J Arthur Brown admits to two fraud countsComment on this story
Cape Town - Former Fidentia boss J Arthur Brown admitted guilt on two major counts in his embezzlement trial in the Western Cape High Court on Tuesday.
He handed in a document with admissions on two charges related to the Transport Education and Training Authority (Teta) and Matco (Mantadia Asset Trust Company).
Teta advanced two promissory notes and two cash amounts totalling R200.3 million to the Fidentia groups of companies as an investment on a non-discretionary mandate, of which R15m had been returned.
Brown admitted that these amounts were invested from time to time in asset classes different to those specified in the investment mandate.
“At the time and throughout the period, I knew that investing in these alternative asset classes would be more risky and would not be as safe as those described in the Teta mandate, and could cause potential prejudice and I have reconciled myself with this fact,” he said in the document.
He also admitted that monthly statements prepared for Teta between May 2003 and September 2006 were incorrect.
“I knew that this could cause potential prejudice and I have reconciled myself with this fact.”
He said his actions on this count were a misrepresentation of the true facts and he had thereby caused potential loss to Teta.
“My actions were unlawful and constituted fraud by way of dolus eventualis (indirect intention).”
Regarding Matco, he admitted that Fidentia misrepresented itself by saying the full purchase price for the company would be paid before it took control of Matco.
“On the date of the transaction, I knew that Fidentia had enough assets in the form of negotiable instruments to execute the sale of share agreement, but not enough liquid cash and that Fidentia would use funds derived from fees from the investment mandate agreement with Matco to pay the largest portion of the purchase prices of the shares.”
Brown said Fidentia had only enough cash to pay the minority shareholders on October 19, 2004.
The same day, Fidentia received control of Matco before full payment and therefore ordered the transfer of R69m from the Matco current account to Fidentia.
He said these actions amounted to misrepresentation of the true facts in respect of the sale of share agreement.
“Although I was not directly involved in each and every detail of this transaction, I did not prevent the format of the transaction. I foresaw that this could cause potential prejudice to the shareholders of Matco and reconciled myself therewith,” Brown admitted in the document.
“My actions were unlawful and constituted fraud by way of dolus eventualis.”
Brown said he made the admissions to “bring an end to the trial”.
The trial was postponed to Wednesday for argument. - Sapa