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How the process works

The Constitutional Court on 29 May 2008 dismissed the appeal of Mr Shabir Shaik and two of his companies against the confiscation of their property in 2006, thus making the State R34 million richer at their cost.

The Constitutional Court confirmed that the property concerned is the proceeds of crime pursuant to the provisions of the Prevention of Organised Crime Act, 1998 (POCA). 

But what actually happens to the confiscated property and how does the process work?

POCA, the statute that regulates the position, is a complex but powerful piece of legislation aimed at the combat of crime. 

It is not only aimed at organised crime but, where appropriate, applies to cases of individual criminal activity. 

It creates a number of statutory offences, including racketeering, which is the crime of continuously or repeatedly committing offences such as fraud, corruption, theft and the like in an organised or planned fashion, and money laundering.

POCA provides for permanent divestment of property from the hands of wrong-doers in one of two ways. 

The first is where the confiscation of property constituting the proceeds of crime is divested pursuant to the successful criminal prosecution and conviction of the wrong-doer. 

The second is a civil court procedure whereby the State may institute legal proceedings to claim the forfeiture of property that has either been instrumental in committing offences or represents the proceeds of unlawful activities.

Property includes virtually all forms of tangible and intangible assets and benefits, including rights, privileges and claims.

The criminal confiscation process requires that a person must either already have been charged with an offence or the court has to be satisfied that the person will be charged. 

The State, acting through a business unit within the National Prosecuting Authority known as the Asset Forfeiture Unit (AFU), applies for an interim restraint order to freeze the relevant assets, pending finalisation of the prosecution of the person or persons concerned. 

A criminal conviction requires proof beyond a reasonable doubt.  Upon conviction, the AFU applies for the permanent confiscation of the property under restraint that represents benefits derived from the offence concerned.

The civil court forfeiture procedure involves the AFU obtaining an interim preservation order in civil proceedings, pending the determination by the court of whether the assets concerned fall to be permanently forfeited to the State. 

The standard of proof required in South Africa is proof on a balance of probabilities, which is a lower threshold than that imposed for criminal conviction.

In both instances, once there is a divestment of the proceeds, they are realised and go to the State.  POCA, however, provides that interested parties such as creditors and victims can make representations to court and claim against the realised property. 

The main purpose of the statute is to divest criminals of their ill-gotten gains, not to enrich the State. 

Further, it ensures that persons, who have suffered patrimonial loss at the hands of the wrong-doer, are able to recover against the proceeds concerned, if such proceeds would otherwise go to the State.

POCA creates a criminal asset recovery account.  All the proceeds of forfeited property upon realisation is paid into the account. 

The account is overseen by a statutory committee which includes the Minister of Justice.  One of the objects of the account is to provide financial assistance to victims of crime.

In both criminal and civil forfeiture procedures under POCA, a curator is appointed by the court to oversee and control the frozen assets pending final determination of the matter. 

If the State is unsuccessful in the proceedings, the frozen assets are returned to the person against whom the proceedings were brought. 

Where the State is successful, the assets, as stated, are forfeited to the State, subject to rights of creditors and victims.

Andre Vos is a director in the Deneys Reitz commercial litigation department