A sum of $127 000 deposited in an offshore trust set up by LeisureNet boss Peter Gardener was cash for a joint investment in property, not an extortion payment, the Cape High Court was told on Wednesday.
Gardener, former joint chief executive of the now-defunct group, was in the witness stand for the third day in succession, defending himself against charges of fraud, money laundering and contraventions of the Companies Act.
He said a claim by architect Dawid Rabie that he and fellow CEO Rod Mitchell, who is also on trial, pressured Rabie to pay them kickbacks after LeisureNet bought out Rabie’s architectural firm, Keystone, in 1999, was ”absolutely false”.
Nor was Rabie correct in saying that the two men chased him for payments.
”We had no reason to chase him for the money. It was his investment,” Gardener said.
He said he and Mitchell had set up separate offshore trusts, which in turn controlled operating companies.
When LeisureNet made an offshore payment to Rabie of R2,8-million for the value of work in progress on overseas projects, Rabie expressed an interest in becoming a partner in a private property investment Gardener was eyeing in the United Kingdom.
The proposal was to buy an apartment, which would then be let out to LeisureNet for the use of employees on temporary assignments in the UK, an arrangement that would mean a massive saving in hotel bills.
Gardener said that because Rabie did not have an offshore structure similar to his own, and because Rabie was ”flabbergasted” at the cost of setting one up, he accommodated him by holding a portion of the work-in-progress payout in the company controlled by the trust he had set up.
A similar payment was made into the trust established by Mitchell.
However, when LeisureNet was provisionally liquidated in October 2000, the need for UK accommodation for its staff fell away.
Though an opportunity came up through a business associate, Hans Moser, for an investment in an apartment project in East Berlin, he and Mitchell were coming under increasingly hostile scrutiny in the media.
In addition, liquidators were freezing the accounts of the Dalmore group, a Jersey based company in which he, Mitchell and Moser had an interest. He and Mitchell decided to stall any investment until ”the storm blew over”.
Rabie, however, had wanted to press ahead with the German investment, and the work-in-progress money was repaid to him so he could do so.
Rabie, a former Springbok yachtsman, told the court in April that Mitchell and Gardener had asked for shares of the work-in-progress money, and that he had been ”totally taken aback” when they did so, and did not dare challenge them.
He said the later repayment — which with the money from both accounts totalled $238 000 (about R1,6-million) — was an apparent attempt by Gardener and Mitchell to wash their hands of the money as investigators turned up the heat.
He said Mitchell asked him to pass $200 000 (about R1,37-million) of the amount on to Moser to invest in an undefined project, which he did.
When he later asked Moser to pay the money back, Moser said he could not, as it had been invested in the purchase of a building in East Berlin.
The trial continues on Monday. — Sapa