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Tue Sep 02 11:18:41 SAST 2014

Fidentia boss falsely represented himself as director: witness

Sapa | 04 February, 2013 14:25
Former Fidentia boss J Arthur Brown. File photo

J Arthur Brown falsely represented himself as the director of a financial services company, the Western Cape High Court heard on Monday.

Brown, the former Fidentia CEO, is on trial for allegedly running a pyramid scheme and using investors' funds for his personal gain.

Fundi Projects director Leon Grobbelaar 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, allowing it to fulfil its obligations to Nitrogen Chemicals of Zambia.

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% interest calculated on the capital amount. At the end of 12 months, Fundi would receive its initial investment plus 25%.

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 only added as a director 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.

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Tue Sep 02 11:18:42 SAST 2014 ::