Life may not be fair but investigations should be.

Our courts have on many occasions expressed the importance of the principle which requires that people should be afforded a chance to participate in a decision that will affect them and more importantly given an opportunity to influence the result of the decision (the audi alteram partem principle).

It is accordingly important for investigators, including those engaged by organs of state, to be mindful of the requirement to afford all persons who may potentially be prejudiced by their findings an opportunity to refute any evidence giving rise to those findings, whether those findings amounted to ‘non-binding recommendations’ or not.

This tenet of natural justice has become increasingly important to bear in mind in recent years where we are seeing a number of investigations, commissions of inquiry and reports published in South Africa emanating from varied allegations of widespread corruption and unethical conduct in the State as well as in private companies.

One such investigation relates to VBS Mutual Bank (VBS) which was declared insolvent and bankrupt in 2018 and placed under curatorship, following the alleged defrauding of South African citizens and taxpayers of roughly R2 billion siphoned from accounts held with the bank.

A senior advocate was mandated by the South African Reserve Bank to investigate certain allegations of impropriety in VBS in terms the Financial Sector Regulation Act 2017. The act allows a financial sector regulator to launch an investigation and confers powers onto investigators to question and require persons to produce documents and other information coupled with obligations for a person to cooperate with the investigation.

The investigation findings, published in a 148-page report entitled ‘VBS Mutual Bank – The Great Bank Heist’, was released in October 2018 and made a number of damning findings against at least 50 people who were found to have collectively and gratuitously received R1.9 billion.

One of the people named in the report, ANC Limpopo treasurer Mr Danny Msiza, challenged the adverse findings, remarks and conclusions made about him. The Pretoria High Court in Msiza v Motau (N.O) upheld the challenge and set aside the findings against Msiza on the basis that the investigator’s failure to afford Msiza an opportunity to be heard during the investigation is unconstitutional and violated Msiza’s rights.

The two issues which the court had to consider were:

  • whether the impugned paragraphs containing the adverse findings, remarks and conclusions against Msiza are reviewable under the Constitution and the Promotion of Administrative Justice Act 2000 on the basis that the report contained adverse findings against Msiza without affording him an opportunity to be heard; and
  • whether the applicant’s right to access to information was infringed under section 32 of the Constitution because the record was redacted, rendering the applicant unable to vindicate his constitutional rights, thereby undermining his right of access to courts (section 34 of the Constitution).

In relation to the first issue, the court said that:

‘where an investigator knows or is expected to foresee that his findings, remarks and conclusions will have consequences for the party on whose behalf an investigation is conducted and for the party against whom findings will be made, he is obliged to listen to both sides and the party who is likely to be affected by adverse findings is entitled to demand the right to be heard before an adverse remark or finding or conclusion or decision is made against him or her’.

The investigation and the findings made were found to be an exercise of public power and were accordingly susceptible to administrative review. The court set aside the preliminary findings and the unfair procedure and declared the investigator’s conduct unconstitutional.

In regards to the second issue, the court endorsed the application of the doctrine known as subsidiarity and found that where legislation has been enacted to give effect to a constitutional right, the applicant should not rely directly on a fundamental right contained in the Constitution. As a result, the applicant, having proceeded by way of a review in terms of Rule 53 of the high court rules could not directly engage a right in section 32 of the Constitution without going through the enacted legislation (the Promotion of Access to Information Act 2000) and the applicable rules of court to compel production of the full record of decision.