managed and controlled by
the first accused while conducting its affairs through a pattern of racketeering
activity. What remains, is the element of participation on the part of the first accused,
a topic which we have also broached in dealing with count 1. It would suffice to say
that the evidence overwhelmingly shows that the first accused actively and directly
participated in the scheme‟s affairs; in fact, she was the heart and soul of the
business of the scheme and knowingly participated in contravening various statutory
provisions and committing common law crimes, as set out below. As pointed out by
counsel for the first accused in her heads of argument, the first accused‟s name „. . .
appears on all certificates as the owner or main shareholder of the organisation. At
no stage did the first appellant attempt to avoid participation in the organisation and
its activities. She was at the forefront of this enterprise at all times‟. It follows, in our
view, that the remaining element of participation on the part of the first accused has
also been proved beyond reasonable doubt.

[63] We should add that, as in the case of count 1, counsel for the first accused
submitted that the State failed to prove that she had the necessary criminal intent in
the form of dolus to contravene the provisions of s 2(1)(e) of POCA. In our view, this
submission fails to take proper account of the definitional elements of this statutory
contravention, ie participation in the affairs of an enterprise through a pattern of
racketeering activity. As emphasised in Eyssen, participation in the affairs of the
enterprise is the offence. Kruger op cit at 13, observes that an accused „is guilty by
virtue of (a) being involved in an enterprise (being part of the group of racketeers),
and (b) being involved in the commission of two or more predicate offences‟ listed in
Schedule I of POCA.

[64] To summarise, it is now well-settled that the essence of the offence in terms
of s 2(1)(e) of POCA is participation through a pattern of racketeering activity and not
knowledge. Once it is proved that the accused has participated in the conduct of an
enterprise‟s affairs through a pattern of racketeering activity, ie by committing two or
more predicate offences listed in Schedule I of POCA, he or she is guilty of a
contravention of s 2(1)(e) of POCA. There is no need for a further inquiry, as
suggested on behalf of the first accused, as to an additional mens rea requirement
over and above the mens rea required by the predicate offences.

[65] It is significant to note that the courts of the USA, in considering the offence of
participation in RICO, have held that the relevant section of RICO (s 1962 (c)),
„imposes no additional mens rea requirement beyond that found in the statutory
definitions of the predicate crimes‟. See United States v Biasucci 786 F.2d 504
(1986) (US Court of Appeals, Second Circuit) para 8; United States v Boylan 620
F.2d 359 (1980) (US Court of Appeals, Second Circuit) para 5. In United States v
Scotto 641 F.2d 47 (1980) (US Court of Appeals, Second Circuit) para 4-6, it was
reiterated that „. . . no specific intent to engage in an unlawful pattern of racketeering
prohibited by RICO is required.‟

[66] In S v Green & others, an unreported decision of the Durban and Coast Local
Division of the High Court (Case no.the first accused CC 39/02  delivered on 27
March 2002) it was held that, in order to satisfy the element of mens rea for the

offence under s 2(1)(e) of POCA, „it must be a prerequisite that the accused had
knowledge of the pattern of racketeering activity and, with knowledge of the activity,
associated himself and participated in one or more of the offences‟. Insofar as Green
requires proof of knowledge on the part of the accused of the pattern of racketeering
activity, in addition to his or her participation in two or more of the predicate offences,
it wrongly introduces an additional mens rea requirement for the offence created in s
2(1)(e) of POCA. In addition, the decision in Green does not accord with the principle
enunciated by this court in Eyssen, that the essence of the offence in terms of s
2(1)(e) of POCA is „actual participation‟ in an enterprise‟s affairs, as opposed to
„knowledge not participation‟ which is the essence of an offence in terms of s 2(1)(f)
of POCA.

[67] It follows, in our view, that the State has beyond reasonable doubt proved the
elements of the offence under s 2(1)(e) of POCA and the appeal of the first accused
against her conviction on count 2 should fail.

Count 3
[68] This count relates to the offence created in terms of s 2(1)(b) of POCA,
namely that any person who receives or retains any property, directly or indirectly,
on behalf of any enterprise, and knows or ought reasonably to have known that such
property derived or is derived from or through a pattern of racketeering activity, shall
be guilty of an offence.

[69] The court a quo found the first accused guilty on this count and although she
had been granted leave to appeal in respect thereof, the appeal on this count was
not pursued. No more need to be said in this regard, and there is no reason why this
conviction should not be confirmed.

Counts 4-13
[70] The immovable properties acquired by the PT Vennote Familie Trust (see
para 34 above) form the subject matter of these counts. The counts are framed in
terms of s 4 of POCA, which deals with the activity commonly known as money
laundering. Each of the counts relates to one of the properties acquired by the trust
with the money deposited by investors in the scheme. The essence of each of

counts 4-13 is that the first accused had knowingly concealed the money derived
from or through a pattern of racketeering activity by acquiring the properties with that
money. It is common cause that the first accused was involved in deciding to acquire
the properties in the name of the trust. In fact, she and accused 4 concluded most of
these transactions on behalf of the trust. In her evidence the first accused conceded
that she was instrumental in acquiring the properties for the trust and that she was
aware that all of the properties were purchased with funds deposited in the scheme
by investors.

[71] The purchase of the property referred to in count 4 differs from the other nine
counts in that the money utilised was the interest earned by accused 3 and 4 on their
investment which they had made in the scheme. The proceeds were utilised to
purchase the relevant property and it was registered in the name of the trust. This
occurred with the full knowledge and consent of the first accused. The result,
however, is the same as in the case of the other counts under this rubric, ie the
money utilised for the purchase of the property was derived through a pattern of
racketeering activity, ie the business of the scheme.

[72] In respect of all these counts it was the money derived from the business of
the scheme that was concealed by utilising it to acquire fixed property. This
constituted a contravention of s 4 of POCA. Counsel for the first accused, however,
approached these counts from a different perspective, namely that the fixed property
acquired by the trust in each instance was the „property‟ for purposes of s 4 of
POCA. She submitted that there was no attempt on the part of the first accused to
disguise or conceal the nature, source, location, disposition or movement of these
properties or the ownership thereof. Therefore, the submission continued, the State
failed to prove a contravention of s 4 of POCA.

[73] There is no merit in this submission. These counts pertained to the disguising
or concealing of the proceeds of the unlawful activities in casu, namely money
derived from the scheme through its various entities.

[74] It follows that the appeal against the convictions on counts 4-13 should also
fail.

Count 27
[75] The first accused was convicted on this count of the offence of conducting the
business of a bank in contravention of the provisions of s 11(1) of the Banks Act 94
of 1990 (the Banks Act). She has not pursued her appeal against this conviction and
there is no reason why the conviction should not be confirmed.

Count 28
[76] The first accused was convicted on this count of fraud with regard to wilful
misrepresentations made to Dr Dekker and Mr van den Bergh during the period 8
May 2000 - 16 May 2000. The first accused has not pursued her appeal against this
conviction and there is no reason why it should not be confirmed.

Counts 29 and 30
[77] These are two counts of fraud. The first relates to a written misrepresentation
made by the first accused through her attorney on 11 December 2000, grossly
understating the total value of investments made in the scheme.  The second
similarly pertains to a written misrepresentation made on 14 December 2000 by the
first accused through her accountant, once again grossly understating the total value
of investments made in the scheme.

[78] The first accused does not dispute that, in respect of both counts, the
definitional elements of the crimes in question have been proved. However, on
appeal, the first accused belatedly submitted that there was an undue duplication of
convictions in respect of these two counts. In our view, there is no merit in this
submission. Although the motive underlying the misrepresentations may have been
similar, namely to prevent the authorities from investigating the scheme, it cannot be
denied that the two instances consist of separate independent acts each with its own
separate intention to deceive. They cannot be regarded as one continuing crime.
Reference can be made to Vorster v S 1976 (2) PH H.202 (AD), in which it was held
that a systematic course of conduct which consists of separate independent acts of
the same nature (in that case the accepting of bribes) need not be treated as a
single offence.

[79] We therefore find that there was no duplication of convictions and that the
appeal against these convictions should fail.

Counts 31, 32, 33, 35, 36, 37 and 38
[80] Counts 31, 32, 35 and 37 are fraud charges while counts 33, 36 and 38 are
contraventions of s 84(8)(c) of the Banks Act (wilfully furnishing a manager
appointed in terms of the Banks Act with false information). All of the counts relate to
misrepresentations made by the first accused during the period 6 June 2001 to 1
August 2001, to duly appointed inspectors or managers appointed in terms of the
Banks Act. The first accused concedes that she wrongfully and unlawfully made
these misrepresentations by grossly understating the number and value of the total
investments made in the scheme, but contends that her intention throughout was the
same, namely to prevent the business of the scheme being closed down.

[81] It was therefore submitted on her behalf that she had acted with a single
intent and ought only to have been convicted on one count of fraud and one count of
contravening s 84(8)(c) of the Banks Act.

[82] This submission, once again, confuses the motive for the offences with the
element of intention required for criminal liability. The first accused may have had the
motive or purpose in mind to prevent the closure of the business of the scheme, but
on four separate occasions during a period of two months and acting in response to
four separate requests, she intentionally misled each of the representatives by
making
separate
and
independent
misrepresentations.
Each
of
these
misrepresentations constituted separate independent acts amounting to separate
offences of fraud and the contravention of s 84(8)(c) of the Banks Act. In the relevant
circumstances the independent acts cannot be treated as a single offence.

[83] We are accordingly of the view that the court a quo correctly found the first
accused guilty of the separate offences mentioned in these counts. It follows, in our
view, that there is no merit in the appeal of the first accused against her convictions
on these counts.

Count 34
[84] This count refers to a contravention of s 84(8)(d) of the Banks Act, ie the
failure of the first accused to comply with a reasonable request made to her by
Mr Bredenkamp, a manager duly appointed in terms of the Banks Act. It is common
cause that on 7 June 2001 Bredenkamp requested the first accused to bank all cash
received in the course of the business of the scheme. This she failed to do and on
10 July 2001 Bredenkamp discovered R3 057 420 in cash kept in three safes by the
first accused at her residence. The first accused has not advanced any argument on
appeal and her conviction on count 34 ought to be confirmed.

Counts 39 and 40
[85] The count of fraud (count 39) and the contravention of s 84(8)(c) of the Banks
Act (count 40), respectively, have their origin in a letter addressed to
PriceWaterhouseCoopers (PWC) by Mr Cossadianos, a bookkeeper who
represented the first accused at the relevant time. The letter, dated 8 February 2002,
was prepared and written by Cossadianos pursuant to a meeting between the first
accused and representatives of PWC appointed as managers to the business of the
scheme in terms of s 84(1) of the Banks Act. The purpose of the letter written by
Cossadianos to PWC was to provide a complete and comprehensive list of investors
and agents to PWC. Cossadianos, acting on behalf of the first accused, advised
PWC in the letter that there were 167 investments made in the scheme to a total
value of R11 002 934. It is common cause that, as at 8 February 2002, the actual
value of investments in the scheme was more than R796 million. It is further
common cause that, had the true state of affairs been conveyed to PWC during
February 2002, immediate steps would have been taken to close the scheme down
so as to prevent investors from suffering further losses.

[86] The court a quo found that this constituted a material misrepresentation which
was false to the knowledge of the first accused and she was thus convicted of fraud
and the statutory offence of providing false information to the managers appointed in
terms of s 84(1) of the Banks Act.

[87] At the hearing of the appeal a two-pronged attack was launched by counsel
for the first accused against the convictions on these counts. First, she submitted

that the State failed to prove that the first accused had made the misrepresentation,
particularly in view of the failure of the State to call Cossadianos as a witness.
Secondly, she submitted that, as PWC accepted that the information to be provided
by Cossadianos would be inaccurate, the letter of Cossadianos did not constitute a
misrepresentation.

[88] We believe that the attempt of the first accused to distance herself from the
content of the letter written by Cossadianos, is rather disingenuous. She testified that
Cossadianos was at her office where she handed all the investor files to him with a
request to audit same and to prepare the letter required by PWC. She testified that
she and Cossadianos „het saam gewerk as vennote‟ and that a „dag of twee later‟
she did have sight of the incorrect information sent to PWC by Cossadianos, but she
did not set the record straight with PWC as she „was bang hulle maak my besigheid
toe‟. It follows that, not only was the first accused the source of the information that
Cossadianos supplied to PWC, but she had in any event ratified the blatant
misrepresentation contained in the letter. As submitted on behalf of the State, the
common thread in the modus operandi employed by the first accused, is that she
repeatedly grossly understated the size of the business for fear that it would be
closed down. In this instance the misrepresentation was that the value of the
scheme was a mere 1, 38 per cent of its actual value of more than R796 million.

[89] We fail to appreciate why, in these circumstances, there would have been a
duty on the State to call Cossadianos as a witness; on the contrary, if there was any
exculpatory explanation for the compilation of this grossly understated list of
investors, the first accused ought to have called Cossadianos to provide such
explanation. Furthermore, if the first accused did, as she testified, afford
Cossadianos access to all the investor files, it is inconceivable that he would have
understated the value of the scheme by some 98, 62 per cent.

[90] To this one should add the evidence of Carel Bothma, who testified on behalf
of the State, that the first accused had instructed him to create loan documents,
which she urgently required, to the value of R10 million or R11 million, apparently for
an audit to be conducted by Cossadianos. His evidence was not disputed by the first
accused and it appears that the falsely created loan documents made up a

substantial part of the list of investments which accompanied the letter of
Cossadianos dated 8 February 2002. It is also common cause that R17 million of the
purported loans reflected in the list of investments, did not exist. In view of the
aforesaid, we find that, not only did the State prove that the first accused was the
source of the false information submitted to PWC, but also that she was aware that
the material misrepresentation had been made on her behalf and failed to declare
the true state of affairs to PWC.

[91] The second submission on behalf of the first accused in respect of these
counts, namely that no misrepresentation had been made, as PWC acknowledged
that the investor list would „not be accepted as accurate or a true reflection in any
way‟, is equally without merit. The letter written by PWC after the meeting of 22
January 2001, records that Cossadianos would provide PWC with a document
specifying the extent of the investments obtained, loans and/or investments made
and the application in general of funds received as investments by the first accused
and her entities. PWC confirmed „that the above document will not be regarded as
the final and true reflection of accounts, but will be used by PWC in the decision
making process regarding the course of action, if any, to be followed‟.

[92] It is therefore clear that PWC would have relied on the document to decide
the future of the businesses of the scheme. The PWC letter certainly did not grant
the first accused and Cossadianos carte blanche to mislead PWC to the extent that
the value of the investments were reflected as a mere 1, 38 per cent of their actual
value. We should also add that this belated defence was not raised at the trial nor
was it relied upon by the first accused as a ground of appeal when she applied for
leave to appeal.

[93] In view of the aforesaid we conclude that the State had proved the guilt of the
first accused beyond reasonable doubt and that her appeal against the conviction on
counts 39 and 40 should fail.

Count 41
[94] This count upon which the first accused was convicted, was also one of fraud.
The first accused has not pursued her appeal in this regard. The evidence clearly

shows that yet another material misrepresentation was made to the appointed
managers by the first accused through her attorney that investments of only
R409 000 had been received by M & B Co-Operative, while the true value of the
investments received at that date amounted to R541 million.

[95] The court a quo correctly convicted the first accused on this count and the
conviction should be confirmed.

Counts 42 and 43
[96] Count 42 is one of fraud, while count 43 is a contravention of s 84(8)(c) of the
Banks Act, both emanating from misrepresentations made by the first accused
through her attorney. The court a quo found the first accused guilty on both counts,
but on appeal counsel for the first accused has not advanced any argument in
respect of these counts.

[97] We accordingly do not have to dwell on these counts, save to say that they
form part of the pattern of grossly understating the magnitude of the scheme by the
first accused, and misrepresenting to the authorities that all investors had indeed
been paid out, whereas this was not the case.

[98] There is no doubt that the court a quo correctly convicted the first accused on
these counts and the convictions should be confirmed.

Counts 45-46
[99] These counts of fraud relate to a range of misrepresentations made in the
conduct of the business of the various entities utilised by the scheme. The court a
quo found the first accused guilty on both counts. Counsel for the first accused has
not presented any argument on appeal in regard to these counts. There is, in our
view, no basis for a finding that the court a quo misdirected itself in this regard.
Therefore the convictions ought to be confirmed.

Counts 48-949, 950-3385 and 8071-11694
[100] Each of these three groups of counts referred to contraventions of s 135(3)(a)
of the Insolvency Act 24 of 1936, by the first accused in her capacity as a director or

officer of one or more of the corporate entities through which the scheme conducted
its business during the period 1 March 1998 to 31 October 2001. These corporate
entities were subsequently liquidated and s 135(3)(a) of the Insolvency Act, read
with s 425 of the Companies Act 61 of 1973 (1973 Companies Act), provides that an
insolvent (or director or officer of an insolvent company) who has contracted debts
without an expectation of ability to pay such debts, shall be guilty of an offence.

[101] The court a quo found the first accused guilty on one count of contravening
s 135(3)(a) of the Insolvency Act in respect of each of the three groups of counts.
The evidence shows that debts were incurred by the corporate entities through
which the first accused conducted the business of the scheme, in circumstances
where there was no expectation at all of an ability to pay same. These convictions
have not been attacked on appeal and there is no reason why same should not be
confirmed.

Counts 20568-20768, 20769-24392 and 24393-33265
[102] The 12698 counts constitute contraventions of s 84(8)(d) of the Banks Act, in
respect of which the court a quo found the first accused guilty as charged. What the
counts referred to are instances where the first accused failed to comply to the best
of her ability with reasonable requests made by the managers appointed to the
scheme, that no further deposits were to be accepted from investors in the scheme.
The first accused does not dispute that the definitional elements of the offences had
been proved by the State, and the only issue raised on appeal is that there was an
undue duplication of convictions on these counts.

[103] In this regard counsel submitted that the first accused had taken a decision to
disregard the request of the manager not to take further investments. This resulted in
12698 different instances where she or her co-accused or her agents took
investments contra the request not to do so. The decision of the first accused was
based on her intention to proceed with the scheme as usual in order to prevent it
from collapsing. Therefore, the submission continued, there was a duplication of
convictions in that the charges were based on „the same culpable fact‟.  However, as
submitted on behalf of the State, counsel for the first accused again confuses the
motive for the crimes with the element of mens rea required for criminal liability.

Although these counts were generic in nature, each count related to a distinct or
separate act with different victims or complainants, dates and amounts and was not
based on the same culpable fact. There was a different intent or mens rea formed in
respect of each separate act in disregard of the manager‟s request not take further
investments.

[104] In the result there was no duplication of convictions and the appeal of the first
accused in regard to these counts should fail.

Counts 33266-34167, 34168-36617, 39068-44550, 50034-54533, 59034-68104,
188911-197707
[105] These are counts of fraud relating to the investments made by investors in all
the entities through which the scheme was conducted. The misrepresentations upon
which the State relied were made by the first accused by means of the investment
certificates and agreements issued to investors, and included the following:
(a) that the entities could lawfully take investments from the public.
(b) that fixed percentage returns and return amounts were lawfully offered.
(c) that investors legally acquired shares in Madikor, whereas it was common cause
that such entity was a private company and could not lawfully issue shares to the
general public.
(d) that MP Finance SACCO was a member of or registered with SACCOL, whereas
it was never registered as such.
(e) that investors legitimately acquired shares or membership in MP Finance
SACCO, whereas the entity never existed.
(f) that investors legitimately acquired shares in Martburt, whereas its prospectus
was never registered or distributed. Moreover, the draft prospectus made provision
for share certificates to the value of R10 million to be issued, while 4500 certificates
to the value of more than R290 million had in fact been issued.
(g) that investors legitimately acquired shares or membership in M & B Co-
Operative, whereas the entity was never registered.

[106] Moreover, under cross-examination, the first accused admitted that:
(a) she did not state to investors that the investments were illegal.

(b) she effectively guaranteed a fixed return, irrespective of how her business
performed.
(c) she did not state to investors that if her business performed poorly, capital would
have to be used to pay interest returns on investments.
(d) she did not state to investors that their investments or deposits were taken in
contravention of the Banks Act or the former Usury Act 73 of 1968.
(e) she did not state to investors that a multiplication scheme was being operated in
contravention of the Unfair Business Practices Act 71 of 1988.
(f) she never stated to investors that the modus operandi employed by her in
conducting the scheme was that investor capital had to be used to pay the interest
returns to investors.

[107] These misrepresentations caused investors to invest in the scheme to their
financial prejudice. In fact, the first accused admitted that, had the investors known
the true state of affairs, they would not have invested in the scheme.

[108] The court a quo found the first accused guilty on all these counts of fraud. On
appeal, it was submitted on behalf of the first accused that the State had failed to
prove the misrepresentations on which it relied. It was contended that, in attempting
to prove the misrepresentations, the State relied on the similar fact evidence of 25
investors, but that this was insufficient to prove the actual misrepresentation in
respect of each count. In our view this submission fails to take account of the fact
that the misrepresentations upon which the State rely, were made in writing as per
the investment certificates and agreements. The presentation of the similar fact
evidence of the 25 investors was only for the purpose of showing that investor
certificates and agreements containing these misrepresentations were issued to
investors. In our view this evidence regarding the misrepresentations, together with
the admissions made by the first accused in her evidence, as well as the undisputed
evidence of prejudice or potential prejudice caused to investors, proves beyond
reasonable doubt that the first accused had defrauded the investors referred to in
these counts.

[109] We should mention that, with regard to counts 188911-19707 (relating to
Krion)
the
first
accused
admitted
during
cross-examination
that
the

misrepresentations and facts deliberately withheld from investors, were also made
and withheld by her at meetings held with investors and agents at various locations
countrywide.

[110] Counsel for the first accused further argued that, in respect of all the counts,
there has been an undue duplication of convictions. In particular, she submitted that,
where individual investors made re-investments and transfers from one entity to the
other, these were made on the investor‟s own initiative and not as a result of any
further false representation made to the investor by the first accused. However, each
investment or re-investment was accompanied by its own documentation and
accompanying new intention on the part of the first accused, with the result that
there was no duplication of convictions.

[111] Finally, in this regard, it was submitted on behalf of the first accused that she
believed that she had acted lawfully after seeking advice from her legal advisors.
However, the record of the trial shows that the first accused had misrepresented the
true state of affairs of the business of the scheme to all the parties that she had
approached for legal advice. She could therefore not have had any honest belief in
the legal advice obtained in this manner.

[112] It follows, in our view, that the appeal against the conviction of the first
accused on these counts should also fail.

Counts 77176-86246
[113] The first accused was charged with 9 071 counts of contravening s 42 of the
Co-Operative Act 91 of 1981 (the Co-op Act), in carrying on business under the
name of M & B Co-Operative without being registered as a co-operative. Section 42
provides that any person carrying on business under a name in which the word „co-
operative‟ or the abbreviation „co-op‟ is included without being incorporated as a co-
operation under the Co-op Act, shall be guilty of an offence. It is common cause that
the first accused conducted business under the name and style of M & B Co-
Operative Limited without being registered as a co-operative. However, the State
charged her separately for every transaction concluded under the name of the co-
operation whereby investments were received from investors in the scheme. On

appeal it was submitted on behalf of the first accused that, in charging her with 9071
counts, a duplication of convictions had taken place.

[114] It seems to us that there has been an improper duplication of convictions in
this instance. Section 42 of the Co-op Act provides that the „carrying on of business‟
in this manner constitutes the offence. This would imply the conduct of a business in
which more than one transaction is concluded. It therefore appears to us that, what
the legislature intended to criminalise, is the actual carrying on of the business under
the name of an unregistered co-operative and not each and every separate
transaction concluded in the course of such business.

[115] Counsel for the State has referred us to the heading of s 42 which reads
„improper use of word “co-operative” etc., an offence‟. This, counsel submitted, is an
indication that each and every improper use of the word „co-operative‟ constitutes a
separate offence and that the conviction of the first accused in respect of all 9071
counts is accordingly in order. We do not agree. As appears from the body of s 42, it
is the carrying on of the business in this manner which is criminalised, which conduct
of necessity would include a range of transactions to constitute the carrying on of a
business.

[116] We are therefore of the view that, in respect of these counts, the appeal ought
to succeed to the extent that the first accused should only be convicted on one count
of contravening s 42 of the Co-op Act.

Counts 144337-188910
[117] On these counts the first accused was convicted of contravening the
provisions of s 83(3)(a) of the Banks Act, in failing to comply with a written direction
issued by the Registrar of Banks on 7 June 2001. In terms of this direction she and
the entities then forming part of the scheme were directed to repay all monies
obtained from investors, including, if possible, any bank interest that may lawfully
have accrued on such amount. The repayment of these amounts to investors had to
be made under the control of Mr Strydom of PWC.

[118] The 44 573 counts of contravening this section were based on the payments
of interest and dividends made to the investors after the date of the direction, without
the knowledge or permission of Mr Strydom. These payments amounted to R1 020
billion. It was not disputed by the first accused that such payments were made, but
counsel on her behalf submitted that these payments of interest or dividends were
not covered by the written direction and therefore could be lawfully made to
investors. We do not agree with this submission. As mentioned earlier, the written
direction expressly refers to all monies obtained from investors including interest that
may lawfully have accrued on such amounts. Therefore such interest, or „dividends‟
as it was often referred to, could only be paid to investors subject to the
management and control of PWC.

[119] Counsel for the first accused further submitted that PWC never put any
procedure in place whereby repayments could be made to investors under the
supervision of PWC. However, Mr Bredenkamp of PWC testified that investors could
not be paid out at that stage because the solvency of the scheme had to be
maintained. The monies could only be repaid to investors once the solvency of the
scheme was established. As the first accused had continuously grossly understated
the magnitude of the scheme, it was impossible for PWC to ascertain the solvency of
the scheme.

[120] Finally, counsel for the first accused submitted that an improper duplication of
convictions had taken place and the first accused should only have been convicted
of one contravention, in that she had one intention only, namely to proceed with the
business of the scheme as usual and therefore to make these payments to
investors. As we have previously pointed out, this submission confuses the motive of
the first accused with the element of mens rea required for criminal liability. Her
motive may have been to proceed with business as usual, but in respect of each
payment so made, she had a separate intention in respect of a separate beneficiary
and in a separate amount. There was accordingly no improper duplication of
charges.

[121] It follows that the appeal against the convictions on these counts should fail.

Counts 197708-199747
[122] These counts represent charges brought against the first accused for
contravening s 104(1)(d) of the Income Tax Act 58 of 1965 (Income Tax Act), by
failing to pay secondary tax on companies (STC) to the South African Revenue
Service (SARS). The charges relate to STC at the rate of 15 per cent deducted from
„dividends‟ payable to investors in Krion. However, no Krion shares had been allotted
to investors at the time when such „dividends‟ were calculated and paid. Therefore
no STC was payable to SARS.

[123] The trial court found the first accused guilty on the main count of contravening
s 104(1)(d) of the Income Tax Act, but the State readily conceded that she ought not
to have been so convicted. The State submitted that she ought to have been
convicted on the alternative counts of theft of the amounts so deducted and which
had not been paid over to SARS. However, during argument counsel for the State
conceded that it had failed to prove that the first to fourth accused had the intention
to appropriate the amounts so deducted and therefore the alternative charge of theft
of the monies deducted had not been proved.

[124] It follows that the appeal of the first accused in this regard should succeed
and that she be acquitted on these counts.

Counts 200564-200663 and 200664-218636
[125] The parties are agreed that the judgment of the court a quo contains a
typographical error indicating that the first accused was found guilty on counts
200564 to 200663. In fact, the accused were all discharged on these counts in terms
of s 174 of the Criminal Procedure Act 51 of 1977 (the CPA). Clearly, what the court
a quo intended to do was to convict the first accused on counts 200664 – 218636,
committed during the period 9 June 1999 to 1 March 2002.

[126] First accused does not dispute that she satisfied the definitional elements of
the offences enumerated in counts 200664 to 218636. These relate to the
conducting of a harmful business practice declared in terms of para 2 of GN 1134 of
1999, promulgated in GG 20169, 9 June 1999 under s 12(6) of the Consumer Affairs
(Unfair Business Practices) Act 71 of 1988, namely the offering or promising or

guaranteeing to pay an annual effective interest rate exceeding the repo rate2
determined by the South African Reserve Bank by more than 20 per cent.

[127] Counsel for the first accused, however, submitted that she should only have
been convicted on one count and not on 17972 individual counts. She contended
that the intention of the legislature was to proscribe harmful business practices,
which implies the practice of the business in its entirety and not each separate
transaction. We believe that counsel is correct in her submission, particularly in view
of the wording of GN 1134 which declares the harmful business practice to be „the
operation of or participation in a multiplication scheme. . . .‟ This necessarily implies
the existence of a multiplication scheme the operation of which constitutes the
harmful business practice. We therefore conclude that what the legislature intended
to proscribe is the operation of the multiplication scheme as such and not to
criminalise each individual offer made in contravention of the Notice as a separate
offence. In fact, counsel for the State fairly conceded that this interpretation is
reasonably justified.

[128] It follows that, in respect of the counts under this rubric, the first accused
ought to have been convicted on one count only and not on 17972 individual counts.

Counts 199748 to 200563; 218683 and 47
[129] The first group of counts represents 815 unauthorised payments made by the
first accused from the Krion bank account to settle amounts due to pre-existing
investors in the scheme in respect of interest and or capital repayments and or cash
withdrawals. This amounted to R20 million. Each of these counts of theft was in
respect of a different amount paid to different investors. It appears that the court a
quo correctly convicted the first accused on these counts.

2 The repo rate is the repurchase rate. This is the interest rate charged by the South African Reserve
Bank (SARB) on short-term loan facilities provided to South African banks. The SARB uses the repo
rate in its refinancing framework to influence short-term market interest rates, economic aggregates
such as spending, economic growth and inflation. See in this regard an information paper by the
SARB entitled The role of the prime rate and the prime-repurchase rate spread in the South African
banking system available on the SARB website at www.resbank.co.za, accessed on 30 November
2015.

[130] Count 218683 deals with the theft of the money accompanying all applications
for shares in Krion, allegedly amounting to R908,5 million. However, the State
concedes that theft in the amount of R908,5 million had not been proved. What does
appear from the common cause facts, is that approximately R115,4 million of new
investor money was received in respect of applications for shares in Krion, of which
R24,29 million was deposited in the Krion bank account. It follows that the quantum
of count 218683 should only be R91,1 million. It appears to be common cause that
this amount was misappropriated by the first accused and therefore her conviction
on the count of theft in respect thereof should stand, but for the lesser amount of
R91, 1 million.

[131] Count 47 is one of fraud, in that the first accused induced Mr van Wyk, a
director of Krion, to issue three Krion cheques to the value of R1, 7 million, R1
million and R3, 3 million, respectively. The first accused represented to Van Wyk that
the cheques were to be used for a legitimate business purpose whilst they were
actually used to make interest payments to existing investors in the scheme.

[132] The first accused did not dispute the above, nor that she satisfied the
definitional elements of the crimes in question, but pointed to the fact that she had
been convicted on counts 199748, 199749 and 199751 of theft of the same amounts
represented by the same three cheques which are the subject matter of count 47.
She contends that it is not legally permissible to find her guilty on a charge of fraud
where she has already been convicted of theft in regard thereto. We do not agree. In
these instances both the intention to defraud and the intention to commit theft were
proved. In such event it is permissible to convict an accused of both fraud and theft,
even if the separate counts „depend on the same factual finding‟. See S v Boesak
2000 (1) SACR 633 (SCA) para 71.

[133] It follows that, subject to what is said above in regard to the quantum of count
218683, the appeal of the first accused against her conviction on the counts under
the above rubric, should fail.

Counts 218637, 218638, 218639 and 218682
[134] The first accused was convicted under these counts for knowingly being a
party to the reckless carrying on of the business of the corporate entities utilised in
the conduct of the scheme. This constituted contraventions of s 64(2) of the Close
Corporations Act 69 of 1984 and s 424 of the 1973 Companies Act, respectively, and
included the entities MP Finance CC, Madikor, Martburt and Krion.

[135] No argument was presented on behalf of the first accused in regard to these
counts, and as the evidence overwhelmingly shows the reckless participation of the
first accused in the business of these corporate entities, the convictions ought to be
confirmed.

Counts 218660 and 218661
[136] On these counts the first accused was convicted on the alternative charge of
contravening s 104(1)(a) of the Income Tax Act, in being instrumental in the making
of false statements in the income tax returns submitted on behalf of MP Finance CC
for the tax years 1999 and 2000.

[137] Counsel for the first accused did not address us on these counts and there is
no reason why the convictions should not be confirmed.

Counts 218641 and 218642
[138] These two counts of fraud relate to the misrepresentations made by the first
accused in her 1999 and 2000 income tax returns, by grossly understanding her
taxable income. The misrepresentations caused substantial prejudice to SARS and
the trial court found the first accused guilty on both counts.

[139] Counsel for the first accused did not address us on these counts and there is
no reason why the convictions should not be confirmed.

The first accused ─ Sentence
[140] The relevant sections of POCA contravened by the first accused, respectively
triggered the following prescribed maximum sentences:
(a) Sections 2(1)(f), 2(1)(e) and 2(1)(b) ─ A fine of R1 billion or imprisonment for life.

(b) Section 4 ─ A fine of R100 million or 30 years‟ imprisonment.

[141] The provisions of s 51(2)(a)(i) of the Criminal Law Amendment Act 105 of
1997, read with Part 2 of Schedule 2 thereto, prescribe a minimum sentence of 15
years‟ imprisonment in respect of a first offender, such as the first accused, with
regard to an offence relating to, inter alia, fraud and theft involving more than
R500 000. A court is obliged to impose this minimum sentence unless there are
substantial and compelling circumstances justifying the imposition of a lesser
sentence.

[142] The trial court had due regard to these prescribed sentences in sentencing
the first accused. On each of counts 1 to 3, ie the contravention of sections 2(1)(f),
2(1)(e) and 2(1)(b) of POCA, she was sentenced to 20 years‟ imprisonment. In
respect of the ten counts of contravening s 4 of POCA, the first accused was
sentenced to 10 years‟ imprisonment on each count. On seventeen of the fraud
counts and two counts of theft she was also sentenced to 10 years‟ imprisonment on
each count. With regard to the remainder of the convictions she was sentenced to
periods of imprisonment ranging from 3 years to six months. The cumulative effect of
the various sentences of imprisonment was ameliorated by ordering that several
sentences are to be served concurrently, to the extent that the first accused has to
serve an effective term of 25 years‟ imprisonment.

[143] On appeal counsel for the first accused did not argue that the trial judge, in
exercising her sentencing jurisdiction, had misdirected herself in any respect. What
was submitted, is that the effective sentence of 25 years‟ imprisonment is shockingly
inappropriate to the extent that it merits interference by this court. It is trite that,
absent any material misdirection by the trial court, interference by a court of appeal
is only justified where there is a striking, startling or disturbing disparity between the
trial court‟s sentence and that which the appellate court would have imposed. See S
v Sadler 2000 (1) SACR 331 (SCA) para 8. It follows that, even if the court of appeal
is of the view that it would have imposed a lesser sentence, interference is only
justified if it is convinced that the trial court could not have reasonably passed the
sentence which it did.

[144] A reading of the trial court‟s judgment on sentence shows that the learned
judge had due regard to all the personal and other mitigating factors of the first
accused, including her clean record; the fact that the matter had dragged on for
seven years before the trial commenced; that she has suffered emotionally and is
financially ruined, as well as the impact that her incarceration would have on her and
her adopted minor child. We should, however, add that the first accused and the
other accused were in custody for only four days awaiting trial, whereafter they were
released on bail.

[145] The trial judge carefully weighed these factors against the nature, gravity and
magnitude of the crimes and the devastating financial and emotional effects the
scheme had on some 14 000 investors and concluded that the only suitable
sentence was one of effective imprisonment for a considerable period of time. In
sentencing the first accused to an effective term of 25 years‟ imprisonment, the trial
judge took into account that she was the driving force of this illegal scheme who
showed no remorse or any sympathy for the investors, particularly those who had
invested R908 million in Krion which could not be recovered.

[146] In our view, this is a matter in which the element of deterrence plays an
important role when considering a suitable sentence. In particular, the sentence
should serve as a deterrent to those who may consider launching illegal
multiplication schemes of this nature. The common theme of these Ponzi schemes is
that the hard-earned financial means of others, often the elderly and financially naïve
members of society, are invested in the scheme on the strength of outrageous
returns offered which cannot be sustained due to the lack of a viable economic
enterprise underpinning the scheme. The devastating effects which this scheme had
on investors was graphically illustrated by the evidence of some 25 investors who
had been financially ruined and now have to rely on the generosity of family and
others to make ends meet. As recorded earlier, the trial court found that the first
accused had shown no remorse or sympathy for the plight of these investors.

[147] A further aggravating factor is the cynical approach of the first accused to the
directives of the authorities to cease taking investments and to repay investors. She
fraudulently misrepresented the extent of the scheme by grossly understating the

number and value of the total investments made in the scheme. These
misrepresentations initially persuaded the authorities not to close the scheme down.
As a consequence the investors suffered further losses. She blandly testified that
she repeatedly understated the size of the business of the scheme for fear that it
would be closed down. In one instance the misrepresentation was that the value of
the scheme was a mere 1,38 per cent of its actual value of more than R796 million.
Apart from these misrepresentations, the first accused had no hesitation, when
confronted by the authorities, to merely change the vehicle through which the
scheme was conducted in an attempt to deceive the authorities and to prevent them
from closing the scheme down.

[148] We should conclude by saying that the damage caused by the conduct of the
first accused, both financially and emotionally, can hardly be over-emphasised.
Therefore, we share the view of the trial court that a substantial period of direct
imprisonment is called for. The sentence of 25 years‟ effective imprisonment is a
heavy sentence, particularly also bearing in mind the fact that, when sentenced, the
first accused was 56 years old. Her relatively high age was taken into account by the
trial court as well as the fact that she requires medication for high blood pressure
and cholesterol. We do not believe that the first accused should necessarily be
considered as a person of old age, but, in any event, in S v Zinn 1969 (2) SA 537 (A)
at 541-542, Rumpff JA held that „old age when accompanied by loss of mental
capacity is a ground for mitigation, but generally speaking old age is not a ground for
leniency‟.

[149] In our view it cannot be said that the court a quo acted unreasonably in
imposing a term of 25 years effective imprisonment. Having regard to all the relevant
circumstances, there is no striking, startling or disturbing disparity between the trial
court‟s sentence and that which we would have imposed had we been the court of
first instance. On the contrary, we would have been inclined to impose a sentence of
the same order. We conclude that the effective sentence of 25 years‟ imprisonment
imposed upon the first accused is not disproportionate to the crime, the personal
circumstances of the first accused and the interest of society. In the result the appeal
of the first accused against her effective sentence of 25 years‟ imprisonment should

fail. Finally, we should add that the limited success that the first accused had on
appeal, does not impact at all on her effective sentence of 25 years‟ imprisonment.

The second accused
Count 2 (Contravention of Section 2(1)(e) of POCA)
[150] It is common cause that the second accused was both associated with and
employed by the scheme. He is a former business banker with 34 years‟ experience
in banking. For approximately 10 years prior to his employment in the scheme he
served as a funding manager for ABSA bank sourcing fixed term investments.

[151] He made his first investment in the scheme on 1 February 2001. From March
2001 he introduced a number of new investors to the scheme and received
commission on such referrals. He resigned his employment with ABSA bank during
July 2001 and took up full time employment in the scheme with effect 1 August 2001.
His role in Martburt and M & B Co-Operative has been set out earlier herein. The
application form for the registration of M & B Co-Operative was completed and
signed by the second accused and he attested to an affidavit verifying the content
thereof. It is not in dispute that the application contained false information in respect
of the number of members and the extent of the investments.

[152] The second accused was appointed to oversee the activities of the various
agents appointed after 6 June 2001 and to verify the correctness of the
documentation prepared by them in taking deposits from the public. In this capacity
he was therefore exposed to the extent and terms of each investment taken. He
knew what the extent was of each interest commitment. He personally signed six
investment certificates in Martburt and 337 membership certificates in M & B Co-
Operative

[153] In dealing with accused no 1 above we have set out the requirements for a
conviction under s 2(1)(e). On behalf of the the second accused it was argued that
the State had failed to prove that the second accused knew that his participation in

the scheme amounted to a pattern of racketeering. The argument is essentially the
same as that advanced in respect of the first accused. In the case of the second
accused he has been convicted of a number of predicate offences listed in Schedule
1 of POCA, some requiring dolus and others requiring culpa in order to establish
liability. The second accused had the required mens rea in each case to commit the
various predicate offences as fully set out below. We have already found that no
further mens rea is required. The offences of which the second accused has been
convicted form part of the pattern of racketeering which characterised the activities
of the scheme. The second accused was therefore correctly found to have
„participated in the affairs of the scheme through a pattern of racketeering.‟

Count 3 (Contravention of section 2(1)(b) of POCA)
[154] The second accused was convicted of a contravention of s 2(1)(b) of POCA
which provides that:
„Any person who: receives or retains any property, directly or indirectly on behalf of an
enterprise; and knows or ought reasonably to have known that such property derived or is
derived from or through a pattern of racketeering activity; . . .  shall be guilty of an offence.‟

[155] Counsel for the second accused submitted that in order to be convicted under
s 2(1)(b) of POCA the State is required to prove beyond reasonable doubt that the
accused received or retained property directly or indirectly as part of his planned,
ongoing, continuous or repeated participation or involvement in offences listed in
Schedule 1 to POCA. The submission does not accord with the definitional elements
of the offence. The provisions of the section are clear. Once it is established that the
accused received or retained property directly or indirectly on behalf of the scheme
the only remaining issue is whether he knew, or ought reasonably to have known,
that such property derived or is derived from or through a pattern of racketeering
activity. His participation in such activity is irrelevant.

[156] It is common cause that the second accused received money on behalf of the
scheme. It is not disputed that it derived from a pattern of racketeering activity.

[157] The only question which arises is whether the second accused knew or ought
reasonably to have known that such money derived from a pattern of racketeering.
The provisions of s 1(3) of POCA are set out earlier herein (para 53). The second
accused was a de facto office bearer in the form of a director and or chairperson of
entities and purported entities which formed part of the scheme. Under these
circumstances the law expects of him to take reasonable steps to acquaint himself
with the provisions of the law that govern his responsibilities (S v Pouroulis 1993(4)
SA 505 (W) at 604C-E; S v International Computer Broking and Leasing Pty Ltd &
another 1996 (3) SA 582 (W); S v Longdistance (Natal) (Pty) Ltd & others 1990 (2)
SA 277 (A) at 283G.) A director of a company has a duty to acquire and maintain a
sufficient knowledge and understanding of the company‟s business to enable him to
properly discharge his duties (cf Halsbury’s Laws of England vol 14 5 ed (2009) para
549. It is well established that a „Director of a Company . . . has a duty to observe
the utmost good faith towards the company, and in doing so, to exercise reasonable
skill and diligence‟ (Howard v Herrigel & another NNO 1991 (2) SA 660 (A)). A
Director is accordingly required to exercise an independent judgment and to take
decisions according to the best interests of the company as his principal. (Fisheries
Development Corporation of SA Ltd v Jorgenson & another 1980 (4) SA 156 (W) at
163E).

[158] The second accused must for purposes of s 1(3)(a) of POCA be judged
according to the general knowledge, skill, training and experience of a director of
companies engaging in the business of deposit taking.

[159] The second accused‟s actual knowledge, skill, training and experience in the
banking sector has been recorded earlier. For purposes of s 1(3)(b), he is an
experienced banker and he was constrained to concede under cross-examination
that he knew that he was contravening the Banks Act in taking a deposit. He has
personally been convicted of numerous offences set out in Schedule 1 of POCA. In
the circumstances we are satisfied that the trial judge correctly concluded that the
second accused ought reasonably to have known when he accepted money on
behalf of the enterprise that it derived from a pattern of racketeering activity.

Count 27 (Contravention of section 11(1) of the Banks Act)
[160] The second accused was convicted of contravening the provisions of s 11(1)
of the Banks Act in that he, together with his co-accused, conducted the business of
a bank in the name of various entities which were not registered as a bank.

[161] Section 11(1) of the Banks Act provides that:
„Subject to the provisions of s 18A no person shall conduct the business of a bank unless
such person is a public company and is registered as a bank in terms of this Act.‟ The
provisions of s 18A are not material to the appeal. „The business of a bank‟ is defined in the
Banks Act to mean:
„(a) the acceptance of deposits from the general public (including persons in the employ of
the persons so accepting deposits) as a regular feature of the business in question. . . .‟

[162] The material portion of the definition of „deposit‟ in the Banks Act provides:
„An amount of money paid by one person to another subject to an agreement in terms of
which─
(a) An equal amount or any part thereof will . . .  unconditionally be paid, either by the person
to whom the money has been so paid or by any other person, with or without a premium, . . .
at specified or unspecified dates or in circumstances agreed to by or on behalf of the person
making the payment and the person receiving it; and
(b) . . . interest will be payable thereon at specified intervals or otherwise,
notwithstanding that such payment is limited to a fixed amount or that a transferable or non-
transferable certificate or other instrument providing for the repayment of such amount
mutatis mutandis as contemplated in paragraph (a) or for the payment of interest on such
amount mutatis mutandis as contemplated in paragraph (b) is issued in respect of such
amount . . . .‟

[163] Counsel for the second accused submits however that the state has proved
only four instances where he has received deposits and accordingly that he has not
taken deposits from the general public as a regular feature of the business.

[164] The argument is misplaced. The business is the scheme. The scheme has, as
a regular feature of its business, taken deposits from the general public without ever
being registered as a bank. The business was conducted through various entities
from time to time including Martburt and M & B Co-Operative. The second accused
personally signed 343 „investment certificates‟ and agreements to a total value of
approximately R20,5million and 971 „investment certificates‟ and agreements were
issued in M & B Co-Operative under the name of the second accused. The
„investment certificates‟ are in the form of agreements in terms of which the capital
amounts and the interest would be repaid as envisaged in the definition of a
„deposit‟. By signing these documents the second accused was actively engaged in
taking deposits as defined in the Banks Act.

[165] In the result the second accused was correctly convicted of this offence.

Count 45 (Fraud)
[166] The second accused was convicted of fraud arising from misrepresentations
made to JT van Wyk and AJ van Wyk (the Van Wyks) in respect of the intended
goals of Krion at a meeting held in January 2001.

[167] Mr AJ van Wyk (Van Wyk) was the only witness on behalf of the State who
testified in respect of the meeting in January 2002 at which the said representations
are alleged to have been made. The evidence of Van Wyk revealed that the second
accused, an old acquaintance, approached him during December 2001 and
indicated to him that he wanted the Van Wyks to become involved as directors in a
company to be formed in which he would have an interest. During January 2002 the
first accused, second accused and one Cossadianos travelled to Klerksdorp and met
with Van Wyk, a chartered accountant and his brother, an attorney. The second
accused introduced Cossadianos as their forensic accountant and business advisor
and the first accused confirmed this.

[168] It is not challenged on behalf of the second accused that misrepresentations
were made nor that they were prejudicial. Counsel for the second accused raised
two arguments. Firstly it is contended that Van Wyk was a single witness, that his
evidence should therefore be treated with caution and that an adverse inference
should have been drawn against the state by virtue thereof that his brother, who was
present at the contentious meeting, did not testify. The second argument is that the
misrepresentations were made by Cossadianos and the first accused and that the
trial judge erred in finding that the second accused associated himself with the
misrepresentations.

[169] Van Wyk was a single witness in respect of these issues. He was also a
suspected accomplice and was warned in terms of s 204 of the CPA. His evidence
must therefore be treated with caution. It is often stated in respect of single
witnesses that their evidence should be clear and satisfactory in every material
respect (See R v Mokoena 1932 OPD 79 at 80) In S v Sauls & others 1981 (3) SA
172 (A) at 180E-G, however, this court held:
„There is no rule of thumb test or formula to apply when it comes to a consideration of the
credibility of the single witness (see the remarks of Rumpff JA in S v Webber). The trial
judge will weigh his evidence, will consider its merits and demerits and, having done so, will
decide whether it is trustworthy and whether, despite the fact that there are shortcomings or
defects or contradictions in the testimony, he is satisfied that the truth has been told. The
cautionary rule referred to by De Villiers JP in 1932 [R v Mokoena 1932 OPD 79 at 80] may
be a guide to the right decision but it does mean “that the appeal must succeed if any
criticism, however slender, of the witnesses‟ evidence were well-founded” (per Schreiner JA
in R v Nhalapo (AD 10 November 1952) quoted in R v Bellingham 1955 (2) SA 566 (A) at
569.) . . .‟

[170] The trial court recognised that his evidence was to be treated with caution. It
found that he was an honest and careful witness. It concluded that he gave careful
consideration to the questions put to him and made concessions where necessary. It
found that he remained consistent throughout cross-examination and did not
contradict his version. There is therefore merit in the submission on behalf of the
State that Van Wyk was a reliable and credible witness and his evidence was clear

and satisfactory in every material respect. Counsel for the second accused
acknowledges that there is no material criticism of the evidence of Van Wyk (nie te
veel kritiek teen sy getuienis). It is argued, nevertheless, that the trial judge ought to
have drawn an adverse inference against the state because, so the argument goes,
he need not have been a single witness.

[171] Counsel for the second accused argues that during the course of cross-
examination Van Wyk declared on a number of occasions that he was unable to
answer the questions put and that his brother could testify in that regard. It is not,
however, suggested that any of these issues in respect of which Van Wyk was
unable to testify in cross-examination are material to the State‟s case. It is not
contended that there was any inherent improbability in Van Wyk‟s evidence which
his brother was able to clarify (compare S v Texeira 1980 (3) 755 (A) 763H-764C). In
the circumstances the State was not obliged to call Van Wyk‟s brother. A prosecutor
is not expected to produce all the evidence which he has at his disposal and he is
entitled to decide what he considers to be sufficient to discharge the onus which he
is required to discharge. In all the circumstances the argument cannot be sustained.

[172] We turn to the second argument raised on behalf of the second accused. The
circumstances leading up to the misrepresentations are set out in paragraph 165
above. Although the second accused did not play an active role in the meeting
thereafter he was present throughout. The intentions with Krion were explained by
the first accused and Cossadianos. The second accused did not correct the false
representations made in the course thereof.

[173] The intentions of Krion set out in the prospectus for the company accorded
with the presentation made by the first accused, but were far removed from that
which the first accused, to the knowledge of the second accused, truly intended to
do. The question which arises is whether the second accused through his conduct
made any misrepresentation.

[174] Fraud is constituted by the unlawful and intentional making of a
misrepresentation which causes actual prejudice or which is potentially prejudicial to
another (See C R Snyman Criminal Law 5 ed (2013) at 530). Although
misrepresentations are, more often than not, made by express verbal statements a
misrepresentation could equally be made by silence in circumstances where there is
a duty to speak. In S v Mbokazi 1998 (1) SACR 438 (N) at 445f-i Thirion J explained:
„Misrepresentation may however take a variety of forms. They may be made by entries in
books or records (S v Heyne & others 1956 (3) SA 604 (A)) or by conduct or even by silence
when there is a duty to speak. It would seem to me that the remarks of Lord Halsbury in
Aaron’s Reef’s Ltd v Twiss 1896 AC 273 (HL) which are quoted with approval in S v Ressel
1968 (4) SA 224 (A) are also apposite in the present case:
“It is said there is no specific allegation of a fact which is proved to be false. Again I protest,
as I have said, against that being the true test. I should say, taking the whole thing together,
was there a false representation? I do not care by what means it was conveyed ─ by what
trick or device or ambiguous language; all those are expedients by which fraudulent people
seem to think they can escape from the real substance of the transaction. If by a number of
statements you intentionally give a false impression and induce a person to act upon it, it is
not the less false, although if one takes each statement by itself there may be a difficulty in
showing any specific statement is untrue”.‟

[175] The second accused clearly created the impression in the mind of Van Wyk
that he and the first accused were business partners and that Cossadianos was their
business adviser and accountant. The second accused was indeed instrumental in
obtaining the consent of the Van Wyks to act as directors for the company. In the
circumstances, by virtue of the situation created by the second accused the Van
Wyks were left under the impression that the presentation was made on behalf of the
first and the second accused. For these reasons an obligation arose for the second
accused to correct the false representations made.

[176] On behalf of the second accused, however, it is further argued that there is no
evidence that she was indeed aware of the true state of affairs. The evidence does

not support this argument. The second accused‟s functions in overseeing the agents
is set out in para 152 above.

[177] At the time of the inaugural meeting of M & B Co-Operative he was aware that
all the previous investors in Martburt would simply be transferred to M & B Co-
Operative because the SARB had not approved of Martburt. By December 2001,
when it was evident that M & B Co-Operative had not been registered as a
cooperative he was fully aware that the purpose for the creation of Krion was to
transfer all the investors who invested money in Martburt and M & B Co-Operative to
Krion. They would continue to receive their interest as agreed in their original
agreements. The conclusion is inescapable that he did know of the true state of
affairs. He chose not to disclose this to the Van Wyks.

[178] For these reasons the submission of counsel for the second accused cannot
succeed.

Count 47 (Fraud)
[179] The second accused was convicted of fraud. It was held that he and others,
made false representations at a meeting on 16 April 2002, either personally or
through Cossadianos to Van Wyk in order to induce him to sign cheques in the
amounts of R1million, R1,7million and R3,3million respectively in the name of Krion.

[180] Again the State relies on the evidence of Van Wyk in respect of the events
which occurred at the meeting on 16 April 2002. Van Wyk kept contemporaneous
notes of the discussions in the meeting which were handed up in evidence and
which support his evidence. Again it is argued that the trial court erred in failing to
draw an adverse inference against the State by virtue of the failure to call
Cossadianos and one Vlok who were present at the meeting and could have
confirmed the evidence of Van Wyk. Vlok was the first accused‟s personal body
guard and was later appointed as a director in Krion. The role of Cossadianos is set

out earlier. The reasoning set out in paragraph 169 to 170 above finds equal
application in this regard.

[181] Cossadianos and Vlok are firmly vested in the camp of the appellants. There
is every reason to believe that their evidence may not support that of Van Wyk. It is,
however, not the function of a prosecutor to place contradictory evidence before a
court and expect the court to find its way through the maze. In S v Van der
Westhuizen 2011 (2) SACR 26 (SCA) para 11 this court stated that:
„[I]t is the obligation of the prosecutor firmly but fairly and dispassionately to construct and
present a case from what appears to be credible evidence, and to challenge the evidence of
the accused and other defence witnesses with a view to discrediting such evidence, for the
very purpose of obtaining a conviction. That is the essence of a prosecutor‟s function in an
adversarial system and it is not peculiar to South Africa. . .‟ (Footnote omitted.)

[182] It was therefore not the obligation of the prosecutor to call witnesses who are
firmly vested in the camp of the accused. In view of the court finding that Van Wyk‟s
evidence was the truth and that it was clear and satisfactory, this argument cannot
succeed.

[183] Counsel for the second accused argues further that the trial court erred in its
factual findings and that it ought to have been held that she was merely a passive
observer at the meeting. The approach to factual findings in an appeal was correctly
set out by Jones J in S v Leve 2011 (1) SACR 87 (ECG) at 90g-i where he
explained:
„The trial court‟s findings of fact and credibility are presumed to be correct, because the trial
court, and not the court of appeal, has had the advantage of seeing and hearing the
witnesses, and is in the best position to determine where the truth lies. See the well-known
cases of R v Dhlumayo & another 1948 (2) SA 677 (A) at 705 and the passages which
follow; S v Hadebe and Others 1997 (2) SACR 641 (SCA) at 645; and S v Francis 1991 (1)
SACR 198 (A) at 204c-f. These principles are no less applicable in cases involving the
application of a cautionary rule. If the trial judge does not misdirect himself on the facts or
the law in relation to the application of a cautionary rule, but, instead, demonstrably subjects

the evidence to careful scrutiny, a court of appeal will not readily depart from his
conclusions.‟

[184] The events leading up to the meeting on 16 April 2002 serve to place the role
of the second accused at the meeting in its context. On 10 April 2002 the second
accused forwarded a fax to Van Wyk in which he requested the payment of a cash
cheque in the amount of R1,7 million by no later than 12 April 2002. He stated in the
communication that agents were waiting for capital to pay out the clients. Van Wyk
refused to sign the cash cheque and directed numerous enquiries to Cossadianos in
respect of this request. Shortly thereafter the second accused called Van Wyk and
intimated that it was no longer necessary to sign the said cheque. On 12 April a
further letter followed from accused 4 regarding the signature of cheques. It is
against this background that the meeting was held on 16 April 2002 when the
misrepresentations were made. Subsequent to the meeting the first accused has
acknowledged that she required these cheques in order to pay out interest and
capital to investors. This accords with the letter sent by the second accused on 10
April. We are therefore not persuaded that the trial court erred in finding that the
second accused knew that Krion money was being used to pay out investors in
previous entities.

[185] In an endeavor to persuade Van Wyk to sign the cheques the first accused
represented to Van Wyk that money was needed to be advanced to micro lending
franchises. The second accused did nothing to correct this misrepresentation.
Cossadianos further represented to Van Wyk that a covering bond over immovable
property of the PT Vennote Familie Trust would be registered as security. The
second accused assured Van Wyk that the property adjacent to the Ardenwold
Guesthouse had been valued at R10million and that the guesthouse was worth at
least R5million. This, the second accused denied, however, his participation is borne
out by the contemporaneous notes kept by Van Wyk during the meeting. The second
accused furthermore presented at the meeting with a banking slip confirming that an
amount in excess of R6million was held in the Krion account to meet the payment of
the cheques. The trial court concluded that he had associated himself with the

misrepresentations made. We find no misdirection on the part of the trial court and
accordingly are disinclined to interfere with the finding of the trial court.

[186] Finally counsel for the second accused argues, in any event, that the State
has failed to establish beyond reasonable doubt that any representation made by the
second accused in fact moved Van Wyk to sign the cheques. Causation, however, is
not a requirement for a conviction for fraud. Even if the state has failed to prove that
the misrepresentation resulted in actual prejudice a conviction may still follow
provided it is established that the representation was potentially prejudicial in that it
involved the risk of prejudice. (See Snyman op cit at 535 and R v Kruse 1946 AD
524 at 533-534; S v Judin 1969 (4) SA 425 (A) 435.) For these reasons the
argument cannot succeed.

Counts 77176 ─ 86246 (9071 counts of unauthorized use of the word
‘cooperative’.
[187] These counts relate to the alleged conduct of a cooperative without it having
been registered. It is not disputed that the second accused acted as chairperson of
M & B Co-Operative and took numerous deposits in the name of the co-operative
which was never registered. 9071 Investment certificates were issued in the name of
M & B Co-Operative hence the 9071 convictions. Two arguments were raised by
counsel for the second accused. First it is argued that although the trial court dealt
with these charges in the judgment (and held the second accused liable) it failed to
pronounce a verdict at the conclusion of the judgment. Therefore it is contended that
the second accused is entitled to be acquitted.

[188] Section 322(1) of the CPA provides:
„In the case of an appeal against a conviction or of any question of law reserved, the court of
appeal may─
(a) . . .
(b) give such judgment as ought to have been given at the trial . . .‟

[189] Counsel for the State submitted that the court is entitled to give the judgment
which the trial court ought to have given. He contended that it is manifestly clear that
the trial court intended to convict the second accused as is evidenced by the
reasons and the imposition of sentence. In the circumstances it was submitted that s
322 of the CPA is applicable.

[190] The trial court held that the second accused as a director of M & B Co-
Operative ought to have been aware of legislation which applies to co-operatives. It
recorded that he acknowledged that he knew that the co-operative was not
registered and he proceeded to issue 337 investment certificates in the co-operative.

[191] These factual findings are common cause. A finding that the second accused
is entitled to his acquittal by virtue of the failure of the trial judge to formally record
his conviction would be contrary to the factual findings made. Such an approach
would undermine the administration of justice. In these circumstances we consider
that the argument on behalf of the second accused cannot succeed

[192] The second argument raised is, assuming that the first argument fails, that the
conviction on 9071 counts constitutes a duplication of convictions. This is dealt with
under the first accused and the same considerations find application. In the
circumstances the second accused was incorrectly convicted of 9071 charges. He
ought to have been convicted on one count only.

Counts 197708 – 199747 (2040 charges of contravening s 104 (1)(3) of the
Income Tax Act.
[193] These counts have been fully dealt with earlier (paras 122-123). For the
reasons stated the appeal against these counts must succeed.

Counts 199748 ─ 200563 (816 counts of theft)

[194] The subject matter of these charges is set out earlier in respect of the first
accused (para 129).

[195] The events surrounding the creation of Krion are discussed earlier (paras 29-
30, 167 and 175). Van Wyk was the only director with signing powers on the Krion
account. The co-signatory was one Nel, one of the trustees of the Share Family
Trust and a long standing friend of the second accused. The Share Family Trust
owned the controlling shares in Krion. Nel had not been apprised of any functions
which he was required to fulfill on behalf of the trust and there is no evidence of any
attendance of any management meetings on behalf of the Trust with regard to Krion.

[196] Nel agreed to act as a co-signatory for Krion on the condition that Van Wyk
would sign all cheques prior to being presented to him for signature. Nel accordingly
relied on Van Wyk to ensure the propriety of the cheques.

[197] On 16 April 2002 at the meeting referred to earlier herein Van Wyk revealed a
reluctance to sign any cheques on behalf of Krion without a full motivation from
Cossadianos and provision of appropriate security. At the request of Cossadianos
and without any reference to Van Wyk the second accused thereafter arranged with
ABSA Bank for accused 4 to obtain authority to affect internet banking transfers. In
these circumstances the trial judge concluded that the second accused knew full well
that Van Wyk would be unwilling to consent to the authorization given to accused 4
to make payments from the Krion account and that the second accused knew what
payments were intended to be made.

[198] Counsel on behalf of the second accused submitted that the trial court
committed various misdirections in respect of the evidence. Firstly the second
accused testified that he did in fact attempt to consult Van Wyk in this regard. He
telephoned Van Wyk to discuss the matter with him. Van Wyk, however, so his
evidence goes, was in Port Nolloth. Although the second accused spoke to Van Wyk

the telephone connection was of such poor quality that the line was interrupted
before he was able to discuss the matter with Van Wyk. In this regard he is
contradicted by the first accused who states that they were unable to make contact
with Van Wyk. Van Wyk, when he testified, denied that he was ever in Port Nolloth.
This evidence was not challenged by the second accused in cross-examination and
the trial court found the second accused to be an unsatisfactory witness. It accepted
the evidence of Van Wyk.

[199] On behalf of the second accused it is again contended that Van Wyk is a
single witness in this regard and that an adverse inference ought to have been
drawn against the State by virtue of the failure to call Van Wyk‟s wife who was able
to confirm whether he was in Port Nolloth or not. There is no merit in the argument
and the considerations in respect of single witnesses set out earlier find application
here too.

[200] It is further argued that the trial court misdirected itself in respect of the extent
of the second accused‟s involvement in the establishment of Krion. The involvement
of the second accused is set out above (paras 167 and 175). Again the trial judge
did not misdirect herself in this regard and we find no grounds to interfere with the
factual finding of the trial court.

[201] Counsel for the second accused argues further that the court erred in
concluding that the second accused knew that Van Wyk would not approve of the
authorisation given to accused 4. This must be seen in the light of the events
preceding the meeting of 16 April and the events at the meeting which are discussed
earlier (para 184-5). The trial court furthermore considered both the inability of the
second accused to explain why it was necessary for internet banking services to be
approved at all and to provide any logical explanation for why it was so urgent that it
could not, on his version, wait for Van Wyk to return from Port Nolloth. We find no
misdirection on the part of the trial court.

[202] Finally, it is argued on behalf of the second accused that the 815 counts of
theft constitute a duplication of convictions. Reliance is placed on S v Verwey 1968
(4) SA 683 (A). Verwey was an attorney charged with one count of theft arising from
a general deficit in his trust account. In the alternative he was charged with nine
individual counts of theft in respect of the theft of monies deposited by nine individual
clients in his trust account. Verwey was convicted of seven counts of theft on the
alternative charges. An appeal to the Supreme Court [now the High Court] failed. In
a further appeal this court held the convictions to be irregular. It held that money
which was paid into the trust account by individual clients became consumed in the
trust account and no longer existed as separate identifiable amounts. Moreover the
State had failed to prove seven withdrawals corresponding to the amounts deposited
by the complainants. It could not be determined in the circumstances whether any
particular withdrawal constituted the theft from any of the individual complainants.
Rather, amounts were paid into the trust account from time to time and withdrawn
from time to time. The balance dwindled and the accordingly the accused ought to
have been convicted of a single count of theft based on the general deficit in the
trust account.

[203] The facts in the present matter are markedly different. In this case money was
held in the bank account of Krion for and behalf of Krion. Each withdrawal made by
accused 4 as a result of the facility arranged by the second accused constituted a
separate identifiable appropriation from the Krion account. Each transfer was made
to a different pre-existing investor in one of the earlier entities or purported entities
used to conduct in the scheme. Each such transfer required a fresh intention to be
formed. In the circumstances counsel‟s argument cannot succeed.

Counts 200664 ─ 218636 (17973 counts of conducting a harmful business
practice being a multiplication scheme)
[204] It is conceded on behalf of the State that the second accused ought not to
have been convicted on counts 200664 to 204797. In respect of counts 200664 to

200683 he was discharged at the end of the State‟s case in terms of s 174 of the
Criminal Procedure Act. He could therefore not subsequently be convicted. Counts
200664 to 204797 relate to events prior to 28 May 2001 when the second accused
was not involved in the scheme. Counts 204798 to 218636 remain.

[205] On behalf of the second accused two arguments are raised, firstly that the
multiple counts constitute a duplication of convictions and secondly, in any event,
that it has not been proved beyond reasonable doubt that the second accused knew
that he was engaged with a multiplication scheme.

[206] The first argument on behalf of the second accused is considered earlier
herein in respect of the first accused. For the reasons set out the second accused
was wrongly convicted of multiple counts. He is guilty of a single offence only.

[207] Turning to the second argument advanced it has been recorded earlier that
the second accused was a director of Martburt and the chairperson of M & B Co-
Operative. The legal implications flowing from the duties of directors has been
discussed (para 157). He personally had investment in the scheme and knew of the
interest which was paid. The second accused‟s participation in the scheme, including
his referral of investors from March 2001, for which he was paid commission, his
function in supervising the agents who collected deposits and his exposure to the
extent of the deposits and interest payments made are indicative of knowledge of the
nature of the scheme. The trial court‟s finding in this regard is therefore correct.

[208] In the result the convictions in respect of counts 200664 to 218636 should be
set aside and substituted with a single conviction for conducting a harmful business
practice.

Counts 218637; 218639 and 218682 relate to reckless trading in MP Finance
CC, Martburt and Krion.
[209] The second accused was convicted of reckless trading in MP Finance CC. He
was never a member of MP Finance CC and was not involved in the scheme when
MP Finance CC was utilised as a vehicle. In the circumstances the State has
correctly conceded that the second accused ought not to have been convicted on
this count.

[210] I turn to the alleged contravention of s 424 of the Companies Act in respect of
Martburt. Section 424(1) of the Companies Act provides:
„When it appears . . .  that any business of the company was or is being carried on recklessly
or within intent to defraud creditors of the company . . . or for any fraudulent purpose, the
court may, . . . declare that any person who was knowingly a party to the carrying on of the
business in the manner aforesaid, shall be personally responsible . . .  for all or any of the
debts or other liabilities with the company . . . .‟

[211] Section 424(3) provides that any person who was knowingly a party to the
carrying on of the business of the company in such manner is guilty of an offence.
On behalf of the second accused it is acknowledged that he was indeed a director of
Martburt, however, it is argued that the evidence establishes that the second
accused did not act in such capacity. The argument need only to be stated to be
rejected. The second accused accepted the directorship in Martburt and his
acceptance thereof gives rise to certain obligations in law. To the extent that he did
not act as the law requires of a director to act it constitutes a dereliction of his duty.
His failure to act in the manner in which it was expected of a director can therefore
not assist the second accused.

[212] Counsel of behalf of the second accused proceeded to argue that the only
involvement of the second accused in Martburt which has been established on the
evidence was the acceptance of a single deposit and the signature of six „investment
certificates‟ which he signed.

[213] Even if this was correct (which it is not) it constitutes participation in the
reckless conduct of the business of Martburt. (Compare Gordon v Standard
Merchant Bank Ltd 1984 (2) SA 519 (C)). He knew that the taking of deposits
constituted the business of Martburt and he personally participated in accepting
deposits with full knowledge that it constituted a contravention of the Bank‟s Act. He
was aware that Martburt offered 10 per cent per month on any investment and he
referred investors to Martburt on that basis. At no time did the second accused
attempt to ascertain that Martburt was able from its income to service such
investments. The objective facts are that it could not. The conclusion is inescapable
that he was knowingly a party to carrying on the business recklessly.

[214] In the result the appeal on this count should be dismissed.

[215] In respect of Krion the second accused was not a director. It is argued on his
behalf that the State has failed to prove beyond reasonable doubt that he had the
intention to be party to the reckless conduct of the business of Krion. Again, counsel
downplays the involvement of the second accused. It is not in dispute that he was
involved in establishing Krion, identifying and appointing directors for Krion,
identifying and appointing trustees in the Share Family Trust which held the
controlling interest in Krion, arranging for the opening of the Krion bank account,
obtaining authorisation for internet banking on the Krion bank account and obtaining
the signature of Mr Nel on the documents which were signed to enable the second
accused to arrange for accused 4 to perform internet transfers. He was present at
the meetings held with investors where it was explained to investors that previous
investments were merely to be converted to investments in Krion for no
consideration. He knew that payments were carried out on the Krion bank account
whereas no business in Krion had been commenced and whereas Krion had not
realised any profit by such time and he actively sought to persuade Van Wyk to sign
such cheques.

[216] For these reasons the argument of counsel cannot succeed.

Sentence ─ Second accused
[217] We have held that the convictions and sentence in respect of counts 197708
to 199747; counts 200664 to 204797 and count 218637 are to be set aside.

[218] We have held too that counts 77176 to 86246 constitute a duplication of
convictions and that the appellant ought to have been convicted on one count. The
trial court took these multiple counts together for purposes of sentence and imposed
a globular sentence of one year imprisonment. Similarly, in respect of counts 200664
to 218636 the trial judge took the offences together for purposes of sentence and
imposed a sentence of three years imprisonment. Whilst the 971 counts in the
former instance and the 17973 counts in the latter have been reduced to one offence
in each case it is merely the result of the interpretation of the relevant statutory
provisions. The factual findings in respect of the conduct of the second accused
which is to be punished in each case remains materially undisturbed. In these
circumstances we do not consider that the sentence in these instances merit
interference.

[219] In respect of the second accused therefore the appeal against the convictions
succeeds to a limited extent only. In respect of sentence, however, this does not
assist the second accused as the effective sentence imposed remains undisturbed.
This is so as the sentences which are affected and which are set aside were in any
event to run concurrently with the sentences imposed in respect of counts 2, 3, 45
and 47.

[220] In argument before us counsel for the second accused did not contend for
any misdirection on the part of the trial judge. He has confined his argument to the
submission that the effective sentence is so disturbingly severe in the circumstances

that this court should interfere with the sentence imposed. Counsel has further
confined his argument to the sentences imposed in respect of counts 2 and 3
(contraventions under POCA) and 45 and 47 (fraud). The sentence imposed in
respect of these four counts determines the effective sentence as all other
sentences imposed in respect of the remaining offences were to run concurrently
with these. The second accused was sentenced to an effective term of imprisonment
of 12 years.

[221] In respect of count 2 and 3 the second accused was sentenced to 10 years
imprisonment in each case of which 3 years were conditionally suspended. The
sentences were ordered to run concurrently. The second accused was therefore
sentenced to an effective 7 years‟ imprisonment in respect of these offences. The
trial court‟s analysis of the second accused‟s involvement and participation in the
scheme is essentially correct. It is true that she stated in her judgment on sentence
that the second accused was also involved in MP Finance Sacco, however, the error
is not material. It is immaterial because she correctly recorded that he only became
involved in the scheme in May 2001 and that he actively participated in all the
activities of the scheme thereafter. She recorded too that the second accused
actively participated in the making of false representations in the application for the
registration of MP Finance Sacco. The reference was clearly intended to be a
reference to the registration of M & B Co-Operative. Despite the erroneous
references to MP Finance Sacco her analysis of his active involvement in the
scheme correctly reflects his conduct.

[222] Although these errors are alluded to in heads of argument before us counsel
for the second accused, fairly, did not seek during argument to make anything of
these errors.

[223] Count 47 was a fraud relating to cheques in the amount of R6million. A
discretionary minimum sentence of 15 years imprisonment applies to the offence.

The trial court held that substantial and compelling circumstances do exist to deviate
from the prescribed sentence and it imposed a lesser sentence. Even where
substantial and compelling circumstances are found to exist, however, the
standardized sentence set out by the legislature in the Criminal Law Amendment Act
must serve as a point of departure in the assessment of sentence.

[224] The trial court gave careful consideration to the personal circumstances of the
second accused and the interest of society in the imposition of sentence on these
counts. It considered that he was a first offender and of an advanced age at 67
years. It gave consideration to his career in finance and to the extent of his
involvement in the scheme. It recognised that he lost his pension in the scheme and
that he lost his material possessions in consequence of his arrest. The crimes of
which the second accused has been convicted under POCA are, however, serious
offences. In our view the trial judge correctly assessed the conduct of the second
accused in the affairs of the scheme and weighed same against his personal
circumstances and the interests of society. In the circumstances we are not of the
view that the sentence imposed on these counts is so severe as to warrant the
interference by this court.

Third and fourth accused
It is convenient to consider the appeals of accused 3 and 4 together.

Count 2 (Section 2(1)(e) of POCA)
[225] Counsel on behalf of accused 3 and 4 submitted that the State has failed to
prove that accused 3 or 4 had knowledge of the unlawfulness of their conduct.

[226] The argument on behalf of accused 3 and 4 is predicated on the assumption
that it is necessary for the State to prove that the accused had the intention to
participate in the conduct of the scheme through a pattern of racketeering activity.
The question of the required mens rea for a contravention of the provisions of s
2(1)(e) of POCA has been considered earlier. The foundational submission for the
argument on behalf of accused 3 and 4 is therefore incorrect. The issue to be

determined is whether accused 3 Scheduleand 4 had the mens rea to commit the
predicate offences listed in Schedule 1 to POCA.

[227] Accused 3 was both employed by and associated with the scheme and was
an active participant in the conduct of the affairs of the scheme from the inception.
Her membership of MP Finance CC and directorships at Madikor Twintig and
Martburt is set out above as is her role in MP Finance Sacco. According to the
personnel list of MP Finance seized by the administrators appointed by the SARB
she is reflected as the Financial Director with effect from 1 June 1998. She
completed the cash book in respect of the micro lending business from 1999 and
she personally signed investment certificates as from November 2000.

[228] Initially accused 3‟s efforts were concentrated in the micro lending division
until April 2001. She knew what the income of the micro lending business was. In
April 2001 she was transferred to the investment division, initially in training. There
she was exposed to all the investment files, the calculating of interest to be paid out
monthly and the extent of the deposits made. As from 7 June 2001 she was
committed on a full time basis in the investment division. She was aware of the
investigation by the DTI while she was a member of MP Finance CC in May 2000.
She professes to have been comforted by the first accused‟s assurance that the
matter was all sorted out. She was present in the meeting with the inspectors
appointed by the SARB on 6 June 2001. She was accordingly witness to the
admission made by the legal representatives on behalf of the first accused that the
scheme was contravening the provisions of the Banks Act. She witnessed the
representation by the first accused that approximately R10million to R12million was
owing to investors. This she must have known to be false as she had personally
signed investment certificates in the amount of R17million prior to that date. She was
present too when the instruction was given that no further deposits may be taken.
Notwithstanding this instruction and her knowledge of the contravention of the Banks
Act she actively continued, after a brief interlude, taking deposits on behalf of the
scheme. She witnessed the dramatic change in the modus operandi of the scheme
which occurred at 6 June 2001 by the appointment of agents to conduct the

collection of deposits and the payment of interest She witnessed the removal of the
investment files from the offices of the scheme in order to hide them from the
inspectors on the same day that the inspectors visited. She has been convicted of a
number of predicate offences listed in Schedule 1 of POCA. Her participation
through a pattern of racketeering is manifestly established.

[229] Accused 4 joined the scheme in January 1999. His involvement with the
establishment of the MP Finance Sacco and M & B Co-Operative and his
directorship in Martburt is recorded above. He was employed in the scheme as
personnel manager. Over the period November 2000 to February 2002 he signed 11
248 investment certificates in an amount in excess of R632,6million.

[230] He was, as recorded earlier, the founder and a trustee of the PT Vennote
Familie Trust. Assets which were purchased in the trust from 17 November 1999 are
recorded above. Accused 4 performed the computer functions in the scheme and
was personally involved in all the amendments and variations to the investors
certificates and related documentation on each occasion that the scheme shifted
from one entity to the next. He was accordingly employed and associated with the
enterprise and participated in the conduct of its affairs from 1999. The submission to
the contrary on behalf of accused 4 can therefore not be sustained.

[231] Accused 4 bore knowledge of the draft prospectus of Martburt. The
prospectus provided for the issuing of debentures to the sum of R10million. Accused
4 personally issued „debentures‟ to the value of R92million in Martburt. He issued
„investments certificates‟ in MP Finance Sacco without ever taking any steps to
determine whether the Sacco had in fact been registered. He knew of the instruction
given by the inspectors appointed by the SARB that no further deposits from the
public should be taken. In the face hereof he issued 659 further „investment
certificates‟ in the name of Martburt to the total value of R40,7million after 6 June
2001. He issued 8317 investment certificates in the name of M & B Co-Operative to
the value of R488,6million without ever ascertaining whether M & B Co-Operative

had been registered. He too has been convicted of a number of predicate offence
listed in Schedule 1 of POCA.

[232] In the circumstances his participation through a pattern of racketeering is
established.

Count 3 (Section 2(1)(b) of POCA)
[233] Counsel for accused 3 and 4 does not dispute that accused 3 and 4 received
or retained property directly and indirectly on behalf of the enterprise. The sole
argument advanced is that the trial court erred in finding that these appellants knew,
or reasonably ought to have known that such property derived or is derived from or
through a pattern of racketeering activity.

[234] The role of accused 3 is set out in paras 227 and 228 above. She conducted
the bookkeeping of the cash loan business from February 1999 for Finsure
Consultants. During cross-examination she was confronted with an extract from the
cash books as at 31 March 1999 which revealed:
 The total amount received from investors was R987 531.63.
 The total amount of money lent out was R87 614;
 The gross income from repayment of loans was R101 344.02.

[235] All investors received 20 per cent per month on their investments at that
stage. From the aforesaid figures it follows that the gross profit from the cash loan
business amounted to R13 730.02. It is therefore apparent from the cash books in
1999 that the enterprise was not able to sustain the payment of interest to investors.

[236] Accused 3, as a director of Madikor Twintig and Martburt, had a duty to
acquaint herself with the legal provisions governing the affairs in the area in which
the companies conducted business and to make the necessary enquiries in order to
determine that the company‟s business is conducted within the perameters

permitted. The trial court found that accused 3 conveniently failed to make further
enquiries from legal representatives or from the inspectors appointed from the SARB
when enquiries were clearly called for. In these circumstances it is not open to her to
shield behind her alleged ignorance of the pattern of racketeering. (See Stannic v
SAMIB Seven Underwriting Managers Pty Ltd 2003 [3] All SA 257 (SCA) at paras
[16]-[17]. See also S v Kasie 1963 (4) SA 742 (W) at 748H-749A)

[237] The provisions of s 1(3) of POCA finds application in determining whether
accused 3 ought reasonably to have known that the property was derived from a
pattern of racketeering. For purposes of s 1(3)(a) she is to be judged as a director of
companies engaging in deposit taking.

[238] In respect of s (1)(3)(b) she in fact had knowledge of the cash book of the
micro lending business in 1999, the financial statements of MP Finance CC for 1999
and 2000 and the extent of interest which was offered to investors and which she
and accused 4 derived from the scheme. Whilst she had no tertiary education
accused 3 had matriculated with commercial law, business economics and
accounting as subjects. In all the circumstances we find that the trial court correctly
held that accused 3 knew or ought to have known that the property received derived
from a pattern of racketeering.

[239] Accused 4 too was a director of Martburt. As the founder of the PT Vennote
Familie Trust he acted as trustee from its inception. The properties which were
purchased in the name of the trust are recorded above. He signed the contracts on
each occasion. On each occasion the money, in cash, was derived from the scheme
and on each occasion no agreement was concluded between the trust and any of
the entities. None of the loans were ever repaid.

[240] His role in the conduct of the scheme is set out in paras 229 to 230 above.

[241] Accused 4 acknowledges that prior to 6 June 2001 he became aware of a
letter addressed to the first accused by the SARB dated 25 October 2000 in which
the SARB stated that it had reason to believe that the first accused was conducting
the business of a bank without being registered as such. He took no steps to
determine the lawfulness of the business.

[242] For purposes of s 1(3) of POCA he too is to be judged as having  the general
knowledge, skill, training and experience of a director of companies engaging in the
business of deposit taking and, in respect of funds received in the trust, of a trustee
managing the affairs of others.

[243] In these circumstances the evidence is overwhelming that accused 4 knew or
ought reasonably to have known that the monies received by him as trustee derived
from a pattern of racketeering. In his case too the argument of lack of knowledge
cannot succeed.

Counts 4, 5, 6, 7 and 8, 12 and 13 (Fourth accused ─ Money Laundering)
[244] The subject matter of these convictions has been discussed earlier in respect
of the first accused. The transactions in issue occurred between 17 December 1999
and May 2001.

[245] Two arguments are advanced on behalf of accused 4. Firstly it is contended
that the trial court erred in concluding that accused 4 knew or ought reasonably to
have known that the „property‟ was derived from unlawful activity and secondly that
the court erred in concluding that the transactions had or were likely to have the
effect of concealing or disguising the nature, source or movement of the said
property or the ownership thereof.

[246] Accused 4 took up employment with MP Finance CC at a salary of R3000 pm
which he received in cash without any deduction. He had resigned his previous
employment and invested an amount of R90 000.00 which derived from his pension
payout in 1999. Within the first year his investment grew to R436 000.00. He was a
branch manager in one of the micro lending outlets and was aware that the micro
lending business was not generating profits. In August 1999 he again invested a
further R1000.00 in the scheme. According to the investment documents the
investment would grow to R9000.00 within a year. He therefore knew of the
extravagant benefits which he derived from the scheme and that the scheme offered
returns on investments which were not sustainable.

[247] In the circumstances by August 1999 he knew that the micro lending business
generated little or no profits. He knew too that the scheme offered unsustainable
returns on investments.

[248] Section 9 of the Trust Property Control Act 57 of 1988 requires of the trustee
in the performance of his duties and the exercise of his powers to act with the care,
diligence and skill which can reasonably be expected from a person who manages
the affairs of another. It is recorded earlier herein that it is not in dispute that the
monies utilised for the purchases of the immovable property in question was derived
from the scheme.

[249] For purposes of s 1(3)(a) of POCA accused 4 should be judged as a trustee
managing the affairs of another with the knowledge and exposure which accused 4
had had to the operation of the scheme prior to the relevant dates and the manner in
which the transactions occurred.

[250] The trial court correctly held that accused 4 knew or ought reasonably to have
known that the money derived from unlawful activity.

[251] The second leg of the argument advanced is predicated upon the same
misguided assumption which underlies the argument on behalf of the first accused,
namely, that the property in issue is the immovable property purchased. The
assumption is erroneous. The property in issue, as set out in the charge sheet, is the
money deriving from the scheme which was utilised for the purposes of purchasing
the properties. The manner in which the money was advanced and transactions
were concluded reveal overwhelmingly that they had, or were likely to have the
effect of concealing or disguising the nature, source or movement of the money used
to effect the purchase.

[252] The appeal against the convictions on these counts can therefore not
succeed.

Count 27 (Third and fourth accused – Contravention of s 11(1) of Banks Act)
[253] The relevant provisions of the Banks Act are set out earlier. The sole
argument advanced on behalf of accused 3 and 4 is that they did not act with the
necessary mens rea and ought therefore not to have been convicted.

[254] The argument is founded on the simplistic submission that the evidence
reveals that they believed at all times that the first accused would sort out the
problems relating to the Banks Act.

[255] There are two difficulties with this argument. Firstly, accused 3 was aware in
May 2000 when the Department of Trade and Industry visited the first accused that
the Banks Act posed difficulties to the continued conduct of the scheme. Accused 3
and 4 were present at the meeting on 6 June 2001 when the inspectors appointed by
the SARB met with the first accused. They were aware that legal representatives for
the first accused acknowledged that the scheme was contravening the provisions of
the Banks Act and they witnessed the instruction given that no further deposits were

to be taken. Accused 3 and accused 4 continued to take deposits after 6 June 2001
with full knowledge of the confession made at the meeting on 6 June. Both
proceeded to take deposits without attempting to ascertain from the inspectors
appointed by the SARB whether their difficulties had been addressed. With
knowledge of the difficulties being presented by the Banks Act they participated in M
& B Co-Operative and took deposits in the name of M & B Co-Operative without M &
B ever being registered as a co-operative. In the circumstances, even accepting their
confidence in the ability of the first accused to overcome the difficulties posed by the
Banks Act in due course, they proceeded to conduct the business of a bank in the
interim without ever ascertaining the nature of the problem posed by the Banks Act
nor enquiring whether the first accused had succeeded in her endeavours to
overcome these difficulties.

[256] The second difficulty with the argument is to be found in their directorships of
Madikor Twintig (accused 3) and Martburt (accused 3 and 4) respectively. The legal
duties of directors are fully canvassed earlier and in these circumstances it cannot
avail accused 3 and 4 to seek cover in the confidence which they had in the first
accused.

Count 31 (Fraud)
[257] The conviction relates to the meeting which occurred on 6 June 2001 with the
inspectors appointed by the SARB. During the meeting and in the presence of
accused 3 and 4 the first accused represented to the inspectors that she held in total
an amount of approximately R10million to R12million in investments and that the
said amount was committed in her micro lending business. The trial court held that
accused 3 and 4 associated themselves with this representation and failed to reveal
the true extent of the scheme nor that the micro lending business had never
generated sufficient income to pay the interest commitment which the scheme had in
fact made to investors.

[258] In truth, at the time, the scheme had taken approximately R320million in
investments, very little of which was invested in the micro lending business and

indeed the micro lending business did not generate an income remotely sufficient to
service the interest commitment made to investors. The monthly interest
commitment of the scheme as at 6 June 2001 amounted to R38,4million.

[259] Accused 3 acknowledged that she was present at the meeting. It is not in
dispute that she failed to correct the misrepresentations. Counsel for accused 3
argues that the trial court erred in holding that accused 3 was aware that the
representations were false.

[260] The functions of accused 3 in the investment division of the scheme and the
extent of investment certificates which she had personally signed prior to 6 June
2001 are not in dispute. Her obligations as a director of Madikor Twintig and Martburt
have been fully discussed.

[261] In the circumstances we find no misdirection on the part of the trial court and
are disinclined to interfere with its finding that accused 3 did know that the
investments held by the scheme as at 6 June 2001 were substantially in excess of
R10million to R12million.

[262] She knew too that the micro lending division did not generate income
remotely sufficient to service the interest commitment. In this regard her exposure to
the financial records has been recorded earlier.

[263] In these circumstances the argument on behalf of accused 3 cannot succeed.

[264] The only argument advanced on appeal on behalf of accused 4 is that he did
not know of the representations nor that they were false as it is argued that he was
not present in the meeting at the time when the misrepresentations were made. It is

common cause that he was not present throughout the duration of the meeting and
that he arrived after the meeting had commenced together with Bredenkamp, who
was present in the meeting when the representations were made. Accordingly it
occurred after he and accused 4 had arrived in the meeting. The trial court accepted
the evidence of Bredenkamp in this regard. We accordingly find no basis to interfere
with the factual finding of the trial court.

[265] In the result the appeal against the convictions on this count cannot be
sustained.

Count 47 (Fraud – Fourth accused)
[266] The circumstances material to this charge are set out earlier herein in respect
of the second accused. It relates to the representations made to Van Wyk in the
meeting on 16 April 2002, which were directed at persuading Van Wyk to sign
certain cash cheques in the name of Krion.  Accused 4 does not dispute that he was
present at the meeting on 16 April 2002, nor that the misrepresentations relied upon
by the State were made. The argument advanced on behalf of accused 4 is that he
did not really pay attention to the discussions at the meeting and that he did not
participate in the discussions and accordingly that he did not associate himself with
the representations and therefore he did not have the mens rea to commit fraud.

[267] The events leading up to the meeting on 16 April 2002 are again material for
the consideration of the argument raised. Reference has been made earlier to the
letter addressed to Van Wyk by the second accused on 10 April 2002. On 12 April
2002 accused 4 directed a letter to Van Wyk recording that Trade Stuff 2064 CC (the
close corporation managing the guesthouse) had applied for a loan in the amount of
R2million, that R300 000 was to be paid in cash and a cheque was requested from
Van Wyk in the amount of R1.7million. The letter was written on a Krion letterhead
and signed by accused 4 on behalf of the loans department. It was as a direct
consequence of this letter that Van Wyk requested the meeting on 16 April.

[268] Prior to the meeting and on 16 April accused 4 addressed a further letter to
Van Wyk now under the heading „Diverse Loans‟. In this letter accused 4 requested
Van Wyk to sign three additional cheques, one in the amount of R10 000 for alleged
accounting fees and two further cheques in the amount of R1million and R3,3million
respectively allegedly for „Corporate Loans‟. Again the letter was written on a Krion
letterhead and signed by accused 4 on behalf of the loans department. Accused 4
was reflected in the Krion prospectus as the „loans manager‟. He accordingly held a
de facto management position in Krion. He therefore owed a duty to Krion. The
purpose of the meeting was to discuss these two letters and to persuade Van Wyk to
sign the requested cheques. The representations in the letters as to the purpose of
the cheques were false.

[269] The trial judge correctly found that the argument advanced on behalf of
accused 4 cannot be sustained. We find no reason to interfere with the finding of the
trial court.

Counts 48 to 949 (contravention of s 135(3)(a) of the Insolvency Act – Third
accused); counts 950 to 3385 (contravention of s 135(3)(a) of the Insolvency
Act – Third accused); and counts 8071 to 11694 (contravention of s 135(3)(a) of
the Insolvency Act – Third and fourth accused)
[270] These three groupings of charges relates to contraventions of s 135(3)(a) of
the Insolvency Act in MP Finance CC, Madikor and Martburt respectively. The
factual background to these charges is set out earlier in respect of the first accused
(para 100).

[271] Section 135(3)(a) of the Insolvency Act prescribes that an insolvent shall be
guilty of an offence if, prior to the sequestration of his/her estates, he/she contracted
any debt of R15 000 or more or debts to the aggregate of R50 000 or more without
any reasonable expectation of being able to discharge such debt or debts.

[272] The section is to be read together with s 425 of the Companies Act. The
relevant portion of the section provides:
„If any person who is or was a director or officer of a company in respect of which a winding-
up order has been granted . . . and which is unable to pay its debts, has committed any act
or made any omission in relation to any assets . . . of such company, which act or omission,
if such act had been committed or such omission had been made by a person whose estate
was sequestrated on the date upon which the winding-up of such company commenced, . . .
would have constituted an offence under the law relating to insolvency such past or present
director or officer shall be guilty of such offence . . .‟
(Section 64 of the Close Corporation Act stipulates for these provisions of the
Companies Act to apply to Close Corporations, with necessary adaptation)

[273] The only argument advanced in respect of accused 3 in respect of counts 48
to 949 is that she could not have lacked the reasonable expectation that MP Finance
CC would be able to pay its debts as all the investments were made with „Marietjie‟
(the first accused) and not with MP Finance CC. MP Finance CC, therefore, did not
incur any liability. The argument cannot be sustained. The objective evidence
reveals that 902 separate agreements were concluded between investors and MP
Finance CC as represented by the first accused to the total value of approximately
R40.7million.

[274] Section 135(3)(a)), however provides for it to be an offence where an
insolvent (or then, in terms of s 425 of the Companies Act, a director or officer of a
company) has prior to sequestration (or liquidation in the case of a company)
contracted a debt without any reasonable expectation of being able to discharge the
debt. Accepting that accused 3 was an officer or director (in the context of a close
corporation, a member) the evidence shows that she did not sign any investment
certificate prior to November 2000. The charges relate to the period March 1998 to
17 May 2000. In these circumstances counsel for the State conceded that it has not
been shown that accused 3 contracted any debt in the name of the close
corporation. Her conviction on this count must therefore be set aside.

[275] Counts 950 to 3385 are formulated under the same legal provisions in respect
of investments made in Madikor. Again the argument raised on behalf of accused 3
is limited to the single issue raised in respect of counts 66 to 949. Again the
argument cannot be sustained. The objective evidence shows that 2 450 separate
agreements were concluded between individual investors and Madikor, as
represented by the first accused, to the total value of R131million. These
investments were made in the period 10 May 2000 to 17 January 2001. The interest
obligation of the scheme as at 14 December 2000, in the name of Madikor,
amounted to R13,5 million per month whilst the income generated from the micro
loan industry amounted to just R2 472 415 for the year. It is not in dispute that third
accused signed a number of these investment certificates and thereby contracted
debts in the name of Madikor.

[276] The knowledge of accused 3 of the cashbook of MP Finance CC in March
1999 and the financial statements for the year 1999 and 2000 is set out earlier. She
does not dispute, nor could she, that she knew that there could be no reasonable
expectation that Madikor would be in a position to pay the debts which she incurred.
She was accordingly correctly convicted of one offence relating to these charges.

[277] Counts 8071 to 11694 are formulated in terms of the same legal provisions
but in respect of Martburt. In this instance both accused 3 and 4 were convicted of
one offence. On behalf of accused 3 and 4 the same argument is advanced as was
advanced on behalf of accused 3 in respect of the earlier charges under this section.

[278] In this instance four thousand five hundred separate agreements between
investors and Martburt were concluded during the period 8 June 2001 to 31 October
2001 to the total value of R290,9million. Both accused 3 and 4 were directors of
Martburt at the time and both signed investment certificates thereby contracting
debts. They could not have had any expectation that Martburt would be in a position
to pay these debts. They were therefore correctly convicted of one offence in respect
of these charges.

Counts 20568 ─ 33265
[279] Accused 3 and 4 do not appeal against the findings under these counts.

Count 33266 ─ 36617; 50034 ─ 54533; and 59034 to 68104
[280] Accused 3 and 4 were acquitted on all of these charges. Notwithstanding their
acquittal the trial court held in the course of the judgment that accused 3 and 4 were
fully involved in the commission of these offences. In these circumstances it is
argued on behalf of accused 3 and 4 that their appeal against this finding should be
sustained.

[281] The argument is misguided. Leave to appeal has not been granted in respect
of individual findings in the course of the reasoning of the trial judge and generally
such an appeal is incompetent. An appeal in a criminal case is only against the
conviction of an accused or against the sentence imposed. There is therefore no
merit in this argument.

Counts 77176 – 86246 (contravention of s 42 of the Cooperative Act ─ Fourth
accused)
[282] Accused 4 was convicted of conducting the business under the name and
style of a co-operative and using the word co-operative in contravention of s 42 of
the Act. Although the argument is not raised on behalf of accused 4 that these
convictions constitute a duplication of convictions, we have held earlier that the
accused ought to have been convicted of only one count. This redounds to the
benefit of accused 4 too.

[283] The sole argument advanced on behalf of accused 4 is once again, that
accused 4 did not culpably conduct business under the name of M & B Co-Operative
Ltd and in fact investments were made under the name of „Marietjie‟ (the first
accused). Again the argument is misguided. The enterprise entered into 9 071
agreements in the name of „M & B Kooperasie Bpk‟ and/or M & B Co-Operative Ltd'

to the total value of approximately R541,7m. Accused 4 signed 8 285 of these
documents clearly in the name of M & B Co-Operative Ltd. The appeal on these
counts accordingly succeeds only to the extent that accused 4 is convicted of one
offence only.

Counts 144337 ─ 188910 (contravention of s 83(3)(a) of the Banks Act ─ Third
accused)
[284] Accused 3 was convicted of the contravention of s 83(3)(a) of the Banks Act.
The merits of the charges are not addressed by accused 3 in the appeal. Yet it is
submitted on behalf of accused 3 that the State, in its heads of argument at the trial,
conceded that accused 3 should be discharged on these counts. In these
circumstances counsel for accused 3 in argument requested her acquittal by the trial
court. The court nevertheless convicted accused 3. In these circumstances counsel
for accused 3 contends that the court failed to afford the defence an opportunity to
address the court on these charges and that this constitutes a gross irregularity
which entitles accused 3 to be acquitted on the charge. The State conceded that the
conviction should be set aside.

[285] We are in agreement. While the trial court is not bound by the concession
made by the State in its argument, an accused‟s right to a fair trial demands that the
trial court must at least indicate to the defense that it may not be inclined to accede
to the view of the prosecution. In the absence of such an indication defence counsel
may rightly conclude that court accepts the concession made by the prosecution. In
the result these convictions must be set aside.

Counts 197708 ─ 199747 (contravention of s 104(1) of the Income Tax Act ─
Third and fourth accused)
[286] The position in respect of the convictions on these counts is identical to that of
the second accused which is set out earlier herein. In the circumstances the
convictions should be set aside.

Counts 199748 ─ 200563 (Theft ─ Third and fourth accused)
[287] These convictions relate to the cash withdrawals and monies transferred from
the Krion bank account by internet transfer effected by accused 4 pursuant to the
authority obtained through the assistance of the second accused which is set out
earlier herein. An amount of R20 090 001,78 was withdrawn from the Krion account,
predominantly in favour of various pre-existing investors in entities or purported
entities operated by the scheme. It is not in dispute that the money was so
withdrawn nor that it was unauthorised. On behalf of accused 3 and 4 it is argued
that they did not have the mens rea to commit theft. Counsel argues that they
worked for the first accused, and it was her business and she took the decisions.
Reliant on their own evidence it is submitted on their behalf that they obeyed and
believed that the first accused would sort out the legal difficulties.

[288] Accused 3 and 4 knew that the money deposited into Krion bank account
originated from new investors to acquire shares in Krion. Accused 3 was actively
involved in the calculation of monthly interest payments to be made to investors. She
calculated the amounts to be paid from the Krion account. Accused 4 carried out the
internet transactions. They accordingly both knew that the payments were in respect
of interest due to pre-existing investors. Both accused had known since 6 June 2001
that the scheme had been prohibited from taking new investments. Both actively
participated in the continued collection of new deposits. They were aware of the
dramatic changes in modus operandi of the scheme which occurred on 6 June as
set out earlier herein. The evidence of the witness Els, which was not challenged in
cross-examination, was to the effect that accused 3 instructed the agents appointed
to pay interest due to investors from subsequent deposits received.

[289] Accused 4 had sought to persuade Van Wyk to sign a number of cash
cheques, as set out earlier herein and he was present at the meeting on 16 April
2001 where Van Wyk was persuaded to sign such cheques. In these circumstances
the conclusion is inescapable that accused 3 and 4 knew that they were acting
unlawfully. That being so it is not open to the accused to rely on instructions given by
the first accused. (See S v Shepherd & others 1967 (4) SA 170 (W) at 177H-178B; S

v Sixishe 1992 (1) SACR 624 (CkA) at 626b-c; Snyman supra at page 139). In the
circumstances the appeal cannot succeed.

Counts 200664 ─ 218636 (Commission of harmful business practise ─ Third
and fourth accused)
[290] In this instance too the simplistic argument is raised on behalf of accused 3
and 4 that they did not have the mens rea to commit the offence in question.
Accused 3 and 4 were both directors in Martburt and accused 3 was also a director
in Madikor Twintig. Accused 3 was furthermore a member in MP Finance CC. The
obligations of directors to the companies concerned has been dealt with earlier
herein and finds equal application under these charges. For those reasons the
argument cannot succeed. For the reasons set out earlier herein, however, the
convictions fall to be set aside and to be substituted by a single conviction.

Count 218637 (Reckless or fraudulent carrying-on of business of corporation –
Third and fourth accused)
[291] Accused 3 and 4 were convicted of contravening s 64(2) of the Close
Corporations Act. The material portion of s 64(1) provides:
„If it at any time appears that any business of a corporation was . . .  carried-on
recklessly, with gross negligence or with intent to defraud any person or for a
fraudulent purpose, a court may . . . declare that any person who was knowingly a
party to the carrying-on of the business in any such manner, shall be personally
liable for all or any such debts or liabilities . . .‟

[292] Section 64(2) renders it an offence for any person to knowingly be a party to
the carrying-on of the business of the corporation in such a manner.

[293] Again the sole argument advanced on behalf of accused 3 and 4 is that they
were not knowingly party to the conduct of the business of MP Finance CC in a
reckless, gross negligent or fraudulent manner in that the investments were not

made in the close corporation, but in the name of „Marietjie‟. For the reasons set out
in paragraph 273 above the argument cannot succeed.

[294] Accused 3 was a member of the close corporation. She had an investment in
the scheme and was aware of the interest rates paid at the time. She referred other
investors to the scheme. She signed the financial statements of the close
corporation and kept the cash books of the corporation. She was therefore aware of
the financial position of the close corporation. In the circumstances we consider that
it was correctly held that she was knowingly a party to the conduct of the business of
the close corporation. It is not in dispute (nor can it be) that the business was carried
on for fraudulent purpose. In the circumstances we consider that accused 3 was
correctly convicted.

[295] Accused 4, however, was not a member of the close corporation. He took up
employment with the close corporation in January 1999. After 3 months training he
became the manager of one of the micro lending outlets. He later became aware
that his branch of the the micro lending business generated little or no income. He
did have an investment in the scheme and knew of the interest generated by his
investment. That constitutes the material evidence against him. Counsel for the
State was constrained to concede during argument that there was insufficient
evidence to have justified the conclusion that he was knowingly a party to the
carrying on of the business of the close corporation in a reckless or fraudulent
manner.

[296] The trial court approached this charge on the basis that the second accused,
3, 4, 5 and 6 were fully involved in the business of the first accused which was
comprised of the unlawful taking of deposits from the public. This conduct she found
was fraudulent and their participation therein persisted at a time when they knew
they were acting fraudulently.

[297] This charge, however, relates only to the business of the close corporation.
The business was conducted through the vehicle of the close corporation until May
2000. The participation upon which the trial court appears to have relied is
participation in the scheme which, in the case of accused 4, occurred much later.
The State‟s concession made during argument is therefore fair and the conviction of
accused 4 on this count must be set aside.

Count 218638, 218639 and 218682 (Accused 3 and 4 ─ contravention of s
424(3) of the Companies Act ─ reckless trading in Madikor Twintig, Martburt
and Krion respectively.)
[298] The provisions of s 424 are set out earlier herein in respect of the second
accused. In respect of these convictions too the refrain by counsel on behalf of
accused 3 and 4 persists that the evidence establishes that the business was not
conducted in the name of Madikor Twintig, Martburt or Krion but in the name of
„Marietjie‟. For reasons fully set out earlier herein the argument in respect of Madikor
Twintig and Martburt is misplaced. Accused 3 was a director of Madikor Twintig and
both accused 3 and 4 were directors of Martburt. Both accused 3 and 4 signed
investment certificates in respect of Madikor Twintig and in Martburt. They were
therefore both actively engaged in the business of Madikor Twintig and Martburt.
Neither Madikor Twintig nor Martburt generated any meaningful income from which
the interest on the deposits taken by accused 3 and 4 could be serviced. Accused 3
was convicted in respect of counts 218638 and 218639 whilst accused 4 was
convicted of the latter count. We are accordingly of the view that accused 3 and 4
were correctly convicted.

[299] Neither accused 3 nor accused 4 were directors in Krion. Accused 4 was,
however, the manager of the loans department in Krion. Their participation in the
reckless or fraudulent conduct of the affairs of Krion is set out in paras 288 to 289
above. For these reasons their appeal on count 218682 cannot succeed.

Count 218648 (Contravention of the provisions of s 75(1)(a) of the Income Tax
Act ─ Third accused)
[300] Accused 3 was convicted of the contravention of the provisions of this section.
She does not appeal against this conviction.

Count 218683 (Fourth accused ─ theft)
[301] Accused 4, together with the first accused, was convicted of theft in the
amount R908,5 million. The State conceded that the amount of R908,5 million had
not been proved. The figures are discussed earlier herein in respect of the first
accused where it was concluded that the first accused ought to have been convicted
of theft in the amount of R91,1 million. On behalf of the State it is argued that the
conviction of accused 4 in such an amount should also be confirmed.

[302] The only argument raised by counsel on behalf of accused 4 is yet again that
accused 4 was merely employed by the first accused, did not take decisions, merely
carried out instructions and always believed that the first accused would sort out the
difficulties. This argument we have already rejected. In the result the appeal in
respect of this count must be dismissed.

Count 218660 and 218661 (Contravention of Section 104(1)(a) of the Income
Tax Act ─ Third accused)
[303] In argument before us counsel for accused 3 indicated that he had omitted in
his heads of argument to deal with counts 218660 and 218661. These were counts
of fraud arising from her signature to the financial statements of MP Finance CC for
the tax years 1999 and 2000 respectively. It is not in dispute that the financial
statements grossly misrepresented the financial position of the close corporation nor
that accused 3, as member of the close corporation, signed off the statements.
Accused 3 contended, however, that she did not verify the contents of the
statements before signature and merely signed same, without reading the
documents because the first accused asked her to sign. The trial court held that she
failed to take reasonable steps to verify the content of the statements before signing.
At the same time the trial judge concluded that the State had failed to „prove all the

elements‟ against accused 3. In the context of the judgment „all the elements‟ clearly
relates to elements of the crime of fraud.

[304] On behalf of accused 3, it is argued that by finding that the State had failed to
prove all the elements the trial judge intended that she be acquitted. In proclaiming
the verdict however, the court convicted accused 3 on the alternative count, which
was formulated under s 104(1)(a) of the Income Tax Act 58 of 1962, (which was in
force at the time).

[305] The alternative charge alleged that the accused had inter alia, with intent to
assist another to evade tax, signed a tax return submitted to SARS without having
reasonable grounds to believe that the return was true. The express finding of the
trial court that accused 3 had failed to take reasonable steps to verify the content of
the financial statements, which were submitted to SARS, seem to us to have justified
the conviction on the alternative count. The belated argument on behalf of accused 3
is therefore without merit.

Sentence ─ Third accused
[306] Accused 3 too has enjoyed limited success in the appeal against her
convictions. In her case too the success enjoyed on the merits has no impact on the
effective sentence imposed. Accused 3 was sentenced to 15 years‟ imprisonment in
respect of each of counts 2 and 3 and in each case 3 years of the 15 was
conditionally suspended. She was accordingly sentenced to an effective term of
imprisonment of 12 years on each count and it was ordered that the sentences
should run concurrently. All the remaining sentences imposed were ordered to run
concurrently with the sentences imposed in counts 2 and 3, thus resulting in an
effective term of imprisonment of 12 years.

[307] Counsel for accused 3 does not contend for any misdirection on the part of
the trial judge. Rather, it is argued that the sentence imposed is shockingly
inappropriate in all the circumstances.

[308] Again the trial court has given careful consideration to the personal
circumstances of accused 3 and to the interest of society having regard to the nature
and severity of the offences in issue. No purpose could be served by repeating same
herein. The maximum sentences prescribed by the legislature in respect of the
convictions under POCA has been recorded earlier. These offences are very serious
offences and the predicate offences of which she has been convicted include 816
counts of theft, reckless or fraudulent conduct of Madikor Twintig, Martburt and
Krion, contraventions of the Banks Act and the Unfair Business Practices Act.

[309] In matters of serious commercial crimes such as those involved in the present
instance the personal circumstances of the accused must necessarily yield to the
interest of society. Under these circumstances we do not consider the sentence
imposed to be so severe as to justify the intervention by this court.

Sentence ─ Fourth accused
[310] Accused 4 has similarly enjoyed limited success in the appeal against his
convictions. In his case too the convictions and sentences which are to be set aside
does not affect the effective sentence imposed upon him. The second accused was
sentenced to 15 years imprisonment each on the counts 2 and 3. The terms of
imprisonment in respect of counts 2 and 3 were ordered to run concurrently and all
the sentences imposed on the remaining counts of which he was convicted were
ordered to run concurrently with the sentences imposed on count 2 and 3. He was
accordingly sentenced to an effective 15 years‟ imprisonment.

[311] Accused 4 was convicted of theft of R91,1million (count 218683), however, no
sentence was imposed. Generally it is undesirable for a court of appeal to impose
sentence without reference to the trial court. In the present instance, however,
thirteen years have already lapsed from the time of the initial arrest of the appellants.
A reference back to the trial court would result in a further delay which, on the facts
of the matter would not serve the interest of justice and cannot be justified.

[312] The offence carries with it a discretionary minimum sentence of 15 years
imprisonment. The trial judge considered the facts of the case and concluded that
substantial and compelling circumstances do exist which justify a deviation from the
prescribed sentences. Hence the sentence of 10 years imprisonment imposed in
respect of count 47. We accept her finding in this regard. The trial court further
convicted the first accused of the same offence (theft) and imposed a sentence of 10
years imprisonment.

[313] Although the trial court convicted the first accused and 4 of theft of
R908million we have held that they ought to have been convicted of R91,1 million.
The sentence imposed in respect of the first accused remains unaltered however. In
this matter parity of sentence dictates that accused 4 too should be sentenced to 10
years‟ imprisonment which it is ordered will run concurrently with the sentence
imposed in respect of counts 1 and 2.

[314] On behalf of fourth accused too it is not submitted that the trial court has
committed a misdirection. It is argued that the effective term of imprisonment, 15
years, is so severe as to induce a sense of shock.

[315] The offences of which he has been convicted are numerous and serious. The
predicate offences of which he was convicted and which give rise to his conviction
on counts 2 and 3 include offences of money laundering (s 4 of POCA) to the value
of approximately R8 million, two counts of fraud and eight hundred and seventeen
counts of theft in an amount which exceeds R100 million.

[316] The trial court has given recognition to the severity of the offences and has
carefully weighed this against his personal circumstances. Again, no purpose would
be served by repeating same herein. Again the nature of the offences demands that
personal circumstances yield to the interest of society. In the result we do not
consider that there is a striking, startling or disturbing disparity between the sentence

imposed by the trial court and that which we would have imposed. The appeal
against sentence must therefore fail.

Fifth accused
Count 3
[317] This is a contravention of s 2(1)(b) of POCA, ie receiving or retaining property
on behalf of an enterprise, while accused 5 knew or ought reasonably to have
known, that such property is derived from a pattern of racketeering. According to
accused 5 he was aware that the first accused conducted a business in which she
accepted investments and paid interest thereon and was involved in a micro lending
business, but he had no further knowledge of the nature thereof, nor was he involved
in its day to day affairs. The evidence, however, paints a different picture. He had a
20 per cent interest in MP Finance and in due course acquired a 20 per cent
member‟s interest in MP Finance CC. He was also a director of Madikor from 9 May
2000 and referred to as the „sales director‟ of Marburt in its draft prospectus. He
executed documentation on behalf of those entities and signed investment
certificates to the value of R9 837 million. He assisted in the conduct of the business
of the scheme as is shown by his presence at Madikor building, the main place of
business of the scheme. He was also involved in removing investors‟ files from
Madikor Building. In addition, he introduced potential investors to the first accused,
thereby earning commission.

[318] The receipt and retention of money from investors on behalf of the scheme,
as we have found earlier, was derived through a pattern of racketeering activity by
virtue of the contravention of s 11(1) of the Banks Act; s 135(3)(a) of the Insolvency
Act and para 2 of Notice 1135 of 1999 promulgated in terms of s 12(6) of the
Consumer Affairs (Unfair Business Practices) Act 71 of 1988.

[319] Having regard to the nature and extent of the involvement of accused 5,
detailed above, we cannot fault the conclusion of the court a quo that accused 5
knew or ought reasonably to have known that the investments so received or
retained were derived from or through a pattern of racketeering activity, in
contravention of s 2(1)(b) of POCA.

[320] Therefore the appeal of accused 5 against his conviction on count 3 should
fail.

Count 27
[321] Section 11(1) of the Banks Act is clear; no person may conduct the business
of a bank unless such person is a public company and is registered as a bank. The
business of a bank is defined as, inter alia, the acceptance of deposits from the
general public. Accused 5, as shown earlier, was not only actively involved in
securing investments from the public, but was aware at all times that this was the
very nature of the business of the scheme conducted through its different entities.
He was a member of MP Finance CC and a director of Madikor Twintig, and
therefore duty bound to take all reasonable care to establish whether or not the
business of the scheme was permitted by law. See S v De Blom 1977 (3) SA 513 (A)
at 532G. This he woefully failed to do and, in our view, the court a quo correctly
found him guilty on count 27. Therefore the appeal of accused 5 against his
conviction on count 27 has to fail.

Counts 144337 – 188910
[322] At the trial the State, during argument, conceded that accused 5 ought to be
acquitted on these counts. However, the trial judge, without affording accused 5 an
opportunity to address her on any doubt that she may have had in acquitting
accused 5, found him guilty and proceeded to impose sentence on these counts.
The State submitted, correctly, that the appeal of accused 5 against his conviction
and sentence on these counts should succeed, as this failure of the court a quo
constituted a serious infringement of his constitutional right to a fair trial.

Counts 200664 – 218636
[323] Accused 5 submits that he merely worked for the first accused in her
business, believing that she had sorted out any problems related to the lawfulness
thereof, and therefore did not have the necessary mens rea to commit the offence of
conducting a multiplication scheme which paid interest at an annual rate of more
than 20 per cent in excess of the REPO rate. We have already found that accused 5

indeed played an active role in the conduct of the business of the scheme and are in
agreement with the finding of the court a quo that, in the circumstances, it is clear
that accused 5 had full knowledge of the fact that this exorbitant rate of interest by
far exceeded that paid by commercial banks on deposits made by them. In addition,
even if accused 5 was not aware of the unlawfulness of this conduct (which we find
difficult to believe, seeing that the average rate of interest paid to investors at that
stage was 10 per cent per month ─ as opposed to a maximum REPO rate of 14,91
per cent per annum), he dismally failed to take any steps to determine whether or
not this was permitted by law. (Cf S v De Blom, supra).

[324] It follows that the appeal of accused 5 against his conviction on these counts
should fail.

Count 218637
[325] Section 64(2) of the Close Corporation Act 69 of 1984 declares the reckless,
grossly negligent or fraudulent carrying-on of the business of a close corporation, to
be an offence. It is common cause that, at the relevant time, accused 5 was a
member of MP Finance CC and involved in its business, which entailed the conduct
of an unlawful multiplication scheme. We have already dealt with the manner in
which the business had been conducted, and have to agree with the court a quo that
it was „om die minste te sê roekeloos‟.

[326] Counsel for accused 5 submitted that it was the first accused, and not him,
who had conducted the business of this corporation, but we have already held that
there is no merit in this line of argument.

[327] Therefore, the appeal of accused 5 against his conviction on this count should
fail.

Counts 218638; 218639 and 218682
[328] Section 424(3) of the Companies Act 61 of 1973 declared the reckless or
fraudulent conduct of the business of a company to be an offence. It is common
cause that, at the relevant time, accused 5 was a director of Madikor Twintig and the
„sales director‟ of Martburt. He was also involved in the administration of the

business of Krion. The business of these companies was, as in the case of the other
entities of the scheme, the unlawful conduct of a multiplication scheme in which
accused 5 participated. There is no doubt, as held by the court a quo, that accused 5
was aware of the unlawfulness of the business of the scheme or, at least, that such
business was conducted in a reckless manner, with accused 5 being an active
participant.

[329] The submission on behalf of accused 5, that he was not involved in the
conduct of those corporate entities, is clearly devoid of any merit.

[330] Therefore, the appeal of accused 5 against his convictions on these counts
should fail.

Count 218653
[331] The State concedes that the evidence does not support the conviction of
accused 5 on the main count of contravening s 104(1)(d) of the Income Tax Act.
However, it was submitted on behalf of the State that the alternative charge to the
main count, namely that of failing to submit a tax return for the 2001 year of
assessment, in contravention of s 75(1)(a) of the Income Tax Act, was proved by the
evidence of Mr Pierre Moolman of SARS, which showed that no tax return was
submitted by accused 5 for the 2001 tax year. Counsel for accused 5 has not
addressed us in regard to this count and there is, in our view, no basis for a finding
that the trial judge misdirected herself in convicting accused 5 on this count. The
appeal should according fail.

Counts 218660 and 218661
[332] On these two counts accused 5 was convicted on the alternative charge of
contravening s 104(1)(a) of the Income Tax Act, in being instrumental in the making
of false statements in the income tax returns submitted on behalf of MP Finance CC
for the tax years 1999 and 2000. In this regard counsel for the fifth accused, who
also appeared for the third accused, repeated the argument on his behalf that we
have considered in paras 303 to 305 above. For these reasons there is no basis why
the appeal against these convictions should not be dismissed.

Sentence ─ Fifth accused
[333] This accused was found guilty of only one contravention of POCA, namely
s 2(1)(b) thereof. As mentioned previously, a maximum sentence of a fine of R1
billion or imprisonment for life is prescribed. The trial court sentenced accused 5 to
ten years‟ imprisonment for the contravention of s 2(1)(b) of POCA of which five
years were suspended for a period of five years. In respect of the remainder of the
convictions accused 5 was sentenced to various terms of imprisonment ranging from
one year to 3 months. The court a quo ordered that all the sentences are to be
served concurrently with the sentence imposed for the contravention of s 2(1)(b) of
POCA. In the result accused 5 was sentenced to an effective term of five years‟
imprisonment.

[334] Counsel for accused 5 submitted that this effective sentence is shockingly
inappropriate entitling this court to interfere. Counsel suggested that consideration
should be given to an alternative sentence of imprisonment under s 276(1)(i) of the
Criminal Procedure Act. It was also suggested that the lesser role played by accused
5 in the conduct of the scheme and the overbearing influence of his mother, the first
accused, are factors to be taken into account, as well as the fact that he suffers from
dyslexia.

[335] The trial judge took full account of all the mitigating factors in favour of
accused 5, including those mentioned above. This moved her to impose an effective
sentence of 5 years‟ imprisonment. In our view there is no room for a finding that the
trial judge acted unreasonably in arriving at the sentence. She had to weigh these
mitigating factors against the active, although limited role played by accused 5 in the
conduct of the business of the scheme. In this regard it should be borne in mind that
he personally signed investment certificates to the value of nearly R10 million. He
was also instrumental in removing the investors‟ files from Madikor building when the
authorities stepped in and directed that the activities of the scheme should cease. In
our opinion it cannot, having regard to all the relevant circumstances, be said that
the sentence imposed by the trial court induces a sense of shock. On the contrary,
had we been the court of first instance, we would have been inclined to impose an
effective sentence of imprisonment of at least five years.

[336] We bear in mind that, as indicated above, the conviction and sentence of
accused 5 on counts 144337-188910 are to be set aside. However, the sentence
imposed in respect thereof is only three months‟ imprisonment which had to be
served concurrently with the effective sentence of 5 years‟ imprisonment imposed
under s 2(1)(b) of POCA. Therefore the setting aside of this sentence has no impact
upon the effective sentence imposed upon accused 5.

[337] In the result the appeal of accused 5 against his effective sentence of five
years‟ imprisonment should fail.

Sixth accused
Count 2
[338] Counsel for accused 6 submitted that she ought to have been acquitted on
the charge of contravening s 2(1)(e) of POCA. He argued that, although accused 6
may have been associated with the first accused, she was not associated with the
scheme or enterprise conducted by the first accused, nor did she participate in the
operation or management of the enterprise itself. In the latter regard counsel
submitted that s 2(1)(e) of POCA requires involvement in the „rigtinggewende
optrede of werksaamhede van die onderneming‟. For this submission reliance was
placed on Reves v Ernst & Young 507 US 170 (1992) where it was held that to
conduct or participate in the conduct, directly or indirectly, of an enterprise‟s affairs
(as required by s 1962(c) of RICO, the counterpart of s 2(1)(e) of POCA),
participation „ in the operation or management of the enterprise itself‟ is required
which entails that „some part in directing the enterprise‟s affairs is required‟.

[339] However, as emphasised by counsel on behalf of the State, it should be
borne in mind that Reves concerned the civil RICO liability of an independent
accounting firm which rendered accounting services in terms of a contractual
relationship with an alleged corrupt co-operative. The accountants were not involved
in the decision-making process of the co-operative, but allegedly failed to perform
their accounting obligation with the necessary care and skill. It was held that RICO
civil liability did not attach to the accountants as they were not part of the decision
making process through which the co-operative‟s affairs were conducted. It should

be immediately apparent that the facts in Reves differ markedly from those in the
instant matter where all the accused, including accused 6, were part and parcel of
the corrupt enterprise and themselves engaged in criminal activities, thereby
furthering the objectives of the enterprise.

[340] We should add that, post-Reves, the United States courts have consistently
made it clear that an accused need not be part of the enterprise‟s management or
control group to be criminally liable under s 1962(c) of RICO. In United States v
Oreto 37 F.3d 739 (1994) (US Court of Appeals, First Circuit) para 64, eg it was
cautioned that:
„Reves is a case about the liability of outsiders who may assist in the enterprise‟s affairs.
Special care is required in translating Reves‟ concern with “horizontal” connections ─
focusing on the liability of an outsider adviser ─ into the “vertical” question of how far RICO
liability may extend within the enterprise but down the organizational ladder.‟

Further, in para 66 the following was said:
„We think Congress intended to reach all who participate in the conduct of that enterprise,
whether they are generals or foot soldiers. . . . The Statute requires neither that a defendant
share in the enterprise‟s profits nor participate for an extended period of time, so long as the
predicate act requirement is met.‟

[341] As we have emphasised above, a contravention of s 2(1)(e) of POCA is
proved where it is shown that the accused has participated in the conduct of an
enterprise‟s affairs through a pattern of racketeering activity, ie by committing two or
more predicate offences listed in Schedule I of POCA. There is no requirement that,
for a contravention of s 2(1)(e) of POCA, one must participate in the operation or
management of the enterprise itself. There is accordingly no justification for the
submission that s 2(1)(e) of POCA requires involvement in the „rigtinggewende
optrede of werksaamhede van die onderneming‟.

[342] The further submission that the scheme and its business was that of the first
accused and that accused 6 did not participate in its affairs, but merely concerned
herself with her own affairs, is similarly without justification. It is common cause that
accused 6 was actively involved in the conduct of the affairs of the scheme. She
appears to have been the favourite of the first accused at least until the second

accused appeared on the scene. Accused 6 was one of the first investors in the
scheme and subsequently canvassed investors in her capacity as a highly
successful agent. In May 2000 she was appointed as a director of Madikor. In the
temporary absence of the first accused, she acted as manager of the business of the
scheme, with signing powers on the cheque account and was from early on allowed
to sign investment certificates. She became so heavily involved in the administration
of the scheme that she had to employ additional staff members to assist her. The
first accused promised her that she would be appointed as a director of Martburt and
although that did not happen, she was identified as one of the directors on Martburt‟s
letterhead.

[343] The evidence shows that the first accused kept accused 6 abreast of
developments, including the problems experienced with the authorities regarding the
nature of the business of the scheme. Her standing in the hierarchy as second in
charge of the business of the scheme, is confirmed by the fact that, when it was
decided to hide investors‟ files from PWC, she was instrumental in hiding same, also
at the farm of her and accused 7. There she continued to operate the business of the
scheme. It is common cause that, during her tenure, she personally signed 521
investment certificates to the value of more than R28,1 million. During the period
February 2000 to October 2000 she was the only person, apart from the first
accused, who personally signed investment certificates. She also assisted with the
administration of payments to be made to investors. To this one should add the
evidence of the first accused, that she appointed the second accused to 6 as
directors of the „oorkoepelende onderneming‟ to assist her in operating the scheme.

[344] In this manner accused 6 actively participated in the scheme‟s affairs and
thereby furthered the objectives of the scheme. It is clear to us that she shared a
common business objective with the first accused and the other accused, who at
different stages played different roles in conducting the business of the scheme. In
so doing, accused 6 personally committed the predicate offences which make up the
pattern of racketeering activity. These crimes are dealt with more fully hereunder and
include contraventions of the Banks Act, Insolvency Act, Unfair Business Practices
Act, Close Corporations Act, Companies Act and common law crimes.

[345] In our opinion the above clearly shows the association of accused 6 with the
scheme by directly participating in its conduct through a pattern of racketeering
activity. However, counsel for accused 6 further submitted that accused 6 ought to
have been acquitted by virtue of the failure of the State to prove that she had the
necessary intention in the form of dolus to contravene s 2(1)(e) of POCA. There is
no merit in this submission, as it seeks to unjustifiably introduce an additional mens
rea requirement for a contravention of s 2(1)(e) of POCA. We reiterate what has
been said before, that, once it is proved that an accused has participated in the
conduct of an enterprise‟s affairs through a pattern of racketeering activity, ie by
committing two or more predicate offences listed in Schedule 1 of POCA, he or she
is guilty of a contravention of s 2(1)(e) of POCA. This the State has proved in regard
to accused 6 and there is no need for a further inquiry as to an additional mens rea
requirement over and above the mens rea required by the predicate offences
committed by her.

[346] We therefore conclude that the State has, beyond reasonable doubt, proved
the elements under s 2(1)(e) of POCA and the appeal of accused 6 against her
conviction on count 2, should fail.

Count 3
[347] The crux of the argument on behalf of accused 6 on this count of
contravening s 2(1)(b) of POCA, is that she ought to have been acquitted as the
State had failed to prove dolus and actual knowledge on her part that the money
received from investors were derived from or through a pattern of racketeering
activity. This submission overlooks the express wording of s 2(1)(b)(ii), that the
offence is committed where an accused knows or ought reasonably to have known
(own emphasis) that the property received or retained on behalf of an enterprise was
derived from or through a pattern of racketeering activity.

[348] As mentioned earlier, the receipt and retention of money from investors on
behalf of the scheme was derived from or through a pattern of racketeering activity,
including the contravention of various statutory provisions and the commission of the
common law crimes of theft and fraud. Accused 6 personally committed some of
these offences, and we agree with the conclusion of the court a quo that, having

regard to the evidence as a whole, the State has proved beyond reasonable doubt
that accused 6 knew or ought reasonably to have known that the investments so
received or retained, were derived from or through a pattern of racketeering activity.

Counts 15 and 17-26
[349] Accused 6 is the only accused convicted of these contraventions of s 4 of
POCA (money laundering). It is common cause that the proceeds derived by
accused 6 from her participation in the activities of the scheme, namely commission
on investments procured by her and interest or „dividends‟ earned on her own
investments, amounted to some R27 million during the period 15 June 2001 to
3 May 2002. This enabled her to purchase immovable properties in the name of
three trusts, ie the Anja, Izarich and Jakia trusts. This income of accused 6 was
derived from the unlawful activities of the scheme which conducted its affairs through
a pattern of racketeering activity.

[350] Having regard to the pivotal position occupied by accused 6 in the
management of the business of the scheme, we have no doubt that the court a quo
correctly held that she knew, or at least ought reasonably to have known, that the
money so received by her formed part of the proceeds of the unlawful activities of
the scheme, and that she therefore knew, or ought reasonably to have known, that
the acquisition of these properties through the trusts, would have the likely effect of
disguising the unlawful source of the money. As pointed out by the court a quo, there
was no documentation, such as loan agreements, disclosing the source of the funds
utilised to purchase the properties. Therefore, the only reasonable inference is that
the purchase of the properties in the name of the trusts was designed to conceal the
illegal source of the funds. This conclusion is underscored by the fact that accused
6, in her affidavit filed in her sequestration proceedings, falsely stated that her
income of approximately R2 million together with her husband‟s farming income had
been utilised to pay the total purchase prices, whilst failing to disclose that her
income received through the unlawful activities of the scheme during that year
exceeded R27 million, which was used to purchase these properties. In the result
the appeal of accused 6 against her convictions on these counts should fail.

Count 27
[351] Counsel for accused 6 conceded that the constituent elements of this count,
ie conducting the business of a bank without being registered as such, had been
proved. It is common cause that accused 6 was actively involved in conducting the
business of a bank by taking deposits from members of the public. It is also clear
from the evidence that accused 6 failed to take any steps, or at least any adequate
steps, to establish whether or not this business of the scheme was permitted by law.
See S v De Blom 1977 (3) SA 513 (A) at 532G.

[352] Counsel for accused 6, however, submitted that her conviction on count 27
constituted an undue duplication of convictions, having regard to her conviction on
charges of the contravention of the Unfair Business Practices Act 71 of 1988, ie
counts 200664 – 218636, referred to hereunder. In our view this submission has no
merit. As pointed out by counsel for the State, the elements of conducting the
business of a bank without being registered as such, in contravention of s 11(1) of
the Banks Act, differ from the operation of, or participation in, a multiplication
scheme in contravention of paragraph 2 of Notice 1135 promulgated in terms of the
Unfair Business Practices Act. Also, as reiterated in S v Whitehead and Others
2008(1) 431 (SCA), „a single act may have numerous criminally relevant
consequences and may give rise to numerous offences‟. Therefore, the appeal of
accused 6 against her conviction on count 27 should fail.

Counts 950-3385
[353] Accused 6 was found guilty on one count of contravening s 135(3)(a) of the
Insolvency Act, read with s 425 of the 1973 Companies Act, by contracting debts on
behalf of Madikor Twintig prior to its liquidation without there being a reasonable
expectation of discharging such debts.

[354] It will be recalled that accused 6 was a director of Madikor Twintig. The
undisputed evidence of Mr Strydom of PWC shows that, during the period 10 May
2000 to 17 January 2001, Madikor Twintig incurred debts by accepting investments
to the value of R131 million, while its liability for interest to be paid to investors, as at
14 December 2000, amounted to R13,5 million per month. Nobody, and in particular

not the directors of Madikor Twintig, could reasonably have believed that the
company would have been able to discharge the debts owed to its investors.

[355] Accused 6 personally signed 104 investment certificates issued by Madikor
Twintig to the value of more than R7,4 million. The certificates confirmed that the
investments were loans to Madikor and were, therefore, debts contracted by
accused 6 on behalf of Madikor. It follows that the submission on behalf of accused
6, that she was not aware that debts were contracted by receiving these
investments, is devoid of any merit.

[356] The further submission that accused 6 did not have any knowledge of the
financial position of this entity, similarly has no merit, particularly in view of the
central role played by accused 6 in her capacity as a director, in the conduct of the
affairs of Madikor Twintig.

[357] We are further of the view that the reasons already furnished in dealing with
count 27 above, apply, mutatis mutandis, to the belated defence of an undue
duplication of convictions raised by accused 6 in respect of these counts.

[358] We therefore conclude that the appeal of accused 6 against this conviction
should also fail.

Counts 8071-11694
[359] Accused 6 was found guilty on one count of contravening s 135(3)(a) of the
Insolvency Act, read with s 425 of the 1973 Companies Act, by contracting debts on
behalf of Martburt prior to its liquidation, without there being a reasonable
expectation of Martburt discharging these debts. Accused 6 does not deny that she
was actively involved in the conduct of the business of the scheme, which included
the entity Martburt. As mentioned earlier, she not only canvassed investments, but
effectively partook in the management of the day to day business of the scheme,
and to facilitate this role she had signing powers on the cheque account. She also
does not dispute that Martburt incurred debts prior to its liquidation in circumstances
where there was no reasonable expectation of discharging same.

[360] However, what was submitted on behalf of accused 6, is that she was, at the
relevant time of the contracting of these debts on behalf of Martburt, not a director of
Martburt; therefore the State has failed to prove that she falls within the ambit of s
425 of the 1973 Companies Act. It will be recalled that, although the first accused
undertook to have accused 6 appointed as a director of Martburt, no formal
appointment was made.

[361] It has to be borne in mind that s 425 of the 1973 Companies Act did not only
include a director of a company, but „any person who is or was a director or officer of
a company . . .‟. The indictment in respect of these counts refers to accused 6 as a
director and/or officer („direkteur en/of beampte‟) of Martburt. In s1(c) of the 1973
Companies Act, an „officer‟ of a company was defined as including „any managing
director, manager or secretary thereof‟. It is so that accused 6 was not formally
appointed as a director or manager of Martburt, nor did she receive a salary for
services rendered to this company, but for all intents and purposes she was a de
facto manager of Martburt. This is convincingly shown by the evidence, including
accused 6‟s own evidence.

[362] Jennifer A Kunst, Professor Piet Delport and Professor Quintus Vorster (eds)
Henochsberg on the Companies Act 61 of 1973 (Service Issue 33, 2011), vol 1 at
921, states, with reference to R v Kaloo 1941 AD 17 at 19-21, that in the context of s
425 „officer‟ includes one who was appointed as an officer and one who was an
officer de facto. In Kaloo the de facto manager of a company was also prosecuted
for a contravention of s 135(3)(a) of the Insolvency Act and this court held, with
regard to s 185 of the Companies Act 46 of 1926 (worded similarly to s 425 of the
1973 Companies Act), that a defence based on the fact that he had not been
formally appointed  as a manager, had no merit. The court held that s 185 (now s
425) applies both to persons who were appointed as managers or officers and to
persons who were managers or officers de facto.

[363] We therefore conclude that the appeal against the conviction of accused 6 on
this count, should fail.

Counts 54534-54542 and 59034-59303
[364] Some confusion has arisen as to whether the court a quo had found accused
6 guilty on these counts, but, as pointed out by counsel on behalf of the State, the
court a quo did actually acquit accused 6 on these charges and no sentence was
imposed in respect thereof. A typographical error in listing the counts on which
accused 6 had been acquitted has given rise to the confusion, but no more need to
be said in this regard.

Counts 144337-188910
[365] The State has correctly conceded that, as in the case of accused 5, the
appeal of accused 6 against her conviction and sentence on these counts
(contraventions of s 83(3)(a) of the Banks Act) should succeed, by virtue of the
infringement of her constitutional right to a fair trial.

Counts 200664-218636
[366] Counsel for accused 6 submitted that these counts of contravening para 2 of
Notice 1135 of 1999, promulgated under Act 71 of 1988 ought to have constituted
one single count and not 17972 separate counts.

[367] We have, in dealing with the appeal of the first accused (see paras 127-128
above), furnished our reasons why an accused ought to be convicted of only one
offence of contravening the provisions of Notice 1135 of 1999, when operating a
multiplication scheme offering an effective annual interest of 20 per cent and more
above the REPO rate to a number of investors on different dates.

[368] In the result we find that, in respect of the counts under this rubric, the first
accused ought to have been convicted on one count only and not on 17972
individual counts.

Count 218637
[369] Accused 6 was convicted in her capacity as a party who knowingly carried on
the business of MP Finance CC in a reckless, grossly negligent or fraudulent
manner, in contravention of s 64(2) of the Close Corporations Act 69 of 1984. It is
common cause that accused 6 contracted debts in the name of MP Finance CC at

an effective interest rate ranging from 60 per cent to 791 per cent per annum. There
is no doubt that these returns could never be sustained. By 13 May 2000, the close
corporation had contracted debts to the total value of approximately R37 million with
an interest commitment of more than R4 million per month. We have earlier
described the active involvement of accused 6 in the affairs of the entities through
which the scheme was conducted, and there is no doubt that such affairs, including
that of MP Finance CC, had been conducted in a grossly reckless manner. As
pointed out by counsel on behalf of the State, the business of MP Finance CC was
carried on recklessly in contravention of s 11(1) of the Banks Act, s 135(3)(a) of the
Insolvency Act and para 2 of Notice 1135 promulgated under Act 71 of 1988.

[370] There is, in our view, no merit in the appeal of accused 6 against her
conviction on this count.

Counts 218638 and 218639
[371] These convictions of contravening s424(3) of the 1973 Companies Act
(reckless or fraudulent conduct of the business of a company) related to Madikor and
Martburt.

[372] It is common cause that accused 6 was a director of Madikor and, as we have
repeatedly emphasised, she was actively involved in the conduct of the business of
this company and Martburt. She was, according to the evidence, knowingly a party
to the carrying on of the business of these companies in a reckless manner, within
the context of this statutory provision.

[373] Counsel for accused 6 submitted that she was only in name a director of
Madikor. However, in our view, the evidence as already dealt with hereinbefore,
shows that her contribution to the business of this company was substantial. This is
underscored by the fact that she had personally signed 104 investment certificates in
Madikor to the total value of more than R7,4 million. She was similarly heavily
involved in the conduct of the business of Martburt; in fact she was reflected as
being a director on the company‟s letterhead. This involvement is borne out by the
fact that she had signed 27 investment certificates in the name of Martburt to the
value of some R1,2 million.

[374] We further conclude that, as in the case of MP Finance CC, the business of
the two companies here concerned was carried on in a grossly reckless manner.

[375] Therefore the appeal of accused 6 against her conviction on these counts
should fail.

Count 218682
[376] The State conceded that there is insufficient evidence to sustain the
conviction of accused 6 on this count, ie the reckless conduct of the business of
Krion. In our view this concession was correctly made, as the evidence does not
show that she had actively participated in the business of Krion.

[377] The appeal against this conviction should accordingly succeed.

Count 218656
[378] Accused 6 was convicted on this count of a contravention of s 104(1)(d) of the
Income Tax Act, by failing to register as a taxpayer for the 2000 tax year, in order to
evade the paying of income tax.

[379] It is not in dispute that, when she became liable to register as a taxpayer in
2000, accused 6 had failed to do so. It is also common cause that the income of
accused 6 for the 2000 tax year exceeded R1,358 million. This income was never
declared to the SARS, not even after she had registered as a taxpayer in 2001.
SARS was therefore precluded from raising an assessment on this income and
accused 6 never paid income tax on it.

[380] Accused 6 submitted that her taxable income at the relevant time was
insufficient to require her to register as a taxpayer. This is plainly not true. The
income level which required registration as a taxpayer at the relevant time, was
R40 000. Her taxable income by far exceeded this amount. Her counsel conceded
that there is no merit in the explanation for her failure to register as a taxpayer for the
2000 tax year, but submitted that the State had failed to prove that she intended
thereby to evade the paying of income tax. This submission is similarly without merit.

As submitted on behalf of the State the only reasonable inference to be drawn from
her failure to register is that she intended thereby to evade the payment of income
tax.

[381] In our view the appeal against her conviction on this count should accordingly
fail.

Count 218657
[382] Accused 6 was found guilty of tax fraud on this count, by wilfully and
intentionally under-declaring her taxable income for the 2001 tax year to have been
R300 000 while it is common cause that her taxable income for that tax year was in
excess of R3,7 million.

[383] The evidence shows that accused 6 and 7 and their bookkeeper, Mr Theuns
van der Merwe, had colluded to defraud SARS in an attempt to alleviate their income
tax problems. In his written heads of argument counsel for accused 6 rather
euphemistically stated that this conduct „laat veels te wense oor‟. In fact, it was
nothing less than a planned fraud, and the explanation of accused 6 at the trial, that
she had requested Van der Merwe not to submit the 2001 tax return, rings hollow.
Van der Merwe could not recall receiving such a request and this version is, in any
event, gainsaid by accused 6‟s own affidavit in her sequestration proceedings in
which she declared „Uit Aanhangsel “F” hiertoe blyk dit ook met respek dat ek my
inkomste gedurende die tersaaklike belastingjaar (2001) verklaar het, en dat daar
inkomstebelasting daarop betaal is.‟ No attempt was made by her in the affidavit to
disclose that her taxable income had been grossly under-declared.

[384] We therefore conclude that the court a quo correctly found accused 6 guilty
on this count and that her appeal in this regard should fail.

Sentence ─ Sixth accused
[385] This accused was sentenced to 15 years‟ imprisonment of which three years
were suspended for a period of five years, on each of the convictions under s 2(1)(e)
and s2(1)(b) of POCA. It was ordered that these sentences be served concurrently.
In addition, accused 6 was sentenced to ten years‟ imprisonment on each of counts

15 and 17-26, ie the contravention of s 4 of POCA, which sentences were to be
served concurrently. On the remainder of her convictions she was sentenced to
periods of imprisonment ranging from two years‟ imprisonment to three months‟
imprisonment. It was ordered that all these sentences were to be served
concurrently with the sentences imposed in respect of counts 2 and 3. This resulted
in an effective term of imprisonment of 12 years.

[386] On appeal counsel for accused 6, as in the case of the other accused, did not
submit that the trial judge had misdirected herself in exercising her sentencing
jurisdiction. He confined himself to the submission that the effective sentence of 12
years‟ imprisonment is shockingly inappropriate to the extent that it merits
interference by this court.

[387] The trial judge had due regard to all the personal and other mitigating factors
of accused 6, but in weighing same against the nature, gravity and magnitude of the
crimes and the disastrous financial and other effects the scheme had on its
investors, concluded that the only suitable sentence was one of effective
imprisonment for a considerable period of time. In our view, having regard to the role
played by accused 6 in the conduct of the business of the scheme as recorded
above, it cannot be said that the trial judge acted unreasonably in imposing this
sentence. In this regard it should be borne in mind that accused 6 often acted as the
manager of the business of the scheme with signing powers on the cheque account
and was from early on allowed to sign investment certificates. During the period of
her involvement, she personally signed 521 investment certificates to the value of
more than R28 million. When it was decided to hide investors‟ files from PWC, she
was instrumental in hiding same, also at the farm of her and accused 7. There she
continued to operate the business of the scheme.

[388] In our view the evidence as a whole regarding the participation of accused 6,
certainly justifies a sentence of this order. Further, had we been the court of first
instance, we would have imposed an effective sentence of similar duration. We
should add that the limited success enjoyed by accused 6 on appeal has no impact
at all on her effective sentence of 12 years‟ imprisonment.

[389] It follows that the appeal of accused 6, against her effective sentence of 12
years‟ imprisonment, should be dismissed.

[390] We now turn to the appeal of the State against the sentence of two years‟
imprisonment imposed upon accused 6 in respect of count 218657. As recorded
earlier, accused 6 was found guilty of tax fraud on this count by under-declaring her
taxable income for the 2001 tax year to have been R300 000, while her taxable
income for that year was in excess of R3,7 million.

[391] Counsel for the State submitted that the sentence of two years‟ imprisonment
imposed on accused 6 on this charge induces a sense of shock. It was further
submitted that the trial court materially misdirected itself in not giving due weight to
the nature and seriousness of the offence and the financial prejudice of more than
R3,7 million caused thereby.

[392] It should be borne in mind that a minimum sentence of 15 years‟
imprisonment is prescribed for this offence in terms of the Criminal Law Amendment
Act 105 of 1997. It appears that the trial court regarded the length of time it took to
bring the case to finality, as well as the clean record of accused 6 as substantial and
compelling circumstances justifying a lesser sentence than 15 years‟ imprisonment
in respect of this count. The State submitted that these factors pale into
insignificance when weighed against the aggravating circumstances, particularly
having regard to the nature and extent, as well as the financial implications, of the
crime.

[393] Upon reflection, we are in agreement with the submission on behalf of the
State. The imposition of a sentence of merely two years‟ imprisonment, having
regard to the aforementioned aggravating circumstances and in the light of the
prescribed minimum sentence of 15 years‟ imprisonment, certainly induces a sense
of shock. In our view there is a striking disparity between the sentence of two years‟
imprisonment imposed by the trial court and that which we, had we been the court of
first instance, would have imposed. It seems to us that a sentence of two years‟
imprisonment for a tax fraud of R3,7 million, sends out the wrong message that,
notwithstanding a minimum prescribed sentence of 15 years‟ imprisonment,

defrauding SARS in such a substantial amount does not warrant a heavy sentence.
In our opinion the appeal of the State ought to succeed and the sentence of two
years‟ imprisonment is to be substituted by one of 12 years‟ imprisonment. As was
the case with the sentence imposed by the trial court, it should be served
concurrently with the sentence imposed in respect of counts 2 and 3, the effective
term of imprisonment thereby remaining one of 12 years.

Orders
[394] As a result the orders as set out above will issue.

________________________
P B FOURIE
ACTING JUDGE OF APPEAL

_______________________
J W EKSTEEN
ACTING JUDGE OF APPEAL

Brand JA
[395] I have had the advantage of reading the joint judgment by my brothers Fourie
and Eksteen AJJA (the majority). Save for one exception I agree with their reasoning
and their conclusions. The exception relates to the conviction of the first accused on
both counts 1 and 2 under sections 2(1)(e) and 2(1)(f) of POCA. I do not believe that
she should be convicted under both these sections on the same facts. To do so
would constitute a duplication of convictions.

[396] Since this is a minority judgment which would in any event have no material
impact on the outcome of these proceedings, I propose to motivate my point of view
without unnecessary elaboration. As explained by Cloete JA in S v Van Eyssen
supra para 5, which is quoted in extenso by the majority in para 45 above, the
essence of the offence in (e) is participation in the affairs of the enterprise. The crux
of (f), on the other hand, is knowledge, not participation. Or, as Cloete JA formulated

it, the essence of (f) is that „the accused must know (or ought reasonably to have
known) that another person did so‟ (my emphasis).

[397] In S v Whitehead 2008 (1) SACR 431 (SCA) para 39 Navsa and Van Heerden
JJA proposed the following approach in this regard:
„In contesting multiple convictions it is often submitted that they are premised on the
same set of facts. This is, in fact, the so-called “evidence test” sometimes applied by
the courts in determining whether or not there is a duplication of convictions. This
test enquires whether the evidence necessary to establish the commission of one
offence involves proving the commission of another offence. In this regard, Bristowe
J, in the case of R v Van der Merwe 1921 TPD 1 at 5 pointed out that “. . . if the
evidence necessary to prove one criminal act necessarily involves evidence of
another criminal act, those two are to be considered as one transaction. But if the
evidence necessary to establish one criminal act is complete without the other
criminal act being brought in at all then the two are separate crimes.”‟
(Emphasis added.)

[398] Logic dictates that, participation in racketeering activities will always include
knowledge of those activities. While one can have knowledge without participation,
the converse is not possible. Of necessity, the conviction of a manager under (e)
must involve a criminal act in terms of (f). In order to participate in racketeering
activities for purposes of (e), the wrongdoer must have knowledge, proof of which in
itself will amount to proof of the offence under (f). It is true that the elements of the
two offences are in certain respects different, but that in itself, is no answer to an
objection of duplication where, as in this case, the greater necessarily includes the
lesser. An accused convicted of murder on the basis of dolus eventualis will almost
inevitably also be guilty of culpable homicide because the wider concept of
negligence will of necessity embrace the narrower concept of legal intent. Yet, no-
one will think of convicting the accused of both. In so far as S v De Vries and others
2009 (1) SACR 613 (C) para 397-398 goes the other way, it was in my view wrongly
decided.

[399] The scenario contemplated by the majority in para 59 seems to envisage a
manager who participated in some of the activities of the enterprise but not in others
of which he or she had knowledge only. In these circumstances I can find no
objection to a conviction of (e) on the basis of the former and of (f) on the basis of
the latter. The point is that in those circumstances, the two convictions will not be
premised on the same set of facts. The problem arises where, as in this case, the
knowledge proved for purposes of (f) derives from the very participation which
founded the conviction in (e). In these circumstances a conviction of both, in my
view, offends against the duplication of convictions rule. The fact that the provisions
of POCA must in principle be afforded a liberal or broad construction does not, in my
view, detract from this rule which is a salutary one based on fairness to an accused
person which is a tenet of our Constitution.

_________________
F D J BRAND
JUDGE OF APPEAL

APPEARANCES:

For First Appellant:
L Augustyn

Instructed by:

Justice Centre, Pretoria

Justice Centre, Bloemfontein

For Second Appellant:
H F Klein

Instructed by:

Justice Centre, Pretoria

Justice Centre, Bloemfontein

For Third, Fourth and
Fifth Appellant:

W A Smit

Instructed by:

Justice Centre, Pretoria

Justice Centre, Bloemfontein

For Sixth Appellant:
C de Beer

Instructed by:

Justice Centre, Pretoria

Justice Centre, Bloemfontein

For Respondent:

G C Nel (with him A V Rossouw and D W M Broughton)

Instructed by:

Director of Public Prosecutions, Pretoria

Director of Public Prosecutions, Bloemfontein