SOUTH AFRICA: A STEP IN THE RIGHT DIRECTION FOR THE FIGHT AGAINST CORRUPTION IN STATE INSTITUTIONS
In the recent Constitutional Court judgment in the matter of Ledla Structural Development (Pty) Ltd and Others v Special Investigating unit, 2023, (Ledla judgment), the Court had to determine if the Special Tribunal established in terms of section 2 of the Special Investigating Units and Special Tribunals Act 74 of 1996 (SIU Act), enjoys the status of a court of law and whether it has the power to adjudicate reviews. The Court found that the Special Tribunal is not a court but does have the power to adjudicate reviews.
The Ledla judgment dealt with serious allegations of corruption in the procurement of personal protective equipment (PPE) which occurred during the Covid-19 pandemic. On 27 March 2020, the chief operations officer of the Gauteng Department of Health presented a report that revealed a PPE shortage of ZAR 1.7 billion for the entire department. The Special Investigating Unit conducted investigations into the conclusion of the unlawful contract and authorisation of the payment of ZAR 38 758 155 to Ledla Structural Development (Pty) Ltd (Ledla). The SIU’s findings prompted it to approach the Special Tribunal for urgent relief cancelling the unlawful procurement contract together with a preservation order. The Special Tribunal reviewed and set aside the PPE contract awarded to Ledla, holding that it was unlawful and tainted by corruption, and ultimately granted a forfeiture order. Leave to appeal was refused by the High Court and Supreme Court of Appeal and the matter came before the Constitutional Court.
The unanimous judgment of the Constitutional Court considered whether the Special Tribunal possessed the characteristics of a court. The Court found that on a plain reading of section 166(e) of the Constitution, it does not include Tribunals.
The Special Tribunal is established by the President’s proclamation and constituted on an ad hoc basis. Section 2(2) of the SIU Act makes it clear that only the President is empowered to refer matters to the SIU. These characteristics are not those of a court of law. The Special Tribunal’s jurisdiction is restricted to civil proceedings that arise from the investigations and referrals by the SIU and the Tribunal’s presiding officers do not enjoy security of tenure. For these reasons, the Court found that the Special Tribunal is not a court.
The Court then considered whether the Special Tribunal has the power to conduct and adjudicate reviews. The Court had regard to the judgment in the matter of Competition Commission of South Africa v Group Five Construction Ltd  ZACC 36, where the powers of the Competition Tribunal were challenged. The Constitutional Court in that case decided that the ‘Competition Tribunal is a creature of statute, limited in the exercise of its powers to those afforded to it within the four corners of the Act. Absent any express powers in the Act to do so, the Competition Tribunal has no authority in law to review the lawful exercise of public power’.
Similarly, the Special Tribunal is a creature of statute. The Court turned to the SIU Act to determine whether it is empowered to adjudicate on legality reviews. Section 8(2) of the SIU Act empowers the Special Tribunal to adjudicate upon ‘any civil proceedings’ brought by the SIU. Mhlantla J, emphasised that the wide language employed by the legislature in section 8(2), to empower the Special Tribunal to adjudicate on ‘any civil proceedings’ points to the power of legality review not being excluded from the Special Tribunal’s purview.
The purpose of the Special Tribunal emanates from the preamble of the SIU Act which provides for the establishment of Special Investigating Units to investigate serious malpractices or maladministration in connection with the administration of State institutions, State assets and public money as well as any conduct which may seriously harm the interests of the public. The function of the Special Tribunal is to adjudicate upon civil matters emanating from investigations by Special Investigating Units. The Special Tribunal thus serves as a mechanism to remedy and deter the corruption that threatens to undermine the democratic values and realisation of the socio-economic rights in our Constitution.
As pointed out by the SIU in the Ledla Judgment, review proceedings are ‘quintessential civil proceedings designed to remedy malpractices and maladministration in connection with the administration of state institutions’. The function of the SIU is to institute civil proceedings in a Special Tribunal or any court, for any relief the State institution is entitled to, including the recovery of or potential damages and losses suffered by such a State institution. The Court found that the legislature intentionally created a wide scope of the proceedings that the Special Tribunal is empowered to adjudicate on. Therefore, in the absence of any express exclusion in the SIU Act, a legality review is not excluded from the ambit of the jurisdiction of the Special Tribunal. The Special Tribunal may, accordingly, adjudicate on reviews brought by the SIU and grant an order setting aside an unlawful procurement contract.
The Special Tribunal’s power to issue preservation and forfeiture orders was also challenged. The Court was asked to interpret rule 26 of the Special Tribunal Rules which provides that the Special Tribunal may make a final order for forfeiture to the State, of the property held under a preservation order or an interdict where the respondent has been found to have participated in unlawful activities. Additionally, the applicants contended that Regulation 5(c) of the SIU Regulations do not permit civil forfeiture, unless the preservation order, under which the property is subject, is ‘legally competent’. The Court expressly refused to engage in an interpretative exercise where the effect is to challenge the constitutionality of the provisions. The Court found that the applicants should have joined the Minister of Justice to the proceedings and launched a frontal attack on the provisions in question instead of approaching the Court under the pretense of an interpretive exercise.
Although the Constitutional Court did not rule on whether the Special Tribunal has the power to issue forfeiture orders, forfeiture orders give effect to a finding that, as a result of unlawful conduct, organs of state have suffered losses which they are entitled to recover. Forfeiture provides an effective recovery mechanism in the hands of the SIU that was established with the express purpose of investigating corruption involving State assets and public funds in the public interest. Section 4 of the SIU Act accordingly affords the SIU wide powers to seek, ‘any relief relevant to any investigation’.
Therefore, until the constitutionality of rule 26 of the Special Tribunal Rules read with Regulation 5(c) of the SIU Regulations is challenged and found to be unconstitutional, the Special Tribunal may issue preservation and forfeiture orders.