Environment Minister asks court to overturn NPA and Barnabas Xulu's appointment in R128m US restitution settlement order

The Minister of Environment, Forestry and Fisheries, Barbara Creecy, has approached the Western Cape High Court to rescind an order granted in 2018 appointing the NPA and attorney Barnabas Xulu, as “implementing agents” for a $7,124,888 (approximately R128-million) restitution settlement ordered by a US court.

The minister and the department’s director-general, Nosipho Ngcaba, in a 27 March 2020 statement, announced they had launched the application in the Western Cape High Court for a rescission of a US court order, and to make these “arrangements a court order in South Africa”.

In 2017 the Court for the Southern District of New York ordered “Lobster Baron”, the now late Arnold Bengis, to repay the South African government $37-million (about R665-million) for plundering the country’s West Coast rock lobster stocks over 14 years and smuggling it into the US.

Bengis was convicted in South Africa in 2002, and in 2003 pleaded guilty in the Southern District Court of New York to “conspiracy to violate the Lacey Act.”

South Africa was the first country to be compensated under the 117-year-old US law regulating “the importation of fish in violation of foreign law, and conspiracy to commit smuggling”.

The Lobster Baron was initially fined $5.9-million (R105-million) and sentenced to 46 months in jail. After serving his sentence, Bengis, who had dual US and SA citizenship, fled to Israel and failed to cough up the restitution. 

For this, he was sentenced, in July 2017, and ordered to pay $37-million to South Africa.

In 2018, a reduced settlement was reached and $7,124,888 was subsequently paid to South Africa. The rest of Bengis’s fortune, a Manhattan District Court judge remarked, was “out of reach of the US”.

Barnabas Xulu, Western Cape Judge President John Hlophe’s legal representative in various cases as well as one of the founders of the Jacob Zuma Trust, has featured as a central figure in the repatriation of the R100-million.

The appointment in 2017 of his firm, Barnabas Xulu Incorporated (BXI), by the department “in the Bengis case”, had been made at the urging of former minister of agriculture, forestry and fisheries, Senzeni Zokwana.

In January 2020, Western Cape High Court Judge Owen Rogers handed down a landmark judgment ordering Xulu to repay R20-million funnelled to his legal firm by Zokwana.

The Service Level Agreements signed between the Department of Agriculture, Forestry and Fisheries (DAFF) and Xulu have been disputed and are referred to in Rogers’ 2020 judgment, which found the appointment of BXI by the department to have been irregular.

Creecy’s application does not seek to deal with the legality of the settlement agreement between the department and Xulu’s firm, but to rescind the order that the NPA and Xulu be appointed “implementing agents” for the R100-million.

In their statement, Creecy and Ngcaba said the application in the Western Cape High Court had been brought seeking a rescission of the US court order and to make this “a court order in South Africa”.

The ministry’s main reason for seeking the rescinding of the US order included, said Creecy, that the Constitutional Court had indicated “on several occasions that parties contracting outside of the context of litigation cannot seek a court order to have an agreement made a court order, irrespective of whether a term of the agreement provides that the settlement be made a court order”.

Creecy added that in terms of the order, “the National Prosecuting Authority and Barnabas Xulu Incorporated are appointed as ‘implementing agents’ for the settlement agreements”.

But the order, she said, was “self-executing and [does] not require implementing agents”.

In other words, Xulu had no business in the matter.

Creecy said that the funds recovered were paid into the Criminal Assets Recovery Account (Cara) upon the receipt of the cheque from the US authorities. 

“As such, the 2018 applicants had no legal authority to direct or seek a court order as to how these funds should be spent,” said Creecy.

She added that the terms of the court order “were wider than the terms of the actual agreements and beyond what was contemplated in the affidavit of Mr Zokwana”.

The parties to the agreement, said Creecy enigmatically, “had each believed that they were signing the same agreement, but it appears not to have been the case”.

How this came about has not yet been explained but is bound to become clearer when Xulu files his response to Creecy’s application.

At the time of the order in 2018, “there was no litigation which involved DAFF and/or the NPA related to this matter pending in the US, Jersey or South Africa”.

Because the order granted by the court on 20 September 2018 was unlawful, the minister and director-general were duty-bound by the constitutional principle of legality to ensure that it is set aside, said Creecy.

The actual settlement agreements [between DAFF and BXI] remained “subject to scrutiny and were not the subject of the current rescission application”. DM