Eyes Turn Towards Porritt
Following Tuesday’s sentencing of Jack Milne to 8 years in prison (3 suspended), attention now turns to Garry Porrit, the big fish in the PSC Guaranteed Growth Fund scandal.
This is not the first time that Porritt has had to face charges of mishandling other people’s money. Fifteen years ago, in the judgement on his failed application for rehabilitation from sequestration, the presiding judge in the case said that his behaviour "suggests to me almost a gamble with other people's money”.
Milne’s conviction follows that of Grant Ramsay, who assisted Tigon and Shawcell and their officials in various offences including contraventions of the Income Tax Act and the Exchange Control Regulations. He received a 10-year sentence.
Now its Porrit’s turn to face the court. According to SAPS spokesperson, Ronnie Naidoo, both Porritt and the other co-accused, Tigon director Sue Bennett, are due to appear in court in August on a number of charges, which include the defrauding of over 4 000 investors in the PSC GG Fund.
Porritt’s defence will not be made any easier by the fact that Milne has entered into a plea bargain with the state. According to the court papers relating to Milne’s sentencing, he has agreed to testify on behalf of the state against Porritt and Bennett.
The papers, which refer to Porritt as the “mastermind” behind the fraudulent scheme, state that Milne’s testimony will be vital to the State in its prosecution of the other accused.
They also state as fact that although Porritt was not a director of PSC GG Limited, he was the person in de facto control.
Indeed it is alleged that Porritt was the originator of the idea of an investment scheme. Porritt, Bennet, Milne, Tony Hodgkinson and Ramsay were then involved in the formation of the PSC GG Fund, which was allegedly established to compete with the unit trust industry.
According to the papers, contrary to what is stated in the PSC GG prospectus, funds were invested by Porritt, with the knowledge of Milne, only in Tigon and Shawcell shares and loans made by Porritt to entities controlled by him.
The funds aquired from investors were used by Porritt to manipulate the share price of Tigon Limited and Shawcell Limited.
Porritt, if found guilty, could face more than 200 years in prison. Naidoo says that Porritt is currently out on bail of R800 000. At present, he has to report to the police once a week on Mondays.
The current allegations against Porritt have a familiar ring. In 2000 the Sunday Times reported that he had been sequestrated in 1986 at the instance of Shell South Africa after failing to meet debt obligations.
At the time there were at least 125 creditors with claims totalling R3,8-m. Concurrent creditors with claims totalling R4,7-m received nothing. Those with proved claims had to contribute towards the costs of his sequestration.
In the judgement on his failed application for rehabilitation in 1989, presiding judge Justice Squires referred to the way in which Porritt extensively financed his activities with other people's resources and how exposed he made them to loss. The behaviour "suggests to me almost a gamble with other people's money," he said.
The judge also referred to Porritt's means after his sequestration. "It shows an unsatisfactory situation for an insolvent in that the cash generated by the company which Porritt effectively controlled (even though he was insolvent) was being used to the applicant's benefit to the exclusion of creditors."
The judge criticised Porritt for ignoring his creditors and any sense of obligation and for not altering his lifestyle.
Now, fifteen years later, it seems likely that Porrit will again be facing similar charges.
With acknowledgements to Elain Wiener and Moneyweb.