The case a nutshell.

The story begins on 26 May, 2009 when Matthews Mulaudzi invested R33.5-million in a Fairbairn Capital Investment Frontiers Policy underwritten by Old Mutual Life Assurance Company. It was a five-year fixed bond policy with a maturity date of 2 June 2014.

On 24 March 2011 Mulaudzi concluded a written deed of cession with Nedbank Financial Planning ceding all rights, title and interest owing to him in the policy. Nedbank in turn informed Old Mutual on 13 April 2011 that it was now the legal owner of the policy.

Now, here’s where things started to go wrong. Let’s call this part of the story “the computer glitch”.

Someone who worked at Old Mutual accidentally forgot to insert Nedbank instead of Mulaudzi on their computers as the new owner of the policy. The businessman, as a result, continued to receive quarterly statements from Old Mutual erroneously listing him as the owner. Then, on August 9 2012, Mulaudzi wrote to Nedbank saying he wanted his policy back. Nedbank said no. Then two years later, on 2 June 2014, Mulaudzi – still erroneously listed as the owner of the policy by Old Mutual – contacted Old Mutual seeking to disinvest the policy. The company went ahead and on 6 June paid out around R48-million into Mulaudzi’s Absa bank account.

Enter Nedbank, who on 28 July 2014 wanted to cash in on the policy Mulaudzi had ceded to the institution in 2011.

Whoops, said Old Mutual, we paid out the wrong beneficiary. But you don’t mess with Nedbank and Old Mutual immediately paid what was due, hoping to collect the full amount later from Mulaudzi.

Only, Mulaudzi was having none of it, prompting Old Mutual to report the matter on 15 August 2014 to the SAPS under the provisions of the Prevention and Combating of Corrupt Activities Act.

In August 2014 the National Director of Public Prosecutions applied as an interested party to the Western Cape High Court for a restraint order, an application that succeeded. The order handed down by Judge A J Weinkove also provided for the appointment of a curator bonis to take charge of all property in excess of R48,163,098.55 belonging to Mulaudzi. Mulaudzi, using the proceeds of the policy, had bought two Old Mutual investment policies of R1-million each, an investment with Momentum Group Limited of R6,372,474 and a R10-million investment with Absa.

Enter Judge Hlophe.

On 17 September Mulaudzi, anticipating the return day on 24 hours’ notice to the NDPP in terms of s 26(3)(c) of POCA, sought a rule nisi, alternatively, a variation of the provisional restraint order to inter alia exclude from its ambit the four investments he had bought with the proceeds of the policy. Mulaudzi was represented in the matter by Barnabas Xulu, Hlophe’s personal lawyer.

Now, while he was not one of the duty judges on the roster set down to hear urgent matters in the Western Cape High Court on that day, 18 September 2014, Hlophe allocated the matter to himself. Hlophe lifted Weinkove’s provisional restraint order and also dismissed an application by Old Mutual to intervene in the matter. The NDPP then sought to intervene, which was also dismissed by Hlophe.

On 11 November 2014 both the NDPP and Old Mutual applied for leave to appeal the judgment. One of the grounds raised was that they reasonably apprehended that Hlophe was biased when he made his ruling.

Where are we now?

It was these appeals that came before SCA Judge Visvanathan Ponnan last week and during which he handed down a scathing judgment with regard to Hlophe’s conduct in the matter. Ponnan not only pointed out the fact that Xulu was Hlophe’s personal attorney who has represented him in various judicial and quasi-judicial tribunals since approximately 2009, and who continues to do so “in grave disciplinary proceedings” but also that he had allocated the case to himself while he was not one of the duty judges.

That Xulu represents Hlophe, said Ponnan, gave rise “to the reasonable apprehension that in the light of the particular nature of that relationship, the Judge President would not bring an impartial mind to bear on the adjudication of a matter brought before him by his attorney”.

Also of concern was that Hlophe proceeded to dismiss Old Mutual’s application for leave to intervene in circumstances “where he had not afforded himself sufficient time to read and properly consider the papers before coming into court. He thereafter proceeded to discharge the rule nisi granted in favour of the NDPP, also on the turn, in circumstances where he had not had the opportunity of first reading the replying affidavit, which was filed shortly before the hearing”.

When Hlophe subsequently gave reasons for his order, he did not refer to the material evidence in the NDPP’s replying affidavit, which had pertinently contradicted Mulaudzi’s defence.

Said Ponnan, “What is more, in a matter that was neither easy nor clear, those reasons, when they were eventually delivered, only ran to some six pages. That fortifies the view, so it was submitted, that Hlophe JP, whether consciously or subconsciously, was partial to Mr Mulaudzi’s cause. It is so that where the offending conduct sustains the inference that the presiding judge was not open-minded, impartial or fair during the hearing, this court will intervene and grant appropriate relief, including declaring the proceedings invalid without considering the merits. Here, however, it was submitted that an examination of the reasons furnished fortifies the inference that the Learned Judge President was prejudiced against Old Mutual and the NDPP and prejudged the case against them.”

The reasons Hlophe had advanced for discharging the provisional restraint order were encapsulated in a single paragraph which read; “there are no reasonable prospects of a successful prosecution in the matter. This is due to the fact that the respondent committed no criminal offence in gaining access to these funds. The Fairbairn Capital under policy no 15715207 was an investment to which he was entitled. At the time the respondent requested that the value of the investment be made available to him he was fully entitled to do so and was entitled to the proceeds. Prior to making the funds available, Old Mutual had verified that he was indeed entitled to realise the investment. Having legitimately obtained the R48,163,089.55 to which he was entitled, he was at liberty to apply it in the manner that he saw fit in meeting his financial commitments and furthering his business interests. In the absence of any misrepresentation the evidence cannot sustain a fraud conviction.”

Records in the SCA hearing reveal that Mulaudzi had provided the court with a balance sheet dated R31 July 2014 which reflected that he owned assets worth R105,255,878.74. Mulaudzi later filed for bankruptcy, blaming his financial woes on the restraint order issued by Judge Weinkove in August 2014.

“Yet the provisional restraint order granted on 28 August 2014 was discharged and all his property restored by the order Hlophe JP made on 18 September 2014, less than a month later. Moreover, when the restraint order was discharged on 18 September 2014, the curator bonis appointed to administer his estate while it was subject to the restraint order, paid over to him R9,759,781.57. This was the early realisation value of a long-term investment Mr Mulaudzi took out with Absa Wealth Ltd using R10-million of the R48,163,098.55 he criminally obtained from Old Mutual. What is more, Mr Mulaudzi received R17,612,128 from MMI on 24 July 2014 in the form of a loan secured against a R25-million investment he acquired on 18 June 2014, also using the proceeds of the R48,163,098.55 received from Old Mutual on 6 June 2014,” reads the record.

Apart from the remainder of the R25-million MMI investment, which was valued at approximately R6-million, and the R2-million Mr Mulaudzi re-invested with Old Mutual, the court said that the “whereabouts of balance of the proceeds of the R48,163,098.55 he received from Old Mutual on 6 June 2014 remains entirely unexplained.”

The record also indicated that Mulaudzi “frittered away a substantial sum between 18 September 2014 (when the rule nisi was discharged by Hlophe) and 1 November 2014 (when judgment was entered against him by Justice De Vos of the North Gauteng High Court).

In that matter Judge De Vos held that Mulaudzi “was not entitled to the proceeds of the policy and any appropriation thereof constituted a fraud”.

With regard to the second appeal by the NDPP, Ponnan said that the NDPP “is an officer of the court and thus no ordinary litigant. The NDPP assured us and it must be accepted, that the allegation is not lightly made. In any event, the law will not lightly suppose the bias of a judge. But, there is also the simple fact that bias is such an insidious thing that even though a person may in good faith believe that he was acting impartially, his mind may unconsciously be affected by it.”

What to do now about Judge Hlophe?

Hlophe was one of the youngest South Africans to become a Judge President and has been a controversial figure in the judiciary ever since his appointment in 2000.

From insisting he be provided with a Porsche (black) instead of the customary BMW or Mercedes as an official judge’s car (Hlophe later agreed to pay in the difference) to authoring in 2004 a 43-page report on racism in the Western Cape High court (pointing a finger at then Deputy Judge President Jeanette Traverso and Advocate Jeremy Gauntlett, who later defended President Jacob Zuma in the Nkandla matter) to allegedly insulting attorney Joshua Greeff in 2005, telling him “you’re nothing but a piece of white shit and it’s time you go back to Holland”, Hlophe has been a divisive and polarising figure.

In 2006 Judge Hlophe faced a JSC complaint with regard to the ethics of judges receiving outside renumeration after it was made public that he had received a R10,000 monthly retainer from the Oasis financial group — a company that litigated in the Western Cape High Court. In fact Hlophe had given the firm permission to sue Judge Siraj Desai for public comments he had made about the group with regard to a proposed office block to be erected in his suburb.

At the time Judge Hlophe had said he had received verbal permission to receive the retainer from Oasis from former Justice Minister Dullah Omar, who had since died.

But perhaps the most serious allegation Judge Hlophe still faces is the one made in 2008 that he had improperly approached Constitutional Court Judges Nkabinde and Jafta in an attempt to influence that court’s pending judgment in a number of related cases relating to Jacob Zuma and Thint and which related to the lawfulness of search and seizures of Zuma’s home in relation to corruption associated with the Arms Deal.

The judicial panel which heard the Zuma/Thint matter comprised of the late Justice Pius Langa and Justices O’Regan, Ngcobo, Madala, Mokgoro, Skweyiya, Van der Westhuizen, Yacoob, Nkabinde, Jafta and Kroon. It was to two of these, Nkabinde and Jafta, that Hlophe is alleged to have made the approach.

Hlophe has employed Jacob Zuma’s Stalingrad strategy when it comes to facing the JSC inquiry into alleged misconduct. It is a case that had dragged on for almost a decade.

The judgment by Justice Ponnan with regard to one of his colleagues, however, cannot just be left as it is. These are serious issues which dent perceptions of the independence and reputation of the country’s judiciary.

What should happen now is that Chief Justice Mogoeng Mogoeng, as chair of the JSC, should either summon Hlophe to explain himself or Hlophe should self-report to the JSC in order to defend his reputation.

Earlier this year the Chief Justice, after his election as president of the Conference of Constitutional Jurisdictions of Africa, urged his peers across Africa to avoid anything that would compromise judicial systems.

For too long, Judge President Hlophe has done just that without having to answer for his actions in a forum where he would be able at least to defend or explain them. The time has come for John Hlophe to face the music. Will Chief Justice Mogoeng Mogoeng be able to put into action his words to his esteemed peers that judges must be men and women of integrity? When it comes to John Hlophe there are just too many controversies and unanswered questions to let it all just slide. DM

Photo: Judge President John Hlophe during his hearing by the Judiciary Service Commission ( JSC) in Braamfontein, Johannesburg, 30 July 2009 Photo: Oupa Nkosi (Sapa)