Money laundering

Offences

• Concealment/disguise of nature/ source/location/… of proceeds of crime

Keywords

• Proceeds of crime
• Instrumentalities

Wildlife, forest and fisheries crime

Offences

• Fisheries crime

Prohibited Act

• Acquisition/Possession/Ownership
• International trade (import, export, re-export)

Keywords

• International trade (import, export, re-export)
• Documentation

Van Staden

UNODC No.:
ZAFx013

Fact Summary

Johannes Erasmus van Staden was a Cape Town businessman and registered representative vendor of Indo Atlantic Seafoods (Pty) Limited, Indo Atlantic Shipping limited and Southern Ocean Marine Corporation (Pty) Limited. From 2005 to 2008, he engaged in an illegal scheme through which he defrauded the South African Revenue Service (SARS). His modus operandi included falsely presenting invoices and inflated fish export records to the SARS, which in return refunded VAT to Mr. van Staden’s company. Over the course of time, Mr. van Staden defrauded taxes of more than R250 million. In June 2016, he was found guilt on 43 charges of racketeering, fraud, reckless conduct of business, and contravention of the Prevention of Organized Crime Act, such as money laundering. Mr. Staden was sentenced to 20 years imprisonment and had R6 million worth of assets confiscated.

During 2005 and 2008, Mr. van Staden submitted false records about alleged fish exports to the SARS, indicating much higher amounts of fish exports than accurate. Furthermore, he submitted alleged expenditures of his business, such as expenditures for refrigerator systems, delivery trucks, and fish production lines. He obtained authentic invoices for these expenditures by requesting quotes from different providers in the fisheries industry. He repeatedly accepted offers and asked for invoices, which he claimed were for financial purposes. Upon reception of these invoices, he submitted them to the SARS but walked away from the deals. Through this, Mr. van Staden not only defrauded money from the SARS but also inflicted significant economic damage on third-party service providers.

In early 2005, Mr. van Staden approached S&D Consulting to function as bookkeeper and accountant to the Indo Atlantic group on a commission basis. Later that year, the First National Bank closed the account of Indo Atlantic Seafoods (Pty) Limited, upon which S&D Consulting started to receive their financial transactions instead. After deducting their commission and fee, SD Consulting forwarded the money to Indo Atlantic companies. Mr. van Staden lived a lavish lifestyle with that money, funnelling it through a family trust called Swordfish Trust. Through this, he financed his luxury expenses, including the purchase of a game farm, an airplane, different motor vehicles, an apartment for his daughter, and a family vacation with chartered jet.

The initial indictment was directed at Mr. van Staden and five other potential perpetrators. In June 2016, Mr. van Staden was found guilty on 43 out of 184 counts, whereas the other accused were found not guilty on all charges. Mr. Staden was sentenced to 20 years imprisonment and had R6 million worth of assets confiscated.

Commentary and Significant Features

This case has been widely reported by the media due to the fact that the perpetrator Mr. van Staden lived a lavish lifestyle using the money he gained through his illegal activities.
The trail become known as one of he biggest cases of fraud in South Africa, with over R250 million defrauded.
Sentence Date:
2016-06-27
Author:
Caitlyn McGeer | DPhil Candidate | University of Oxford

Cross Cutting

Liability

... for

• completed offence

... based on

• criminal intention

... as involves

• principal offender(s)

Procedural Information

Legal System:
Common Law
Latest Court Ruling:
High Court
Type of Proceeding:
Criminal
 
 
Proceeding #1:
  • Stage:
    other
  • Is the decision appealable?:
    No
  • Official Case Reference:
    SS15/2010
  • Court

    Court Title:

    Western Cape High Court

     

    Location

  • City/Town:
    Cape Town
  • Province:
    Cape Town
  • • Criminal
    Description:

    The six accused, including Johannes Erasmus van Staden, were indicted with 184 counts under the Prevention of Organized Crime Act 121 of 1998 as well as under the common law. The charges spanned racketeering, fraud, reckless conduct of business, and contravention of the Prevention of Organized Crime Act, such as money laundering.

    The High Court assessed the evidence presented for the guiltiness of each of the six individuals.

    Accused 1: Johannes Erasmus van Staden, was found to be a bad witness, giving evasive statements and relying on his memory to fail him whenever it seemed suitable. Furthermore, he was found to have lied at times. He was the registered representative vendor with SARS and as such responsible for VAT returns paid to Indo Atlantic Seafoods (Pty), Indo Atlantic Shipping Limited and Southern ocean Marine Corporation (Pty) Limited. He was found to have signed several VAT returns himself. Witnesses confirm that Mr. van Staden had been in contact with several other business from which he requested services in order to receive quotas, even though he never intended to fulfil his part of the agreement. The court further found that accused 1 laundered 90% of the money of his illegal activities through a trust, using it to pay for private expenses. The court concluded that accused 1 had designed, implemented and ran the illegal scheme whereby SARS was defrauded. Eventually, the court found accused 1 guilty on 43 out of 184 counts (1,3,4-15,16-19,21-50,61,62,182-184).

    Accused 2:

    Accused 2 was approached by accused 1 in early 2005 with the request to render bookkeeping and accounting services through his firm, S&D Consulting. Accused 2 was offered to be paid on a commission-basis, i.e. 10% of all VAT refunds plus his fee. The court discussed whether accused 2 should have become suspicious after receiving a rapidly increasing amount of VAT returns. Yet, the court found that even though accused 2 could be described as opportunistic, the agreement he entered was not illegal as such. When the First National Bank closed the accounts of Indo Atlantic Seafoods (Pty), accused 2 agreed to receive the VAT refunds on his company’s account on behalf of accused 1. Similarly like in the first decision, the court found that this arrangement was not illegal, and that the behaviour of accused 2 could only be described as opportunistic and greedy. It was discussed whether accused 2 should have concluded that SARS was being defrauded, given the large sums of VAT refunds that accused 2 helped to process throughout the course of the business. Yet, the court found that accused 2 seldom visited the offices of his clients but on the occasions that he did he saw a thriving business. Furthermore, it was argued that the initial refunds accused 2 had to process were fairly small, only growing in magnitude over the course of time. Generally, the court found accused 2 to be a collaborative witness. His passive role in the whole scheme was confirmed by the small amount of communication and information exchange he had with accused 1.

    Eventually, accused 2 was found not guilty on all charges.

    Accused 3: The court discussed whether accused 3 had knowledge of the falsity of VAT claims of the illegal scheme, which he came in touch with during employment by the accounting firm of accused 2. The procedure for completion of the VAT returns was that accused 3 was presented figures by accused 1, which constituted the claims. Upon becoming uncomfortable with the claims, accused 1 assured accused 3 that it was not his responsibility. Furthermore, the court found that processing these VAT returns was only a minor part of accused 3’s business responsibilities. Moreover, no false invoices were found on accused 3’s computer. As a result, accused 3 was found not guilty on all charges.

    Accused 4: This person had only been accused erstwhile and had not been indicted eventually.

    Accused 5: The court found it not necessary to analyse the evidence by accused 5, as he was an excellent witness and there was no evidence that would imply his role in the illegal scheme.

    Accused 6: This person had only been accused erstwhile and had not been indicted eventually.

     

    In summary, only accused 1 had been found guilty.

     

    Victims / Plaintiffs in the first instance

    Victim:
    South African Revenue Service
    Institution

    Defendants / Respondents in the first instance

    Respondent:
    Johannes Erasmus van Staden (Accused 1)
    Gender:
    Male
    Age:
    54
    Defendant:
    Accused 2
    Defendant:
    Accused 3

    Charges / Claims / Decisions

    Respondent:
    Johannes Erasmus van Staden (Accused 1)
    Verdict:
    Guilty
    Charge / Claim:

    Racketeering activity

    Legislation / Statute / Code:

    Contravention of s2(1)(f) of POCA (Prevention of Organized Crime Act 121 of 1998)

    Verdict:
    Guilty
    Charge / Claim:
    Money laundering
    Legislation / Statute / Code:
    Contravention of s4 of POCA (Prevention of Organized Crime Act 121 of 1998)
    Verdict:
    Guilty
    Charge / Claim:
    Fraud, VAT Fraud & Income tax fraud
    Legislation / Statute / Code:
    18(2)(a) of Act 17 of 1956
    59(1)(a) of Value Added Tax Act 89 of 1991
    30(1)(i) of the Fourth Schedule to the Income Tax Act, 58 of 1962
    Term of Imprisonment:
    20 years
     
    Defendant:
    Accused 2
    Verdict:
    Not Guilty
    Charge / Claim:
    Fraud, VAT Fraud & Income tax fraud
    Legislation / Statute / Code:

    18(2)(a) of Act 17 of 1956

    59(1)(a) of Value Added Tax Act 89 of 1991

    30(1)(i) of the Fourth Schedule to the Income Tax Act, 58 of 1962

    Defendant:
    Accused 3
    Verdict:
    Not Guilty
    Charge / Claim:
    Fraud, VAT Fraud & Income tax fraud
    Legislation / Statute / Code:
    18(2)(a) of Act 17 of 1956
    59(1)(a) of Value Added Tax Act 89 of 1991
    30(1)(i) of the Fourth Schedule to the Income Tax Act, 58 of 1962

    Court

    High Court of South Africa – Western Cape High Court, Cape Town

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