State’s fall in Seretse's P50m demand

Mpho Mokwape | Monday April 28, 2025 15:46

In a recent judgment, Judge Michael Leburu said it was a fallacy for the State to say the funds being interest from the funds taken from Seretse and his companies Khulaco (Pty) Ltd, M & B Properties (Pty) Ltd belonged to the bank not him to play claim to it. “The respondent has strenuously submitted that the restraint funds are owned by the bank whereat they were kept, in terms of banking law. Whilst this submission may be appealing at first blush, and within the rubric of classical banking law, such proposition is untenable,” he said. Leburu posed questions to the State as to, “why did the bank lay supine and or fiddled when 'Rome was burning', and when its moneys were subject to a civil forfeiture? Why did the said bank not enter the legal fray and put up a virilis defensio, or a strong defence, and contend that such moneys belonged to it?

In his orders directing the State to pay back the money to Seretse, he said it explains the fallacy of the AG’s submission on ownership of the money by the bank “Respondent has also argued that the restrained funds belonged to government. It is baffling as to how an owner of property can bring a civil forfeiture application before the High Court, and ask that its property should be forfeited under the PICA,” wondered the judge.

The judge also stated that the two questions posed above portray the fallacy of the respondent's submission on the ownership of the restrained funds. One moment, it is submitted that the funds belonged to the bank and the next opportune moment, it is argued that the funds belonged to the government.

He emphasised that such approbating and reprobating was clear indication that the said submissions are not merit-laden. Dealing with the Constitution and Proceeds and Instruments of Crime Act (PICA), Leburu said the court was fully alert to Section 8 of the Constitution that protects and guarantees protection from deprivation of property.

The respondent has not denied that upon the discharge of the restraining order, the said funds were returned to the three applicants herein, less interest accrued from the restrained funds. “In keeping with the primary prescripts of the PICA, if an interim restraining order is ultimately discharged, the restrained property reverts to its owner or from whom the property was seized from. This is in sync with Section 8 of the Constitution, which guarantees the right to property. Any interest or profit generated by the restrained property is the property of the owner of the restrained property or the lawful holder of such property,” said the judge.

He explained that if the legislature, in its usual wisdom, had intended that any interest generated from restrained funds, which are subsequently released to the owner, is to be forfeited to the State, such clear expression could have been espoused in the PICA. That it is only the forfeited property, in terms of Section 29 of the PICA that invests in the government and that by parity of comparison, the legislature, in terms of the Legal Practitioners Act specifically spelt out how interest generated from attorneys' trust accounts is to be regulated, per Section 45 of the said Act. “Within the zone of interest and sphere of PICA, there is no specific provision regulating interest accrued from restraint funds and later released from restraint. In the final analysis, once the restrained property is released to its owner, or lawful holder, any interest accrued whilst the property was still under attachment, pending finalisation of the civil forfeiture application by the Court, is payable and returnable to the owner of the property or to the person from whom the said property was taken from,” Leburu noted.

Meanwhile, the P50m demand by Seretse is from three applicants being Khulaco (Pty) Ltd, M & B Properties (Pty) Ltd and Seretse, and they filed a notice of motion seeking amongst others the following orders being that State be declared to have preserved the value of the money that was seized and held by them from the applicants, the respondents be ordered to pay to the applicants the sum of P50, 293, 738.10; the respondents ordered to pay to the applicants interest on the sum above at the rate of 10% per annum. The application was anchored on Seretse's founding affidavit as the director and controlling mind of the two companies. According to the application, on December 13, 2017, the following sums of money were placed under restraint, pending the determination by the High Court of a civil forfeiture application made by the Directorate of Public Prosecution (the DPP) P69, 734, 260.00 belonging to Khulaco, P11, 081,016.00 belonging to M & B Properties P750, 000.00 belonging to Leomog Investments and P814, 000.00 belonging to him. The court documents indicated that on August 12, 2021, the High Court per judge Godfrey Radijeng, delivered judgment on the civil forfeiture application and the application was dismissed on the ground that the DPP had failed to prove, on a balance of probabilities, that the funds alluded to above were proceeds of a serious criminal activity. “The High Court ordered the discharge of the restraint funds and dissatisfied with the said decision, the DPP appealed to the Court of Appeal. The Court of Appeal dismissed the appeal on the 29th April 2022 and reaffirmed that the State had failed to prove that the said funds were proceeds of a crime. An order confirming the discharge of the restraining order therefore ensued,” reads the court papers. He averred that during these legal skirmishes, the restraint funds were kept and held in a bank account, which accrued interest, from the date of the restraint up to the date of the upliftment of the restraint by the Court of Appeal. According to Seretse he contended that the respondent has, without lawful basis, refused to pay over to the applicants such accrued interest, hence the application. He also argued that the failure to pay the interest accrued from the restraint funds contravenes Section 46 (4) of the PICA, in that the said provision enjoins the respondent to preserve the value of the property under restraint and if same is released from restraint, then the owner is entitled to the true value of the property, including any interest accrued there from. Seretse contended that by unlawfully withholding accrued interest, the respondent has been unduly enriched. The accrued interest on the total funds restraint was stated to be P50, 293, 738.10 and the judge ruled that each amount from Seretse and his companies, interest be paid from December 2017 until April 2022 when the funds were released.