Cheeky Watson had no idea that anything was amiss when he was asked to accept a deposit of R2.9m into EP Rugby’s bank account, which would then be transferred from EP Rugby to entertainment company Zeranza’s coffers.
The former EP Rugby boss made the claim in his plea explanation in the Port Elizabeth Commercial Crimes Court on Tuesday, when he also learnt that he would be facing an additional charge.
This, after the court ruled in the state’s favour following Watson’s objection to the inclusion of a charge of failure to report suspected theft or fraud.
Watson now faces three charges, including fraud and money laundering, for his alleged part in the multi-million rand fraud case linked to the siphoning off of money given to the Nelson Mandela Bay municipality by the National Treasury for the beleaguered Integrated Public Transport System (IPTS).
In total, Watson and his co-accused – the former assistant director in the metro’s finance department, Nadia Gerwel, businesswoman Andrea Wessels and her events company Zeranza, former director of Laphum’ilanga Mandisa Mkasa, and former chief executive of Access Facilities and Leisure Management Stephan Pretorius – face a total of 44 charges between them.
Watson and the other accused have all pleaded not guilty to the charges.
Watson has been charged for his alleged role in the misappropriation of the R2.9m meant for the IPTS.
The state alleges that Watson willingly and unlawfully allowed the multimillion-rand transaction made by the municipality at the behest of Gerwel to be moved from the EP Rugby bank account into Zeranza’s account in February 2013.
It is alleged that Gerwel, Wessels and Watson defrauded the municipality by submitting a fake invoice to Access Management claiming EP Rugby was owed the money by the municipality for profit share from an IRB Sevens rugby match between New Zealand and SA in 2011.
The accused allegedly also falsely claimed the money with an invoice not issued in the normal and regular course of business.
A total of R2,998,209.12 was paid into the EP Rugby account on February 15 2013 and transferred three days later into the Zeranza account as per Gerwel’s instruction.
Watson claimed in his plea explanation that he had been approached by Gerwel at his EP Rugby Football Union offices in early February 2013 to inform him that R2.9m had to be paid to Zeranza and that the money would be released to EP Rugby and should then be paid to Zeranza.
He said he had been told by Gerwel that the municipality owed the money to Zeranza for services rendered with regard to a music festival.
It emerged during the court proceedings that the music festival meant to be hosted at the Nelson Mandela Bay Stadium in 2012 – allegedly to raise funds for Laphum’ilanga – never happened.
Later in February 2013, Gerwel – accompanied by Wessels – met Watson again and allegedly told him that the R2.9m would be released into the account of EP Rugby.
EP Rugby was, at that stage, the anchor tenant at the stadium managed by Access.
“[Gerwel] explained that Zeranza had not been captured on the [municipality’s] system as a vendor and, for that reason, the funds owing to Zeranza could not be paid directly,” Watson said.
He said that, after the meeting, he had informed EP Rugby chief accountant Clinton Hadley about the amount coming into its bank account but cautioned him not to use it because it had to be paid in full to a company that performed services at the stadium, and that Gerwel would furnish him with the full details.
“[Gerwel] had full access to EP Rugby’s accounts department and from time to time when there was a problem with funds that had been released by [the municipality] to Access not coming through to EP Rugby, [Gerwel] would liaise directly with Hadley to sort out the problem,” he said.
He said that after conveying to Hadley the discussion between himself, Gerwel and Wessels, the two women had then met Hadley in his office.
“If there was something amiss with the transaction, Hadley and/or Access would most certainly have informed me,” he said.
Months later, Hadley and another EP Rugby employee, Sharon Brown, raised concerns with Watson about the transaction.
Watson said he had had no reason to doubt the word of Gerwel and saw nothing wrong with the transaction.
“I reiterate that every cent that was paid into the bank account of EP Rugby with regard to this transaction was paid out to [Zeranza].
“Neither EP Rugby nor I obtained any benefit as a result of the transaction.
“I trusted [Gerwel] absolutely and did not find anything untoward in respect of her request,” he said.
“I accepted what she had told me at face value by reason of the excellent working relationship that existed between her – representing the [municipality], myself – representing EP Rugby, and Access, and the fact that she has always made good on promises made to EP Rugby.”
In their plea explanations read out by their legal counsel, advocate Terry Price SC, Wessels and Gerwel denied any wrongdoing, saying that they had acted lawfully and the R2.9m transaction was aboveboard and did not result in a loss to any party.
They claim the money was paid, legally and with a legitimate paper trail, to Wessels’s company for services rendered.
Wessels claimed that a number of falsified invoices had been supplied to the municipality and that Pretorius was being used as a sacrificial lamb by Access while Watson had been brought to court in the “most dishonest form possible”.
In their pleas, Mkasa and Pretorius also denied performing or being involved in any fraudulent activities, with Mkasa claiming that the state had supplied incorrect information about him in its indictment, including that he did not resign as a director of Laphum’ilanga, but was voted out.
The state prosecutor, advocate Tjaart van Zyl, submitted a ream of documents to the court as exhibits, including bank statements for Wessels, Zeranza, Gerwel and The Peculiar People’s Church in Uitenhage, among others.
In May, the Asset Forfeiture Unit served an asset seizure order on the church related to alleged unlawful cash transfers of about R6m from the IPTS funds to Zeranza and used to acquire property and other items for Pastor Victor Bassey and the church.
The case continues.