THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED
IN THE SUPREME COURT OF APPEAL
From:
The Registrar, Supreme Court of Appeal
Date:
21 August 2018
Status:
Immediate
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal.

A C SCHOLTZ & OTHERS
v
THE STATE

The first appellant, Mr A C Scholtz, and the eighth appellant, Mr J F Block,
together with various companies in which they had an interest, were tried and
convicted in the Northern Cape Division of the High Court on various charges
of corruption and money laundering. They appealed against their convictions
while Mr Scholtz and Mr Block also appealed against the sentence imposed
upon them.

The charges on which the appellants were convicted arose from a number of
lease agreements concluded during a period May 2006 to August 2008 by

various State entities and departments in the Northern Cape with members of
what became known as the Trifecta Group of Companies, the second to seventh
appellants.

The first appellant, Mr Scholtz, a businessman from Pretoria who was engaged
in the private equity business, came into contact with a Mr Sarel Breda with
whom he identified business prospects in the Northern Cape. Their business
model was to identify rundown buildings which could be renovated into offices
and then leased to State entities. This was done and in due course a number of
leases were concluded which went to the heart of the charges that were brought.

The trial court held that the eighth appellant, Mr John Block who was a senior
politician in the province, had corruptly used his influence to ensure that
Mr Breda and his companies obtained certain of these leases. These were
concluded with the State without the necessary statutory protocols and
procedures being followed. As a quid pro quo for his actions, he was paid
substantial gratifications, including two payments of R228 000 and R500 000.
Mr Block appealed against this finding.

The Supreme Court of Appeal exhaustively analysed the evidence relating to
these particular counts and held that the two amounts of R228 000 and
R500 000 were corrupt gratifications which fell within the ambit of the charge
of corruption set out in the indictment – which related solely to the conclusion
of contracts of lease for two buildings, the Kimberlite Hotel and the NCTC
Building. It held that various other substantial gratifications which had been
paid to Mr Block had probably also been paid to him as part of a corrupt
relationship but that those payments had not related to the two buildings

mentioned and that the State had limited itself to those buildings in its charge. It
therefore found that had the charge been framed differently he may well have
been found guilty of corruption relating to all the payments made to him but
that, although his appeal against his conviction should stand, it related only to
the payments of R228 000 and R500 000.

It was argued on behalf of Mr Block that he could not be convicted of
corruption as he had received these sums after the contracts had been
concluded. This was rejected by the Supreme Court of Appeal.

In regard to sentence, the Supreme Court of Appeal went on to hold that there
were no substantial and compelling circumstances which justified a lesser
sentence than the 15 years’ imprisonment which was in prescribed by the
legislature for this offence. In doing so, the court mentioned that Mr Block had
been a political leader who had achieved high political office which he abused
to corruptly enrich himself; that the political leaders of this country should set
the example and not misuse public office to corruptly obtain personal wealth;
and that in these circumstances it was necessary for a unequivocal message to
be sent out that corruption on the part of politicians holding high office would
not be tolerated. The court therefore confirmed the sentence of 15 years’
imprisonment imposed on Mr Block.

Turning to Mr Scholtz, in regard to the Kimberlite Hotel and the NCTC
Building leases the State conceded on appeal that the evidence fell short of
establishing beyond a reasonable doubt that he had known of the payments of
R228 000 and R500 000 which had been effected by his business associate Mr

Breda. Mr Scholtz’s conviction of corruption relating to those offences and the
sentence impose in respect thereof were accordingly set aside.
However on a further count relating to six further leases, the appeal of Mr
Scholtz was dismissed. The leases in question had been negotiated on behalf of
the State by a Ms Botha who made various decisions beneficial to the Trifecta
Group, in some instances on terms even more beneficial than those in respect of
which the State had been invited to contract. This Ms Botha had done in order
to convey a benefit to an entity known as the Jyba Investment Trust in which
she had an interest valued at millions of rand.  In an affidavit in previous
proceedings – the correctness of which Mr Scholtz disputed and blamed the
incorrect allegations upon his legal representatives – Mr Scholtz had stated that
he had from 1995 been aware that a trust of Mr Breda had undertaken to hold
10% shares in the Trifecta Holding Company as nominee of Ms Botha. This
indicated that throughout the time of the negotiations between the Trifecta
Group and the State Ms Botha was advancing her own interest. Had this interest
been known, and disclosed as it ought to have been, the leases would not have
been concluded. Ms Botha therefore clearly acted corruptly, and her corruption
was the mirror image of the corruption charge laid against Mr Scholtz whom the
Supreme Court of Appeal held had been aware of the facts set out in his earlier
affidavit.

Mr Scholtz tried to avoid the obvious consequence of this by falling back on a
default contention that he left the daily running of the business to Mr Breda and
that he had not been aware of any improper negotiations relating to the leases.
The Supreme Court of Appeal analysed the evidence and concluded that even if
Mr Scholtz had not been actively involved in negotiating the leases, it would be
extending the ground bounds of credulity to accept that he was obliviously
unaware of all the negotiations leading up to their conclusion. In the

circumstances the only reasonable inference to be drawn was that to the
knowledge of Mr Scholtz the 10% shareholding in the Trifecta Holding
Company constituted a gratification that had been promised to Ms Botha in
2005 in order for her to assist in securing leases for the Trifecta Group of
Companies. Mr Scholtz had therefore been properly convicted of corruption.

In Mr Scholtz’s case, too, although the evidence established that there were
various other gratifications that Ms Botha received, these fell beyond the ambit
of the charge which had been set out in the indictment and did not relate to the
conduct of a general on-going relationship between Ms Botha and her co-
accused. However in Mr Scholtz’s case, too, there were no special and
compelling circumstances which justified the imposition of a sentence less than
the prescribed minimum of 15 years’ imprisonment in respect of the corruption
that fell within the indictment.

The appellants had been convicted of money laundering on various counts of
money laundering but the State correctly conceded that they could not be
convicted on those counts. The appeal affecting those convictions therefore
succeeded.

In the result, although certain of the convictions and sentences were set aside,
the conviction of Mr Block and Mr Scholtz on different charges of corruption
were confirmed, as was the sentence of 15 years’ imprisonment imposed upon
them.