INTRODUCTION
Forfeiture is important. It seems obvious that the state should do its best to ensure that crime does not pay. Asset forfeiture is often portrayed simply as a means of reclaiming what has been wrongfully gained by criminals. In this sense, it is merely the state claiming the fruits of crime on behalf of society. Put in this light, it is hard to understand the objections raised to asset forfeiture.
But there is a clear sense of unease that surrounds the idea of asset forfeiture. Arbitrary and capricious deprivation by governments of the private property of individuals who have not been convicted of a crime is generally not permissible in rights-based societies. For example, the land invasions in Zimbabwe and the government’s expressed intention to expropriate such land are examples of a type of property right infringement that has been widely condemned. In what way can asset forfeiture, where no-one is convicted of a crime, but private property is seized by the state without compensation, be distinguished from this type of action?
At the root of the unease over forfeiture are certain principles which are generally accepted in societies that embrace liberal democratic values. These are the right to private property (especially land), which encompasses that:
Civil asset forfeiture provisions vary from country to country. However, most cast a shadow over these principles. Paradoxically, ‘the land of the free’, the United States, had a federal civil forfeiture regime until recently that rode roughshod not only over these principles, but over others, such the principle of audi alterem partem (hear the other side). South Africa has come nowhere near the excesses in US law, but certainly brushes against these principles:
These are the objections to asset forfeiture in South Africa. This is not to imply that civil asset forfeiture cannot be justified, or that South African law is particularly limiting with respect to rights. The purpose of this article is to look at South Africa’s civil asset forfeiture law comparaticely and to gain some perspective of where it is placed on the rights continuum.
HISTORY AND UNITED STATES LAW
In South Africa, the dawn of the human rights era in the 1990s brought with it violent and serious crime on a scale and distribution not seen before, as well as crime associated with international organised drug-trafficking groups.
The latter is of concern, particularly to the US, which noted an increase in drugs entering its territory with a connection to South Africa, even if only as a transit country. Demand in the US for proscribed substances has not decreased significantly, despite its much publicised ‘war against drugs’.1
Hence, the US has been quick to assist South Africa with its programme aimed at organised crime. Most recently, Scorpion recruits (Directorate of Special Operations) were trained by the Federal Bureau of Investigation (FBI) in the US. While the legislation governing the Scorpions has not been finalised, it is evident that the Directorate will focus partly on organised crime. Prior to that, US experts assisted with the drafting of South African legislation to combat organised crime.
South Africa’s Prevention of Organised Crime Act, an omnibus act which also includes provisions on criminal and civil asset forfeiture, is based on the controversial Racketeer Influenced Corrupt Organisations Act (RICO) of the US.2 RICO was passed essentially in response to the difficulties in policing drug laws and in tackling syndicates and gangs involved in illegal enterprises in the US. It is thus useful to look at US law.
Until 1970, all US federal forfeitures were civil forfeitures. Civil forfeitures are premised on the legal fiction that the forfeited property is guilty of an offence. It is the property that is charged. The citation of some US cases illustrates the point: United States v. $405,089.23 U.S. Currency; United States v. 92 Buena Vista Avenue; United States v. One Mercedes 560 SEL.3
The origins of civil forfeiture law are found in the Old Testament and in medieval doctrine. Animals and objects involved in wrongdoing could by sacrificed or forfeited to the Crown.4 Later, civil forfeiture was used to avoid the jurisdictional problems of England’s maritime trade. Admiralty courts in the 17th century used it to punish foreign owners of pirate and smuggling ships, who escaped criminal punishment as they were beyond the jurisdiction of the courts.5
The fiction that captured pirate ships and smuggled goods were the wrongdoers was therefore adopted. Such wrongfully used properties were forfeited. Foreign owners escaped personal criminal prosecution, but were punished by property losses. These roots of forfeiture are an indication of an important aspect of its nature: a means of punishment where the law is unable to convict a perpetrator who lies beyond the reach of the legal system.
In 1970, the US passed the federal statute, The Comprehensive Drug Abuse Prevention and Control Act. It was subsequently amended in 1978 and 1984. Unlike the admiralty courts, US civil forfeitures in the modern era are used when wrongdoers are within the court’s jurisdiction. Officials can seize property without notice, upon an ex parte application (without hearing the defendant’s case) of probable cause (a low standard of proof) that the property has been ‘involved’ in a crime.6
No person has to be charged. The action is against the ‘thing’. The allegation of ‘involvement’ may be that the property is contraband, represents the proceeds of crime, or somehow ‘facilitates’ crime. ‘Probable cause’ may be based on nothing more than hearsay, innuendo, or the oral evidence of a party with interests adverse to the property owner.7 Family homes, vehicles and other assets have been seized in pursuance of this law, especially in relation to drug-dealing.
Because of abuses of forfeiture laws, extensive lobbying for reform was undertaken by American civil rights groups such as the respected Cato Institute, a conservative policy think-tank, and FEAR, a citizen’s lobby group (Forfeiture Endangers Americans’ Rights).8 To give an often quoted example of an unjust outcome in the US: a family car, jointly owned by a husband and wife, was forfeited after the husband was caught consorting with a prostitute in the car. The car was an ‘instrument of crime’. The wife had no recourse. There is a significant incentive for agencies to abuse forfeiture as the proceeds ultimately accrue to the agency bringing the forfeiture application.
In June 1999, the US House of Representatives passed the Civil Asset Forfeiture Reform Bill (House Resolution 1658, known as the Hyde Bill as it was sponsored by representative Hyde) by a large margin of 375 to 48. In essence, the Hyde Bill provided for two things. Firstly, where it is alleged that the property is the proceeds of crime, the burden would be on the government to prove, by clear and convincing evidence, that the property seized was derived from crime.9
Secondly, where it is alleged that the property is an ‘instrument of crime’, all federal forfeiture statutes would have to incorporate a defence for innocent owners.10 This is because ‘instruments of crime’ have become so widely defined that, to give another example, homes have been seized where an illegal phone call was made from it. The Hyde Bill also incorporated some procedural reforms.
The Senate, however, did not pass the Bill in its original form. A watered-down version of House Resolution 1658 was passed on 27 March 2000. On 11 April, representative Hyde presented the amended version to the House of Representatives where it was adopted as amended.11 However, the two essential features remain. The US Attorney’s Office must consider the merits of the case, instead of having the seizing agency win most cases by default when the claimant fails to file a claim and post bond on time. The innocent owner defence that applies across the board to virtually all civil forfeiture statutes also remains. This Bill came into force in August 2000.
SOUTH AFRICAN CIVIL FORFEITURE
For civil forfeiture, South Africa’s Prevention of Organised Crime Act requires proof, on a balance of probabilities, that the property is an instrumentality of an offence or the proceeds of unlawful activities for property to be forfeited.12 For example, forensic evidence that cash notes to the value of R140 000 were physically tainted with drugs, has in one instance satisfied the burden of proof, and resulted in the civil forfeiture of these notes.13 In this application, the forfeiture application was not opposed. Similar to US law, there is no need to find any person guilty of a criminal offence.
At first glance, there seems to be nothing wrong with proof being on a balance of probabilities. After all, all civil cases, for damages or any other order where money and assets are routinely claimed and won by private persons, are won on proof to a balance of probabilities. What then is the difference with asset forfeiture?
The difference is that, in asset forfeiture, the state is the applicant. As such, it has all the resources of the state, including the police and prosecution service, funded by the public purse, at its disposal in pursuing the claim.
Chapter six of the Prevention of Organised Crime Act has other provisions relating to civil forfeiture. A preservation order, which precedes a forfeiture order, is at this stage brought against any person, and not against the property, to prevent him or her from dealing with the property in any manner. A preservation order requires only the showing of ‘reasonable grounds’ to believe the property is either proceeds of or an instrumentality in crime. This is similar to the US situation where the state is required to show ‘probable cause’ at the first stage of a forfeiture.
The Prevention of Organised Crime Act provides that the state is then required to give notice that the order has been made to all persons who may have an interest in the property. Anyone intending to oppose a forfeiture or to apply for his or her interest in the property to be excluded must give such notice to the court at this stage.
Property subject to a preservation order may be seized by a police official if there are reasonable grounds to believe that such property will be removed. In the US, however, the state automatically seizes the property at the first stage.
Once the preservation order is in force, the state may apply for a forfeiture order. Anyone opposing the application or applying for an exclusion may bring evidence at the hearing of the application. To succeed with a forfeiture order, the burden of proof is on the state to show on a balance of probabilities that the property is the proceeds of or an instrumentality in crime. Compare this to the US situation prior to reform, where the burden is on the owner to prove a negative, that is, that the property is not the proceeds of crime and not an instrumentality in crime.
South Africa’s Act requires the state to give notice to all persons who may have an interest in the property. Anyone applying for an exclusion of his or her interest in the property may show (if the state has satisfied its burden of proof) on a balance of probabilities that he or she acquired the interest legally and neither knew nor had reasonable grounds to suspect that the property was the proceeds of or an instrumentality in crime. South Africa’s Act further provides for appeals. It appears, therefore, that South Africa has avoided the worst of US civil forfeiture law: South Africans already have an ‘innocent owner’ defence and recourse to appeal.
AN ASIDE ON RICO
It may help to explain the depth of suspicions toward forfeiture in the US, in general, when looking at certain aspects of the RICO law. RICO itself is often associated with the idea of ‘asset forfeiture’. The bad name that forfeiture has in the US is often linked to controversial aspects of RICO. But this is not because of the criminal forfeiture contained in the RICO law. Rather, it is the result of civil asset forfeiture contained in federal and state laws as discussed above, and certain other aspects of the RICO law.
The RICO law provides for criminal forfeitures, which are possible on conviction of an accused, as does South Africa’s Act. Only property representing the fruits of illegal activity is realised. Anyone likely to be affected by the realisation of confiscated property, or who has suffered damages as a result of offences committed by the accused, can make representations to the court. Criminal forfeiture seems quite reasonable. Why then does the RICO law have a bad reputation?
It is not the criminal forfeiture provisions of RICO that are controversial, but one of its punitive provisions related to racketeering, which has become confused in the public imagination with forfeiture. This provision14 stipulates that any person injured financially as a result of a racketeering offence may sue and recover threefold the damages sustained. A racketeering offence consists of two or more ‘predicate’ offences, which includes such offences as mail fraud. Although South Africa has similar racketeering provisions, the Act does not provide for threefold damages claims by private citizens.
The US Supreme Court held in a 1985 decision15 that such a private action can proceed against a defendant even if he or she has not been convicted in a criminal case of a predicate act (one of the offences making up a racketeering offence) or a racketeering offence. A defendant may never be convicted of a criminal offence, yet a plaintiff may claim and win treble damages. Of course, the plaintiff must prove the elements of a racketeering offence, but only on the civil standard of proof, and not on the criminal standard (beyond a reasonable doubt).
Treble damages are meant to be punitive, yet can be awarded where the defendant has never been convicted. A plaintiff is therefore over-compensated. For example, in April 1998, a Chicago federal jury in a private action found, on the civil standard, that three national leaders of the anti-abortion lobby had committed predicate extortion offences against abortion clinics. The jury found the defendants responsible for damaging the clinics’ ability to do business. The plaintiff, the National Organization for Women, was awarded US $86 000.16
SOUTH AFRICAN CRIMINAL FORFEITURE
The South African Prevention of Organised Crime Act provides for two types of asset forfeitures. RICO-type criminal forfeitures are provided for in chapter five. In terms of chapter five, a ‘confiscation order’ may be made on conviction of an accused who has benefited from any of the offence(s) of which he or she is being convicted, as well as from any criminal activity sufficiently related to those offences. Such an order is for the payment by the accused of an amount of money. This amount may not exceed the proceeds of his or her criminal activity, or the value of all ‘realisable property’, whichever is the lesser.
Realisable property is property held by the accused plus the value of any ‘affected gifts’ made by the accused. An affected gift is one made in the seven years preceding prosecution, or which was originally received by the accused in connection with unlawful activities.
A confiscation order may be preceded or followed by a ‘restraint order’. The purpose of the order is to prevent property from being removed. Chapter five also makes provision for a ‘realisation order’ for the conversion to money of realisable property. Anyone likely to be affected by the realisation, or who has suffered damages as a result of the offences committed by the accused, can make representations to the court regarding the realisation.
UN CONVENTION
It is important to note that forfeiture is not something novel embarked upon only by the US and South Africa. Indeed, a 1988 UN convention requires states party to the convention to adopt forfeiture provisions.
The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances was adopted by the UN conference at its 6th plenary meeting on 19 December 1988. The African countries that are party to this convention include Algeria, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Chad, Côte d’Ivoire, Egypt, Ethiopia, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya, Lesotho, Madagascar, Malawi, Mauritania, Morocco, Mozambique, Niger, Nigeria, São Tomé and Principe, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Swaziland, Togo, Tunisia, Uganda, the United Republic of Tanzania, Zambia and Zimbabwe.
This was the third such convention adopted by the UN. Most countries, including South Africa, that have adopted laws against organised crime reflect the provisions recommended by the convention, but have extended them to cover criminal activities other than drug offences. The Transnational Convention against Organised Crime, recently finalised in Vienna, can also be seen to some extent as an extension of the provisions of the convention.
The parties agreed to adopt measures to establish drug offences under their domestic law, as well as money-laundering offences (conversion or transfer of property derived from drug offences; concealment of property derived from drug offences; acquisition of such property). Criminal gang provisions provide for harsher penalties where these offences involve organised criminal groups.
With regard to forfeiture in terms of article five of the convention, each party must adopt measures to enable confiscation of proceeds derived from drug offences, or property of which the value corresponds to that of such proceeds; and narcotic drugs and psychotropic substances, materials and equipment, or other instrumentalities used in or intended for use in any manner in drug offences.
Each party must adopt measures to enable its competent authorities to identify, trace, and freeze or seize proceeds, property, instrumentalities or any other things referred to in defining the drug offences, for the purpose of eventual confiscation.
In order to carry out the measures referred to in this article, each party must empower its courts or other competent authorities to order that bank, financial or commercial records should be made available or seized. A party shall not decline to act under the provisions of this paragraph on the grounds of bank secrecy.
Proceeds or property confiscated by a party must be disposed of by such a party according to its domestic law and administrative procedures. If proceeds have been transformed or converted into other property, such property shall be liable to the measures referred to in this article instead of the proceeds. If proceeds have been intermingled with property acquired from legitimate sources, such property must, without prejudice to any powers relating to seizure or freezing, be liable to confiscation up to the assessed value of the intermingled proceeds. Income or other benefits derived from proceeds, from property into which proceeds have been converted or property with which proceeds have been intermingled, must also be liable to the measures applicable to proceeds.
In terms of article seven, each party may consider ensuring that the onus of proof regarding the lawful origin of alleged proceeds or other property liable to confiscation should be reversed, to the extent that such action is consistent with the principles of its domestic law and with the nature of the judicial and other proceedings. Article eight provides that this must not be construed as prejudicing the rights of bona fide third parties. A reversal of the onus of proof in South Africa would not be consistent with the country’s Constitution.
Interestingly, the convention also provides that a party may adopt more strict or severe measures than contained in the convention if, in its opinion, such measures are desirable or necessary for the prevention or suppression of illicit traffic. The convention is subject to ratification, acceptance or approval by states. By October 1999, there were 153 states party to the convention.
NIGERIAN ASSET FORFEITURE
Nigerian asset forfeiture law17 is not contained in a single piece of legislation. Most forfeiture is criminal in nature, in that a criminal offence must first be proved in Nigerian courts. However, there is an exception, which is being challenged in Nigeria on a constitutional basis.
Again the links to the war on drugs are clear. The National Drug Law Enforcement Agency Decree 48 of 1989, now contained in chapter 253 of the Laws of the Federation of Nigeria, is the law that established the National Drug Law Enforcement Agency and gave it the power to enforce laws against the cultivation, processing, sale, trafficking and use of hard drugs, and to investigate persons suspected of dealing in drugs.
This decree was passed by the then military regime in response to the US ‘decertification’ of Nigeria. The US’s annual ‘certification’ procedure provides for economic sanctions against those who are decertified. The US believed that Nigerians were making a significant contribution to the world drug trade, especially in cocaine, and acted in order to persuade nations to co-operate in the drug war.
Decree 48 provides for the forfeiture of the properties of any person convicted under the decree. This law is still in operation. A number of cases have been dealt with under this law, which led to the conviction of the accused persons and the forfeiture of their property. Apparently, this law has been able to curb the rate of drug-related offences in Nigeria, which grew rapidly during the second half of the 1980s and the early 1990s.
Some have alleged that this decree was used to target the Ibo people of the south: an example where the perceived selective application of forfeiture has in fact occurred. Allegations of Ibo persecution stem from the days of the Biafran war when the area known as Biafra in which the Ibo live, attempted to secede from Nigeria in the 1960s. It has been alleged that many Ibo subsequently relocated to South Africa to escape asset forfeiture. Their knowledge of asset forfeiture laws makes Nigerians in South Africa loath to invest in property.
Decree No 33 of 1990 is an amendment to Decree 48. Decree 33 creates the offence of bringing the name of Nigeria into disrepute. Section 12A(2) of the decree stipulates that any Nigerian found guilty of a drug-related offence outside the shores of Nigeria has committed an offence, and subsection 3 sanctions such an offence with a five-year jail term, while the person’s assets may be subjected to forfeiture. All that needs to be shown is that there was a criminal conviction in another jurisdiction, without requiring proof to the criminal standard of the original offence in terms of Nigerian criminal law.
Decrees are laws made under the military regime. Since democratic government was instituted in Nigeria in mid-1999 under President Olusegun Obasanjo, it was decided that all decrees made until 1990 would become acts. Decrees after 1990 would have to be assessed and passed by the Nigerian Federal Parliament, but remain in force until thus considered. Decree 33 of 1990 is therefore still in force.
However, the Constitutional Rights Project, a Nigerian non-governmental organisation (NGO), filed a suit18 early in 2000 at the Federal High Court in Lagos, challenging the legality of Decree 33. In the suit, the plaintiff is seeking an order of the court declaring the Decree null and void on the ground that it contravenes section 36(9) of the 1999 Nigerian Constitution. This section provides that:
"no person who shows that he has been tried by any court of competent jurisdiction or tribunal for a criminal offence and either convicted or acquitted shall again be tried for that offence or for a criminal offence having the same ingredients as that offence save upon the order of a superior court."19
It is also argued that it violates article 5 of the African Charter on Human and Peoples Rights.
Money Laundering Decree No 3 of 1995 makes provision for the prevention of money-laundering and creates offences for the contravention of its provisions. Punishment for the offences includes forfeiture. This law is still an existing law and the jurisdiction to try offences created under it has now been vested in the Federal High Court, following the abolition of the tribunal system in Nigeria.
There are also code of conduct provisions in the Constitution of Nigeria of 1999, which provide for the declaration of assets by public officers on assuming office and stipulate punishment for its violations, including seizure and forfeiture to the state of any property acquired as a result of the abuse or corruption of office. It is said in jest by Nigerians that if Shari’a, or Muslim law, was applied to former state officials they would all be one-handed. Sharia is, in fact, in force in some Muslim states in Nigeria at present.
Four properties in the Nigerian capital Abuja, forfeited by former minister, Lieutenant-General Jeremiah Useni, one of the most powerful generals of the Abacha regime, were auctioned in May 2000 for over 2 billion Naira, or more than US $20 million, in terms of these provisions. Nigerians criticised the auctions, as they wanted to know why the government had not enquired where the buyers obtained the capital to make such purchases.
CANADIAN CIVIL FORFEITURE
Canada has a very conservative civil forfeiture regime. The law in which it is contained refers expressly to the Canadian Charter of Rights and Freedoms. Civil forfeiture is possible only where criminal proceedings have commenced against an accused, and the accused has absconded or is deceased. Proof is to the criminal standard. Immovable property may not be forfeited, unless it can be shown that it was built or modified expressly for the purpose of carrying out criminal activity.20
CONCLUSION
South Africa’s forfeiture laws lie somewhere between the polar opposites represented by the US and Canada. Perhaps these opposites are a reflection of the extent to which economic crime and its profits are a priority in these countries. Under a benevolent government, South African asset forfeiture laws appear to incorporate sufficient checks and balances. But as with all legislation, it has to be asked: What would my worst enemy be entitled to do within this law?
NOTES
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