The sentencing of LeisureNet chief executives Peter Gardener and Rodney Mitchell in the Cape high court this week was a leap forward in the fight against white-collar crime. The case has taken five years to work its way through the legal system, with every obstacle Gardner and Mitchell could put in the way. They have been granted leave to appeal the sentence of 12 years each (some of which is suspended), so there is a further hurdle to overcome. But the National Prosecuting Authority (NPA) has doggedly pursued the case.
Such high-profile sentences are an important signal to would-be corporate criminals. The prospect of being caught and punished needs to be tangible to swing their calculus in favour of the legal route. The LeisureNet case was important in achieving that. Yet it is just one; other high-profile cases remain frustratingly bogged down. Also, the breadth of cases is important: justice must be seen to be done, even in small commercial crimes.
Government has shown commitment to tackling commercial crime. This is clear in the capacity building that has occurred in the past few years in three important institutions: the NPA with its Scorpions investigative unit; the SA Police Service's serious commercial crimes unit (SCCU) ; and Willie Hofmeyr's special investigating unit which focuses on the public sector. At least two of the three have grown significantly: the SCCU from eight prosecutors in 1999 to more than 200 today, and the special investigating unit from 70 staff five years ago to more than 500 and forecast to reach 1 000 by 2010. The Scorpions, through morale issues and private-sector poaching, now fill just 70% of their assigned 640 posts, but the unit is engaged in a vigorous recruitment drive. The Pretoria office of the SCCU has 24 prosecutors, each handling 60- 80 cases at any one time, usually highly complex commercial crimes.
The skills shortage applies to investigators, too. For example, the Pretoria commercial crimes unit has 113 investigator positions. Until recently, only 16 of those were filled. Nevertheless, the general growth of specialist units is encouraging, even if qualified and experienced staff remain scarce. Hofmeyr, for instance, says he would like to see at least 5 000 anticorruption operatives to cope with SA's white-collar crime.
But even when investigators and prosecutors overcome the resource constraints, they must face every legal barrier their quarries can muster. Consider the case of Tigon and its former CEO, Gary Porritt, being pursued by the SCCU. " They've used every possible method to delay the matter," says one investigator involved in the case. Every legal turn has been frustrated by counteraction. Prosecutors say the case will go to court later this year.
The same can be said of the NPA's efforts to bring to book Jeff Levenstein, former CEO of Regal Treasury Bank, which collapsed in 2001. A commission of inquiry subsequently found prima facie evidence for a string of charges. Levenstein was then charged in 2003. Since then, every obstacle has been thrown in the way of getting the case under way, most recently in December when a judge rejected the latest series of applications, one numbering 163 pages. Business Day quoted Johannesburg high court judge Ivor Schwartzman as saying the applications were "a novel and unmeritorious attempt" to get prosecutors to accept his version.
The LeisureNet sentencing, and the progress of the Tigon and Regal cases, shows that people accused of white-collar crimes can use their resources to throw legal obstacles in the way of their prosecution, but only as a delaying tactic. In the past, with the thin resources available, prosecutors could understandably be intimidated by a litigious opponent. But that no longer works.
Alleged commercial criminals are, in effect, squandering their own wealth in pursuing frivolous applications. Hopefully, as that lesson is learnt, those accused will be more willing to have their day in court where the real merits of the case can be argued.
