Former LeisureNet joint chief executives Peter Gardener and Rod Mitchell were not responsible for the collapse of the LeisureNet empire, the Cape High Court ruled on Friday.
LeisureNet operated the health and racquet clubs in the country, but was liquidated in 2000 with R1,2-billion in liabilities and assets worth only R302-million.
Gardener and Mitchell are alleged to have been party to an elaborate scheme to cheat LeisureNet through the fraudulent purchase of companies.
They face charges of fraud, money laundering and violations of the Income Tax Act and the Companies Act.
Their marathon trial has been before acting Judge Dirk Uijs, who said it was important at the outset to dismiss and dispel once and for all the public perceptions that Gardener and Mitchell were responsible for the collapse of the LeisureNet empire through mismanagement.
Uijs said: ”This was not the case.”
He said the point was important, as it would have a bearing on the outcome of the case.
He added: ”I mention it now already, so that the misconception in the minds of people as to the board of directors of LeisureNet can be dismissed and eradicated as soon as possible.”
The judge said the success of the Health and Racquet Clubs was such that Gardener and Mitchell listed LeisureNet on the JSE, which resulted in other directors joining them on the board.
The additional board members were in accordance with the law, the JSE regulations and the recommendations of the then-King Commission, Uijs said.
He said the decision to expand LeisureNet abroad was taken by the extended board of directors and Gardener and Mitchell could not be blamed for it.
The decision to expand overseas resulted in the company overextending itself, he said.
Uijs said each and every witness in the case had extremely high regard for the abilities of Gardener and Mitchell.
Uijs said the reason for the expansion overseas was self evident — South Africa, being a small country, had only so much room for clubs of this kind.
The judgement continues on Tuesday. — Sapa