Fidentia boss J Arthur Brown, the man at the centre of what could be South Africa’s biggest-ever corporate-investment scandal, is behind bars.
He and group accountant Graham Maddock were arrested by the Scorpions at their luxurious Cape Town homes shortly after 8am on Tuesday.
Within hours they appeared in the Cape Town Magistrate’s Court on a string of charges, including fraud of R200,3-million.
Denied bail despite the efforts of their lawyers, they will be detained at Goodwood prison, ironically not far from Brown’s Sunset Beach mansion, until a bail hearing on March 15.
The men face charges of fraud, theft and contraventions of the Companies Act, the Financial Advisory and Intermediary Services Act, the Reserve Bank Act and exchange-control regulations, as well as of income-tax laws.
Scorpions prosecutor Bruce Morrison, the man who recently secured a conviction in the LeisureNet criminal trial, told the court that these charges related to the Transport, Education and Training Authority (Teta), which was only one leg of the Scorpions’ three-week-old investigation.
The other legs related to the Living Hands Trust, responsible for funds meant for miners’ widows and orphans, and to allegations of corruption arising from the first two probes.
About 351 bank accounts would have to be examined in the process, he said.
Opposing immediate bail for the two men, Morrison said investigators feared they might interfere with state witnesses and that they were a flight risk.
The state would ”vehemently” oppose bail at the March 15 hearing as well, he said.
Brown (36), a former Port Elizabeth instant-lawn salesman, hit the media headlines after Fidentia was put under curatorship early last month.
At that stage Brown — whose full given names, as listed on the charge sheet, are Joseph Arthur Walter — was paying himself a salary of R3-million a year, and had developed a taste for expensive cars and high-end property.
It was reported in the curatorship application that of the approximately R2-billion controlled by the Fidentia group of companies, at least R680-million was unaccounted for.
Since then the curators have been trying to track down the missing cash, including about R250-million the Teta invested in Fidentia Asset Management.
Fidentia splashed out millions on sponsorships, including R15-million that went to Boland Rugby, a R4,9-million deal with the Eastern Cape Warriors and the purchase of the Manning Rangers soccer team.
This money has now dried up, causing major headaches for sports organisers.
In a series of media interviews last month, Brown described the claims of missing money as lies, and said the cash was ”still right there in those companies”.
He described as ”absolute hogwash” suggestions that he stole money or used trust funds for private spending sprees.
He was represented at Tuesday’s court hearing by former Transvaal attorney general Klaus von Lieres, while Maddock, who is 52, was represented by Pete Mihalik, the advocate who at one point represented German fraud convict Jurgen Harksen. — Sapa