Angelina Procopos v National Director of Public Prosecutions

The appellant's daughter was convicted on 100 charges of fraud and other financial crimes relating to a fraudulent investment scheme operated through Two Ferns Financials CC. The scheme involved approximately R52.9 million from investors. The daughter had no bank account in her own name and requested the appellant (her mother) to open a bank account, into which approximately R9.7 million was deposited. The appellant withdrew R2.3 million in cash from the account on various occasions. The National Director of Public Prosecutions sought a restraint order under section 26 of the Prevention of Organised Crime Act 121 of 1998 against the appellant's assets, alleging she received an "affected gift" from her daughter. The appellant and her daughter both deposed affidavits stating that the account was merely used as a conduit for the daughter's business and that the appellant received no benefit from the transactions. Rabie J granted a provisional restraint order, and Claassen J confirmed it in respect of the appellant's interests in two close corporations and her ABSA bank account.

• Whether the National Director of Public Prosecutions must prove on a balance of probabilities that an 'affected gift' was made, or whether reasonable grounds for believing such a gift was made suffice for a restraint order under section 26 of the Prevention of Organised Crime Act
• Whether the respondent established on the facts that the appellant received an 'affected gift' as defined in section 12(1) of the Act
• Whether section 16(1) of the Act operated to deem a gift to have been made to the appellant
• Whether property held as a conduit constitutes 'realisable property' for purposes of a restraint order
• Whether the court should have ordered cross-examination of the appellant and the defendant under Rule 6(5)(g)

The appeal was allowed with costs, except in relation to the ABSA bank account. The order of the court a quo regarding the appellant's interests in the two close corporations was set aside and replaced with an order directing that the defendant and appellant be subject to cross-examination under Rule 6(5)(g). The cross-appeal was dismissed with costs.

In an application for a restraint order under section 26 of the Prevention of Organised Crime Act 121 of 1998 against a person other than the defendant, the applicant must prove on a balance of probabilities that the person holds 'realisable property' as defined in section 14, including that they received an 'affected gift' as defined in section 12(1). Proof of reasonable grounds for belief does not suffice. Section 16(1), which deems certain transfers to be gifts, only operates where there has been: (a) a transfer of property by the defendant to another person; (b) the supply of consideration by that other person to the defendant; and (c) proof that such consideration was worth significantly less than the property transferred. Where a bank account is used merely as a conduit through which funds are channeled, with the account holder receiving no benefit, no 'gift' has been made and the account holder's other assets do not constitute realisable property subject to restraint.

The court noted that certain decisions relied upon by the respondent relating to confiscation orders (as opposed to restraint orders against non-defendants) may require reconsideration in light of the House of Lords decision in R v May [2008] UKHL 28. The court also observed that the respondent's alternative arguments were fallacious because they overlooked the fundamental distinction that the appellant was not an accused person/defendant, and that the relief sought was specifically premised on the assertion that she had received an 'affected gift', which would render property held by her 'realisable property' under section 14(b).

This case clarifies important principles regarding restraint orders under Chapter 5 of the Prevention of Organised Crime Act 121 of 1998. It establishes that: (1) For restraint orders against third parties (non-defendants), the state must prove on a balance of probabilities that an 'affected gift' was made - reasonable grounds for belief are insufficient. (2) The concept of 'gift' in the Act bears its ordinary meaning denoting permanency, and the use of an account as a mere conduit does not constitute receipt of a gift. (3) Section 16(1)'s deeming provision requires proof of actual consideration supplied by the recipient before a transfer can be deemed a gift. (4) Only 'realisable property' as defined in section 14 can be subject to a restraint order - property held purely as a conduit for a defendant does not qualify. The judgment provides important protection for third parties against whom restraint orders are sought, requiring proper proof rather than mere suspicion, and reinforces the civil nature of proceedings under Chapter 5.