CRI/A/19/85

IN THE
HIGH COURT OF LESOTHO

In the
Appeal of

REX
Appellant

V

SHALLAE
SIMEON NTABEJANE Respondent

REASONS
FOR JUDGMENT

Filed by
the Hon Acting Mr Justice D S Levy on the 25th day of July, 1985.

The
accused was charged with contravening Section 8(1) of the Financial
Institution Act No 23 of 1973 (the Act) in that he unlawfully

transacted business as a Financial Institution, to wit, a Credit
Institution by lending money out to the general public at a fixed

rate of interest of M1 50 for every M10.00 kept by the borrower for a
period of one month thereby constituting himself into a Credit

Institution without being in possession of licence issued by the
Commissioner of Financial Institutions in terms of the Act.

Put more
succinctly, the accused, by carrying on the business of a money
lender, is alleged to have thereby constituted himself
into a Credit
Institution and thereby contravened the Act

The
Magistrate acquitted the accused and the Crown has appealed against
that finding on a question of law

I
dismissed the appeal for the following reasons

1. The
   question of law was 'whether the accused was aware that he was
   committing an offence, in short whether mens rea

   
   

is a necessary element of the offence created by Section 8(1) of the
Act.

2. It
   is not necessary for me to deal with this question inasmuch as I am
   satisfied

   
   

2

that the conduct of the accused in any event in no way constituted
the carrying on of the business of a Credit Institution or Financial

Institution in terms of the Act

3. A
   statement of agreed facts was placed before the magistrate from
   which it is apparent that the business of the accused was simply

   that of a money­lender, certainly at oppressive rates

   
   

of interest but nevertheless his business was that of a money lender
even though usurious rates of merest

4. There
   was no evidence at all to suggest or indicate that the accused
   received any deposits from anybody or that he employed any
   money
   other than his own to make his usurious loans It is true that the
   borrowers sometimes delivered their salary cheques to
   the accused or
   authorised him to collect their salary cheques from their employers
   which cheques the accused deposited to his
   own account at the
   Lesotho Building Finance Company Ltd.

   
   

But the accused did so apparently in order to facilitate his recovery
of his loans to these borrowers plus interest. It was not
suggested
in evidence that the collection and deposit of these salary cheques
in any way amount to the deposit with the accused
of such money by
the payees of the cheques

5. An
   examination of the various definitions in the Act of a "banking
   business" a "financial institutions" and
   a "credit
   institution" shows that an integral part of the business of a
   credit institution must be the receipt of deposit.

   
   

In terms
of Section 1 of the Act –

"Credit Institution" is defined to mean any financial
institution other than a bank

"Financial Institution" means any person carrying on
banking business.

"Banking Business" means the business of receiving funds
from the public.

"Bank" means any financial institution whose

operations include the acceptance of

deposits subject to withdrawal of deposit by cheque

credit institution is therefore simply a finan­cial institution
which does not allow its depositors to withdraw their deposits
by
cheque,

3

Since "financial institution" is defined to mean any person
carrying on a banking business and since "banking business"

is defined as meaning the business of receiving funds from the public
a main or substantial activity of a financial institution
if it is to
qualify as such, must be the receipt of funds from the public. As
Trollip J A. put it in S. v. Rosenthal 1980 (1) 65
at 75A the
fundamental postulate common to each of them is that it"carries
on the business of accepting deposits."

If a
credit institution is any financial institution other than a bank
then it can only be such if, as with any financial institution,
it
receives funds from the public so long as it does not allow its
customers to withdraw their funds by cheque as would a bank.

In the
absence of proof that the accused receives funds from the public on
deposit he cannot be considered to be anything more than
a
money-lender and he is accordingly not guilty of any offence under
Section 8(1) of the Act.

D S LEVY

ACTING
JUDGE

25th
July, 1985

For
Appellant Mr Kabatsi

For
Respondent Mr. Maqutu