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Leisurenet cash is from private deals.

Posted On Friday, 04 October 2002 09:34 Published by
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Sums paid by architect Dawid Rabie in 1999 to offshore companies associated with former Leisurenet CEOs Rod Mitchell and Peter Gardener stemmed merely from a private property deal between the three individuals.
Sums paid by architect Dawid Rabie in 1999 to offshore companies associated with former Leisurenet CEOs Rod Mitchell and Peter Gardener stemmed merely from a private property deal between the three individuals, despite the liquidators' attempts to create a conspiracy around it, according to evidence given by Rabie, the founder of Keystone Architects.

Rabie, who sold his 50,1% of Keystone to Leisurenet, which already held the other 49,9%, in May 1999 for R2,8m, was being questioned yesterday by advocate Gavin Woodland for the liquidators, at the commission of inquiry into Leisurenet's collapse.

Leisurenet, which owned the Health & Racquet Clubs and Healthland International, had about R1bn of liabilities when it was placed in liquidation in October 2000.

Citing bank records, Woodland asked Rabie about the fact that of £257000 paid into his Investec Bank offshore account during 1999 and 2000 for the value of offshore projects under way by Keystone at the time of its sale to Leisurenet, one third was channelled to Ajaxway, a company from which Gardener and his family benefited, and one third to Clockwork, from which Mitchell and his family benefited. In October last year, at the time a witness gave evidence at the commission about the connections between Dalmore (Leisurenet's joint venture partner in Germany), Ajaxway and Clockwork, these sums were repaid to Rabie's bank account in full. Rabie said the timing of the repayment was coincidental.

Rabie said Mitchell, Gardener and he had expected, while Leisurenet was expanding aggressively overseas, that they would need permanent accommodation abroad and they decided to develop properties in London and in Sydney which they would own privately and together.

Leisurenet was liquidated and the plans were put on hold, but Rabie revived the idea late last year. Mitchell and Gardener were, however, reluctant to commit funds to an offshore property development at that stage and they repaid him his share of the joint venture. Rabie had since invested about £200000 in a Switzerland-based property company that was developing flats in Berlin. Rabie's joint venture partner in this development was Hans Moser, the original developer of clubs in Germany for Leisurenet.

Woodland asked how Rabie could have said he had received R2,8m for his Keystone stake, yet Leisurenet's 1999 financial statements said the group paid R397000 for it. Rabie said it represented the value of projects under way offshore.

Business Day


Publisher: Business Day
Source: Business Day
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