Telecoms giant MTN on Tuesday suffered a setback in its fraud case against its former executive Robert Madzonga, after the South Gauteng High Court ruled he has a right to not self-incriminate.
Madzonga previously served as MTN SA chief corporate services officer. He was suspended in 2013 after MTN began an internal investigation into allegations of misconduct and irregularities.
He is accused of improperly authorising payment of R12.3m to a law firm, Nozuko Nxusani, to conduct legal services “knowing very well that they did not render the services that they were contracted to deliver”.
MTN insists that the law firm’s director, Nozuko Nxusani, conspired with Madzonga to issue instructions for work that MTN did not need, and which was never performed, or which carried no value.
The company says Nxusani would then present invoices for the work that Madzonga accepted and on which he authorised payment.
Madzonga and Nxusani were in December arrested and charged with fraud and theft.
MTN, which is also seeking to recover the money it lost to the alleged fraudulent conduct, asked the court to compel discovery of a range of documents relating to its action in the fraud case against the respondents.
In the main, MTN wanted the court to compel discovery of Madzonga’s and Nxusani’s financial records to assist it in proving its case of fraud against them.
Madzonga and Nxusani opposed the application. They argued that MTN’s discovery application was an attempt to procure evidence for the state in the criminal proceedings as the civil proceedings have been ongoing since 2014, and have only recently been renewed by MTN.
Judge Stuart Wilson on Tuesday ruled that the fact that there are parallel criminal and civil proceedings being pursued simultaneously on fundamentally the same accusation of fraud is critical to any evaluation of whether they have a right to withhold disclosure of potentially incriminating documents in the civil action.
“In the absence of an express statutory limitation on the right against self-incrimination in this context, I do not think that I can allow MTN in this case to secure by means of civil discovery proceedings evidence that may clearly tend to incriminate the second and third respondents if it is produced in the criminal proceedings currently pending against them,” the judgment reads.
“To be clear, I hold only that it is a valid objection to making discovery in civil proceedings that a party honestly believes the material sought to be discovered may incriminate them in parallel criminal proceedings arising from the same facts, said Wilson.
“I say nothing about whether the objection would still be good if there were no criminal proceedings pending, or if those proceedings have nothing to do with the civil action in which discovery is sought.”
Madzonga is also one of the accused in the R2bn looting of the now defunct VBS Mutual Bank. He served as VBS Mutual Bank COO and CEO of its parent company, Vele Investments.
MTN was not immediately available to respond to questions.
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