00:00:00
Speaker 1: This was a question asked by a listener yesterday we were reporting Eyewitsiness News was reporting and I commented on the first there was a preservation order, so the assets for its unit goes to the court and says, we just want to freeze these assets. We want a legal prohibition against them being disposed of while we take the next step of applying for them to be confiscated and handed over to the state and become the property of the state. And it was the significant well, I don't know if it's all of these assets, but it's the ones that the AFU was able to identify, the very expensive properties, including an eighty eight million round property here in Cape Town, several Lamborghinis, other expensive cars, other expensive houses, my favorite thing, the Regency party boat, all of that. And the listener said, what happens to it? And I said, well, it's you know, becomes the state's property. And I expressed the opinion that it would be nice if that money was then dedicated to use in further crime fighting, further corruption busting, further asset forfeiture. And I said, we would speak today and about this, and so we do. With Stephen Powell, head of the forensics practice at EANs Africa.
00:01:21
Speaker 2: Helo, Stephen, Hi, John, Good afternoon, Good afternoon, listers.
00:01:26
Speaker 1: Are you on a speakerphone?
00:01:29
Speaker 2: No, I'm not, John O.
00:01:31
Speaker 1: It's not that it sounds weird, but let's hope it holds up. Okay, So what what what happens to the value, Well, what happens to the physical assets and what happens to any cash that might be seized as part of the court order.
00:01:49
Speaker 2: So, John, there's a process that ensues when the asset forfeiture make an application the state. The court actually appoints a curator bonies to assume control over those acids. And I've often acted for the Acid Forfeiture unit. As a curator bonus, I speak from experience in a multitude of matters, and what the curator Bonus's job is is to preserve those acids, to make sure that they are not dissipated, to manage those assets, and ultimately, if there is an acid forfeiture order, to liquidate the acids and pay it into CAIRA, which is the acronym for the Criminal Acids Recovery Account. So there is a huge amount of cash that gets recovered from these proceeds. And yeah, we're talking about in excess of three hundred million rand that will all be converted into liquid cash paid into CARA. And then the good news is just pursuant to your comment at the start of this discussion, those funds are then utilized to bolster the fight against crime. So it is exactly what you were hoping to take place. That is what is happening in practice, okay.
00:03:04
Speaker 1: And then does that money become part of the operational budget or is the application made for a trance of it for a specific purpose. And how is that that with CARA? How is KARA managed?
00:03:20
Speaker 2: It is strictly controlled and they would have to be an application for funds to be released for specific projects or to be used to bolster a budget in the department for a specific purpose. So where there is a gap, where there is a need, CARRA is there to assist.
00:03:38
Speaker 1: And Stephen. Once once the stuff has been forfeited physical assets, homes, cars, yachts, et cetera have been confiscated, is the what did you call yourself when you're acting in that capacity? Curator Bonies, Curator Bonies, does the curator Bonies continue to do so to take on the task of disposing of those assets at the best possible price.
00:04:05
Speaker 2: That's exactly right, John, And it becomes quite challenging. I remember years ago I seized the assets on behalf of the state in the Road Accident Fund matter with two attorneys that were accused of defrauding road accident victims of the settlements that were granted by the Road Accident Fund. And there we had to operate businesses where the two individuals had established businesses using the proceeds of crime, and literally the curator bonus steps into the shoes of their two accused and as to manage and make sure that those assets don't devalue. And I remember when we paid the proceeds over we recovered several million round There were funds hidden all over the globe New York, India and the UK. And when we paid the funds over to KIRA, I paid the funds within interest and the two gentlemen threatened to sue me in my personal capacity because they said the order didn't make provision for me to pay the interest over to Kurrent. Fortunately and nothing came of that. They didn't proceed against me, and I think we would have succeeded against them, but it is quite a process, and the curator has a hot job on his hands to make sure that we realize the best possible price for those assets. You know that it's not sold at bargain basement prices and we get a realistic figure and these valuations that have to take place.
00:05:35
Speaker 1: Yeah, that's the next question that I was going to ask, which you partially answered. I mean it, perhaps there's a temptation to say, all right, the valuation on the Slamborghini is fourteen million, but if we ask for fourteen million, we're going to wait nine months a year before we find a buyer. Put it on the market at nine million, and it'll be snapped up within five minutes. So let's do the latter. This property. You know, how long do you how long do you might marcket an eighty eight million round properly, for they're not that many buyers in that price span. So those are just some of the I suppose the difficult things you have to do as part of your job.
00:06:10
Speaker 2: Exactly, John, And the curactor is exposed on two fronts. If he acts too quickly and doesn't achieve a reasonable price, the asset forfeiture will be unhappy. And at the same time, you know, if the value of the asset diminishes because it's not being properly looked after or preserved by the curator Bonus, then you have an unhappy accused who will then bring a claim against the curator. So at all times, as Curator bon is managing these assets, you've got to make sure that you maintain the value of those assets under restraint to protect against dissipation. And then the other thing that is allowed for by the legislation is because the assets of this the accused are our restraint, they don't have access to funds for legal expenses and they also may need money for living expenses, So the curator has to determine what are reasonable legal expenses to incur from the assets under restraint, as well as to make sure that the claim for living expenses is not too extravagant. So when you get the order, and the order is all done in secret for obvious reasons, there's an application made by the asset forfeature unit to judging chambers. The curator gets appointed, you go out to the home of the subject and you do an inventory of all the assets. You get an income, an expenditure statement, and as well as an inventory outline line in the assets and liabilities of that individual. And then you've got to make sure that whatever is dispersed from assets under restraint is reasonable and defensible and modest, you know, because you don't want to utilize the funds that have been restrainted to fund a whole lot of ridiculous legal applications that may be frivolous, but the lawyers make money.
00:08:02
Speaker 1: And then five listeners so far have asked me the same question in different ways, why doesn't the money go back to the Tembisa hospital.
00:08:09
Speaker 2: It can go back to the Timbisa Hospital. And what happens with acid forfeiture is when there is an identifiable victim and we can see where the money was extracted from, then typically kaira will be utilized to make good those victims. So, for example, in that road accident fund matter that I was curated bonies in a few years back, in that matter, the Fidelity Fund of the Law Society actually stepped in and made the victims hold again and paid out something like oh, I can't remember how many million, but it was a significant amount of money to more than two hundred and twenty victims of fraud. And then when we recovered the assets abroad and we liquidated everything and we implemented the final forfeiture order. We then compensated the fidelity fund. So in this instance to be so, hospital may well have a clam and we may well be able to determine the exact quantum that was defrauded in terms of these dodgy tenders and they'll have first claim on the ki of funds for reimbursement to receive the proceeds of crime back.
00:09:20
Speaker 1: Stephen, really appreciate your time. That was an absolutely fascinating insight into this. Really really appreciated. Stephen pal the head of the forensics practice at EANs Africa,
Speaker 1: This was a question asked by a listener yesterday we were reporting Eyewitsiness News was reporting and I commented on the first there was a preservation order, so the assets for its unit goes to the court and says, we just want to freeze these assets. We want a legal prohibition against them being disposed of while we take the next step of applying for them to be confiscated and handed over to the state and become the property of the state. And it was the significant well, I don't know if it's all of these assets, but it's the ones that the AFU was able to identify, the very expensive properties, including an eighty eight million round property here in Cape Town, several Lamborghinis, other expensive cars, other expensive houses, my favorite thing, the Regency party boat, all of that. And the listener said, what happens to it? And I said, well, it's you know, becomes the state's property. And I expressed the opinion that it would be nice if that money was then dedicated to use in further crime fighting, further corruption busting, further asset forfeiture. And I said, we would speak today and about this, and so we do. With Stephen Powell, head of the forensics practice at EANs Africa.
00:01:21
Speaker 2: Helo, Stephen, Hi, John, Good afternoon, Good afternoon, listers.
00:01:26
Speaker 1: Are you on a speakerphone?
00:01:29
Speaker 2: No, I'm not, John O.
00:01:31
Speaker 1: It's not that it sounds weird, but let's hope it holds up. Okay, So what what what happens to the value, Well, what happens to the physical assets and what happens to any cash that might be seized as part of the court order.
00:01:49
Speaker 2: So, John, there's a process that ensues when the asset forfeiture make an application the state. The court actually appoints a curator bonies to assume control over those acids. And I've often acted for the Acid Forfeiture unit. As a curator bonus, I speak from experience in a multitude of matters, and what the curator Bonus's job is is to preserve those acids, to make sure that they are not dissipated, to manage those assets, and ultimately, if there is an acid forfeiture order, to liquidate the acids and pay it into CAIRA, which is the acronym for the Criminal Acids Recovery Account. So there is a huge amount of cash that gets recovered from these proceeds. And yeah, we're talking about in excess of three hundred million rand that will all be converted into liquid cash paid into CARA. And then the good news is just pursuant to your comment at the start of this discussion, those funds are then utilized to bolster the fight against crime. So it is exactly what you were hoping to take place. That is what is happening in practice, okay.
00:03:04
Speaker 1: And then does that money become part of the operational budget or is the application made for a trance of it for a specific purpose. And how is that that with CARA? How is KARA managed?
00:03:20
Speaker 2: It is strictly controlled and they would have to be an application for funds to be released for specific projects or to be used to bolster a budget in the department for a specific purpose. So where there is a gap, where there is a need, CARRA is there to assist.
00:03:38
Speaker 1: And Stephen. Once once the stuff has been forfeited physical assets, homes, cars, yachts, et cetera have been confiscated, is the what did you call yourself when you're acting in that capacity? Curator Bonies, Curator Bonies, does the curator Bonies continue to do so to take on the task of disposing of those assets at the best possible price.
00:04:05
Speaker 2: That's exactly right, John, And it becomes quite challenging. I remember years ago I seized the assets on behalf of the state in the Road Accident Fund matter with two attorneys that were accused of defrauding road accident victims of the settlements that were granted by the Road Accident Fund. And there we had to operate businesses where the two individuals had established businesses using the proceeds of crime, and literally the curator bonus steps into the shoes of their two accused and as to manage and make sure that those assets don't devalue. And I remember when we paid the proceeds over we recovered several million round There were funds hidden all over the globe New York, India and the UK. And when we paid the funds over to KIRA, I paid the funds within interest and the two gentlemen threatened to sue me in my personal capacity because they said the order didn't make provision for me to pay the interest over to Kurrent. Fortunately and nothing came of that. They didn't proceed against me, and I think we would have succeeded against them, but it is quite a process, and the curator has a hot job on his hands to make sure that we realize the best possible price for those assets. You know that it's not sold at bargain basement prices and we get a realistic figure and these valuations that have to take place.
00:05:35
Speaker 1: Yeah, that's the next question that I was going to ask, which you partially answered. I mean it, perhaps there's a temptation to say, all right, the valuation on the Slamborghini is fourteen million, but if we ask for fourteen million, we're going to wait nine months a year before we find a buyer. Put it on the market at nine million, and it'll be snapped up within five minutes. So let's do the latter. This property. You know, how long do you how long do you might marcket an eighty eight million round properly, for they're not that many buyers in that price span. So those are just some of the I suppose the difficult things you have to do as part of your job.
00:06:10
Speaker 2: Exactly, John, And the curactor is exposed on two fronts. If he acts too quickly and doesn't achieve a reasonable price, the asset forfeiture will be unhappy. And at the same time, you know, if the value of the asset diminishes because it's not being properly looked after or preserved by the curator Bonus, then you have an unhappy accused who will then bring a claim against the curator. So at all times, as Curator bon is managing these assets, you've got to make sure that you maintain the value of those assets under restraint to protect against dissipation. And then the other thing that is allowed for by the legislation is because the assets of this the accused are our restraint, they don't have access to funds for legal expenses and they also may need money for living expenses, So the curator has to determine what are reasonable legal expenses to incur from the assets under restraint, as well as to make sure that the claim for living expenses is not too extravagant. So when you get the order, and the order is all done in secret for obvious reasons, there's an application made by the asset forfeature unit to judging chambers. The curator gets appointed, you go out to the home of the subject and you do an inventory of all the assets. You get an income, an expenditure statement, and as well as an inventory outline line in the assets and liabilities of that individual. And then you've got to make sure that whatever is dispersed from assets under restraint is reasonable and defensible and modest, you know, because you don't want to utilize the funds that have been restrainted to fund a whole lot of ridiculous legal applications that may be frivolous, but the lawyers make money.
00:08:02
Speaker 1: And then five listeners so far have asked me the same question in different ways, why doesn't the money go back to the Tembisa hospital.
00:08:09
Speaker 2: It can go back to the Timbisa Hospital. And what happens with acid forfeiture is when there is an identifiable victim and we can see where the money was extracted from, then typically kaira will be utilized to make good those victims. So, for example, in that road accident fund matter that I was curated bonies in a few years back, in that matter, the Fidelity Fund of the Law Society actually stepped in and made the victims hold again and paid out something like oh, I can't remember how many million, but it was a significant amount of money to more than two hundred and twenty victims of fraud. And then when we recovered the assets abroad and we liquidated everything and we implemented the final forfeiture order. We then compensated the fidelity fund. So in this instance to be so, hospital may well have a clam and we may well be able to determine the exact quantum that was defrauded in terms of these dodgy tenders and they'll have first claim on the ki of funds for reimbursement to receive the proceeds of crime back.
00:09:20
Speaker 1: Stephen, really appreciate your time. That was an absolutely fascinating insight into this. Really really appreciated. Stephen pal the head of the forensics practice at EANs Africa,
