Court hears of Fidentia promissory notes

2013-02-28 19:28
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Cape Town - Ex-broker Steven Goodwin testified in the Western Cape High Court in Cape Town on Thursday about two promissory notes with which Fidentia was entrusted.

He explained his role in facilitating the relationship between Fidentia and the Transport Sector Education and Training Authority (Teta), to which the notes, worth R100.3m, belonged.

Goodwin played a key role in getting Teta to transfer these investments to Fidentia's control.

Judge Anton Veldhuizen wanted to know how a company could set up a credit line using these promissory notes.

"It's probably no different to an asset. It's a very tangible and very secure asset made out to a person or entity. The bank would be very willing to loan. It's as good as cash," Goodwin said.

He said one could use a note to invest in higher risk endeavours and earn 30 to 40% interest before paying a certain amount back to the bank.

Alternatively, one could buy and sell shares via a stock-broking house, using the note as security.

"And if you re-invested this money into the [country's] top four banks?" the judge asked.

"That wouldn't work. It would be shooting yourself in the foot."

The same court previously found Goodwin guilty of bribing former Teta CEO Piet Bothma to facilitate the transfer of investments.

He entered into a plea agreement in 2009 and was sentenced to in effect 10 years in jail, on condition he testified against former Fidentia boss J Arthur Brown.

Brown is on trial for allegedly running a pyramid scheme and for 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.

Stolen notes

Brown sold these promissory notes, allegedly without Teta's approval, and the money was placed in his accountant's Standard Bank account.

The State alleges that instead of re-investing this money for Teta, he used some of the proceeds for other purposes, including the purchase of vehicles and properties.

It also alleges that Brown made misrepresentations about an additional R100m that Teta wanted invested.

The case was postponed until Monday to allow the State and Brown's new lawyer Braganza Pretorius to consult.

The State wants Brown to admit to the flow of money between certain bank accounts.

Veldhuizen said the defence could always argue the intention behind the flow.

Read more on:    fidentia  |  j arthur brown  |  cape town  |  corruption

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