Marianne Merten
Vito Palazzolo, the Cape-based alleged Mafia boss, has halted an investigation into his possible involvement in international money-laundering and won a stay of prosecution related to his illegal 1986 entry into South Africa.
Two Cape High Court orders last Friday effectively stalled years of efforts by South African authorities to investigate the alleged Mafia don.
The state withdrew several charges, including fraud and forgery, related to Palazzolo’s allegedly illegal entry into South Africa on a false passport and holiday visa in December 1986 while on 36-hour parole from a Swiss jail.
However, one charge connected to alleged misrepresentations on his 1994 application for naturalisation could still be pursued.
In November 2000 Palazzolo, who is also known as Robert von Palace Kolbatschenko, launched the legal challenge against the immigration-related offences, saying the prosecution violated his constitutional right to a fair trial and that he had received indemnity in the late 1980s.
His challenge to review the international cooperation centred on legal arguments that prosecuting officials had misled the Cape High Court in December 1999 when they motivated the request in chambers. Palazzolo won the first round in May when the court ordered full arguments be heard.
Scorpion investigators had arrested Palazzolo in November 1999. The self-proclaimed financier remained on R500 000 bail while that case was frequently postponed.
At the same time investigators started probing Palazzolo’s alleged role in money-laundering through Liechtenstein companies and trusts and requested legal assistance from authorities there via the Cape courts.
An international cooperation granted by the regional court in Vaduz in March 2000 has been ruled invalid.
Following an agreement between lawyers for the state and Palazzolo, the Cape High Court ordered that the state “shall forthwith withdraw the requests for mutual legal assistance to Liechtenstein and Switzerland respectively and also any similar requests made to any other countries since 1999”.
This means investigators cannot access documents, computer data and other information obtained from four companies and trusts based in Liechtenstein last year.
The material was seized and sealed after the Vaduz court approved the cooperation request, stating that “for the period from 1986 to present, the South African investigation authorities have managed to trace approximately 90 transactions to a total of approximately R101,5-million”.
The Vaduz court decision filed in the Cape High Court last month said there was a “shrewd scheme” to conceal money flows of millions of dollars into the control of Palazzolo via Corlis AG, Timber and Timber Products Estab-lishment Ltd, the Von Palace Kolbatschenko Trust and Erix Family Trust.
Reference was made to various offshore accounts, Cosa Nostra accounts and several other companies based outside South Africa.
The alleged Mafia don has been shrouded in controversy since his arrival in South Africa after he absconded from a Swiss jail where he was serving a three-year prison term for drug money-laundering.
Palazzolo remained in South Africa until January 1988 when he was deported following a Swiss-issued international arrest warrant. He was brought back to testify against National Party MP and attorney Peet de Pontes, who was in 1990 convicted on several charges related to forging home affairs documents.
Following his testimony in the trial, Palazzolo reestablished himself in the former Ciskei. In 1994 he obtained a certificate of naturalisation. A day before his 1999 arrest home affairs officials discovered that it was issued fraudulently.
National director of public prosecutions representative Sipho Ngwe-ma said international legal cooperation in this matter may be pursued at a future date.