Porritt warned about sidestepping material issues

Judge Brian Spilg on Tuesday warned Tigon accused Gary Porritt that he will make (negative) inferences if Porritt fails to deal with material matters in his criminal trial.

Porritt is currently cross examining the state’s first witness, convicted fraudster Jack Milne.

Porritt is the former CEO of JSE-listed financial services group Tigon, which collapsed around 2002. Together with former Tigon director Sue Bennet he is standing trial on more than 3 000 charges of fraud, racketeering and contravention of the Income Tax Act, the Companies Act and Stock Exchanges Control Act.

The trial resumed on Monday in the South Gauteng High Court after a two-week postponement to allow the accused to participate in a civil matter that was heard in the Pietermaritzburg High Court.

The charges in the criminal trial relate to Tigon’s collapse. At the time it was hailed as the best performing company on the JSE.

Both accused are unrepresented in the trial, saying they don’t have money to pay for legal representation. The state has however alleged that Porritt has direct or indirect access to assets worth more than R100 million.

At the time of Tigon’s collapse Milne was the CEO of Progressive Systems College (PSC). Tigon invested in PSC and underwrote an investment fund that PSC launched, called Progressive Systems College Guaranteed Growth (PSCGG).

During his earlier testimony Milne alleged that he, Porritt and Bennett conspired to mislead investors in PSCGG and that they jointly compiled the prospectus, knowing it was a fraud.

Milne earlier reached a plea and sentence agreement with the state and served a jail term for fraud due to his role in PSCGG.

Porritt on Tuesday questioned Milne about the prospectus. He disputed Milne’s version that the three of them conspired to mislead investors and together compiled the prospectus, knowing it was a fraud.

According to the prospectus Milne, who had a reputation as an investment guru, would have led a team that would have invested the funds in a diversified portfolio, using Milne’s methodology.

That is exactly what Tigon planned to do, Porritt indicated. It was prepared to underwrite what was in the prospectus, he said.

Milne differed and said he was an expert in small-scale private investment. “He was not qualified as a fund manager and did not have the experience to manage a R100 million fund. If it was really your interest to underwrite my fund, why would you select someone with no experience (in fund management),” Milne asked Porritt.

Porritt denied having known that fund managers need special university qualifications and asked whether Milne disclosed to Tigon that he lacked such qualifications when he put PSC’s market share in investment training at 70%.

Milne responded that that was the share of the private investment market and he thought it was common knowledge that universities trained fund managers. Surely Porritt as the CEO of a large JSE-listed financial services group should have known that, Milne said.

Spilg asked Porritt what the relevance of his line of questioning was. He invited Porritt to rather deal with what in fact happened.

Milne earlier testified that Porritt himself managed the portfolio, that PSCGG’s funds were invested only in the shares of Tigon and Shawcell, a Tigon-linked company, to prop up the share prices and crucial net asset values (NAVs) were cooked.

Porritt’s whole cross examination of Milne has seemingly been aimed at attacking Milne’s credibility.

Spilg has however repeatedly told Porritt that the court is well aware that Milne is a convicted fraudster and will weigh his testimony in that light. Spilg also pointed out to Porritt that the case against him and Bennett is based on documentation and urged him to address the charges against him, rather than dealing at length with side matters.

Spilg repeatedly warned Porritt against the contemptuous way he addressed the court and said he will at a later stage go through the record and consider all the incidents of contempt. He warned Porritt against a pattern of regular contemptuous conduct followed by apologies.

He reminded Porritt that he earlier said he would put his version of events and said time is running out for Porritt to do so. If he fails to put his version and to deal with the serious accusations against him, the court will draw inferences from such failure, Spilg said.

The trial continues. Porritt will have to conclude his cross examination of Milne in November in line with a deadline Spilg gave him, where after Bennett will have an opportunity to cross examine him.

Porritt remains in custody.