PRETORIA SOCIETY OF ADVOCATES

and

JOHANNESBURG SOCIETY OF ADVOCATES

In the disciplinary proceedings against Advocate S Nthai SC

CHARGE SHEET

BACKGROUND TO THE CHARGES

1.1. In November 2006 eleven claimants (being P Foresti, I L de Carli, D Foresti, M T Suardo, P Suardo, A Foresti, L Foresti, M Foresti, F Conti, D Conti and Finstone s.a.r.I., and who are shareholders in South African registered companies Marlin Holdings Limited and RED Graniti SA (Pty) Ltd, requested the Washington-based International Centre for Settlement of Investment Disputes (‘ICSID") to arbitrate in a dispute between them and the South African Government over their investments in South Africa.

1.2. The South African companies in which the claimants are shareholders were the registered owners of mineral rights in respect of certain immovable property in South Africa, in particular rights to granite. The dispute arose from the promulgation of the Minerals and Petroleum Resources Development Act, 2002, and the Mining Charter, which provides for the lapsing of registered mineral rights and the vesting thereof in the State under certain circumstances.

1.3. The claimants contend that the Minerals and Petroleum Resources Development Act, 2002 and the Mining Charter were unfair and discriminatory and were tantamount to an expropriation of their investments in South Africa, in consequence whereof they claimed compensation of some R2,2 billion from the South African Government.

1.4. The claimants in the arbitration proceedings are seeking recourse on the basis of two bilateral investment treaties concluded between Italy and South Africa, and between the Belgo-Luxembourg Economic Union and South Africa.

1.5. The Government of the Republic of South Africa is defending the claimants' claim and the matter has been set down for hearing from 12 April 2010 to 22 April 2010 in The Hague, Amsterdam.

1.6. During the course of 2007 the State Attorney, Pretoria briefed Advocate S Nthai SC ("Nthai") and appointed the legal firm Freshfields Bruckhaus Deringer ‘Freshfields"), a firm based in Paris, France, to represent the Government of the Republic of South Africa in the arbitration proceedings. The Minister and the Department of Trade and Industry, and the Minister and the Department of Mineral Resources, are the responsible Ministers and Departments in relation to the issues raised in the arbitration proceedings.

1.7. The claimants are represented in the arbitration proceedings by attorneys Webber Wentzel of Johannesburg, who have instructed London Counsel to act in the matter.

1.8. Mario Vittorio Marcenaro ("Marcenaro") is the de facto Chief Executive Officer of Finstone s.a.r.l. He at all relevant times has been authorised to act on behalf of Finstone in instructing its lawyers and in discussions with the Government, and has also acted in the same capacity on behalf of RED Graniti SA (Pty) Ltd and its shareholders (who are the claimants).

1.9. Prior to October 2009, and to the knowledge of Nthai and Marcenaro, discussions had been held between representatives of Marlin Holdings Limited and RED Graniti SA (Pty) Ltd, to convert the mineral rights which these companies had held in South Africa into "new order rights in terms of the Minerals and Petroleum Resources Development Act, 2002. The conversion and retention of the mineral rights of the companies in terms of the Mineral and Petroleum Resources Development Act, 2002 would have the result that the value of the claimants' investments in South Africa would be preserved, and render it unnecessary to continue with the arbitration proceedings. The claimants were, however, not prepared to withdraw or discontinue the arbitration proceedings if this would have the result that the claimants would be held liable for payment of the fees of the arbitration tribunal and the legal costs of the Government.

FACTS FORMING THE FOUNDATION OF THE CHARGES:

2.1. On 10 October 2009 Marcenaro and Nthai met at the offices of attorney Maurizio Manano in Johannesburg.

2.2. At this meeting:

2.2.1. Nthai informed Marcenaro that there were two factions within the Government, one of which wished to settle the arbitration proceedings on the basis that the claimants withdraw their claims and each party pay its own costs, and the other of which wished the matter to be pursued to finality, or if the claimants were to discontinue the proceedings, to seek a cost order against the claimants.

2.2.2. Nthai informed Marcenaro that he was an influential senior member of the Government's legal team in the arbitration proceedings.

2.2.3. Nthai informed Marcenaro that if the arbitration proceedings were to be settled, Nthai would lose a substantial amount in respect of future legal fees which he would earn if the arbitration proceedings continued.

2.2.4. Nthai proposed to Marcenaro that if the claimants made a secret payment of R5 million into Nthai's foreign bank account, Nthai would use his influence to get the Government to agree to settle the matter on the basis that the proceedings be withdrawn and each party pay its own costs.

2.2.5. Nthai informed Marcenaro that he had already prepared a written proposal to put to the Government to settle the matter on this basis.

2.3. Marcenaro did not accept Nthai's proposal but undertook to convey it to the claimants.

2.4. A part of the discussions held between Marcenaro and Nthai on 10 October 2009 was recorded by Marcenaro without Nthai's knowledge.

3.1. On 18 October 2009 Nthai and Marcenaro met at Marcenaro's house in Johannesburg.
3.2. At this meeting:

3.2.1. Marcenaro informed Nthai that the claimants were not prepared to pay any amount to Nthai in consideration for him procuring a settlement of the arbitration proceedings on terms favourable to the claimants.

3.2.2. Nthai attempted to persuade Marcenaro to procure the payment by the claimants to Nthai of a sum of R5 million in consideration for his procuring a settlement of the arbitration proceedings on terms favourable to the claimants.

3.2.3. Nthai informed Marcenaro, with a view to placing undue pressure upon him to procure the payment of the sum of R5 million to Nthai, that if the arbitration proceedings continued this would damage the companies Marlin Holdings Ltd and RED Graniti SA (Pty) Ltd and their interests, and the companies would encounter problems in the future with the National Union of Mineworkers and Non-governmental Organisations (‘NGO's').

3.3. The discussions between Nthai and Marcenaro on 18 October 2009 were recorded by Marcenaro without the knowledge of Nthai.

4.1. On 20 October 2009 Marcenaro and Nthai met at Marcenaros home in Johannesburg.

4.2. At this meeting:

4.2.1. Marcenaro again informed Nthai that the claimants were not prepared to make the proposed secret payment of R5 million to Nthai.

4.2.2. Nthai again attempted to persuade Marcenaro to procure the payment of a sum of R5 million by claimants to Nthai in consideration for Nthai procuring a settlement of the arbitration proceedings on terms favourable to the claimant.

4.2.3. Nthai arranged with Marcenaro that Nthai would meet him in Pisa, Italy, on 28 October 2009 with a view to meeting with Mr Ponzanelli of RED Graniti SA (Pty) Ltd, in order to discuss, inter alia, the proposed payment of a sum of R5 million to Nthai.

4.2.4. Nthai impressed upon Marcenaro that he should not disclose to the claimants' lawyers that he had been discussing a possible settlement of the arbitration proceedings with Nthai.

4.3. The discussions between Marcenaro and Nthai on 20 October 2009 were recorded by Marcenaro without the knowledge of Nthai. On 28 October 2009 Marcenaro and Nthai met alone in Pisa, Italy. At this meeting Nthai again raised the proposed payment of a sum of R5 million by the claimants to himself, and Marcenaro again informed him that the claimants were not prepared to make any payment to Nthai.

6.1. On 31 October 2009 Marcenaro, after oral discussions with Iqbal Sharma, the Deputy Director-General of the Department of Trade and Industry and his suggestion, drafted a letter to be sent to the Minister of Trade and Industry and to the Minister of Mineral Resources, in which a discontinuance of the arbitration proceedings would be proposed.

6.2. Marcenaro sent a copy of the draft letter to Nthai, who approved the content of the letter but suggested the addition of a sentence stating the claimants were prepared to record in any settlement agreement that the Minerals and Petroleum Resources Development Act, 2002 and the Mining Charter did not violate International Law.

6.3. This letter in a final form was sent to the two Ministers and to Freshfields on 31 October 2009.

7.1. On 2 November 2009 Freshfields sent a letter, which was electronically co-signed by Nthai, to the claimants' attorneys Webber Wentzel in Johannesburg, in which exception was taken to the sending of the letter of 31 October 2009 directly to the Ministers, and in which it was stated that "seeking to bypass counsel for the respondent was improper"

7.2. On 2 November 2009, after receipt of this letter from Freshfields, a Request for Discontinuance of the arbitration proceedings was filed by the claimants with the Arbitration Tribunal. In this Request a reference was made to discussions with "another senior representative of the respondent", which reference was intended to be a reference to Nthai, but whose name was not mentioned in the document.

8.1. On the evening of 2 November 2009 Marcenaro telephoned Nthai to discuss Freshfields' letter of 2 November 2009.

8.2. During this telephone conversation:

8.2.1. Nthai confirmed that the Government representatives were aware that Marcenaro had been engaged in discussions with Iqbal Sharma of the Department of Trade and Industry.

8.2.2. Nthai advised Marcenaro to keep in touch with lqbal Sharma, but informed him that Sharma was not in a position to achieve a settlement in the arbitration proceedings.

8.2.3. Nthai recommended to Marcenaro that the claimants responded to Freshfields' letter of 2 November 2009 by stating that the allegations made were unfair, and by pointing out that the claimants had been speaking to Sharma and that Sharma had advised the claimants to write directly to the Ministers.

8.2.4. Nthai instructed Marcenaro not to mention to anyone that Marcenaro had been involved in discussions with Nthai, or to mention Nthai's name.

8.2.5. Nthai informed Marcenaro that the Government's next step would be to send to the claimants a proposal for settlement of the arbitration proceedings. He advised Marcenaro that the claimants should not agree to the proposal, but should reject it and that this would then lead to discussions between the parties during which the matter would be settled on terms favourable to the claimants.

8.3. The telephonic discussion on 2 November 2009 between Marcenaro and Nthai was recorded by Marcenaro without the knowledge of the Nthai.

9.1. On 3 November 2009 Marcenaro, at the request of Nthai, telephoned Nthai who was then at the Cape Grace Hotel.

9.2. During this telephone discussion:

9.2.1. Nthai confirmed having seen the claimants Request for Discontinuance, and enquired who the "senior representative of the respondent" was who was referred to in the Request, and wanted to know whether it referred to himself.

9.2.2. Nthai sought confirmation from Marcenaro as to whether the claimants' attorneys, including P Leon of Webber Wentzel, were aware that Marcenaro had been engaged in discussions with Nthai.

9.2.3. Nthai told Marcenaro that he should not disclose to the claimants' lawyers the proposal which Nthai had made in regard to a payment of R5 million to Nthai.
9.3. The telephone discussion on 3 November 2009 between Marcenaro and Nthai was recorded by Marcenaro without the knowledge of Nthai.

10.1. On 3 November 2009 Marcenaro again telephoned Nthai, who was then still at the Cape Grace Hotel, in response to a message left by Nthai.

10.2. During the telephonic discussion:

10.2.1. Nthai informed Marcenaro that the Government was working on a proposal for settlement and an agreement on discontinuance of the arbitration proceedings:

10.2.2. Marcenaro again confirmed to Nthai that the claimants had turned. down Nthai's offer to procure a favourable settlement of the arbitration proceedings in consideration for payment of a sum of R5 million to Nthai.

10.3. The telephonic discussion on 3 November 2009 was recorded by Marcenaro without the knowledge of Nthai.

11.1. On 3 November 2009 Marcenaro telephoned Nthai, who was then at his home in Bryanston.

11.2. During this telephone discussion:

11.2.1. Marcenaro asked Nthai why he had co-signed Freshfields letter of 2 November 2009, despite having seen and given his comments on the claimants' letter of 31 October 2009 before it had been sent.

11.2.2. Nthai again asked Marcenaro who the "senior representative of the respondent" was who had been referred to in the Request for Discontinuance of 2 November 2009, and Marcenaro confirmed that it referred to Nthai.

11.2.3. Nthai informed Marcenaro that Freshfields thought that the a senior representative of the respondent" was a reference to an official in the Department of Trade and Industry, and stressed to Marcenaro that there should be no further reference to Nthai in any correspondence.

11.2.4. Nthai stressed that Marceriaro should not reveal that Nthai was talking to him, and that Nthai himself could not reveal that he was talking to Marcenaro to compromise the claimants' case.

11.3. The telephone discussion on November 2009 was recorded by Marcenaro without the knowledge of Nthai.

12.1. On 4 November 2009 Webber Wentzel Attorneys sent a letter to Freshflelds in response to its letter of 2 November 2009. This letter, as did the Request for Discontinuance, referred to discussions held with aanother senior representative of the respondent.

12.2. On 4 November 2009 Marcenaro, in response to a request from Nthai, telephoned Nthai.

12.3. During the telephone discussion:

12.3.1. Nthai expressed his concern about the reference in Webber Wentzel's letter of 4 November 2009 to discussions with 4another senior representative of the respondent", which Nthai now knew was a reference to himself.

12.3.2. Nthai informed Marcenaro that everyone on the Government's side wants to know who this other person is.

12.3.3. Nthai informed Marcenaro that he could not assist the claimants to settle the arbitration proceedings unless the discussions which he had with Marcenaro were kept confidential and were not disclosed to anyone else. He stressed that all future communications between himself and Marcenaro should not be disclosed to anyone.

12.4. The telephonic discussion on 4 November 2009 between Marcenaro and Nthai was recorded by Marcenaro without the knowledge of Nthai.

13.1. Shortly after 4 November 2009, but before 8 November 2009, Marcenaro met with Nthai at Nthai's home in Bryanston in Johannesburg. At this meeting Nthai again attempted to solicit a payment of R5 million to himself in consideration for his facilitating a settlement of the arbitration proceedings on terms favourable to the claimants.

13.2. On 8 November 2009 the claimants London-based counsel Toby Landau QC, informed Freshfields of Nthai's aforementioned conduct and the import of the discussions which Nthai had had with Marcenaro.

MISCONDUCT BY NTHAI SC

14. S Nthai SC is, having regard to the facts as set out above, guilty of misconduct in relation to his profession as an advocate, and which conduct is prejudicial to the interests of the Pretoria Society of Advocates and the Johannesburg Society of Advocates, of which he is a member, in that

14.1. he corruptly, improperly and dishonestly attempted to procure payment of a sum of R5 million to himself in consideration for advising and persuading his own client to pay its own costs in the arbitration proceedings should the claimants discontinue the arbitration proceedings;

14.2. he placed his own personal financial interest above the interests of his client, to the actual or potential prejudice of his client;

14.3. he established a relationship with Marcenaro, a representative of the claimants, which compromised the legitimate expectation of Nthai's client that his advice with respect to the conduct of the arbitration proceedings would be honest and independent;

14.4. he entered into and engaged in settlement discussions with a representative of the claimants, without any authority to do so, and with a view to advancing his own personal financial interests rather than the interests of his client;

14.5. he disclosed privileged and confidential client-legal representative information to the opposing party, to the actual or potential prejudice of his client;

14.6. he betrayed the confidence which his client and his instructing attorney had placed in him to honestly, objectively and independently advance its interests in the arbitration proceedings.

NGD MARITZ Sc
15 March 2010
(Note: This charge sheet has been prepared and submitted without consideration and confirmation by the co-prosecutor, Advocate L Halgryn Sc of the Johannesburg Bar.)

(Transcribed from the PDF. As such there may be errors in the text)

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