Recovery of ill-gotten assets held abroad
Recovery of ill-gotten assets held abroad
Asset forfeiture is a powerful tool for clawing back unlawful proceeds located both domestically and internationally. Assistant Federal Bureau of Investigation Special Agent Douglas Leff said, “Unfortunately, asset forfeiture often is neglected or misunderstood, thereby allowing criminals to enjoy the fruits of their crimes even after conviction.” This statement is true when it comes to the law relating to the court’s power to grant an asset forfeiture order outside the territory of South Africa.
At a glance
- Asset forfeiture is a powerful tool to recover unlawful proceeds, but its application outside the territory of South Africa raises jurisdictional questions.
- The Supreme Court of Appeal (SCA) examined the case of Bobroff v The National Director of Public Prosecutions, which involved the forfeiture of assets held in Israel by individuals residing in Australia.
- The SCA determined that the High Court had jurisdiction to make a forfeiture order under the Prevention of Organised Crime Act (POCA) and the International Co-operation in Criminal Matters Act, allowing for international enforcement of such orders. The court amended the order to ensure effective execution and proportional forfeiture of proceeds of unlawful activities.
In the case of Bobroff and Another v The National Director of Public Prosecutions (Case no 194/20)  ZASCA 56 (3 May 2021), the Supreme Court of Appeal (SCA) was required to determine whether the High Court exceeded its powers in ordering the forfeiture of assets located outside the territory of South Africa in favour of the National Director of Public Prosecutions (NDPP).
In the High Court, the NDPP sought an order to preserve credit balances and interest accrued and held in two accounts in Israel by account holders Ronald Bobroff and Darren Bobroff who were resident in Australia. The basis for the preservation order was that the assets were proceeds of unlawful activities, as defined in the Prevention of Organised Crime Act 121 of 1998 (POCA).
The order was granted by the High Court but the Bobroffs appealed the order on the basis that the High Court lacked jurisdiction to make a forfeiture order in terms of POCA in respect of property held abroad and belonging to persons resident outside of South Africa.
The SCA, in considering whether or not the High Court did have the requisite jurisdiction stated that the determination of jurisdiction is a two-stage inquiry: (i) it must be established whether the court is competent to take cognizance of the particular case (that is, whether a recognised jurisdictional ground exists); and (ii) if a recognised jurisdictional ground exists, whether an effective judgment can be given.
The SCA considered section 50 of POCA as well as section 19 of the International Co-operation in Criminal Matters Act 75 of 1996 (ICCM Act). Section 50 of POCA provides that if the court finds on a balance of probabilities that the property concerned “(a) is an instrumentality of an offence referred to in schedule 1; [or] (b) is the proceeds of unlawful activities it may order a forfeiture of the property” and section 19 of the ICCM Act provides for South Africa to request a foreign state to assist it in the enforcing of a confiscation order.
The SCA held that section 50 of POCA read together with section 19 of the ICCM Act is;
“directed at enlisting international assistance in the enforcement of a forfeiture order made under the POCA in respect of property held in another country”.
The SCA further held that although the High Court did not have inherent jurisdiction over persons in foreign countries and assets held in a foreign country, it found that jurisdiction can find its source in statute as well. In this case, it found that the High Court is empowered by the POCA to make forfeiture orders in respect of assets held in a foreign country and the ICCM Act ensures the execution of such orders.
Amending the order
In applying the two-stage inquiry set out above, the SCA held that the court a quo had ordered that the authorized personnel at the respective banks in Israel be directed to deposit the credit balance into the Criminal Asset Recovery Account established in terms of POCA. The SCA recognised that in so doing the court a quo had indeed overstepped its jurisdiction as it cannot exercise its powers over persons not resident in its jurisdiction and over whom it has no authority. The SCA directed that the order granted by the High Court be amended to bring it in line with section 19 of the ICCM Act, by setting aside that particular order and replacing same with;
“The balance of the proceeds in the accounts … are to be paid into the Criminal Assets Recovery Account.”
The SCA was also careful to order only those amounts proportional to the proceeds of unlawful activities engaged in by the appellants – engaging in a full enquiry into the source of amounts within their various bank accounts. It held that some amounts were sufficiently explained and accounted for, whereas other amounts were unexplained and were likely the proceeds of unlawful activities.
In conclusion, the Bobroff case upholds the principles of effectiveness to ensure that the courts produce orders that can be meaningfully executed and section 19 of the ICCM Act is specifically directed at achieving the effectiveness of a forfeiture order. Further, section 19 of the ICCM Act ensures that criminals do not enjoy the fruits of their crimes when such fruits have been moved outside the territory of South Africa – making certain that the arm of the law remains long.
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