Organised crime and presenting evidence on racketeering

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Case study and analysis of the South African law relating to racketeering prosecutions.

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Organised crime and presenting evidence on racketeering

  1. 1. www.pwc.comOrganised Crime andPresenting Evidence onRacketeering ACFE 4th African Conference Sandton September 2011 Adv Jacqueline Fick
  2. 2. AgendaMeet Johnny la RicaRacketeering definedHow to prove the offence of racketeeringClosing remarksOrganised Crime and Presenting Evidence on Racketeering September 2011PwC 2
  3. 3. Meet Johnny la RicaOrganised Crime and Presenting Evidence on Racketeering September 2011PwC 3
  4. 4. Meet Johnny la RicaLa FamiliaJohnny was born an entrepreneur. When his father died it was justnatural that he would take over the business. For years the family hasbeen in the curios business, exporting from South Africa to all over theworld. Johnny used to live in South Africa, but has now decided thathis business skills flourish in a tropical environment and he is nowliving in the Bahamas. He trusts his manager and shareholder, Rico dela Fingers to run the business. Rico has a big corner office in thepremises the business owns and where all the goods are packed andshipped from. They have a wonderful accountant, Kook da Book thatlooks after the financial affairs of the business and has always investedtheir hard earned cash well. Kook has often wondered how curios canbe so lucrative, but with the salary he earns he has never askedunnecessary questions. The company, Packadapowda, employs severalpackers that also collect the merchandise from where ever the best priceOrganised Crime and Presenting Evidence on Racketeering September 2011PwC 4
  5. 5. Meet Johnny la RicaLa Familia (continued)is offered. Johnny also regularly makes contributions to customsofficials in other countries to see that the curios are not damaged whenthey arrive and are distributed in the particular country. His networkof agents abroad have also ensured that there is a constant demand forhis products and their loyalty to Johnny has always been paramount.For their loyalty Johnny has also given them shares in the business.Even when one shipment of curios developed “mildew” and the customsofficial remarked about the white powdery substance leaking from acalabash, the agent immediately reported this to Johnny and Rico andthe customs official, officer Massif Bribe was also rewarded for hisdiligence in spotting a potentially hazardous situation. Packadapowdahas truly been a home to its employees, most who have been on thewrong side of the law before and have seen the inside of a prison cellmore than once. But family is family and who said loyalty cannot bebought?Organised Crime and Presenting Evidence on Racketeering September 2011PwC 5
  6. 6. Racketeering definedOrganised Crime and Presenting Evidence on Racketeering September 2011PwC 6
  7. 7. Racketeering definedPrevention of Organised Crime Act 121 of 1998 (POCA)• Statute was patterned after American law: Racketeer Influenced Corrupt Organisations Act (RICO)• Chapter 2 includes provisions that make it a crime to engage in racketeering.• Central to the prohibitions against racketeering are the concepts of an enterprise and a pattern of racketeering activity (PORA).• Sections vary with regard to the accused person‟s relationship to the enterprise and pattern of racketeering activity.• Difference between organised crime and other criminal offences: Investigative method relies on the event based response. The event is processed with regard to who is responsible for the crime.• Racketeering on the other hand needs an entirely different approach. The quest is to find out what organization is behind those crimes. Aim is to prosecute the ORGANISATION behind the events.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 7
  8. 8. Racketeering definedWhat to look for when considering racketeering charges• The Accused• The Enterprise • Separate from the accused. • The vehicle which the syndicate used to commit the crimes.• The Offences • Pattern of racketeering activity. • Predicate offences.• State must establish the existence of an enterprise, a pattern of racketeering activity and a link between them and the accused (S v dos Santos and another 2010 (2) SACR 382 (SCA))Organised Crime and Presenting Evidence on Racketeering September 2011PwC 8
  9. 9. Racketeering definedThe accused• Have to prove that the accused were involved in the illegal activities or operations of the enterprise by proving their participation in the PORA. Remember that the accused and the enterprise are two separate concepts.• There are seven (7) separate offences in Chapter 2 of POCA. The property subsections (a) – (d); the racketeering offences (e) – (f); and the conspiracy to commit racketeering subsection (g)• Section 2(1)(f) is utilised to charge the Manager of the enterprise (who ought to have known.)• Section 2(1)(e) is for any manager, employee, associate if they participated in the PORA.• A typical enterprise has common goals and that is to profit from crime. There will be differentiating jobs within the organisation – a hierarchy and structure.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 9
  10. 10. Racketeering definedThe 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.• S v Eyssen 2009 (1) SACR 406 (SCA): “There is no requirement that the enterprise be legal or illegal. It is the pattern of racketeering activity, through which the accused must participate in the affairs of the enterprise, that brings in the illegal element; and the concepts of „enterprise‟ and „pattern or racketeering activity are discrete. Proof of the pattern may establish proof of the enterprise, but this will not inevitably be the case.”Organised Crime and Presenting Evidence on Racketeering September 2011PwC 10
  11. 11. Racketeering definedCharacteristics of an Enterprise• A differentiation of roles and a differentiation of tasks• A system of command• A common or shared goal/purpose• Intention to make a profit• Continuity of personnel• The enterprise is an entity separate and apart from the pattern of activity in which it engages• The enterprise is the organising principle behind the “events”Organised Crime and Presenting Evidence on Racketeering September 2011PwC 11
  12. 12. Racketeering definedThe Offences: Pattern of Racketeering Activity• A “Pattern of Racketeering Activity” is 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.• Participation must be by way of ongoing, continuous or repeated participation or involvement.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 12
  13. 13. Racketeering definedSection 2(1)(e)“Any person who – whilst managing or employed by or associated withany enterprise, conducts or participates in the conduct, directly orindirectly, of such enterprise‟s affairs through a pattern of racketeeringactivity;within the Republic or elsewhere, shall be guilty of an offence.Participation in the affairs of the enterprise is the offence. The accusedis guilty by virtue of two things:(i) being involved in an enterprise (to be part of the group of racketeers), and(ii)being involved in the commission of two or more offences (Schedule 1).Organised Crime and Presenting Evidence on Racketeering September 2011PwC 13
  14. 14. Racketeering defined Acquiring or maintaining an interest in or control of the enterprise (Section 2(1)(d)) Any person who – acquires or maintains, directly or indirectly, any interest in or control of any enterprise through a pattern of racketeering activity; in the Republic or elsewhere, shall be guilty of an offence. • In terms of this provision, the interest in (or control of) the enterprise is acquired or maintained through a pattern of racketeering activity. • Johnny, manager and agentsOrganised Crime and Presenting Evidence on Racketeering September 2011PwC 14
  15. 15. Racketeering definedSection 2(1)(f)“Any person who –manages the operation or activities of an enterprise and who knows orought reasonably to have known that any person, whilst employed by orassociated with that enterprise, conducts or participates in the conduct,directly or indirectly, of such enterprise‟s affairs through a pattern ofracketeering activity; within the Republic or elsewhere, shall be guilty of an offence.”• Managing the operation or activities of the enterprise is the offence.• Target is the Manager.• Must be shown that the accused is in a position of some kind of management.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 15
  16. 16. Racketeering definedProsecuting the Manager• How do we prosecute a manager who ought to have known?• Guilt can be proved by negligence. Johnny does not bother himself with the day to day operations of the business.• Benefit of racketeering prosecution: prosecute those who cannot be touched with the normal concepts of liability.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 16
  17. 17. Racketeering definedProperty connected to racketeering• Section 2(1)(b) deals with receiving, s 2(1)(c) deals with using, and section 2(1)(a) includes both receiving and using.• I.t.o. section 2(1)(a) it is an offence to receive or retain and use or invest property derived from a pattern of racketeering activity.• I.t.o. section 2(1)(b) it is an offence to receive property derived from a racketeering activity on behalf of an enterprise.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 17
  18. 18. How to prove the offence of racketeeringOrganised Crime and Presenting Evidence on Racketeering September 2011PwC 18
  19. 19. How to prove the offence of racketeeringHave to supply proof of the following three things: - The Enterprise - The Pattern of Racketeering Activities - The Relationship between the accused and A & B above• A Legitimate legal entity can be proved by the company charter.• The elements of each offence needs to be proved through the evidence deduced.• To prove the relationship we have to prove knowledge. In the circumstances the only deduction is: “Sure he knew”• If an accused is an employee/associate we must prove that he participated in the events.• Who are we targeting? We are prosecuting the accused for the collective activity of the enterprise.• Instead of a misjoinder – we charge the accused as an enterprise conducting a PORA.Organised Crime and Presenting Evidence on Racketeering September 2011PwC 19
  20. 20. How to prove the offence of racketeeringS v dos Santos and Another 2010 (2) SACR 382 (SCA):“.... Regarding the contention that an accused must first be tried andconvicted of the predicate offences before he or she could be indicted onracketeering charges under POCA, that the decision whether toprosecute, and on what charges, rested with the prosecutor.Prosecutions under POCA, together with prosecutions for the predicateoffences, would usually involve considerable overlap in the evidence...Such overlap did not of itself occasion an automatic invocation of animproper splitting of charges or duplication of convictions.... Since the POCA substantive offences were not the same as thepredicate offences, the State was at liberty to prosecute them inseparate trials or in the same trial. It followed as well that there couldbe no bar to consecutive sentences being imposed for the two distinctcrimes because the one required proof of a fact which the other didnot.”Organised Crime and Presenting Evidence on Racketeering September 2011PwC 20
  21. 21. Closing remarks• Difficult and arduous investigations and prosecutions• Approval from NDPP for prosecution• Section 3(1): • Any person convicted of an offence referred to in section 2(1) shall be liable to a fine not exceeding R1 000 million, or to imprisonment for a period up to imprisonment for life.• Way to get the guy at the top!Organised Crime and Presenting Evidence on Racketeering September 2011PwC 21
  22. 22. “Victories often occur after you see no way to succeed but refuse to give up anyway.” Dave WeinbaumThis publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon theinformation contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to theaccuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC, its members, employees and agents do notaccept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the informationcontained in this publication or for any decision based on it.© 2011 PricewaterhouseCoopers (“PwC”), the South African firm. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers in SouthAfrica, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity and does not actas an agent of PwCIL.

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