THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case no: 446/10

In the matter between:

IZAK JACOBUS NEL ENGELBRECHT
Appellant

and

THE STATE
Respondent

Neutral citation: Engelbrecht v The State (446/10) [2011] ZASCA 068
(17 May 2011)

Coram:

Mpati P, Bosielo JA and Plasket AJA

Heard:

07 March 2011
Delivered:
17 May 2011
Summary:
Criminal law – Appeal against conviction on 157 counts of
fraud and the sentence imposed on all the counts of fraud and
one of corruption – Conviction – accomplices’ evidence found
to be satisfactory – Sentence – Disparity in the sentences
imposed on different accused convicted of the same offences by

two different courts – sentencing discretionary – no
misdirection.

ORDER

On appeal from: Western Cape High Court (Cape Town) (Le Roux AJ and
Oosthuizen AJ sitting as a court of appeal):

1. The appeal against conviction on the 157 counts of fraud is dismissed.
2. The sentences imposed on the appellant in respect of the counts of fraud and one
of corruption are confirmed, but it is ordered that the sentence imposed in respect
of 157 counts of fraud run concurrently with the sentence imposed in respect of the
corruption charges.

__________________________________________________________________

JUDGMENT
__________________________________________________________________

BOSIELO JA (Mpati P and Plasket AJA concurring)
[1] The appellant was convicted of 157 counts of fraud and one of corruption in
the Regional Court, Bellville. He was sentenced to six (6) years’ imprisonment
with two (2) years suspended for five (5) years on certain conditions in respect of
the fraud counts, which were taken together as one for purposes of sentence, and
three (3) years’ imprisonment in respect of the count of corruption. His appeal to
the Western Cape High Court, Cape Town failed and leave to appeal to this court
was refused. This appeal, which is against his convictions in respect of the fraud
charges and the sentences imposed on him, is with leave of this court.

[2] Although the facts of this case are convoluted, I shall extract from them
what I consider to be essential and largely common cause. This matter involves
fraud against the South African Revenue Service (SARS). The three key
protagonists are the appellant, Mr Ian Wiid (Wiid) and Mr Frederick Carstens
Geldenhuys (Geldenhuys). The appellant worked as the sales manager of Reeds
Motors, a motor dealer in Observatory, Cape Town. He was responsible for the
purchase and sale of motor vehicles. Wiid was the sole owner of two motor
dealerships, known as Quattro Trade and Wholesalers (Quattro) and Auto Haven
Motors CC (Auto Haven), whilst Geldenhuys was the manager of both Quattro and
Auto Haven.

[3] Although there is some conflict between the appellant’s version and that of
Wiid and Geldenhuys regarding how they started to do business together, it is not
in dispute that between October 1997 and December 1998 the appellant, purporting
to act on behalf of Reeds Delta, supplied vehicles to Quattro. The appellant
explained that as he was eager to expand Reeds Delta’s business of exporting
vehicles to Namibia, he telephoned a dealer in Namibia, Mr Lewellyn Anthony
(Anthony) and offered him a vehicle for sale. As Anthony did not know the
appellant he was reluctant to do business with him. Instead, he recommended that
he take the vehicle to Wiid who would inspect it on his (Anthony’s) behalf and
advise him about its condition. Since Anthony was satisfied with the condition of
the vehicle as advised by Wiid, he agreed to purchase it through Wiid who was
better known to him. It appears that Wiid felt that the appellant was interfering
with his market in Namibia and expressed his displeasure to the appellant.

Although the evidence is not clear as to when this occurred, it is not in dispute that
an arrangement was then put in place in terms of which Reeds Delta would use
Quattro for all its vehicle exports to Namibia. It was agreed that Reeds Delta would
be responsible for completion of all invoices and the necessary documentation
whilst Quattro would act as sales agent for Reeds Delta.

[4] Purporting to act in terms of the agreement the appellant prepared offers to
purchase and invoices which he sent with the vehicles to Quattro. In addition, the
appellant also furnished Quattro with Common Customs Area forms (CCA1) duly
completed and reflecting the names of the purchasers in Namibia. The invoices
were all written for ‘export to Namibia only’ and reflected the particulars of the
purchasers in Namibia. According to the appellant Quattro was supposed to export
these vehicles to the consignees mentioned in the invoices and offers to purchase.

[5] It is common cause that by exporting the vehicles to Namibia, Reeds Delta
would be able to have them zero-rated for purposes of Value Added Tax (VAT).
In other words Reeds Delta would not be obliged to pay any output VAT on such
vehicles to the Receiver of Revenue (SARS) whereas, if it sold them locally, there
would have been a legal obligation to pay output VAT. The appellant testified that
he was under the impression that the vehicles which he delivered to Quattro were
exported as per the invoices and the CCA1 forms to the consignees in Namibia.
However, the appellant conceded that he did not, on his own, verify if the vehicles
were exported to the purchasers in Namibia as he believed that Quattro would
export them. According to the appellant, he only discovered much later that not all

the vehicles which he had delivered to Quattro were exported, but, on his own
admission, did nothing to correct the situation.
[6] The appellant’s version conflicts directly with that of the respondent as
deposed to by Wiid, Geldenhuys and Ms Jeanette Riley (Riley). The combined
version of both Wiid and Geldenhuys is that it is the appellant who came up with
the scheme to sell vehicles to Quattro which would be disguised as exports so that
Quattro would not have to pay output VAT on them. In order to facilitate the
scheme, the appellant would prepare all the necessary documentation which
included an offer to purchase and an invoice accompanied by a CCA1 form. The
CCA1 form is essential proof that a particular vehicle whose details are reflected
on it has in fact been taken across the border as an export to the consignee in
Namibia. It is then submitted to SARS as proof that output VAT is not payable on
the transaction.

[7] The CCA1 form must contain all the correct details of the vehicle to be
exported, and the particulars of the person to whom it is to be delivered to.  It must
be signed at the border post by the relevant customs official. It is common cause
that the CCA1 forms relevant to the various counts were initially completed by the
appellant and later by Geldenhuys until Wiid stopped him.

[8] It is common cause that at some stage during February 1998 the appellant
and his brother, together with Wiid and Geldenhuys, went on a fishing expedition
to Namibia. Whilst at Swakopmund they visited Anthony. It was during this trip
that a bundle of blank CCA1 forms were produced and stamped with a fake
Namibian border post stamp made available by Anthony. Although the appellant

denied having participated in the stamping of the blank CCA1 forms, Wiid and
Geldenhuys insisted that he stamped them with Geldenhuys and that they returned
to South Africa with them. These forms were subsequently used to facilitate the
scheme.

[9] Riley was the administrative clerk at Quattro. She worked closely with
Geldenhuys. Her job entailed receiving vehicles into stock, preparing sales
invoices, maintaining the floor plan and attending to the cash book and the writing
of cheques. She testified that she was aware of the scheme that involved the
purchase and sale of vehicles between Reeds Delta and Quattro. According to her,
Auto Haven purchased vehicles from Reeds Delta. Auto Haven would in turn book
the vehicles out to Quattro. The appellant would bring the invoices to her so that
she could receive the vehicles into their stock. Upon receiving the vehicles she
added a certain amount to the original price. According to Riley the invoices in
respect of these vehicles were addressed to Sirkel Motors in Namibia.
Notwithstanding this, Auto Haven received them into their stock. The invoices
would show the commission which was payable to the appellant. Once the vehicle
had been received, Geldenhuys would issue his personal cheque to pay Reeds
Delta.  He would, in turn, issue a cheque for the equivalent amount from Quattro’s
account to repay himself. As Riley was also responsible for preparing cheques for
the commission payable to the appellant, she would prepare a cheque and give it to
Mr Sam Linders, the messenger, to cash at the bank. Once the cheque was cashed,
she would hand the money over to Geldenhuys who would give it to the appellant.
She testified that the appellant, from time to time telephoned her to check if the
money was available and he would then fetch it. Importantly, Riley testified that

the appellant knew that the vehicles which he had brought to Quattro and which
were purportedly exported to Namibia were not exported as he saw them on the
shop floor at Quattro where he used to visit regularly. Riley also testified about an
amount of R30 000 which she once had to send to the appellant in an envelope
when the latter was with Wiid at the Cape Town airport. This money represented
commission in respect of a number of vehicles which the appellant had delivered to
Quattro.

[10] Mr P J Cronje (Cronje) was an investigator contracted by SARS. To a large
extent his evidence was not disputed. He was personally involved in the
investigation of this matter.  In the course of his investigation he discovered that
the CCA1 forms in respect of the vehicles which form the subject of the various
charges herein had on them a stamp purporting to be from the Noordoewer border
post. However, he was unable to trace the actual stamp. He concluded that the
stamp used on the forms was not an official one.  He also discovered that
Geldenhuys had in each case completed documents indicating that Quattro had
taken the relevant vehicles into stock, whereas in the books of Reeds Delta the
invoices were made out to some particular Namibian purchasers. Furthermore, in
Quattro’s books the amount reflected in the relevant invoice in each case was more
than the zero-rated amount actually invoiced and paid to Reeds Delta. On the other
hand, Geldenhuys calculated the deemed VAT on the increased amount reflected
on the invoices which he then entered into Quattro’s documents, thus reflecting the
vehicle as part of Quattro’s stock.

[11] A prominent feature in the documents which Cronje handed in consisted of
some offers to purchase and corresponding invoices from Reeds Delta in respect of
each vehicle. These documents reflected either Sirkel Motors or Auto Angling in
Windhoek, Namibia, as the purchaser. The offers to purchase in each case were
signed by the appellant on behalf of the supposed purchasers in Namibia. On both
the purchase order and invoice from Reeds Delta, VAT was shown as zero in each
case. According to Cronje each CCA1 document contained a Customs and Excise
stamp which was subsequently established to be false. In turn Mr Roy Marcus
(Marcus) Reeds Delta’s Financial Director at the time, relied on the invoices
generated at Reeds Delta and the CCA1 forms to prepare Reeds Delta’s tax returns,
the so-called VAT 201 forms. Marcus testified that because the information
reflected on the CCA1 forms corresponded with the one in the schedule of sales in
their computer, he believed that the vehicles were indeed exported to Namibia.
Relying on this information he ensured that Reeds Delta did not pay output VAT
on these transactions.

[12] In further pursuit of his investigations, Cronje went to Namibia where he
interviewed all the dealers who were reflected as purchasers on the Reeds Delta
invoices and CCA1 forms. All of them indicated that they had never purchased, or
received, the vehicles in question. He established further that these vehicles were
instead delivered to Quattro and Auto Haven in South Africa. Cronje discovered
that no output VAT was paid on these transactions when the vehicles were sold to
Quattro and Auto Haven by Reeds Delta. This resulted in Quattro and Auto Haven
unlawfully increasing their profits. Cronje also discovered that the appellant
constantly received commission in respect of each of the vehicles he delivered to

Quattro. A history of these vehicles showed the previous owner to be Quattro and
not Reeds Delta. It is worth noting that although the appellant denied receiving
cash cheques from Geldenhuys or Quattro, he admitted that he received a small
commission for his involvement in these various transactions.

[13] As against the state’s version, the appellant denied any participation in any
fraudulent scheme involving the sale of vehicles. He admitted that he delivered the
vehicles in issue to Quattro. He maintained that the vehicles which Reeds Delta
delivered to Quattro were intended to be exported to the Namibian dealers
mentioned in the documents. He confirmed that he completed the offers to
purchase in the name of the dealers in Namibia to whom the vehicles had to be
delivered. He knew that the tax invoices for these vehicles would show that they
were destined for export to some specific purchasers in Namibia. This would all be
used as a legal basis for the transactions to be zero-rated for VAT purposes. He
only discovered much later that the vehicles were never exported. The appellant
denied ever having stamped any CCA1 forms whilst on a fishing trip with Wiid
and Geldenhuys in Namibia. He also denied that he received any commission by
way of cheque payments. He maintained that the deals which were made between
Reeds Delta and Quattro were legitimate. According to the appellant, this
arrangement was agreed upon at a meeting where his manager, Mr John Danks
(Danks) was present thus implying that Danks approved it. He testified that he met
Wiid at a time when he wanted to expand his market into Namibia. As Wiid
complained that he was stealing his market after he had contacted Anthony in an
attempt to sell a vehicle to him, they agreed that he would use Quattro as Reeds
Delta’s agent. For all intents and purposes he believed that the vehicles which he

had delivered to Quattro were subsequently exported to Namibia in accordance
with the invoices and CCA1 forms which he had prepared. He denied having
received any commissions as testified to by Geldenhuys and Riley and testified
that he only received meagre payments for facilitating the sales. He pertinently
denied that he received R30 000 as commission for the sale of vehicles to Quattro.
He conceded that he knew that it was against Reeds Delta’s policy for him to
receive any secret commission for any work done by him on behalf of Reeds Delta.

[14] It is common cause that both Wiid and Geldenhuys testified as accomplices.
They had already been convicted of  charges relating to the same scheme following
a plea-bargaining agreement with the state in terms of s 105A of the Criminal
Procedure Act 51 of 1977 (CPA). Riley was duly warned by the Regional Court
Magistrate in terms of s 204 of the CPA because of her role in the scheme.

[15] Counsel for the appellant was critical of the magistrate’s acceptance of their
evidence. He submitted that Wiid and Geldenhuys were neither honest nor truthful
witnesses as they tried to minimise their respective roles in this saga. Regarding
Riley it was argued that she had been intimately involved in this elaborate fraud
scheme and that she failed to testify truthfully and honestly. The main contention is
that their versions should have been rejected as unreliable.

[16] Stripped of any unnecessary frills it appears to me that the only real issue is
whether and to what extent the appellant had knowledge of, and was involved in,
this fraudulent scheme. That this was a scheme intended to defraud SARS of
money in respect of VAT admits of no doubt. It is clear from the evidence as a

whole that, although the vehicles in issue were supposed to be exported to Namibia
and thus qualified to be zero-rated, they were never exported to the purchasers
identified in the relevant documents in Namibia. Instead, they were delivered to
Auto Haven or Quattro where they were taken into their stock. Contrary to the
invoices and offers to purchase, the vehicles were then sold locally. It is also
common cause that false CCA1 forms were used to facilitate this fraudulent
scheme. This is confirmed by Mr Vuzo Ngcobo (Ngcobo) who was the Branch
Manager at Vioolsdrift border post. Mr Edwin van Rooy (Van Rooy), who was a
Senior Customs Officer in Namibia, testified that for a proper import of vehicles
into Namibia from South Africa, a CCA1 form had to be submitted together with a
NA500 form from Namibia which has been in use since 1 June 1995. He stated
further that the stamp of Noordoewer 061 which was used on the CCA1 forms was
false and did not emanate from their offices. This is so as the Namibian authorities
did not use Noordoewer 061 but Noordoewer 06I, the ‘I’ standing for ‘import.’
Importantly Van Rooy confirmed that the vehicles involved herein could not be
found either in the computers at Noordoewer border post or their main computer at
their head office. This is crucial as all vehicles imported from South Africa or
anywhere outside Namibia have to be registered on their computer for purposes of
registration.

[17] It was argued on behalf of the appellant that the evidence of Wiid and
Geldenhuys should have been rejected as unreliable. The main argument is that
their versions were littered with serious contradictions and further that they did not
testify truthfully and honestly, in particular about their involvement in the scheme.
It is clear that the trial court was aware of the contradictions in the versions of both

Wiid and Geldenhuys. Having observed the two witnesses whilst testifying, the
trial court acknowledged that it could not be said that they were perfect witnesses.
However, the trial court, despite some imperfections in their evidence and having
applied the necessary caution, found that their evidence  was the truth, more so that
it was amply corroborated by other evidence, including circumstantial evidence. It
is not required of accomplices that they be perfect witnesses. In S v Francis
1991(1) SACR 198 (A) at 205f-g, this court set out the position thus:
‘It is not necessarily expected of an accomplice, before his evidence can be accepted, that he
should be wholly consistent and wholly reliable, or even wholly truthful, in all that he says. The
ultimate test is whether, after due consideration of the accomplice’s evidence with the caution
which the law enjoins, the Court is satisfied beyond all reasonable doubt that in its essential
features the story that he tells is a true one.’

[18] Having read the transcript I am unable to find any fault with the assessment
of these witnesses by the trial court, which had the advantage of seeing them testify
and observing their reactions to questions during cross-examination. This gave the
trial court an advantage which this court does not have as a court of appeal. In the
absence of any misdirection by the trial court, I decline to interfere with such a
finding. See R v Dhlumayo & another 1948 (2) SA 677 (A); S v Francis, above at
204c-e

[19] Central to the resolution of this appeal is the interpretation of s 11(1)(a) of
the Value-Added Tax Act 89 of 1991 (the VAT Act) which provides:
‘Zero rating

(1)
Where, but for this section, a supply of goods would be charged with tax at the rate
referred to in section 7 (1), such supply of goods shall, subject to compliance with subsection (3)
of this section, be charged with tax at the rate of zero per cent where –
(a) the supplier has supplied the goods (being movable goods) in terms of a sale or
instalment credit agreement and –
(i) the supplier has exported the goods in the circumstances contemplated in paragraph
(a), (b) or (c) of the definition of ‘exported’ in section (1); or
(ii) the goods have been exported by the recipient and the supplier has elected to supply
the goods at the zero rate as contemplated in Part 2 of an export incentive scheme
referred to in paragraph (d) of the definition of ‘exported’ in section 1: Provided that –
(aa)
where a supplier has supplied the goods to the recipient in the Republic otherwise
than in terms of this subparagraph, such supply shall not be charged with tax at
the rate of zero per cent; and
(bb)
where the goods have been removed from the Republic by the recipient in
accordance with the provisions of an export incentive scheme referred to in
paragraph (d) of the definition of ‘exported’ in section 1, such tax shall be
refunded to the recipient in accordance with the provisions of section 44 (9).’

[20] Section 7(1)(a) provides that ‘there shall be levied and paid for the benefit of
the National Revenue Fund a tax, to be known as the value-added tax – (a) on the
supply by any vendor of goods or services supplied by him on or after the
commencement date in the course or furtherance of any enterprise carried on by
him’. Equally relevant is s 28(1), which prescribes that any vendor shall, within the
period ending on the twenty-fifth of the first month commencing after the end of a
tax period relating to such vendor, furnish the Commissioner with a return and
calculate the amount of such tax accordingly and pay the tax payable to the
Commissioner. Section 16(3)(a)(i)  prescribes how the amount of the tax payable
should be calculated by deducting the ‘output tax’ from the ‘input tax’.

[21] It is common cause that Reeds Delta, as a registered vendor, had the legal
obligation to comply with the provisions of the VAT Act. As a registered vendor it
was obliged to pay ‘output tax’ in respect of all vehicles it sold in South Africa. It
was  only when  it sold its  vehicles outside the country ie exported them, that it
was exempted from paying ‘output tax’ in terms of s 11(1)(a) of the VAT Act. In
other words it would be entitled to charge tax on the vehicles at the rate of zero per
cent.

[22] It is clear from a reading of the VAT Act that it is essentially a system of
self-assessment, in that the responsibility to calculate, deduct and pay over the
correct value-added tax lies solely with the vendor. Invariably, SARS is bound to
rely on the honesty and integrity of vendors to calculate and pay the correct
amount for VAT. It will not be feasible or cost-effective for SARS on its own to
try and verify each and every transaction by each and every vendor. It is therefore
of critical importance that all relevant documentation be properly completed.

[23] Counsel for the appellant submitted that no fraud has been proved in this
case. The thrust of his submission was that, even accepting that the vehicles
concerned were not delivered to the purchasers shown in the invoices and CCA1
forms, which were prepared by the appellant, there was evidence that some of the
vehicles were ultimately sold and delivered to certain purchasers in Namibia.
Based on this, he contended that the appellant was entitled to sell those vehicles at
zero-rated VAT. He submitted that what was essential for compliance with s
11(1)(a) was that the vehicles were ultimately exported to Namibia. He contended

that it was irrelevant as to when or to whom they were exported. He argued further
that by having the vehicles eventually exported to Namibia, albeit to different
purchasers and at dates different to those reflected on the invoices and CCA1
forms, the appellant did not cause SARS to suffer any prejudice, be it actual or
potential and hence no fraud was proved.

[24] On the other hand, counsel for the respondent submitted that s 11(1)(a)
requires strict compliance. This is so because the CCA1 forms and the tax invoices
are intended to serve as essential proof that the goods reflected on them  have in
fact left South Africa for export to another country,  this being the basis for a
legitimate reason for the zero-rated  VAT.  Counsel submitted that for the appellant
to have complied with the section, he had to ensure that the vehicles which were
recorded in the offers to purchase, invoices and CCA1 forms were indeed taken
over the South African border and sold and delivered to the purchasers in Namibia
as reflected on the forms. She contended further that the fact that some of the
vehicles which were delivered to Quattro by the appellant were subsequently
exported to Namibia by Quattro and delivered to purchasers different to those
reflected in the forms was not sufficient to purge these transactions of their
illegality. Counsel’s contention was that the evidence demonstrated clearly that the
scheme between the appellant, Wiid and Geldenhuys was that the appellant sold
the vehicles to Wiid at zero-rated VAT on the pretext that the vehicles were
destined for export to specific customers in Namibia. She submitted that all three
of them knew that the vehicles were not to be exported but would be sold by
Quattro locally. This is further bolstered by the admitted fact that it is Geldenhuys
and not Namibian purchasers who paid Reeds Delta for the vehicles sold. She

submitted that the fact that Reeds Delta unlawfully avoided paying ‘output VAT’
in respect of vehicles which were never exported constituted actual prejudice to
SARS.
[25] The appellant’s main submission raises the rather philosophical question of
when is fraud a real fraud. Does the mere fact that some of the vehicles sold by
Reeds Delta to Quattro were ultimately sold by Quattro to different purchasers in
Namibia purge these transactions of their illegality? I think not. The appellant did
not dispute the fact that, whilst employed by Reeds Delta, he sent vehicles from
Reeds Delta to Quattro which were accompanied by offers to purchase, tax
invoices and CCA1 forms, all of which reflected that the vehicles were destined for
export to identified purchasers in Namibia. However, contrary to what was
contained in these documents, the state has proved beyond a reasonable doubt, in
my view, that the vehicles in issue were in fact never exported to the named
purchasers in Namibia. Instead, they were delivered to Quattro which in turn took
them into its stock and sold most of them locally. There is also uncontradicted
evidence that the CCA1 forms used in these transactions were false. The appellant
admitted to facilitating these sales, for which Quattro would pay him a small
commission. I accordingly find the submission by appellant’s counsel to be
without merit.

[26] The word ‘export’ in terms of the general scheme of the VAT Act has a
special meaning. In terms of the VAT Act ‘exported’, in relation to any movable
goods supplied by any vendor under a sale or an instalment credit agreement
means amongst others–

‘(a) consigned or delivered by the vendor to the recipient at an address in an export country as
evidenced by documentary proof acceptable to the Commissioner….’
It is clear from the evidence that the vehicles which appeared on the invoices and
CCA1 forms from Reeds Delta were never delivered to the recipients at the
addresses in Namibia reflected on the invoices and CCA1 forms and were not
intended to be delivered to them. Undoubtedly, the appellant acted in contravention
of the VAT Act.

[27] In his book, the South African Criminal Law and Procedure 3ed (1996) Vol.
II at p702, JRL Milton defines fraud as the unlawful making, with intent to defraud
of a misrepresentation which causes actual prejudice or which is potentially
prejudicial to another. The essential elements of fraud are therefore (a) unlawfully;
(b) making a misrepresentation; (c) causing; (d) prejudice or potential prejudice;
(e) intent to defraud (at p707). It is clear from the evidence that by pretending that
the vehicles concerned were destined for export to certain specified purchasers in
Namibia when in truth they were sold locally the appellant misrepresented the
facts.  The fact that the appellant knowingly falsified the offers to purchase and the
tax invoices and used false CCA1 forms is clear proof that the appellant acted
unlawfully and with clear intent to defraud. It is common cause that the appellant is
an experienced seller of vehicles. Importantly, he conceded that he knew what the
correct procedures and legal requirements for exports of vehicles were as, on his
own admission, he had been exporting vehicles to Namibia prior to his
involvement with Wiid and Geldenhuys. Evidently, the appellant’s conduct
resulted in SARS losing approximately R1,6 million in respect of the output VAT
which Reeds Delta should have paid in respect of  the vehicles as they were not

exported but sold locally. To my mind, the appellant’s conduct meets the definition
of fraud. The fact that the appellant consistently received payments from Quattro,
no matter how big or small, for these fraudulent transactions, constitutes proof that
he was a willing participant in this elaborate fraudulent scheme. It follows that his
convictions for fraud on all the 157 counts were correct and must stand.
[28] I now proceed to deal with the appeal against the sentences imposed. The
main submission advanced on the appellant’s behalf was that the sentences
imposed on him are startlingly disparate to the sentences imposed on Wiid and
Geldenhuys, his former co-accused who were both convicted on all the counts of
fraud following their plea-bargains with the respondent. It was submitted that a
comparison of the respective sentences induces a sense of shock. Great emphasis
was placed on the principle of parity ie that people who commit the same
offence(s) must, absent compelling reasons, be sentenced alike. It was submitted
that the fact that both Wiid and Geldenhuys pleaded guilty to all the charges in
terms of s 105A of the CPA cannot justify such disturbing disparities in their
sentences. I do not agree.

[29] There are two important factors which distinguish the two scenarios. First,
the appellant’s two former co-accused entered into a plea-bargaining agreement
with the state in terms of s 105A of CPA and were sentenced in accordance
therewith. Secondly, and quite importantly because of the fact that the appellant
pleaded not guilty with the result that evidence was led against him, the trial court
had sufficient evidence about how the frauds were carefully planned and executed,
including the crucial role played by the appellant. To my mind, the trial court was
justified in taking such evidence into account in deciding on an appropriate

sentence for the appellant. This is so as each court had a discretion to decide on an
appropriate sentence based on the facts adduced before each court. It is trite that
sentencing is pre-eminently a matter falling within the discretion of the sentencing
court. Accordingly, I fail to see how, assuming the sentences imposed on the
appellant’s erstwhile co-accused were unduly lenient, the appellant could be
entitled to benefit from any such alleged undue leniency committed by the court
which sentenced them. Such an approach to sentencing would lead to a travesty of
the principles underlying sentencing.

[30] I am not persuaded that the sentences imposed on the appellant, given the
scale and circumstances under which these offences were committed, are
shockingly inappropriate. It is clear from the evidence that this elaborate fraudulent
scheme was well thought out and planned. The scheme was executed from October
1997 to December 1998. In the process 157 vehicles were fraudulently sold
without any ‘output VAT’ being paid. This resulted in SARS being defrauded of
approximately R1,6 million. The evidence proves clearly that the appellant played
a pivotal role in this scheme. He prepared the false offers to purchase, which were
used to generate false tax invoices as well as the CCA1 forms. All these documents
were indispensable to the success of the fraud. And for every fraudulent
transaction, the appellant benefited unlawfully by receiving a commission from
Quattro. This is notwithstanding the fact that in terms of his contract with his
employer, Reeds Delta, he was not supposed to receive any remuneration or
commission privately. It is clear that the appellant was motivated by nothing other
than greed and self-aggrandisement. He unashamedly abused the position of trust
in which he stood vis-à-vis his employer.

[31] I agree that there is a need to impose appropriate sentences with a deterrent
effect, particularly in matters involving fraud which is so endemic in our society.
However, I am of the view that the court below did not give proper consideration
to the cumulative effect of the sentences imposed on the appellant. What is clear is
that the various counts of fraud and the one of corruption all emanate from the
same transactions. I regard it as fair that the sentences be ordered to run
concurrently to ameliorate the severity thereof.

[32] In the result I make the following order–
1. The appeal against conviction on the 157 counts of fraud is dismissed.
2. The sentences imposed on the appellant in respect of the counts of fraud and one
of corruption are confirmed, but it is ordered that the sentence imposed in respect
of 157 counts of fraud run concurrently with the sentence imposed in respect of the
corruption charges.

______________
L O Bosielo
Judge of Appeal

APPEARANCES:

APPELLANT:

D A J Uijs SC
Instructed by:
Craig Schneider & Associates, Stellenbosch;

McIntyre & Van der Post, Bloemfontein

RESPONDENT:
B Hendry

Instructed by:

Director Public Prosecutions, Cape Town;

Director Public Prosecutions, Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

17 May 2011

STATUS

Immediate

Please note that the media summary is intended for the benefit of the media and does
not form part of the judgment of the Supreme Court of Appeal.

Engelbrecht v The State (446/10) [2011] ZASCA 068 (17 May 2011)

In a judgment delivered on 17 May 2011, the Supreme Court of Appeal dismissed the
appellant’s appeal against his conviction on 157 counts of fraud but partly upheld the appeal
in respect of the sentence imposed by the Western Cape High Court.

The State alleged that the appellant was part of a group of three who acted together in an
elaborate fraudulent scheme which resulted in the South African Revenue Services (SARS)
being defrauded of approximately R1,6 million in terms of Value-Added Tax (VAT) which was
fraudulently withheld from SARS. The fraudulent scheme involved the appellant and two other
co-accused. The scheme entailed the appellant procuring motor vehicles from his employer,
Reeds Motors in Observatory Cape Town and delivering them to another dealer, Quattro
Trade and Wholesalers (Quattro). The two former co-accused were involved with Quattro,
one as the owner and the other as the manager in Cape Town. The appellant would, with the
knowledge of the two co-accused prepare false documents purporting to be documents for
the export of the vehicles to Namibia which would entitle the group to have the vehicles zero-
rated. Instead of exporting the vehicles to Namibia as per the documentation, the vehicles
would be sold locally by his co-accused, through Quattro. The two co-accused pleaded guilty
to the charges in terms of s 105A of the Criminal Procedure Act 51 of 1977 and were
sentenced accordingly.

In the trial against the appellant, the State relied on the evidence of the two former co-
accused, together with the evidence of other witnesses and some documentary evidence.

The appellant was convicted on all counts. On appeal the appellant attacked his conviction
against the fraud charges primarily on the basis that the regional magistrate should not have
accepted the evidence of the two former co-accused as they were accomplices and further
that their evidence was unreliable. Furthermore the appellant submitted that as some of the
vehicles were eventually exported to Namibia, albeit not to the purchasers for whom they
were originally destined as per the original offers to purchase and invoices, no fraud had been
proven.

Regarding sentence the appellant was sentenced to six (6) years’ imprisonment with two
years suspended on the 157 counts of fraud, after the counts were taken together for
purposes of sentence. In respect of the count of corruption, he was sentenced to three (3)
years’ imprisonment. On the other hand the appellant’s two former co-accused had been
sentenced in terms of he plea bargain agreement by another court to a fine of R300 000
payable on instalments and upon default to imprisonment for five (5) years and a further
imprisonment for five (5) years suspended for five (5) years on suitable conditions.

The appellant argued that the disparity in the sentences imposed on him as against the one
imposed on his former co-accused is disturbing and unjustifiable. He submitted that fairness
requires that the accused who have been convicted of the same offence(s) should receive the
same sentence.

On appeal the Supreme Court of Appeal dismissed the appeal against the conviction on the
basis that the state’s evidence was overwhelming and reliable. Regarding the evidence of the
accomplices, the trial court found that, notwithstanding the fact the two accomplices did not
appear to have been perfect witnesses, they nonetheless told the court the substantial truth.
The SCA could find no fault with this finding. Furthermore the SCA found that their evidence
was amply corroborated by the evidence of other witnesses and some strong circumstantial
and documentary evidence.

Regarding sentence, the SCA re-affirmed the legal principle that sentencing is pre-eminently
a matter for the discretion of the sentencing court. Although the SCA found no misdirection on
the part of the sentencing court, it found that the court below had not taken due and proper
account of the cumulative effect of the sentences. In order to ameliorate the severity of the
sentences the SCA ordered the sentence of three (3) years imposed in respect of corruption
charge to run concurrently with the sentence imposed in respect of the 157 counts of fraud.