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Panama Papers: Canal gates open

Apr 12 '16 | By La Afrique Media | Views: 335 | Comments: 0

Gary Porritt: Reluctant to provide information to Legal Aid. Picture: DAYLIN PAUL/AMABHUNGANE CENTRE FOR INVESTIGATIVE JOURNALISM

The documents in the leaks, distributed by the International Consortium of Investigative Journalists this week, could complicate their defence when they face 3 000 charges of fleecing more than 2 000 investors out of R160m.

These investors pumped cash into the PSC Guaranteed Growth Fund, and Porritt and Bennett are accused of channelling this money into a complex tangle of companies, including some offshore.

Over the years, Porritt and Bennett have blown R23m on legal costs, even while applying for legal aid.

In the 2010 judgment denying them legal aid, supreme court of appeal judge Visvanathan Ponnan recounted how the Legal Aid Board (LAB) claimed Porritt and Bennett had “deliberately structured their affairs in such a way as to facilitate the disposal or concealment of their assets”.

“Both Bennett and Porritt adopted an intractable attitude and, for well on one year, refused to furnish the LAB with information that was legitimately sought for the purposes of assessing their entitlement to legal aid,” he said. “When they eventually did, many of their responses were deliberately evasive and cagey.”

The Panama Papers provide a clue why this may have been so. They say Porritt used the services of Panama law firm Mossack Fonseca to establish shell companies in territories known for offering high degrees of anonymity — such as Panama itself, the British Virgin Islands and other havens — between 1986 and his 2002 arrest.

It is unclear, however, whether prosecutors intend to use the Panama information when the case goes to court.

Separately, the Panama Papers show that Graham Maddock, a former accountant in the Fidentia group, asked Mossack Fonseca to set up two offshore companies at a cost of $59 000. Mossack Fonseca also created offshore structures for Steven Goodwin, a Fidentia broker who was arrested in 2009 after escaping to Australia and the US, where he tried to dodge extradition back to SA.

Both Maddock and Goodwin were convicted of defrauding investors, along with Fidentia mastermind J Arthur Brown.

Fidentia curators George Papadakis and John Levin are still trying to recover what they can to repay investors.

Levin tells the Financial Mail that the curators first learnt about the Panama link early on. Fidentia staff told them that the company wanted to take advantage of Panama’s “more relaxed” regulatory environment — which did not have “know your customer” requirements — to structure its expansion.

Fidentia registered eight entities, at a cost of $10 000 each, using Mossack Fonseca, says Levin. “It would seem that, but for the costs of registration of the foundations, no investor funds were diverted to these entities,” he says.

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