As the screws started tightening on LeisureNet’s bosses, they instructed their former in-house architect to invest $200 000 in an overseas development he knew nothing about, the Cape High Court heard on Thursday.
The architect, Dawid Rabie, was in the witness box for a second day in the trial of former LeisureNet joint chief executives Peter Gardener and Rodney Mitchell, their business associate Hans Moser, and Mitchell’s wife Suzanne.
Rabie testified earlier that when LeisureNet took over his architectural firm Keystone in 1999, Gardener and Mitchell ”requested” — and got — kickbacks on the money LeisureNet paid him for the value of the firm’s work in progress.
Gardener and Mitchell have admitted that Rabie transferred about $250 000 to companies they had registered in the British Virgin Islands, but say it was his money, and that he wanted them to invest it in property development.
Rabie told the court on Thursday that towards the end of 2001, a year after LeisureNet was liquidated, Mitchell and Gardener transferred $238 000 to his account, and that Mitchell asked him to pass $200 000 of the amount to Moser to invest in an undefined project.
However, some time after the money was transferred to Moser’s Swiss bank account, Mitchell told him he could regard the money as his own, and early in 2002 gave him a handwritten document to this effect.
The document explained the payment to Moser as being for the purchase of 50% of the shares in a company named Pankow AG.
Before he saw the document he had never heard of Pankow. He met Moser soon afterwards, and asked Moser to pay the money back to him. Moser said he could not, as it had been invested in the purchase of a building in East Berlin.
Rabie said he had to date received no shares or payment from Pankow.
He said Mitchell gave no reason for the change of mind over the money, but that it appeared that, faced with an inquiry under section 417 of the Companies Act, Gardener and Mitchell had decided they would wash their hands of the cash.
Gardener and Mitchell face charges of fraud, money-laundering, income tax evasion and contraventions of the Companies Act, involving R16-million.
Moser and Suzanne Mitchell face only money-laundering charges.
LeisureNet, owner of the Health and Racquet Club chain of fitness gyms, had 900 000 members and 7 000 employees at the end of 2000, with its last accounts showing an annual turnover of more than R1-billion, most of it generated by the Health and Racquet Club. – Sapa