Former LeisureNet boss Peter Gardener on Tuesday denied that the purchase of a R7-million home at Hermanus by an offshore trust he set up was an attempt to launder money.
In the witness box in the Cape High Court for the second day in succession, Gardener also denied that he was dishonest with his tax return in concealing a R6-million payment into the trust.
Gardener and fellow joint chief executive of the now-defunct LeisureNet group, Rod Mitchell, have pleaded not guilty to multiple charges of fraud, money laundering and contraventions of the Companies Act.
In testimony on Monday, Gardener confirmed that he did not tell the LeisureNet board about his 20% interest in a company named Dalmore when LeisureNet entered into a joint venture with Dalmore to develop fitness centres in Germany.
On Tuesday, he told the court that he did not disclose the interest when LeisureNet bought out Dalmore’s half share in the venture in mid-1999 either.
It was his share in the buy-out proceeds, which came to £652 017,62, that made up the bulk of the money invested in the Hermanus house, which was next door to one already owned by his wife.
Gardener told the court that he did not declare his Dalmore interest to the board at the time of the buy-out because at the time he was ”purely wearing a LeisureNet hat” and was completely focused on getting the best deal possible for the group.
”I had no doubt in my mind that this was a deal that had to be done,” he said. ”From our perspective it was a deal made in heaven.”
At one point he also said: ”To me it was a steal.”
The money went into a trust he had set up in the British Virgin Islands, a trust in which, he said, he was advised that he had no direct or indirect interest.
All he was able to do was send the trustees a ”letter of wishes” suggesting what he thought they should do with the money in it. They were not obliged to act on his wishes, he said.
It was for this reason, and the fact that it came from an offshore source and was a ”capital payment”, that he did not declare the money in his tax return.
It was following such a ”letter of wishes” that the trust bought the Mossel River Drive house in Hermanus.
The purchase was carried out via a share acquisition in Gull on the Roof, the company that owned the house.
”We didn’t purchase the house for accommodation,” Gardener said. ”The proposal was they [the trust] purchase it for investment.”
The claim that it was a money laundering exercise was ”absolutely ridiculous”.
”The money in my mind wasn’t tainted at all … I wasn’t trying to hide where the money was going to from anyone … or coming from.”
Gardener’s advocate, Francois van Zyl, put it to him that the state was claiming that the non-disclosure to LeisureNet on the Dalmore deal was a bid to intentionally defraud the group.
”What do you say to that?” asked Van Zyl.
”I say it’s untrue,” replied Gardener.
LeisureNet, former owner of the Health and Racquet Club chain of fitness centres, was provisionally liquidated in October 2000 with liabilities of R1,2-billion and assets of only R302-million.
The hearing continues on Wednesday. — Sapa