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  06 - 2013 Sections of acts found invalid after Auction Alliance warrantless search
  11 - 2013 Auction Alliance in Constitutional Court to keep paper trail private


11 - 2013 Auction Alliance in Constitutional Court to keep paper trail private
Author : Business Day BDlive - Franny Rabkin 

18 November 2013


Auction Alliance in Constitutional Court to keep paper trail private

ALLOWING the Estate Agency Affairs Board access to the records of Auction Alliance would be an "obliteration" of the auction house’s right to privacy, the Constitutional Court heard on Monday.

Auction Alliance is fighting the board’s acquisition of a paper trail of years of alleged wrongdoing.

Last year, the company became mired in scandal after media reports alleged it had been paying kickbacks to bankers to send work its way and had been rigging auctions, most famously the 2011 sale of the Quoin Rock wine estate, which was being bid for by heiress Wendy Applebaum.

A mirror image of the company’s server is currently being held in escrow by KPMG after the Estate Agency Affairs Board tried to seize it without a warrant. The judgment of the Constitutional Court will determine whether the board will be able to access it immediately or whether it must go back to the magistrate’s court and fight over a warrant, which could take years.

The case had also, initially, raised important constitutional questions about when and how regulators may enter and search premises.

All the parties agreed that the Estate Agencies Affairs Act and the Financial Intelligence Centre Act were unconstitutional because they allowed search and seizure operations without warrants and without any boundaries as to where, when and how they are conducted. But they did not agree on what the court should do to deal with the unconstitutionality.

However, last week the Constitutional Court delivered a judgment in the Gaertner case, which dealt with very similar questions in the context of the Customs and Excise Act.

As a result, much of the argument in court on Monday was about how similar or different this case was to Gaertner and about what Deputy Chief Justice Dikgang Moseneke called the "brass tacks": whether the board was going to be able to get its hands on the information being held by KPMG.

In the Gaertner case, Justice Mbuyiseli Madlanga had distinguished between searches of people’s homes and their business premises, saying that going into people’s homes without a warrant was an unjustifiable intrusion into their privacy. Business premises might well raise different considerations, especially when there was a huge public interest at stake, he held.

Counsel for Auction Alliance, Anton Katz SC, tried to persuade the court that Monday’s case was different from Gaertner. "It’s a very different type of power, given to a very different type of person, in very different circumstances in respect of a very different statute," he said.

He said the court should make a distinction that it had explicitly decided not to make in the Gaertner case — between routine searches and "targeted searches", searches that came about because of a suspicion of wrongdoing.

"You are in effect inviting us not to follow our own precedent," suggested Justice Moseneke. But Mr Katz said not, because Justice Madlanga had been careful to limit the reasoning in Gaertner to that case in particular.

Mr Katz said that if the court did not make the distinction between routine and targeted searches, the board’s attorneys could walk into KPMG without a warrant and seize the information, despite the breach of its right to privacy.

"It’s not fair … it’s an obliteration of the right to privacy," he said.

But counsel for the finance minister, Jeremy Gauntlett, SC said the court was right to have rejected the distinction between targeted and routine searches, saying it was hard to differentiate between them in practice and would require the regulator to enter into a "theological debate" each time.

He said the two statutes before the court in this case had "at least equally important social objectives" as the Customs and Excise Act. The Financial Intelligence Centre Act was enacted to "prevent hiding money to fund further criminality", he said. "Unbounded criminality is subversive to democracy," he said.

Counsel for the Estate Agency Affairs Board, Steven Budlender, said Parliament should be given the space to decide under what circumstances a warrant could be done away with. It was not necessary for the court to go further than the Gaertner judgment, he said.

He said if the board had to approach a magistrate’s court again for a warrant before it got access, Auction Alliance would be able to delay the investigation for years. Mr Budlender quoted a previous judgment of the Supreme Court of Appeal, which said courts should not allow "ingenious legal stratagems" in order to seek delays — "a pervasive feature of white collar crime cases in this country".

In this case, there were "most serious allegations of high-level criminality inside Auction Alliance" and nothing had been said to traverse them, said Mr Gauntlett. It was in the interests of justice that the board be able to access them.

Judgment was reserved.

Business Day BDlive:  Business / Property



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