CONTRABAND CIGARETTES: PROSECUTIONS AND SANCTIONS ADV A MOSING

Transcription

1 CONTRABAND CIGARETTES: PROSECUTIONS AND SANCTIONS ADV A MOSING

2 Introduction The NPA deals with contraband (illicit or counterfeit) cigarette cases mainly through the specialized Tax Units. Also the Organized Crime Components in DPP offices; The incidents of contraband cigarettes are prevalent in the following DPP jurisdictions: Gauteng South and Gauteng North (the latter includes Limpopo and Mpumalanga); KZN and WC; No cases were reported in Mthatha and EC did not provide data as at the time of writing.

3 SARS STATS According to SARS contraband cigarettes accounted for: 30% of total cigarette consumption in ; 27% in 2001; Beit Bridge border accounts for 91% by volume of contraband cigarettes seized by Customs

4 SARS Stats (Cont.) Quantity of cigarette sticks seized year on year in RSA: 03-04: ; 04-05: ; 05-06: ; increase of % over previous year; 06-07: ; increase of 43.71% over previous year; 07-08: ; 08-09: ; 09-10: ;

5 Case Stats: Western Cape DPP: Finalized 267 cases by way of Section 91 Administrative penalty totaling R Another 21 cases finalized through Admission of Guilt fines totaling R ; Received 22 new cases for reporting year to date; Finalized 4 for this period, with payments made to CARA of R ; 86 cases with convictions since 2007 by Tax unit alone with fines totaling approximately R3, 5m actually paid.

6 Case Stats: Other DPP Offices Gauteng South (Johannesburg) reporting year New cases received: 28 (fewer cases received due to internal changes in SARS); Guilty: 8 Not guilty: 1 AGF: 4 KZN 12 cases currently of possession or dealing in illicit cigarettes. FREE STATE 2014: received 14- with 13 convictions; 1 acquittal; 2015: 10-7 convictions; 3 withdrawals (due to absence of foreign interpreter; Intelligence agencies refused to make affidavit; SARS officials making affidavit where they were not involved in the seizures). NORTH WEST 2014: received 17 cases; convicted 13; 2 acquitted and 2 withdrawn.

7 Case Stats (Cont.): Gauteng North Limpopo Cases received 2014: : 28 Cases prosecuted 2014: : 28 Cases convicted 2014: : 11 Cases Acquitted 2014: 01 Mpumalanga Cases received 2014: : 117 Cases prosecuted 2014: : 115 Cases convicted 2014: : 45 North West Cases received 2014: : 13 Cases prosecuted 2014: : 11 Cases convicted 2014: : 07 Gauteng Cases received 2014: : 22 Cases prosecuted 2014: : 20 Cases convicted 2014: : 12

8 OFFENCES Customs and Excise Act- 91 of 1964 c/s 80(1)(a) or (b) c/s 83(a) or (b) c/s 102 rw s 78 (1) and (2) c/s 3(7)(a) of the Tobacco Products Control Act 83/1993 COUNTERFEIT GOODS ACT 37 OF 1997 Fraud Prevention of Combating of Corrupt Activities Act 12 of 2004 Robbery Prevention of Organised Crime Act 121 of 1998

9 Section 80 (1) Any person who- (a) has upon his premises or in his custody or under his control, or purchases, sells or otherwise disposes of any illicit goods knowing the same to be illicit goods; (b) not being a licensed manufacturer or dealer, without lawful authority has in his possession or custody or under his control any partly manufactured excisable goods or fuel levy goods or excisable goods or fuel levy goods upon which duty has not been paid;

10 Section 80 (Cont.) shall be guilty of an offence and liable on conviction to a fine not exceeding R or treble the value of the goods in respect of which such offence was committed, whichever is the greater, or to imprisonment for a period not exceeding five years, or to both such fine and such imprisonment.

11 Section 83 Any person who- (a) deals or assists in dealing with any goods contrary to the provisions of this Act; or (b) knowingly has in his possession any goods liable to forfeiture under this Act; shall be guilty of an offence and liable on conviction to a fine not exceeding R20000 or treble the value of the goods in respect of which such offence was committed, whichever is the greater, or to imprisonment for a period not exceeding five years, or to both such fine and such imprisonment, and the goods in respect of which such offence was committed shall be liable to forfeiture.

12 Illicit 'illicit goods', in relation to imported or excisable goods, surcharge goods or fuel levy goods, means any such goods in respect of which any contravention under this Act has been committed, and includes any preparation or other product made wholly or in part from spirits or other materials which were illicit goods;

13 SANCTIONS Sentences are usually a fine coupled with a suspended sentence of imprisonment. In addition, correctional supervision is imposed (house arrest and community service); Fine is usually equivalent to the amount determined as value of illicit cigarettes.

14 CHALLENGES Custom and Excise Act very technical and requires expertise evidence (Western Cape developed an expert affidavit of some 198 pages used during court in aggravation of sentences). The Customs Act does not define value, therefor state devised a fair formula to determine value that is below actual value of contraband cigarettes for purposes of court- the risk is worth taking; Use of external forensic services by industry. Exceeding of mandate by actively participating in searches, with or without law enforcement officials. Such searches are deemed to be illegal which impacts negatively on the prosecution and have potential civil claims for the state.

15 CHALLENGES (CONT) SAPS members are not familiar with the laws pertaining to cigarettes; Customs officials are not trained in the gathering and preservation of evidence, for example, Exhibits are destroyed before the finalization of the criminal case, no proper inventory is made of cigarettes seized during a search; Also refuse to inspect cigarettes; gives affidavits where not involved in operation (where goods stopped by saps (uniform)/traffic police); Latter also do not understand the laws applicable; Foreign interpreters;

16 CHALLENGES (CONT) Our land borders are porous, which allows for easy smuggling of illicit goods; Borderline with Botswana is apparently in sorry state. Shortage of storage space for seized goods; Conflict at times between SAPS and SARS over the seized exhibits;

17 BATSA ROBBERIES Delivery trucks targeted around the Cape Peninsula and other regions (EC); Modus operandi: waylay delivery trucks to spaza shops in townships; Hold up the drivers with either a firearm or other weapon and drive to a predetermined place, where the cigarettes are offloaded into a getaway vehicle.

18 BATSA (CONT) Participants are usually 4 or more persons, but not always the same persons; were able to identify a core group of individuals, but groups are loosely organized and fluctuate; WC Organized Crime Component analyzed approximately 80 such dockets received and was able to formulate two Racketeering prosecutions currently on court roll. Other cases pending in the Priority Court as single facetted cases.

19 WHY POCA TO DEAL WITH CONTRABAND SIGARETTES AND BATSA ROBBERIES Crimes are organised Involves various role players Different levels of participants Can target the King pins behind the crimes Crimes committed in an ongoing manner There are legal business entities that fuels the crimes (market) It is transnational in nature- very organised; involves exportation/importation to/or from other countries;

20 WHY POCA (CONTINUED) POCA only effective tool to deal with sophisticated organised crime Effective sentences (Fine not exceeding R1000m/ life imprisonment for racketeering) Can charge with Money Laundering Contraband cigarettes- should be viewed as proceeds of unlawful activities (contravention of Customs laws/fraud/corruption) therefor target the launderer, person assisting criminal to launder proceeds and/or the person who possesses, acquires or uses proceeds (spaza shop owners).

21 WHY POCA (CONTINUED) Conventional offences (customs) not effective due to being viewed as merely the avoidance of paying customs duty; Sentences therefor fines, which they pay easily; Cannot prosecute those beyond actual participation in conventional offences; Rules of evidence favourable: may include hearsay evidence, similar fact evidence and evidence of previous convictions;

22 RACKETEERING Section 2 of POCA Section 2(1)(a)-(d)- property sections Section 2(1)(e)-(f)- most relevant sections Section 2(1)(g)- conspiracy or attempt to commit racketeering offence

23 THE ENTERPRISE Enterprise includes any individual, partnership, corporation, association, or other juristic person or legal entity, and any union or group of individuals associated in fact, although not a juristic person or legal entity. Three categories: Business entity; or a Legal entity; or group of individuals associated in fact Organising principle behind the racketeering events Distinguish from accused persons Different roles and tasks performed by various people (driver; negotiator; customs official, etc.)

24 Enterprise (cont.) System of command/hierarchy Common or shared goal/purpose Intention to profit Continuity of existence

25 THE ACCUSED Not the enterprise Relationship with enterprise through participating in a pattern of racketeering activity (PORA) or managing the affairs of the enterprise

26 PORA Defined as: The planned, ongoing, continuous or repeated participation or involvement in any offence referred to in Schedule 1 and includes at least two offences referred to in Schedule 1, of which one of the offences occurred after the commencement of this Act and the last offence occurred within 10 years (excluding any period of imprisonment) after the commission of such prior offence referred to in Schedule 1 (section 1 of POCA)

27 PORA (CONT.) Question whether to include offences relating to customs in schedule I of POCA? Similarity of offences Connected to enterprise and accused Means whereby accused participated in the enterprise Benefits enterprise

28 SECTION 2(1)(e)- PARTICIPATION Any person who whilst managing or employed by or associated with any enterprise, conducts or participates in the conduct, directly or indirectly, of such enterprise s affairs through a pattern of racketeering activity;

29 SECTION 2(1)(e) (CONT.) Enterprise exists Three possibilities: Acc participated in the enterprises affairs through a PORA either through managing the affairs of the enterprise OR employment by the enterprise or association with the enterprise; Direct or indirect conduct

30 SECTION 2(1)(f) Any person who manages the operation or activities of an enterprise and who knows or ought reasonably to have known that any person, whilst employed by or associated with that enterprise, conducts or participates in the conduct, directly or indirectly, of such enterprise s affairs through a pattern of racketeering activity;

31 SECTION 2(1)(f) (cont) Existence of enterprise Manage is ordinary dictionary meaning of word- S v DE VRIES AND OTHERS 2009 (1) SACR [388] to [389]- The first requirement for a conviction under count 1 is that the accused must have managed the operations or activities of the enterprise. The Concise Oxford Dictionary 10 ed, defines 'manage' as: 'be in charge of', 'supervise (staff)', 'administer and regulate' or 'maintain control or influence over (a person or animal)'.

32 SECTION 2(1)(f) (cont) Knew or ought reasonably to have known that people employed by or associated with the enterprise are participating, directly or indirectly, in the conduct of its affairs through a pattern of racketeering activities. Wide application of knowledge; Cannot say merely I did not know. Question is what steps taken to establish the true state of affairs that a reasonable manager in that position would have taken.

33 MONEY LAUNDERING- SECTIONS 4, 5, AND 6 'proceeds of unlawful activities' means any property or any service advantage, benefit or reward which was derived, received or retained, directly or indirectly, in the Republic or elsewhere, at any time before or after the commencement of this Act, in connection with or as a result of any unlawful activity carried on by any person, and includes any property representing property so derived; 'property' means money or any other movable, immovable, corporeal or incorporeal thing and includes any rights, privileges, claims and securities and any interest therein and all proceeds thereof;

34 Section 4- ML Any person who knows or ought reasonably to have known that property is or forms part of the proceeds of unlawful activities and- (a) enters into any agreement or engages in any arrangement or transaction with anyone in connection with that property, whether such agreement, arrangement or transaction is legally enforceable or not; or (b) performs any other act in connection with such property, whether it is performed independently or in concert with any other person, which has or is likely to have the effect- (i) of concealing or disguising the nature, source, location, disposition or movement of the said property or the ownership thereof or any interest which anyone may have in respect thereof; or [Para. (i) substituted by s. 6 (b) of Act 24 of 1999.] (ii) of enabling or assisting any person who has committed or commits an offence, whether in the Republic or elsewhere- (aa) to avoid prosecution; or (bb) to remove or diminish any property acquired directly, or indirectly, as a result of the commission of an offence, shall be guilty of an offence.

35 Section 4 -elements Property is or forms part of unlawful activity Actual knowledge or assumed knowledge Agreement; arrangement or any act in connection with the said property Effect of concealing, or disguising the nature, source, location, disposition or movement of the said property or the ownership thereof or any interest which anyone may have in respect thereof, OR To avoid prosecution or to remove or diminish any property acquired directly, or indirectly, as a result of the commission of an offence

36 Section 5- Assisting another to benefit from proceeds of unlawful activities Any person who knows or ought reasonably to have known that another person has obtained the proceeds of unlawful activities, and who enters into any agreement with anyone or engages in any arrangement or transaction whereby- (a) the retention or the control by or on behalf of the said other person of the proceeds of unlawful activities is facilitated; or (b) the said proceeds of unlawful activities are used to make funds available to the said other person or to acquire property on his or her behalf or to benefit him or her in any other way, shall be guilty of an offence.

37 Section 5-Elements of Proceeds of unlawful activity That another has acquired Knows or ought reasonably to have known that another ahs obtained the unlawful activity Agreement, arrangement/ transaction Effect of: retention or control over proceed is facilitated, OR Used to make funds available to the other person or to acquire property or to benefit in any way

38 Section 6- Acquisition, possession or use of proceeds of unlawful activities Any person who- (a) acquires; (b) uses; or (c) has possession of, property and who knows or ought reasonably to have known that it is or forms part of the proceeds of unlawful activities of another person, shall be guilty of an offence.

39 Section 6- Elements of (Easiest to proof) Acquires; uses; or has possession of Property, Intention- knew or ought reasonably to have known that it is or forms part of the proceeds of unlawful activities of another person

40 ML- SENTENCES Any person convicted of an offence contemplated in section 4, 5 or 6 shall be liable to a fine not exceeding R100 million, or to imprisonment for a period not exceeding 30 years.

41 POCA CASES Presently only one racketeering matter on the roll in NW (S v Rahman and others) for smuggling illicit cigarettes. Another in Pretoria was withdrawn due to lack of credible evidence (section 204 witness). Underlying offences were corruption, fraud and Money Laundering to bring under POCA. Few other more racketeering cases deals with the robbery of BATS trucks. The SAPS (DPCI) needs to be more involved in investigating these crimes from an organized crime perspective. It is not enough to treat them merely as Customs- related crimes.

42 THANK YOU