Valabhji & Anor v Anti-Corruption Commission of Seychelles (CM 75 of 2023) [2023] SCSC 626 (16 August 2023)

CAROLUS J

Background

 

1. The 1st applicant, Mr Mukesh Valabhji, is the 1st accused in CR 114/2021 (Anti-Corruption Commission v Valabhji & Ors) and CR 04/2022 (Republic v Valabhji & Ors). His wife Laura Valabhji, the 2nd Applicant is an interested party in the application and 2nd accused in CR 04/2022 (Republic v Valabhji & Ors). The Respondent is the Anti-Corruption Commission of Seychelles (“the Commission”).

 

2. This Court, by Order dated 31st March 2023, granted an ex-parte application made by the Commission for a Restraint Order pursuant to sections 26(1) and 27(1) of the Anti-Money Laundering Act 2006 as amended by the Anti-Money Laundering (Amendment) Act 2008 (“the AMLA”).
3. The Order prohibits dealing with any realisable property belonging to Mukesh Valabhji subject to certain conditions and exceptions. It allows for the payment of living and legal expenses of Mukesh Valabhji upon application being made to the Court as permitted under section 27(2) of the AMLA.
4. In terms of the Order, any person affected by it or the Commission may make an application for the discharge or variation thereof. The 1st and 2nd applicants have made the present application for an order to vary the Restraint Order pursuant to section 27(6) of the AMLA to allow for payment of legal and living expenses of the respondents. The application is supported by two affidavits sworn by the 1st applicant on 16th June 2023 (1st affidavit) and 22nd June 2023 (2nd affidavit), respectively to which supporting documents are exhibited. In terms of the application, the applicant prays for orders as stated in an attached Draft Order. A schedule to the Draft Order sets out eight bank accounts from which payments are to be made (3 Seychelles Nouvobanq accounts; 2 Singapore DBS Bank Limited accounts; and 3 Singapore Deutsche Bank AG Accounts).
5. The Commission filed an affidavit in reply to the application to vary the Restraint Order, sworn by Kevin Stephenson and dated 21st June 2023, to which supporting documents are exhibited. Counsels for the parties filed written submissions and also made oral submissions to the Court.
6. The Commission did not oppose the granting of the application in principle but objected to payments from two Singapore Deutsche Bank AG accounts: 60201429 and 6085120, on grounds discussed further in this ruling. By ruling of 23rd June 2023 (Valabhji v Anti-Corruption Commission of Seychelles (CM75/2023) [2023] SCSC 468 (23 June 2023), the Court granted the order insofar as it concerned payment of legal fees specified in the Order from six of the eight named bank accounts (Seychelles bank accounts: Nouvobanq account nos. 32001002577001, 01201002577018 and 01201039828004; Singapore bank accounts: DBS Bank Limited account nos. S225012-0 and 8900298189; and Deutsche Bank AG account no. 6030845. The Court reserved its decision regarding payment out of two Singapore bank accounts namely Deutsche Bank AG accounts 60201429 and 6085120, pending information as to whether money from the six bank accounts subject to the Order of the 23rd June 2023 was sufficient to cover payment of the entire sum of the legal fees claimed by the applicants’ counsels. The Court also stated that its decision concerning payment of living expenses as well as other orders sought as per the draft order would also be made at a later date.
7. At a subsequent sitting of this Court, the applicants produced emails they had received from DBS Bank Limited in Singapore stating the balance in account no. S225012-0 to be USD40 and 20 Cents. The bank further stated that the bank was not aware of account no. 8900298189 maintained by Mr. Mukesh Valabhji with them. As for the Deutsche Bank AG account no. 6030845, it was confirmed that the balance as at 21st July 2023 stood at USD3,500,000/-, and as at 26th July 2023 (after payment of EUR55,768.54 to Samantha Aglae Legal Services and GBP 2,644,692.30 to Zaiwalla & Co. Ltd) stood at USD 38,270.42. It is evident from the foregoing that the above-mentioned accounts do not hold sufficient funds for payment of the entire sum of £3,253,250 million invoiced by Zaiwalla & Co. of which only GBP 2,644,692.30 was paid. Hence this Court is required to make a determination as to whether the balance of GBP608,577.70 can be paid from the two Singapore Deutsche Bank AG account nos. 60201429 and 6085120, in light of the objections of the Commission to the same. This Court will also make a determination as to the request of the applicants for payment of their personal expenses.

Submissions

Respondent’s Submissions

8. The Commission submits that the two Singapore Deutsche Bank AG accounts namely, account no. 60201429 (the “1429 account”) and account no. 6085120 (the “5120 account”) are not personal accounts of either of the applicants. In his submissions dated 21st June 2023, counsel for the Commission submits that “[t]he 5120 account is in the name of CFH Investments Limited, a company registered in the British Virgin Islands of which the Applicants are not directors, but which is held under the Topaz Trust Limited, a trust company established in New Zealand, of which the 1st Applicant is a beneficiary”. Counsel submits that “[t]he 1429 account is not, as previously stated, an account in the name of Silver Cap Limited but is a correspondence account used by Deutsche Bank” to facilitate USD transfers to other accounts, and that the bank has used this correspondence account to transfer USD to accounts including Silver Cap Limited (‘Silver Cap’). It is submitted that Silver Cap, as in the case of CFH Investments Limited (‘CFH’), is also held under Topaz Trust Limited and the applicants are not directors of Silver Cap. On that basis counsel avers that the applicants are self-evidently not the owner or controller of the 1429 account. In support of these arguments, counsel for the Commission relies on the affidavit evidence of Roy Cadence (dated 08.03.23) and Kevin Stephenson (dated 08.03.23) in support of the application of the Restraint Order, and Kevin Stephenson’s affidavit in reply to the present application dated 21.06.23, and exhibits attached thereto.
9. Counsel further submits that the 5120 account of CFH is believed to have been used for criminal purposes as follows:
   1. 1.  In 2016, the CFH Investments Limited account was used to pay US$4m for shares in Apollo Towers Pte Ltd (now Apollo Towers Holdings Ltd), then owned by Tillman Global Holdings LLC; the purchase was made fraudulently by Fahreen Rajan on behalf of 1st Applicant; these shares are the subject of a Civil Confiscation Order pursuant to section 4 Proceeds of Crime (Civil Confiscation) Act 2008, granted by the Honourable Justice Burhan J at the Supreme Court on 26.09.2022 (MC 59 of 2022);

 

1. 1. 2. In 2012, the CFH Investments Limited account was used to transfer to an account in Australia held by Sarah Zarqani Rene US$15,000, an allegation of money laundering AGAINST Mukesh Valabhji and Sarah Rene, which is the subject of an application currently before the Supreme Court in CR 114 of 2021, which the Respondent seeks to add by amendment to the trial indictment.

 

10. Counsel therefore submits that it would not be appropriate to vary the Restraint Order to allow for the use of these two accounts.

 

Applicants’ Submissions

11. The 1st and 2nd Applicants filed their submissions dated 22nd June 2023 addressing the two grounds of objection to the application to vary the Restraint Order in regards to the 1429 account and the 5120 account, namely that neither of the two accounts are personal accounts of either of the Applicants and furthermore the CFH 5120 account is alleged to have been used for criminal purposes. The applicants submit that both points are irrelevant and inconsistent with the position of the Commission.
12. With regards to the objection on the basis of the alleged use of the 5120 CFH account for criminal purposes, counsel for the applicants submits that the restraint proceedings act in personam and not in rem, in that all the property of the 1st applicant is restrained whether or not it is derived from the proceeds of crime or is traceable to criminal activity. It is submitted that “[a] pecuniary penalty order is an order that the defendant pay a sum of money, it does not matter if that money is “clean” or “dirty” money”. Further that the exceptions to a restraint order to pay for legal fees and living expenses are not confined to funds the applicant can show are not derived from criminal activity. The applicants’ counsel states that “very often monies later found to be the proceeds of crime are used for legal and living expenses” and this is because (1) at this stage there is no finding of criminality and the presumption of innocence still holds; (2) restraint and pecuniary penalty orders act on all realisable property of the applicant; and (3) for the applicant to prove that funds are not proceeds of crime at this stage reverses the burden of proof, invites self-incrimination, and give the Respondent disclosure relating to the assets, which was sought at the ex parte application and refused by this Court.
13. With regards to the other objection that the accounts are not personal accounts of the applicants, counsel for the applicant submits that only realisable property of the defendant can be subject to a restraint order, that is property in which the defendant has a beneficial (proprietary) interest, and if the two accounts are not the beneficial property of the 1st applicant they could not have been legally restrained. In that regard, counsel makes reference to the “Table of Properties subject to Restraint Order” and subheading “Property held in the name of the 1st Defendant” in the Restraint Order, which includes the two Deutsche Accounts. He submits that in the proceedings for the Restraint Order the Commission alleged which was accepted by the Court, that the two accounts were beneficially owned by the 1st applicant and the 1st applicant himself has accepted on oath that he is beneficially entitled to the two accounts.
14. Relying on the ruling of Govinden CJ dated in Anti-Corruption Commission of Seychelles v Valabhji & Ors (CO 114 of 2021) [2022] SCSC 981 (10 November 2022, counsel further submits that there is no restriction on ‘personal accounts’ being the source of payments for legal fees and living expenses. He submits the 1st Applicant “is entitled to pay legal fees and living expenses from any of his restrained financial resources”, which means that he should be entitled to funds for these purposes from the Deutsche accounts.
15. The Applicants further submit that the transfer of sums to Zaiwalla & Co (the law firm representing the applicants) client account puts the respondent in a better position to recover such sums (in the event that they are not used or fully used)  than if the funds were left in the bank accounts in Singapore, given the undertaking of Zaiwalla & Co to use any sums transferred to its client account by or on behalf of the applicants only for payment of properly incurred legal fees and disbursements in regards to CR04/2022 and CR114/2021 and not for any other purpose.

Analysis

Accounts not directly held by 1st Applicant

16. This Court will first address the point raised by the Commission that the 1429 account and the 5120 account are not personal accounts of the applicants and money cannot therefore be released from these accounts to pay for their legal and personal expenses.
17. In the Restraint Order the two accounts are listed as “property held in the name of the 1st Defendant” i.e. the 1st applicant in the present application. However the documents exhibited to the affidavit of Kevin Stephenson dated 21st June 2023 (Exhibits KS101, KS103, KS104, KS106, KS107) indicate that the accounts are not in the personal name of the 1st applicant but are likely to be a company account and a correspondence account of the bank. Counsel for the Commission has conceded that the 1429 account is only a correspondence account used by the bank to transfer funds and does not contain funds belonging to the applicants. This therefore leaves only the 5120 account to be dealt with.
18. As for the 5120 account, the Commission now claims that the 1st applicant is the beneficial owner of the account, hence taking the position that the account is indirectly linked to the 1st applicant. There appears to be an inconsistency in the position taken by the Commission when it made its ex-parte application for the Restraint Order where it argued that the account was directly held in the name of the 1st applicant, and the position it is now taking by arguing that the account is indirectly held by the 1st applicant who has beneficial ownership of the same, and that in order to vary the Restraint Order the Court “will want to be satisfied” that the bank account from which payment is sought to be made is a personal bank accounts in the name of and belonging to the applicants. This change in the Commission’s position appears to be due to findings made after further investigation/analysis, but does not change the applicability of the Restraint Order to the account.
19. The Restraint Order applies to “any realizable property belonging to MUKESH VALABHJI, whether or not the assets are described in this Order or are transferred to him after the Order is made, or are held on trust for him, and whether or not they are in his own name or are solely or jointly owned”. It is not disputed that the 1st Applicant is the beneficial owner of the CFH account, and the Restraint Order would therefore have applied to this account whether it was listed as property directly held by the 1st applicant or as property held indirectly by him.
20. As stated, the Commission is arguing that the 1st applicant should not be permitted to use the funds from this account as it is not in his personal name although when it made the application for the Restraint Order it claimed that it was.
21. The applicants rely on Govinden CJ’s ruling in the Anti-Corruption Commission of Seychelles v Valabhji & Ors (CO 114 of 2021) [2022] SCSC 981 (10 November 2022) to argue that the source of payment for legal fees and living expenses is not restricted to accounts held in their personal names. The case concerned the variation of orders made pursuant to section 60(1) of Anti-Corruption Act, 2016 against the accounts of local entities and companies in which the applicants have a financial interest and their private individual accounts. In that case the Republic argued that the applicants’ legal fees should be paid from their private accounts and not legal entities in which they have financial interest. The Court did not agree with this argument and held as follows:

“Having considered the law and the facts and circumstances involved in this matter this court determines as follows on these points.

 

1. 1. 1. 1. As regards to the position by the ACCS in respect of the payment of the legal bills and invoices by companies the court will not agree with its position. The accused would be entitled to pay a legal bill or invoice from monies in an account of a legal entity or company in which they hold financial interest and subject to the limits of those interest and the applicability of the provisions of statutes including the Companies Act. This is subject to the following conditions:-

 

1. 1. 1. 1. 1. The accused must demonstrate that they have proprietary interest in the legal entity or company against which account the bill is presented for payment. If the ACCS has section 60(1) notice issued against the account of that entity a prima facie case of such an interest will be established.

 

1. 1. 1. 1. 2. The bill or invoice presented must be with regards to a bona fide legal service to be rendered in the case of a retainer fee or having been rendered by the legal practitioner or legal firm.

 

1. 1. 1. 1. 3. That there is compliance with the provisions of the Companies Act, with regards to the decision to settle the payment by the legal entity or company.

 

1. 1. 1. 1. 4. If the funds acquired from the legal entity or company belongs to the 1st Accused alone he would be entitled to decide as to whether he is going to share it with the 2nd Accused and vice versa.”

                  (Emphasis added)

 

22. Although in the present case, this Court is concerned with the variation of a Restraint Order, in my view a similar reasoning should apply. Even more so considering that the current Restraint Order is made against all realizable property of the 1st applicant and not just specific accounts, and restricts the applicants from accessing any of their funds for the purpose of paying legal fees, unless specifically permitted by the Court. In that regard the Restraint Order specifically states that “it shall allow for the payment of living and legal expenses” as the Court thinks fit, upon application by the applicant as permitted under section 27 (2) of AMLA 2006.
23. It is therefore my view that any funds directly or indirectly belonging to the 1st applicant and not just funds in accounts held in his name may potentially be used for payment of legal fees. However, as was specified in Govinden CJ’s Ruling, where the funds are held by a legal entity of which the 1st applicant is beneficiary, there must also be compliance with the provisions of the Companies Act and other applicable laws with regards to the decision to settle the payment by the legal entity or company.
24. The applicants have not provided any documents showing their connection to CFH with the present application. Furthermore as already stated, the Commission when applying for the Restraint Order did not list the account as held in the name of or linked to CFH but stated it was in the 1st applicant’s name. Nevertheless, the application before this Court is not one requesting an order to oblige CHF to provide the funds for the applicants’ legal fees: the current application is to vary the Restraint Order to allow for the payment of funds (if any are available) from the account which is held in the name CFH for the purpose of payment of legal expenses up to the amount requested by the applicants. If the Court makes a decision to vary the Order in relation to the account the legal entity which is the holder of the account and the bank will still need to follow the necessary compliance procedures in order to make funds available and effect the payment for the legal expenses. This Court cannot stress enough that the necessary compliance procedures will have to be adhered to.
25. For the reasons given above, and given that this Court has varied the Restraint Order to permit payment of funds from six personal accounts of the 1st applicant held directly by him, there is no valid reason for Court not to permit payment from the 5120 CFH account of which the 1st applicant is a beneficial owner, subject to compliance procedures being adhered to by the company and the bank effecting the payment.

Account 5120 allegedly used for criminal purposes

26. The second objection raised by the Commission is that the 5120 account held by CFH is believed to have been used for criminal purposes, namely the payment of the allegedly fraudulent purchase of shares by Fahreen Rajan on behalf of 1st applicant, which shares are the subject of a Civil Confiscation Order granted by Burhan J on 26.09.2022 (MC 59 of 2022), as well as the transfer of funds to Sarah Zarqani Rene.
27. I note firstly that the Civil Confiscation Order made pursuant to section 4 of the Proceeds of Crime (Civil Confiscation) Act 2008 by Burhan J on 26.09.2022 (MC 59 of 2022) prohibits Fahreen Rajan and any other person having notice of the order from disposing of or otherwise dealing with or diminishing the value of the whole or any part of the said shares. That order does not put any restriction on funds held in the 5120 account.
28. The basis for granting the Restraint Order against all realizable property of the 1st applicant was a finding of the Court that it was satisfied that a pecuniary penalty order might be made against the 1st applicant in respect of criminal conduct from which he has benefitted, and for which proceedings are to be instituted against him (para [153] of the Restraint Order). In my view therefore, the argument that this specific account was used to pay for the fraudulent purchase of shares and was used to launder money, and that the Restraint Order against this account should not be varied on that basis, does not provide a valid reason for not granting the variation order in respect of that account. All realizable assets of the 1st applicant have been restrained for the aforementioned reasons and not only those identified to have been allegedly used for criminal purposes. The Commission’s second objection also fails.

Living Expenses

29. In regards to the living expenses of the applicants, the 1st applicant states in his affidavit that:
    1. 1. 21. There are living expenses notwithstanding that I and my wife are held in custody. These include items such as property upkeep, utility bills, medicines for my personal upkeep and food for my special diet, and medical, dental and optician bills for myself and my wife. I have a dependent daughter who is at university and I need to pay her fees and living expenses.

 

1. 1. 1. 22. I propose to submit bills for these expenses monthly to the court. However if I am allowed SCR25,000 per month any surplus or shortfall can be accounted for after the monthly bills have been submitted to the court.

 

30. It is suggested as per the Draft Order that the Court makes an Order that the 1st applicant “is allowed to spend up to SCR25,000 per month on living expenses and pay Singapore $8,000 for the dependent support of Ms Valabhji”.
31. The only supporting document is exhibit MV3 which is exhibited to the 1st applicant’s additional affidavit in support dated 22nd June 2023. Exhibit MV3 is basically a typed Schedule of Payments in which monthly recurring expenses in SCR, anticipated one-off payments for June 2023 in SCR, and monthly recurring expenses in foreign exchange are set out.
32. The monthly recurring expenses in SCR are the following:

• Medication - 5,000
• Personal care, laundry & food - 15,000 - Bulk of it is food for MV diet which needs to be tailored for his medical conditions
• Family upkeep - 5000 – includes fuel for food and laundry delivery and electricity bills and vet bills
• Total 25,000

 

33. The following are the anticipated one-off payments in SCR for June 2023:

• Optician – 25,000 – Tests and glasses for Applicant and wife (Will provide invoice or receipt for refund)
• Dentist – 5000 – dental treatment (Will provide invoice or receipt for refund)

 

34. The following are the monthly recurring expenses in foreign exchange:

• Stipend for daughter – 8,000 Singaporean Dollar – for housing, transport, utilities, books and living expenses
• University fees – TBC

 

35. None of these expenses are supported by any documentary evidence. This Court therefore declines to make any Order in that regard.

 

Decision

36. On the basis of the above, I hold that the Restraint Order may be varied in relation to Deutsche Bank AG (Singapore) account no. 6085120 held in the name of CFH Investments Limited, subject to legal requirements and compliance procedures being adhered to by the company and the bank effecting the payment. This does not apply to the Deutsche Bank AG account 60201429 as it is only a correspondence account used by the bank. Furthermore, the application insofar as it concerns living expenses stands dismissed as such expenses are not substantiated by any evidence.
37. Accordingly, on the strength of the undertaking given to this Court by Varun Zaiwalla employed as senior counsel to Zaiwalla & Co, that Zaiwalla & Co shall pay any sums paid to it by and on behalf of Mukesh Valabhji  and/or Laura Valabhji towards the payment of properly incurred legal fees and disbursements in the proceedings CR04/2022 and CR114/2021 and shall not apply any such sum for any other purpose; and further that particularised invoices showing the legal practitioner to be paid and the services provided will be submitted to the Court within 7 days of payment,  I make the following Orders:

1. The 1st applicant Mukesh Valabhji is permitted to pay, or procure to be paid, on demand to Zaiwalla and Co, from Deutsche Bank AG (Singapore) account no. 6085120 held in the name of CFH Investments Limited, a sum not exceeding £608,580 or equivalent in other currencies in respect of the reasonable legal costs of the 1st and 2nd applicants incurred in defending criminal proceedings in CR04/2022 and CR114/2021,

PROVIDED THAT in effecting such payment, the necessary legal requirements and compliance procedures are adhered to by the company and the bank effecting the payment.

2. The 1st applicant is authorised to issue a power of attorney appointing a person to facilitate the payment made pursuant to sub-paragraph A. above. The 1st Applicant shall provide a copy of such power of attorney to this Court within 10 days of this Order.
3. The 1st applicant shall within 10 days of this Order, provide a bank statement, to this Court showing the standing balance of the bank account as at the date of this Order. He shall also provide the Court with a bank statement after payment made pursuant to sub-paragraph A. above is made.
4. The Deutsche Bank AG (Singapore) and the Central Bank of Singapore shall be notified of this Order forthwith.

Signed, dated, and delivered at Ile du Port 16th August 2023.

 

 

____________

E Carolus J