Sapa and Staff Writer
J ARTHUR BROWN falsely represented himself as the director of a financial services company, the Western Cape High Court heard yesterday.
Brown, the former Fidentia chief executive who was arrested in March 2007, is on trial for allegedly running a pyramid scheme and using investors’ funds for his personal gain. He faces four counts of fraud, two of corruption, one of money-laundering and two of theft.
The financial scandal involving Fidentia is one of the country’s biggest cases of alleged white-collar crime. Brown’s trial started in the Western Cape High Court in November, more than five years after he was arrested.
More than R1 billion from the Living Hands Umbrella Trust, formerly the Mantadia Asset Trust Company (Matco), which paid money to widows and orphans of mineworkers killed in accidents, went missing while it was under Fidentia’s control.
Brown is also accused of soliciting a R200 million investment from the Transport, Education and Training Authority (Teta), by giving Teta boss Piet Bothma a R6m bribe.
Fundi Projects director Leon Grobbelaar yesterday testified that he entered into an agreement with Brown in 2002, on the basis that Brown was a director of Brown Brothers Investment Management Services (BBIMS).
Grobbelaar said he approached Brown for assistance because he was having difficulty in supplying chemicals to a Zambian firm.
Brown apparently said he could solve their problem through financial gearing and structuring, giving Fundi Projects a monthly income, capital guarantees, and capital growth.
Brown’s explanation was that the cash amount received would be invested and secured. Fundi would then be able to draw against the capital to enable it to pay the suppliers of its chemicals for the Zambian deal, once the money was transferred and invested with BBIMS.
Grobbelaar was told that Fundi would receive a monthly income of 1.9 percent interest calculated on the capital amount.
At the end of 12 months, Fundi would receive its initial investment plus 25 percent.
Prosecutor Jannie van Vuuren asked Grobbelaar what position he thought Brown held during their interactions.
“He interacted with me as the owner or director of that company. He began with BBIMS, which turned to Brown Brothers Financial (Management) Services (BBFMS).
“In all correspondence, it was Brown Brothers,” Grobbelaar said.
According to the indictment, Louis Koen was the sole director of BBIMS at the time and Brown was added as a director only in January 2003.
BBIMS was owned by Brown Brothers Holdings (BBH), which later changed to Fidentia Holdings in 2004.
BBIMS, BBFMS, and BBH were apparently used interchangeably during that period.