Kapia V The State (cc 09-2008) [2015] nahcmd 195

Count 2
Accused no’s 1 – 7
[91] On this count all the accused persons were charged under s 424 (3) of the Companies Act 61 of 1973 (the Act) to which they have all pleaded not guilty.
[92] Section 424 of the Act provides that where any business of a company is carried on recklessly or with such intent or for such purpose as mentioned in subsection (1) ie to defraud creditors of the company, or any other person, or for any fraudulent purpose, every person who was knowingly party to the carrying on of the business in the aforesaid manner, shall be guilty of an offence.

[93] In respect of accused no’s 1 – 6 it is alleged that the accused wrongfully and unlawfully took part or were party to the reckless carrying on of the business of Avid with intent to defraud creditors or for any fraudulent purpose; the same charges were made against accused no 7, only in respect of the company, Namangol Investments.

[94] No submissions were made in respect of this count by either counsel for the defence or the State except for Mr Makando who argued that, in view of the inferred concession by the State that accused no 7 had made no misrepresentation as embodied in the fraud charge on count 1, for the same reason, he could not be convicted on count 2. I do not agree with counsel’s submission as the charge in count 2 constitutes a completely different offence as far as it relates to the manner in which the business is run and does not necessarily relate (only) to the alleged misrepresentations made to the SSC in count 1. From a reading of the charge it is furthermore evident that, in respect of accused no 7, it is formulated differently and refers to the manner in which the business of Namangol was conducted, not that of Avid. The same accusations are being made against accused no’s 1 – 6 in respect of Avid and although no direct evidence was adduced in support of the allegations contained in this count, the court is entitled to draw inferences from the proved facts. It must be borne in mind that the offence does not only relate to directors of a company, but to ‘every person who was knowingly a party to the carrying on of the business’ which would obviously also include an outsider or any individual within the company. It therefore makes no difference that the accused were charged in their personal capacity and not as directors of their respective companies.
[95] In the light of the evidence before the court, I am of the view that it constitutes prima facie evidence on count 2 in respect of all the accused who are accordingly placed on their defence. When coming to this conclusion I have given due consideration to the position of accused no 6, as discussed earlier herein, and particularly his active association with those persons responsible for the carrying on of Avid and the role he was required to fulfil. Objectively viewed it seems to me that his actions in this regard could be incorporated under the provisions of s 424 (3) of Act 61 of 1973.
Count 3 (Accused 1 – 4)
[96] In this count the accused are charged under s 251 (1) of the Act. This section provides for the making, circulating or publishing of certificates, written statements, reports or financial statements in relation to any property or affairs of the company which are false in material respect by a director or officer of a company. Whereas the State elected to prosecute the accused in respect of those charges committed under the Companies Act in their personal capacity, thereby alleging that they have acted in person and not as directors or officers of Avid, any action taken by them in their personal capacity, in my view, would fall outside the ambit of s 251 (1) of the Act, accordingly the accused ought to be acquitted on this count.
Count 4 (Accused 1 – 4)
[97] In respect hereof the accused are charged under s 284 of the Act for having failed to take all reasonable steps to keep accounting records of the company. From the heading of the section it is evident that the duty to keep the said records and registers lies with the company and not its directors, except in as far as subsection 4 provides that a director or officer of the company who is a party to such failure, or who fails to take the necessary steps to secure compliance by the company with the provisions, would be guilty of an offence. In the present circumstances, irrespective as to whether or not any of the directors of Avid were party to the company’s failure to keep the required records or failed to take reasonable steps to do so, they are not bound thereto as individuals, only in their official capacity. As already stated, they have not been charged in their official capacity and therefore cannot be held liable in person. Accordingly accused no’s 1 – 4 are entitled to their acquittal on count 4.
Count 5 (Accused 1 – 4)
[98] In this count the accused were charged with a contravention of s 211 (6) of the Act for having failed to consent in writing that they will act as directors of Avid. It however emerged during the testimony of Mr Knouwds that the accused persons did comply with the provisions required by the Act and, in view thereof, it was conceded by the prosecution that the accused ought to be discharged on this count. The concession is properly made and the accused stand to be acquitted on count 5.
Count 6 (Accused 1 – 4)
[99] Section 216 of the Act deals with duties of directors and officers of the company in respect of the furnishing of their particulars for purposes of keeping a register and thereafter, to lodge a return with the Registrar of Companies, reflecting the particulars of its directors or any changes thereanent. The provisions of the section, read together with s 215 providing for a register of directors and officers of the company to be kept, make plain that it refers only to such directors and officers of the company and places no obligation on any other person. Whereas s 216 (5) refers to ‘any person’ it must be interpreted to refer to directors and officers of the company in their official capacity to comply with the provisions set out therein, and not to any other person. Although accused no’s 1, 2 and 4 were directors of the company at the relevant time, they were not charged as such and are before court in their personal capacity. Therefore, the provisions of s 216 do not find application and the accused stand to be acquitted on this charge.
Count 7 (Accused 1 – 4)
[100] Under s 242 (5) of the Act the directors of the company are obliged to cause minutes of all proceedings of meetings of directors or managers to be entered into a register/book which must be kept up to date; failing which would constitute an offence when any of these persons knowingly is party to the default. From the evidence of Mr Knouwds it is clear that a minute book was part of the documentation seized for purposes of liquidation of the company, but that the said book in the meantime had gone missing. Although unable to testify in any detail about minutes kept of meetings held by the board, he could distinctly recall that the minute book did contain minutes of meetings held. His evidence in this regard clearly refutes any allegations about any omission on the part of the accused and, as with most of the other counts charged under the Act, the accused were not charged in their official capacity; hence they stand to be acquitted on this count.

Count 8 (Accused 1 – 4)
[101] Section 245 requires from every director present at any meeting of directors, and managers at a managers’ meeting, to sign his or her name under the date of the meeting in a book (minute book) as provided for in s 242 of the Act. Whereas the minute book was not produced into evidence, the allegations in this charge could obviously not be proved. Neither could the accused, as already stated, have been charged in their personal capacity if the duty to comply with the provisions of this section rested on the shoulders of directors and managers alike, acting in their official capacity. Consequently, for reasons already stated, the accused must equally be acquitted on this charge.
Count 9 (Accused 1 – 7)
[102] In this count all the accused are charged with the offence of contravening s 249 (2) of the Companies Act 61 of 1973 in that they allegedly gave false evidence when testifying at an inquiry held in terms of s 417 in the High Court. Whereas no evidence in support of the allegations embodied in the charge had been presented at the trial, and the State having conceded that there is no evidence on which the accused persons could be put on their defence, all the accused stand to be acquitted on this count.
Count 10 (Accused 3)
[103] This count concerns only accused no 3 in which he is charged with corruption in contravention of s 2 (a) of Ordinance 2 of 1928 in that he, between April 2004 and 14 April 2005, being an agent of the Ministry of Labour and/or the SSC, unlawfully and corruptly as an inducement of reward for doing or omitting to do an act in relation to his principal’s affairs or business, or for showing or refraining from showing favour or disfavour to any person in relation to his principal’s affairs, by accepting or obtaining or agreed to obtain from Lazarus Kandara, cash amounts as an inducement or reward for assisting Avid to secure an investment of N$30 million from the SSC, while omitting to disclose to his principal, the Ministry of Labour, his own involvement or that of the late Kandara, with Avid.
[104] Section 2 (a) of the Prevention of Corruption Ordinance 2 of 1928 reads as follows:
‘(a) If any agent corruptly accepts or obtains, or agrees to accept, or attempts to obtain from any person for himself, or for any other person, any gift or consideration as an inducement or reward for doing or forbearing to do …. any act in relation to his principal’s affairs or business, or for showing or forbearing to show favour or disfavour to any person in relation to his principal’s affairs or business, or

(b) …

(c) …

he shall be guilty of corruption … .’

The Ordinance was repealed by s 54 of the Anti-Corruption Act 8 of 2003 which came into effect on 15 April 2005.
[105] From a reading of the present charge it is evident that the alleged corrupt conduct on the part of accused no 3 relates to cash amounts that were given to him by Mrs Kandara which, so it is alleged, were as reward for having assisted and/or ensured that the SSC invests with Avid.
[106] Mrs Kandara testified about several occasions during April and May 2005 when she, as requested by her late husband, Lazarus Kandara, personally handed sums of N$40 000 in cash to accused no’s 3, 5 and 6. The handing over thereof took place at her home. On a subsequent occasion she again had to hand a further N$10 000 over to accused no 3, which she did. What is clear from the testimony of Mrs Kandara is that, according to her, she simply gave effect to instructions she had been given by her late husband and which she slavishly complied with, not knowing why she had to hand over sums of cash to those persons identified by her husband. Other than knowing that the money was brought to her by accused no 7 under circumstances which can only be described as suspect, she was in no position to say where the money had come from. On a different occasion she, again on instruction of her husband (who on each occasion had been outside the country), had to give N$7 000 to accused no 7. This seems to show a strange connection between Kandara and accused no 7 involving the exchange of substantial amounts in cash between them and which could not be explained by the go-between, Mrs Kandara.
[107] From the afore-stated it is clear that no evidence was presented during the State case showing that cash amounts handed over to the accused on two occasions, as testified by Mrs Kandara, were consequential upon an inducement of reward for assisting or ensuring that Avid was the successful bidder in the N$30 million investment made by the SSC; neither could that, in my view, be inferred from the proved facts to be the only reasonable inference that could be drawn therefrom. Without such evidence there is no basis for a finding that accused no 3 received the said moneys as inducement of reward for any corrupt act on his part in respect of the SSC investment. As mentioned, the circumstances as testified by Mrs Kandara under which the cash was dropped off by accused no 7 and later collected by accused no’s 3, 4 and 6, are extremely suspect. However, the evidence does not support the charge of corruption against accused no 3. Accordingly, the court should acquit on this charge.
Count 11 (Accused 3)
[108] This count involves only accused no 3 and the charge is equally one of corruption, however, now in contravention of s 33 of the Anti-Corruption Act, 8 of 2003. During submissions the State conceded that the charge was essentially a duplication of the offence contained in count 10 and that the accused should therefore be acquitted on this count. The concession is proper and accused no 3 is entitled to be acquitted on this count.
[109] In the result, the court’s finding in respect of the s 174 of Act 51 of 1977 applications, is the following:

Count 1 – Main and alternative counts:
Accused no’s 1 – 5: The application in respect of each accused is dismissed.

Accused no 6: The application is granted.

Accused no 7: The application is granted only in respect of the main count (Fraud), on the alternative counts (Theft) it is dismissed.
Count 2
Accused no’s 1 – 7: The application in respect of each accused is dismissed.
Counts 3 – 8
Accused no’s 1 – 4: The application in respect of each accused is granted.
Count 9
Accused no’s 1 – 7: The application in respect of each accused is granted.
Counts 10 and 11
Accused no 3: The application is granted.

__________________

JC Liebenberg

Judge

APPEARANCES

STATE E E Marondedze (assisted by C Lutibezi)

Of the Office of the Prosecutor-General, Windhoek.
ACCUSED NO 1 S Namandje

Instructed by Sisa Namandje & Co, Windhoek.

ACCUSED NO 2 W Boesak

Instructed by Diedericks Inc., Windhoek.

ACCUSED NO 3, 4 & 5 G Kasper

Instructed by Murorua & Associates, Windhoek.

ACCUSED NO 6 J Wessels

Instructed by Stern & Barnard Legal Practitioners, Windhoek.

ACCUSED NO 7 S Makando

Instructed by Directorate: Legal Aid, Windhoek.

1 S v Nakale 2006 (2) NR 455 (HC) at 457; S v Teek 2009 (1) NR 127 (SC) at 130I-131B.

2 S v Hugo 1976 (4) SA 536 (AD) at 540E-G.

3 Attorney-General of Namibia v Minister of Justice and Others 2013 (3) NR 806 (SC).

4 1976 (4) SA 536 (A).

5 1978 (3) SA 302 (WLD).

6 1958 (2) SA 481 (A).

7 See S v Erasmus and Others 1997 (1) SACR 379 (CC).

8 Service Issue 6 at 33-8.

9 1970 (3) SA 700 (N).

10 1981 (3) SA 803 (C).

11 S v BM 2013 (4) NR 967 (NLD).

12 1960 (4) SA 364 (OPD).

13 1994 NR 233 (HC).

14 1995 (4) SA 790 (A).

15 Attorney-General supra.

16 See Martha Namundjebo-Tilahun N.O. and Another v Northgate Properties (Pty) Ltd and 3 Others (unreported) Case No. SA 33/2011 [2013] NASC 12 (7 October 2013); City of Tswane Metropolitan Municipality v RPM Bricks Ltd 2008 (3) SA 1 (SCA) at 5F-6A.

17 Criminal Law (6^th ed.) at p. 523.

18 1921 SA 413 (AD).

19 1998 (1) SACR 438 (N).

20 1991 (1) SACR 503 (Nm).