Former Fidentia boss J Arthur Brown suggested using a company's own funds to buy itself out, ex-broker Steven Goodwin testified.
|||Cape Town - It was former Fidentia boss J Arthur Brown's idea to use a company's own funds to buy itself out, ex-broker Steven Goodwin told the Western Cape High Court on Monday.
Goodwin said he had helped facilitate meetings between Fidentia and the Mantadia Asset Trust Company (Matco), later known as the Living Hands Umbrella Trust.
The trust paid money from the mineworkers' provident fund to the widows and orphans of workers killed in mine accidents.
“Arthur Brown and I attended some meetings 1/8in 2003 3/8. In the course of these meetings they not only proposed to use Fidentia as asset managers but also for Brown Brothers to buy the business,” he said.
The purchase offer was put on ice, but in 2004, Brown apparently gave Goodwin a framework for how Fidentia could buy Matco.
Prosecutor Thersia du Toit-Smit, asked Goodwin whether Brown had told him how he was going to pay for the deal.
“In passing discourse with Arthur, he mentioned it as a side issue. He said 'We'll just pay them with their own money',” Goodwin said.
In response to this, Brown muttered under his breath in court and shook his head. He also seemed to laugh in disbelief.
Asked if Goodwin had reprimanded Brown for his alleged plan, he replied: “It was not my place to tell him that. I didn't know how serious it was.”
Brown is on trial for allegedly running a pyramid scheme and using investors' funds for his personal gain.
He has pleaded not guilty to four counts of fraud, two of corruption, one of money-laundering, and two of theft.
It is alleged that Brown acquired Matco, but orchestrated the transaction so as to gain full control of the company before full payment of the purchase price.
He allegedly then stole R70 million from Matco's current bank account to finance the balance of the Matco purchase price.
Goodwin claimed that he did not know the inner workings of the deal.
“I know less than nothing on what transpired... Various due diligence processes ensued... I was not involved in the negotiation of that agreement.”
Goodwin said Matco director Geoff Gover got cold feet about the deal and wanted to know who Fidentia was and whether they would be able to pay the purchase price.
He said Brown instructed him to put Gover at ease.
Goodwin then assured Gover that Fidentia had the required infrastructure and professionalism for the deal. - Sapa