Ruling on enquiry into SSC’s N$30m dud deal given today

ACTING High Court Judge Raymond Heathcote is set to indicate today whether an enquiry into the investment of N$30 million by the Social Security Commission through an upstart company that has since failed to repay the overdue money will be continuing as planned.

A packed courtroom in the High Court on Friday heard lawyers representing four past and current directors of Avid Investment Corporation, to which the SSC entrusted the investment of N$30 million in public funds for a four-month period in January this year, arguing before Acting Judge Heathcote that the enquiry in terms of the Companies Act should be put on hold. The four, ex-Avid directors Paulus Kapia, Inez /Gâses and Otniël Podewiltz, and still-serving director Sharon Blaauw, want to challenge the constitutionality of the section of the Companies Act under which Acting Judge Heathcote ordered last week that they be subpoenaed to an enquiry on the SSC’s investment of N$30 million through Avid.The whereabouts of the money remains unknown, almost two months after it was supposed to be returned to the SSC with added interest of some N$1,47 million.The four are claiming that section 419 of the Companies Act requires that they will have to answer questions at the enquiry even if the answers might incriminate themselves.That is unconstitutional, because it infringes their constitutional right not to be compelled to give testimony against themselves, they say.But whether the section of the Act that they want to attack in fact compels them to answer incriminating questions, did not on Friday appear to be something that Acting Judge Heathcote himself was wholly convinced of.Several times during the hearing he quizzed the lawyers on their views of the fact that the section states that “any person may be required to answer any question put to him at the examination, notwithstanding that the answer may tend to incriminate him”.He appeared to be hinting that the use of the word “may”, as opposed to the more compelling “shall”, may still leave a witness at such an enquiry with the option to refuse to answer self-incriminating questions.The response from /Gâses’s lawyer, Shafimana Ueitele, was that the four nevertheless have a right to have their constitutional challenge heard first, before the enquiry proceeds, since as the section stands, there is a potential threat to their constitutional rights.Why could the lawyer of a witness who was asked a question that is potentially incriminating not just object at that point, Acting Judge Heathcote also asked.”We will object the whole day, my Lord,” Ueitele replied.The Acting Judge further asked Kapia’s lawyer, Sisa Namandje, whether someone who knows he had done nothing wrong and knows he would not incriminate himself would be able to ask the court to stay the enquiry because he did not want to answer questions.Namandje’s reply was that it may be or may not be that the witnesses have incriminating information; the situation was that they had a fear of incriminating themselves, and that included a fear of incriminating themselves without even knowing that they were doing that, he said.The lawyers further explained to the Acting Judge that the four also needed more time to prepare for the enquiry, which in the words of Podewiltz’s lawyer, Dirk Conradie, should not just be sprung on someone, thus getting them “caught with their pants down”.The SSC’s counsel, Theo Frank, SC, opposed the request for a stay in the enquiry.He said there was no allegation that the four were indeed in possession of incriminating information.Although there is a possibility of that being the case, it is so remote that it could not justify having the enquiry put on hold, he argued.Frank however also agreed with the Acting Judge that it was highly likely that part of the section of the Companies Act that the four want to challenge – that is the part stating that someone may be required to give incriminating answers to questions at such an enquiry, and that the answers may thereafter be used against the witness – would indeed be declared unconstitutional to the same extent that it had already been done in South Africa in 1995.Frank also appeared to be in agreement with the lawyers of the four on the point that as the law stands now, someone giving information to the enquiry would have to answer questions even if the answers are self-incriminating.The person would however at a later stage be able to object against those answers being used against him or her, Frank added.Kapia and /Gâses were the two prime driving forces behind a proposal from Avid, in which the Swapo Youth League has a substantial stake, for the SSC to invest tens of millions of Namibia dollars through the young company, the SSC informed the court last week when it asked for an order provisionally liquidating Avid.Avid Investment Corporation was started around the middle of last year.The SSC eventually agreed to invest N$30 million through Avid in late January this year, after Kapia had been “applying pressure from higher political authority”, with it being pointed out that the Swapo Youth League apparently holds 80 per cent of the shares in Avid, the court was informed.The investment was done without any written agreement between Avid and the SSC.Avid however assured the SSC in writing that the money was to be kept in an account with Standard Chartered Bank, at an annual interest rate of 14,5 per cent, and that Avid would secure the investment through financial guarantee bonds.Despite several demands to be provided with the guarantees, the SSC never received them.Avid informed the SSC early in February that Kapia and /Gâses would be acting on behalf of the company in connection with all matters concerning the SSC investment.It is claimed that a month later Kapia himself signed wrote a letter to the SSC to inform it that the financial guarantee bond that it was insisting on had indeed been obtained, but could not be given to the SSC “due to trade considerations”.By May 24 the investment period was over and N$31,47 million was supposed to be returned to the SSC./Gâses duly wrote a letter to the SSC to inform it “with great pride and excitement” that the money was about to be transferred into the SSC’s bank account.Close to two months later, the money is yet to reappear.In the meantime, though, the SSC is claiming, it has discovered that the N$30 million, which Avid undertook to invest in South Africa, appears to have found its way to a supposed investment company in Montevideo, Uruguay – or perhaps to a company in Texas, which however indicated in a communication to /Gâses that it had received only N$20 million from Avid to invest.The SSC is increasingly “constrained to conclude that the Avid investment is part of a fraudulent scheme and that such funds have in fact disappeared,” the court was informed in the application for Avid’s winding-up.The four, ex-Avid directors Paulus Kapia, Inez /Gâses and Otniël Podewiltz, and still-serving director Sharon Blaauw, want to challenge the constitutionality of the section of the Companies Act under which Acting Judge Heathcote ordered last week that they be subpoenaed to an enquiry on the SSC’s investment of N$30 million through Avid.The whereabouts of the money remains unknown, almost two months after it was supposed to be returned to the SSC with added interest of some N$1,47 million.The four are claiming that section 419 of the Companies Act requires that they will have to answer questions at the enquiry even if the answers might incriminate themselves.That is unconstitutional, because it infringes their constitutional right not to be compelled to give testimony against themselves, they say.But whether the section of the Act that they want to attack in fact compels them to answer incriminating questions, did not on Friday appear to be something that Acting Judge Heathcote himself was wholly convinced of.Several times during the hearing he quizzed the lawyers on their views of the fact that the section states that “any person may be required to answer any question put to hi
m at the examination, notwithstanding that the answer may tend to incriminate him”.He appeared to be hinting that the use of the word “may”, as opposed to the more compelling “shall”, may still leave a witness at such an enquiry with the option to refuse to answer self-incriminating questions.The response from /Gâses’s lawyer, Shafimana Ueitele, was that the four nevertheless have a right to have their constitutional challenge heard first, before the enquiry proceeds, since as the section stands, there is a potential threat to their constitutional rights.Why could the lawyer of a witness who was asked a question that is potentially incriminating not just object at that point, Acting Judge Heathcote also asked.”We will object the whole day, my Lord,” Ueitele replied.The Acting Judge further asked Kapia’s lawyer, Sisa Namandje, whether someone who knows he had done nothing wrong and knows he would not incriminate himself would be able to ask the court to stay the enquiry because he did not want to answer questions.Namandje’s reply was that it may be or may not be that the witnesses have incriminating information; the situation was that they had a fear of incriminating themselves, and that included a fear of incriminating themselves without even knowing that they were doing that, he said.The lawyers further explained to the Acting Judge that the four also needed more time to prepare for the enquiry, which in the words of Podewiltz’s lawyer, Dirk Conradie, should not just be sprung on someone, thus getting them “caught with their pants down”.The SSC’s counsel, Theo Frank, SC, opposed the request for a stay in the enquiry.He said there was no allegation that the four were indeed in possession of incriminating information.Although there is a possibility of that being the case, it is so remote that it could not justify having the enquiry put on hold, he argued.Frank however also agreed with the Acting Judge that it was highly likely that part of the section of the Companies Act that the four want to challenge – that is the part stating that someone may be required to give incriminating answers to questions at such an enquiry, and that the answers may thereafter be used against the witness – would indeed be declared unconstitutional to the same extent that it had already been done in South Africa in 1995.Frank also appeared to be in agreement with the lawyers of the four on the point that as the law stands now, someone giving information to the enquiry would have to answer questions even if the answers are self-incriminating.The person would however at a later stage be able to object against those answers being used against him or her, Frank added.Kapia and /Gâses were the two prime driving forces behind a proposal from Avid, in which the Swapo Youth League has a substantial stake, for the SSC to invest tens of millions of Namibia dollars through the young company, the SSC informed the court last week when it asked for an order provisionally liquidating Avid.Avid Investment Corporation was started around the middle of last year.The SSC eventually agreed to invest N$30 million through Avid in late January this year, after Kapia had been “applying pressure from higher political authority”, with it being pointed out that the Swapo Youth League apparently holds 80 per cent of the shares in Avid, the court was informed.The investment was done without any written agreement between Avid and the SSC.Avid however assured the SSC in writing that the money was to be kept in an account with Standard Chartered Bank, at an annual interest rate of 14,5 per cent, and that Avid would secure the investment through financial guarantee bonds.Despite several demands to be provided with the guarantees, the SSC never received them.Avid informed the SSC early in February that Kapia and /Gâses would be acting on behalf of the company in connection with all matters concerning the SSC investment.It is claimed that a month later Kapia himself signed wrote a letter to the SSC to inform it that the financial guarantee bond that it was insisting on had indeed been obtained, but could not be given to the SSC “due to trade considerations”.By May 24 the investment period was over and N$31,47 million was supposed to be returned to the SSC./Gâses duly wrote a letter to the SSC to inform it “with great pride and excitement” that the money was about to be transferred into the SSC’s bank account.Close to two months later, the money is yet to reappear.In the meantime, though, the SSC is claiming, it has discovered that the N$30 million, which Avid undertook to invest in South Africa, appears to have found its way to a supposed investment company in Montevideo, Uruguay – or perhaps to a company in Texas, which however indicated in a communication to /Gâses that it had received only N$20 million from Avid to invest.The SSC is increasingly “constrained to conclude that the Avid investment is part of a fraudulent scheme and that such funds have in fact disappeared,” the court was informed in the application for Avid’s winding-up.