Former LeisureNet bosses Peter Gardener and Rod Mitchell were on Monday jailed for an effective eight and seven years respectively.
”You let society down very very badly,” said acting Judge Dirk Uijs as he handed down the sentences in the Cape High Court.
He granted both men leave to go to the Supreme Court of Appeal to challenge conviction and sentence, and extended their bail of R500 000 each.
Uijs took just over an hour to sentence Gardener to 12 years in jail, of which four were suspended, and Mitchell to 12 years of which five were suspended.
The men, former joint chief executives of the company, were convicted last month on charges of fraud involving a total of R12-million, related to their undisclosed interest in a German gym operation that LeisureNet bought out in 1999.
Uijs told them that the fact that they had paid over the money, plus an additional R4,5-million, to LeisureNet’s liquidators was ”the best thing you did”, and meant that they had to an extent already been punished.
He found that this was a ”substantial and compelling” reason not to impose the 15-year minimum sentence laid down in the Criminal Procedure Act for fraud involving over R500 000.
Uijs said both men were first offenders — Gardener has a previous conviction for VAT fraud but this is also related to LeisureNet — and the fact they had clean records indicated they were not criminals by nature.
However, the bottom line was that they unlawfully took a total of R12-million from the coffers of a public company.
”Business, economic enterprise, economic intercourse, is based on trust,” Uijs said.
”Therefore I find it to be indubitably so that it is in the interests of society that people be told by way of the sentences that must be imposed by the republic’s courts, that crime will not be tolerated.
”Mr Gardener, Mr Mitchell, that relates to your kind of crime. It relates to white-collar crime.”
Saying that their sentencing was the most difficult task that had ever been put on his shoulders, Uijs revealed he had ”sleepless nights” over the issue.
The millions involved might not be a huge amount of money to Gardener and Mitchell, but it was to him and presumably also to members of the public, both wealthy and poor.
Uijs said their fraud did not actually cause LeisureNet a loss equivalent to their gain, and he could not find that what they did led directly to the demise of the company.
”Nevertheless, to walk away from a deception with R6-million in each of your pockets is a very, very serious offence, that despite the fact that you paid it all back.”
He said he was not impressed by the defence’s call for fines and suspended sentences. This would be a message to the public that the rich could pay for their misdeeds like paying for groceries.
Addressing Gardener, he said: ”The question which has sat in my head ever since the day I found you guilty is, why? What did you need to do this for, or for what did you need to do this? You were independently wealthy.”
Exactly the same went for Mitchell, he said.
Uijs said the State had asked for sentences of 10 years for Gardener and eight for Mitchell, who had not stooped quite as low as Gardener.
It was not often that a court agreed with counsel’s submissions, Uijs said.
”I believe Mr Gardener that you deserve ten years in jail. I believe Mr Mitchell that ten years is not inappropriate to your case either,” he said.
However in arriving at the lesser sentences, he had tried to the best of his limited ability to blend mercy with the needs of society. The suspension of part of the sentences is conditional on the men not being found guilty of a crime involving dishonesty.
Neither Mitchell nor a grim-faced Gardener, who has accused the media of destroying his life, would speak to journalists afterwards.
Their attorney Jeremy Tyfield said in a brief comment that it was difficult to comment on the judgement without being disrespectful to the court.
He said it was ”a relief” that leave to appeal had been granted.
Gardener and Mitchell still face an asset forfeiture application, which will be heard in September.
Earlier in the trial, which has been running for over a year, they were discharged on counts under the Prevention of Organised Crime Act, the Income Tax Act, and a Companies Act charge of reckless trading related to LeisureNet’s collapse.
When LeisureNet, which ran the Health and Racquet Club chain, was provisionally liquidated in 2000 it had liabilities of R1,2-billion and assets of only R302-million. – Sapa