Bakang Seretse and his company, Khulaco, may have lost their appeal in spectacular fashion, but the Court of Appeal refused to make two findings that would have carried even heavier consequences.
Despite describing the case in unusually strong language, the court declined to find that Seretse had committed fraud.
The judgment leaves Seretse facing an order to repay P42 million. But the court drew a distinction between the serious allegations made by government and what it could determine on the evidence before it.
Government had argued that the conduct amounted to fraud and asked the court to award costs on a punitive scale. The Court of Appeal declined.
Although the judges said there remained a ‘whiff of fraud’ over the transactions, they said they were not making a finding of fraud itself. The appeal was decided on different legal grounds. Those included breach of fiduciary duty, undisclosed conflicts of interest and the obligation to account for profits received.
The judges also rejected government’s attempt to secure attorney-and-client costs, one of the harshest costs orders available in civil litigation.
Instead, the court awarded costs on the ordinary scale. The ruling means Seretse and Khulaco remain liable for substantial legal costs, but avoid the additional financial penalty that accompanies punitive costs orders.
The judgment nevertheless leaves little doubt about the court’s view of the case.
The judges found that Seretse occupied a fiduciary position in relation to the National Petroleum Fund. They concluded that he failed to disclose interests in companies involved in the transaction and that Khulaco was required to account to government for the P42 million it received.
The court also criticised the defence mounted by Seretse and Khulaco. It said they failed to provide meaningful answers to key allegations raised by government during the summary judgment proceedings. Still, the judges drew a clear line between suspicion and proof. Their reference to a ‘whiff of fraud’ were a reflection of concerns arising from the evidence. But they did not elevate those concerns into a formal finding that fraud had been established.This was one of the few legal victories in an otherwise comprehensive defeat for Seretse and company. The judgment leaves him liable for the money government sought to recover. But it also confirms that the Court of Appeal was not prepared to make findings that went beyond what was necessary to resolve the appeal.