11 February 2014 by and

Provisional Sequestration - Can Julius Malema still get to parliament?

On 10 February 2014, the North Gauteng division of the High Court granted a provisional sequestration order against the estate of the leader of the Economic Freedom Fighters, Julius Malema. The order was granted after an unsuccessful application by Mr Malema for a postponement of the matter until the criminal charges against him are resolved. The sequestration of Mr Malema was applied for by the South African Revenue Services which alleges that Mr Malema owes the Receiver approximately R16 million.

The effect that a sequestration order will have on Mr Malema's political aspirations has sparked public interest. Section 47 (1)(c) of the Constitution disqualifies a person whose estate has been sequestrated from being a Member of Parliament. The provisional order does not prevent Mr Malema being elected to Parliament but the order is provisional until 26 May 2014 when the matter will again be in court. Then the court will decide if the order should be made final after hearing argument by Mr Malema or any other of his creditors as to why a final order should not be granted. If the order is made final, Mr Malema will immediately be disqualified from being an MP. Although Mr Malema cannot appeal the grant of the provisional order he can certainly appeal a decision to grant a final order of sequestration and in all likelihood an appeal will follow whatever the court decides on 26 May. Normally the effect of an appeal is to suspend the operation of the order but in the case of sequestration the final order is not suspended which means that until the appeal is decided Mr Malema is disqualified from being an MP.

Now that a provisional order has been granted a provisional trustee will be appointed by the Master of the High Court to take control of and preserve Mr Malema's assets in the interests of his creditors until the appointment of a final Trustee.   In practice a provisional trustee will be appointed against proof that the creditors supporting their appointment make up the majority of creditors both in terms of their number and the combined value of their claims. 

The effect of the provisional order is that control of Mr Malema's assets is taken away from him and given first to the Master of the High Court, then to the provisional trustee once appointed and eventually to a final trustee, depending on the outcome of the matter on 26 May 2013. During this process Mr Malema will need the permission of his trustee if he wants to sell or even give away any of his property or sign any agreement which would adversely affect his estate. Also, Mr Malema may not be a director of a company and he will not even be able to have a personal cheque account. A further consequence may be that the trustee asks the permission of the Master of the High Court to hold a formal enquiry into the affairs of Mr Malema in order to find and recover assets or funds for the benefit of creditors.

Whilst the provisional sequestration order will have a profound impact on Mr Malema's life it is the effect of a final order and the potential appeal process that has added a fascinating twist to the forthcoming elections.

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