Seizing Criminal Assets Seizing Criminal Assets to Fight Crimeto Fight Crime

National Prosecuting Authority

Report to Parliament

5 June 2002

Asset Forfeiture Unit

Willie Hofmeyr - Head

Ouma Rabaji – Head of Operations

Mission statement for 2002Mission statement for 2002We aim to take the profit out of crime by

providing an effective asset forfeiture service to government agencies and the public of South Africa. We will do this by:– Ensuring an 85% success rate– Seizing assets in 150 cases involving R250m– Applying for forfeiture in 100 cases involving

R150m – Obtaining forfeiture orders in 75 cases involving

R75m

AFU Strategic objectivesAFU Strategic objectives

1: Testing the lawto develop the law by taking test cases to

court and creating the legal precedents that are necessary to allow the effective use of the law

2: Rolling out volumeto build the capacity to ensure that asset

forfeiture is used widely and makes a real impact in the fight against crime

Objective 2: Cases doneObjective 2: Cases doneto datto datee

  No Value Success

assets Rate

Seizures 150 R373m 88%

Forfeitures granted 55 R 22m 88%

Cases complete 21 R 5m Deposits in fund 12 R 0.7m

Update since reportUpdate since reportForfeitures granted have tripled in value

from R22m to R65m

Cases completed are up fivefold from R5m to R26m

Another R12m has been deposited into special fund, bringing deposits to R13m (Criminal Assets Recovery Account)

Large deposits into CARALarge deposits into CARAThis will be year of delivery into CARAThe first half of this financial year should

deposit at least R40m in CARAR12m from Hout Bay fishing case already inPlus orders already grantedAbout R6m from alleged Durban drug dealer

Ronny Johnny SmithAbout R15m from Durban illegal casino

kingpin GayadinR6m to R8m from sale of another Hout Bay

Fishing boat

Funds to fight crimeFunds to fight crimeAim of the AFU was to bring in more

money that its costs by year 4 – expected some delay as big cases take time to finalise

This target will now be achieved early In fact, the expected deposits of over R40m

will cover all AFU costs over last 3 yearsThese funds will be available to fight crimeHowever, some amendments may be

required to spend it effectively

Increasing roll-outIncreasing roll-outTo achieve the objective of making asset

forfeiture widely usedthe AFU would like to double the number

of cases (& value) every yearDuring the past year again achieved

exceptional growthDoubled the number of new cases and other

applicationsNearly achieved this for value of assetsAim to do the same again this year

Types of casesTypes of cases

Economic crime is about 34% of cases and 50% of assets

Corruption another 16% and 7% of assetsTends to be so because large amounts are

involvedImportant for stronger action against

economic crime – more organised crime involvement – eg Nigerian 419 scams

Types of cases (cont)Types of cases (cont)

Drug cases 31% of cases, 4% of assetsWould like to do more big dealers like

SmithViolent 7% of cases, 2% of assetsNatural resources 6% cases, 18% assetsBecome major area with abelone

smuggling, overharvesting

Priority casesPriority casesOrganised crime in all formsDrugs - dealers, cash and housesSerious violent crime with economic motiveSerious economic crime – esp where publicCorruptionPrecious metalsCleaning up areas: community irritantsProperty used to commit crimeNatural resources – added later

Building partnershipsBuilding partnerships A key focus for the rapid establishment of a

forfeiture capacity has been to build partner-ships, both locally and internationally

Great deal of help from other states that have use forfeiture effectively

USA, UK have given extensive advice and assistance

Also help from Canada and UN – esp useful has been a UK barrister with extensive litigation experience UN employed for a two year period to assist SA with advice

Local partnershipsLocal partnershipsLocal partnerships are even more importantAFU saw itself as a support organisation to

the SAPS, DSO, the NPS and other law enforcement bodies - depend on them to bring work to us

Proud of the good relations that have been built

PartnershipsPartnerships

The most effective model has been where full time task teams were established to work with AFU, but difficult given the resource constraints

Also focus on partnership with the private sector – to assist with growing forfeiture quickly, but also to help build business confidence in SA

Growth of AFUGrowth of AFUThe AFU has been able to grow quickly – in

the coming year it will grow to a staff of 76 including 48 lawyers

In large part our success is due to the foresight and commitment from the NDPP

Decentralising operations have been vital and have assisted in growing the organisation – now offices in Cape Town, Durban, Johannesburg, East London

This year in Port Elizabeth, Bloemfontein, Kimberley, Pietermaritzburg

Promoting representivityPromoting representivityThe AFU is proud of what it has achieved

in a field where skills are very specialised But more remains to be done to promote

representivity of African peopleAll Legal Manstaff

Designated 83 84 73Black 73 68 64African 50 39 46Women 50 48 36

Objective 2: Testing the lawObjective 2: Testing the law

Still focussed on test cases – imply very high quality of work, conservative case selection

But rolling out in areas where law is more clear, plus more adventurous approach

Decided on lower success rate than beforeIt is a vital part of increased roll-out

Important casesImportant cases

Many issues have been clarified in about 32 judgements thus far

But few of about 30 issues are finally settled

Rebuzzi case in the SCA settled the issue that the AFU can act even when all the recovered assets will go to compensate the victim

CasesCases

The most important judgement was in the Phillips matter where Heher J delivered a 120 page judgement dealing with a large number of issues

Also confirmed Bathgate judgement that chapter 5 is constitutional

One of the most important issues being litigated is whether chapter 5 is applicable when the benefit has been lost - Kyriacou

Constitutional issuesConstitutional issuesMohammed case was the first to be heard

in Constitutional Court– expect judgement probably in July

Cloete J ruled that POCA compels ex parte seizure proceedings, and that this is unconstitutional

The AFU argued that it is not Alternatively that POCA does not in fact

exclude the discretion of the court to allow for a hearing when it feels ex parte is not justified

The benefits of asset forfeitureThe benefits of asset forfeiture

Taking profit out of crimeTaking profit out of crime

Much of crime today is committed for an economic motive

Unless one can increase the risk and decrease the profits, it will be impossible to deal effectively with crime

DeterrenceDeterrenceIt has an important deterrent effect by

hitting the crime bosses where it hurts most ‑ in the pocket

Many criminals see gaol as an occupational hazard – the expect their families to be comfortable while they are inside, and that they will be well‑off when they are released

Putting their families on the street and removing their favourite playthings and their “pensions” causes them real pain

Removing the asset baseRemoving the asset base

Even where it is possible to convict syndicate heads, civil or criminal forfeiture has proved valuable

It ensures that the businesses, properties, cars, bank accounts and other assets used by the organisation do not remain behind for the use of a new leadership

Hitting syndicates in the Hitting syndicates in the pocketpocket

It is very difficult to convict syndicate heads as they are seldom directly involved in crime

The small guys who are convicted seldom own any of the assets

Civil forfeiture enables the state to get at the assets of the syndicate and at least hurt them financially

Easier burden of proofEasier burden of proof

Civil forfeiture only requires proof on the balance of probabilities

Thus it can be used even when the evidence is strong enough to prove anyone guilty beyond a reasonable doubt

Getting at the real ownersGetting at the real ownersForfeiture gets behind the increasingly

sophisticated efforts of syndicates to hide the real ownership of assets, such as front companies, trusts or nominee owners

Criminal forfeiture ‑ retrieve gifts Civil forfeiture by going directly for

property

Closing down criminal Closing down criminal infrastructureinfrastructure

Civil forfeiture has been used successfully to close down the infrastructure used for criminal activities, such as drug houses, cars, bars and clubs

Funds for law enforcementFunds for law enforcement

Additional benefit that seized assets that are not returned to victims, must be used for law enforcement

Should not become main purposeBut it is an important incentive to persuade

law enforcement agencies to devote their scarce resources to doing the additional work required for forfeiture

ConclusionConclusionAsset forfeiture is an important part of the

war against crime ‑ it hits the crime bosses where it hurts most ‑ in the pocket

It is a vital part of increasing the deterrence, esp in areas such as economic crime where it is low

But most importantly, forfeiture is a vital weapon to take the profit out of crime

If we are to deal effectively with crime, it must become true “that crime does not pay”