Garth le Roux vindicated

2010-09-23 16:42
Garth le Roux (Gallo Images)
Cape Town - The Cape High Court has overturned the convictions of former South African fast bowler Garth le Roux and his accountant Deon van Heerden on tax fraud charges.

The ruling, handed down on Thursday, was welcomed as an "outright vindication" by Le Roux's attorney Henry Vorster.

It is understood that the case has cost Le Roux alone just under R6m in legal fees over the past seven years.

The two men were found guilty last year by a regional magistrate, and sentenced to an effective four years' jail each, while one of Le Roux's companies, MCC, was fined R10 000.

The charges related to alleged failures to disclose some R2m due in commissions on property sales that MCC negotiated at the prestigious Fancourt golf estate in George.

In one of the deals, MCC waived its claims of commissions of R500 000 as part of an agreement that another Le Roux company would get an equivalent discount when it bought a property at Fancourt.

Judges Willem Louw and Dumisani Zondi said on Thursday that it had to be emphasised that MCC had relinquished the commissions before it received them, and got nothing in return for doing so.

They said it was clear from the evidence that Le Roux had established the MCC and other separate corporate entities in good faith for sound commercial reasons.

It was clear the waiver of the commissions occurred lawfully, in good faith and for practical commercial reasons, namely Le Roux's lack of cash.

"There is no evidence that the waivers were done for income tax purposes," they said.

"There was no fraud or other improper conduct in the establishment of the corporate entities or in the use of the separate corporate entities by (Le Roux) in the conduct of the affairs of those entities."

The judges said the State had not proved beyond a reasonable doubt that Le Roux and Van Heerden knew that the commissions had to be deemed to have accrued to MCC.

"In our view, the magistrate was wrong in finding that the evidence adduced, seen as a whole, justified the inference that (Van Heerden) acted with the knowledge that his conduct was unlawful," they said.

They agreed with senior counsel Wim Trengove, who appeared for Le Roux, that a key paragraph in the Income Tax Act was "obscure and uncertain".

They also found that the magistrate was wrong to find that MCC's liability for output tax arose at the time the service was rendered to Fancourt's owners.

"In the present case MCC did not invoice (Fancourt) for the sacrificed commissions nor did it receive payment of the sacrificed commissions," the judges said.

"The service was therefore not supplied for purposes of VAT."

The judges rejected a cross-appeal by the State, and ordered it to pay Le Roux and Van Heerden's costs for that.

Vorster said the Le Roux family had been "traumatised and ruined" by the experience.

"One is reminded that when the case started, in the plea explanation Mr Le Roux said he was not guilty of any of these charges.

"He has now been vindicated in what he told the court at the outset," he said.

Van Heerden and Le Roux have been on bail of R10 000 each.

Read more on:    fraud

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