South Africa

Op-Ed: What the law says about Nkandla

By Danie Visser 2 June 2015

Unfortunately for the president, a careful analysis of the circumstances of the expenditure – i.e. not one which is selective and tendentious – will likely show that the president is liable to refund the state a certain amount of the money spent on his Nkandla homestead. By DANIE VISSER.

Ever since the Public Protector finding that the president and his family benefited unduly from the upgrades to his private residence, there has been an increasing number of calls for the president “to pay back the money” – from the carefully phrased statement by the Public Protector herself that the president must “take steps, with the assistance of the National Treasury and the SAPS, to determine the reasonable cost of the measures implemented by the DPW … [and then] [p]ay a reasonable percentage of the cost of the measures”, to the rather less nuanced chants by Economic Freedom Front when the president spoke in Parliament on 21 August 2014, leading to the suspension of the National Assembly by the Speaker.

The president left it to the Minister of Police to decide “whether the president is liable for any contribution in terms of the security upgrades” and on 27 May 2015 the Minister of Police released his report, finding that the president is “not liable to pay for any of the security features” – an outcome that has drawn condemnatory responses from a variety of sources and a statement from the Public Protector that she stands by her recommendations. Amidst the fury of the political debate – and apart from any moral duty to pay back the excessive amount spent on the property – the following questions arise: is there in fact a legal duty on the president (or anyone else) to pay back any of the amounts spent in relation to the Nkandla property (or on the property adjacent to it); and if so, what is the basis of this legal duty?

The answer is that the law of unjustified enrichment provides a solid basis for the Public Protector’s directive and a careful analysis of the circumstances of the expenditure (that is to say, not one which is selective and tendentious as that by the Minister of Police) is likely to show that the president is liable to refund the state a certain amount of the money spent on his Nkandla homestead.

The law of unjustified enrichment has the advantage that it operates without any requirement of fault. That means that if the president is judged to have received a gain which is unjustified in terms of this part of our law, he would have an obligation to refund this gain, even if he had not acted either intentionally or negligently in the process of obtaining that gain – indeed even if he were completely ignorant of the fact that he was obtaining it. But in order to found a claim, certain specific elements must be established:

It must be shown that the president’s own patrimony has in fact increased as a result of the expenditure – that is to say, the costs of effecting the improvements do not automatically translate into an increase in the patrimony of the president. In this context the following is relevant: First, none of the odd R50 million that was paid to consultants and contractors will be recoverable from the president.

Secondly, the president’s private homestead and the surrounding area belong to the Ingonyama Trust and the improvements were thus all erected on Ingonyama Trust land. Some of these improvements – though intended for the benefit of the president – are situated outside of the president’s private residence (e.g. the helipad and the hospital) and definitely do not accrue to the president’s patrimony. (The Ingonyama Trust may be unjustifiably enriched in this case, but if it is, the law would probably allow it to reject the enrichment.) However, those improvements erected on the portion of Ingonyama land that serves as the president’s private residence could however increase his private estate.

Although all the land belongs to the Ingonyama Trust, the increase in value brought about by these improvements do not necessarily accrue to the Ingonyama Trust alone. The president has indicated on several occasions that he is paying off a bond on the property, which case he must have some form of real right (presumably a long lease) – and in that case, the increase in value to the portion that forms his private residence could be said to accrue to him.

However, the mere fact that an improvement has been added does not automatically translate into an increase of the president’s patrimony: the measure of enrichment is either the amount which was expended or the increase in the patrimony of the owner, whichever is the lesser. In the normal course of events, additions such as those made at Nkandla can be expected to increase the value of the property. However, there is clearly not a big market for luxurious estates in that part of rural KwaZulu-Natal and, furthermore, the necessity to administer the property as contemplated in section 2(2) of the Ngonyama Trust Act act severely restricts the saleability of the property.

Enrichment in this instance need not only calculated on the basis of the value added by the improvements, but can also be calculated with reference to expenses saved. If it is established that the president would have spent the money on the improvements effected by the State, bringing about those improvements prevented his estate from decreasing (since he did not now have to pay what he would have otherwise have paid). The president declared to Parliament that the renovations to his house were being financed by a mortgage bond. This establishes two important facts: 1) that the president indeed intended to effect certain improvements to his private residence and 2) that, since the Department of Public Works paid for everything constructed at the residence, he must have saved the amount that he would otherwise have spent on the improvements.

For any increase in the patrimony of the president to be reclaimable, it must further be established that the enrichment is unjustified (that is to say, that the enrichment must be without a legal basis). Here the interpretation of what is justified expenditure comes into play. For instance, the Minister of Police has made quite a bit of the fact that a firepool was necessary and appropriate, but the Public Protector has not said that a fire pool was not necessary: she merely said that the difference between a basic fire pool and one converted into a swimming pool amounts to unjustified expenditure.

The Minister also argues that other features that the Public Protector identified as not dictated by security concerns were in fact completely justified from a security angle, but quite probably an objective assessment would show that all (or at least a part of ) the expenditure was not justified from a security perspective. The Minister points out in his report that the Cabinet Policy places no limit on what can be paid for security provisions at the president’s private residence, but administrative action must be reasonable – and the way reasonableness has been interpreted by the Constitutional Court is unlikely to allow a finding that the unbridled expenditure that happened at Nkandla was necessary and proportional. Furthermore, the Minister does not deal with the such improvements as the addition of 19 buildings to the estate and several other features identified by the Public Protector.

Nevertheless, an analysis of the Public Protector’s report shows that the outer limit of what could realistically be expected to be successfully claimed back from the president is about 10% of the total expenditure. And practically to get to the position where a claim is in fact instituted will not be easy road: the State must in fact claim the money owed to it – and it is plain to see that such a claim would not be high on the agenda of anyone who has the authority to do so – and this is, of course a serious threat to democracy in the country. DM

Prof Danie Visser is Deputy Vice-Chancellor with the portfolio for Research, University of Cape Town.

Photo: Nkandla by Bruce Hopwood.

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