To enjoy the full Mail & Guardian online experience: please upgrade your browser
17 Mar 2008 14:23
Fidentia boss J Arthur Brown will go on trial in September on fraud and theft charges, the Cape Town Regional Court heard on Monday.
Prosecutor Thersia du Toit said the trial had been set down for nine days between September 15 and October 3.
Magistrate Wilma van der Merwe postponed the case to May 2 for the state to reply to a defence request for further particulars.
This case is separate from the court case against Brown and Piet Bothma, the suspended chief executive of the Transport Education Training Authority (Teta).
In that case Brown and Bothma face a battery of charges including fraud, money laundering and corruption.
In the regional court case, Brown is alleged to have used R5,5-million in Infinity loyalty programme funds to pay salaries and other expenses of Fidentia companies, and to have swindled a company named Fundi Projects of R3-million.
His former co-accused in this case, Fidentia financial director Graham Maddock, was sentenced to an effective seven years jail after a plea agreement in February.
According to the charge sheet, on January 24 this year Maddock instructed Infinity’s general manager to transfer R5,5-million from Infinity’s so-called “settlement” account, which included money due to members of the programme, to its current account the same day.
He promised to return the funds by the end of the month.
The funds were then transferred to another company in the Fidentia group, Bramber Alternative.
The charge sheet says Brown was informed of the transaction beforehand.
It says that Maddock and Brown entered an arrangement “whereby the said proceeds of unlawful activities are used to make funds available to pay the salaries and/or other expenses of the group of companies”.
In the Fundi case, the charge sheet says that company ran into difficulties in 2002, which meant it could not meet its obligations to supply chemicals, including ammonia, phosphate and pot-ash, to a Zambian firm.
Brown told Fundi director Leon Grobbelaar that he could solve Fundi’s predicament by means of financial gearing and structuring, which would give Fundi a monthly income, capital guarantees and growth, and allow it to meet its obligations to the Zambians.
Brown said Fundi’s cash would be invested with Brown Brothers Investment Management Services, a company of which he later became a director.
At the time of the initial deal with Fundi, former rugby player Louis Kone was Brown Brothers’s sole director, but Grobbelaar believed Brown was “the director and/or owner”.
Brown also said the investment would be secured, and Fundi would receive a monthly income of 1,9% of the capital amount, or 12 times the initial investments. At the end of a year, Fundi would get its initial investment back, plus 25%.
In December that year, in terms of a written agreement with Brown Brothers, Fundi transferred R8-million to the trust account of Maddock’s chartered accounting firm, Maddock Incorporated.
From there it was supposed to be moved to and invested with Brown Brothers.
Maddock, Grobbelaar had been told, was Brown Brothers’s “independent auditor”.
“BBIMS [Brown Brothers] failed to pay the monthly interest in an amount of 1,9% or any interest at all to Fundi,” the charge sheet says.
Though Fundi had demanded repayment of its money, R3-million was never handed back.
Nor was R1,5-million Fundi handed over to cover the cost of a financial guarantee from a top bank to serve as insurance for the delivery of the goods to the Zambian firm.
Instead, Brown used R800 000 of the cash to make a deposit on a property at Cape Town’s upmarket Sunset Beach, where he lives.
Fundi, the charge sheet said, has since launched a civil claim against Brown Brothers and Maddock’s firm.
Brown was arrested in March last year.
Brown, who was in court on Monday, is out on R1-million bail.
Create Account | Lost Your Password?