The South Gauteng High Court has unfrozen more than a billion rands worth of assets belonging to Gupta-linked consultancy firm Regiments Capital, after finding the state failed to disclose various “material” facts when the matter first came before a judge last year.
The National Director of Public Prosecutions (NDPP) last November secured an interim restraint order against Regiments Capital and got R1.1 billion worth of its assets believed to be the proceeds of crime frozen.
This came on the back of an investigation into millions of rands worth of Transnet contracts awarded between 2009 and 2019 for the supply of locomotives and to carry out rail maintenance.
Regiments was Transnet’s investment advisor and carried out investment services for the Transnet Second Defined Benefit Fund (TSDBF) during the period in question.
Judge Maletsatsi Mahalelo on Monday found there was important information the NDPP had not shared with the court at the time of the original application, which was brought on an ex parte basis, without notice being given to Regiments ahead of time.
This included that just two months prior, Judge Bashier Vally, also in the South Gauteng High Court, had handed down what Regiments described as an “anti-dissipation” order, which did not allow the firm to “remove, encumber, dispose of, deal with, diminish the value of, forego, or reduce control over any of their assets” pending the finalisation of a shareholder dispute.
The NDPP, represented in these proceedings by Investigating Directorate head Hermione Cronje, argued the order in question was in fact not an anti-dissipation order. Further, the NDPP argued it was not “sufficiently relevant” to warrant disclosure and would not have influenced the court’s final decision.
But Mahalelo yesterday said these concerns, along with the order, should have formed part of Cronje’s founding affidavit.
“This in my view, would have enabled the ex parte court to make a determination whether her concerns were valid,” Mahalelo said. “I agree with counsel for Regiments that it was not appropriate for [the] NDPP to pick and choose what should be drawn to the attention of the ex parte court.”
She said the order was “of equal force and relevance to the application” at hand.
“And failure to disclose it to the ex parte court is simply indefensible,” she added.
The judge made similar findings about the NDPP’s failure to disclose a settlement agreement between Transnet and Regiments.
“Surely if the court granting the ex parte order was informed that the settlement agreement concluded between Transnet and Regiments was in full and final settlement of the claims by Transnet against Regiments, he [the judge] might have wanted to know more about it and it may have influenced the court in coming to its decision,” Mahalelo said.
The NDPP was yesterday still considering its options.
“The repercussions of today’s judgment are significant. Not only will the restrained assets be returned to the defendants, but it sets a high bar for disclosure in restraint applications in the future,” Cronje said in a statement,
“When launching applications for provisional restraint orders, the NDPP’s deponent is forced to make a call which documents are material and should be put before a court. In the present case, the founding papers were already in excess of 1 400 pages. Where the net for materiality is cast too widely, there is a real danger of overwhelming the duty judge who has mere days to consider the application.”
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