I lied, says LeisureNet witness

Time of article published Apr 6, 2006

Share this article:

A witness in the LeisureNet trial on Thursday told the Cape High Court he plotted with one of the group's bosses to lie to the official Companies Act inquiry into the collapse of the group.

Dawid Rabie, who was once LeisureNet's in-house architect, is testifying against former LeisureNet joint chief executives Peter Gardener and Rodney Mitchell, their business associate Hans Moser, and Mitchell's wife Suzanne.

Rabie, who has been in the witness box for two days, has already testified that when LeisureNet took over his architectural firm Keystone in 1999, Gardener and Mitchell "requested" - and got - kickbacks on the money LeisureNet paid him for the value of the firm's work in progress.

Some $254 000 (about R1,5-million) was paid to Mitchell and Gardener's bank accounts in the British Virgin Islands.

He told the court on Thursday that when he was summoned to appear at the Companies Act inquiry chaired by Cape Town advocate Peter Hodes in October 2003, he had several meetings with Mitchell.

They agreed that they would say the money was meant to cover Rabie's share of an investment in property in Australia.

This was the version he gave the inquiry, and to the Scorpions a month later.

Asked by prosecutor Bruce Morrison why he did this, he said he had believed the work in progress payment - money due from developers for projects under way - represented his share in the value of Keystone.

Because Leisurenet was going to recoup this money from the developers, it was not going to be out of pocket or compromised in any way.

Though he paid some of it over to Gardener and Mitchell "under circumstances in which I believed I had no choice", the decision to share it with the two men had been his to make.

"I believed at (that) point in time that if any mistake had been committed, it had been that I agreed to relinquish some money to Mr Mitchell and Mr Gardener, and that it's entirely my mistake," he said.

"Because of this view I felt compelled to stand by my decision... I was prepared to defend the stupidity of it and make sure nobody else gets into trouble for it."

It was only when he spoke to lawyers after his arrest in 2004 that he realised that a case could be made out that he was a participant in fraud.

"As a result I decided to change my version of events to what actually happened," he said.

He had by this time spent considerable legal fees to "conceal the lie".

Rabie also told the court that towards the end of 2001, in an apparent attempt to wash their hands of the money as investigators turned up the heat on LeisureNet's bosses, Mitchell and Gardener transferred $238 000 (1,4-million) back to his account.

Mitchell asked him to pass $200 000 (about R1,2-million) of the amount on to Moser to invest in an undefined project.

However, some time after the money was transferred to Moser's Swiss bank account, Mitchell told him he could regard the money as his own, and early in 2002 gave him a handwritten document to this effect.

The document explained the payment to Moser as being for the purchase of 50 percent of the shares in a company named Pankow AG.

Before he saw the document he had never heard of Pankow.

He met Moser soon afterwards, and asked Moser to pay the money back to him. Moser said he could not, as it had been invested in the purchase of a building in East Berlin.

Rabie said he had to date received no shares or payment from Pankow.

Gardener and Mitchell face charges of fraud, money-laundering, income tax evasion and contraventions of the Companies Act, involving R16 million.

Moser and Mrs Mitchell face only money-laundering charges.

LeisureNet, owner of the Health and Racquet Club chain of fitness gyms, had 900 000 members and 7 000 employees at the end of 2 000, when it was liquidated. - Sapa

Share this article: