R v Jona

• Jurisdiction: South Africa
• Judge: Williamson J
• Judgment Date: 12 December 1960
• Citation: 1961 (2) SA 301 (W)
• Hearing Date: 01 November 1960
• Court: Witwatersrand Local Division

D Williamson, J.:

The accused in this case is charged on a number of counts with the crime of theft, on four counts with the crime of fraud, on one count of contravening sec. 86 (bis) of Act 46 of 1926, that is the Companies Act, on 20 counts of contravening sec. 70 (oct) (1) of the Companies Act, and on one count of contravening sec. 225 (bis) of the Companies Act.

E These charges really, in essence, all arise out of the acquisition by the accused of the shares of a company known as the Continental Spinning and Knitting Mills (Pty.) Ltd. I say that because indirectly they really all derive back to that fact, although the counts involve different aspects of the history of this firm under the accused over several F years. This company, the Continental Spinning and Knitting Mills (Pty.) Ltd - I will call it the Continental - was founded some time about 1950 by Italian interests that had come to South Africa. I think the first one to come out was a Dr. Albergeni and he was followed shortly afterwards by the accused, his wife and certain employees he G brought out. He brought out four or five employees and some machinery, and a knitting wear manufacturing company was started with a factory at Robertsham.

The main financial interest behind the setting up of this factory may be termed the Rizzoli interest, a family in Italy with which the accused had had some connection in Italy prior to coming out here.

H The accused is an Italian, and let me say at once that there are one or two things that satisfy me that he is by no means a master of the English language. He can be understood when he speaks English; he has given his evidence in this Court at some length in English; I may say at times it was difficult to follow him, but he managed to convey his meaning. I think he understands English, certainly to-day, and I am satisfied from the evidence that he understood it fairly well at the

Williamson J

material times which arise in this case, namely round about the years 1956 to the end of 1957 - or 1955. He is a person who has a degree in chemistry. He had no training as a business man as far as I have been able to make out. When I say business man I mean in the conduct and A administration of business affairs as such, the keeping of books, the preparation of accounts, and so forth. One of the witnesses, Mr. Betty, said that the accused had said to him that he had a Bachelor of Commerce degree. I am satisfied that Mr. Betty is mistaken when he said that, because I am quite certain that the accused did not say it, and could never have said it. There was another person connected with this case B who may have had such a degree. I refer to Dr. Marcon. But I am satisfied that the accused was not specially trained in regard to business administration or accounts in any way by the acquisition of any degree or by any other special training.

One of the accountants who gave evidence in this case, Mr. Lindeque, C said that he had the knowledge of books of an average business man. It is a vague phrase, I do not quite know what it means in the sense of what degree of competence it indicates. All I can say is that experience over a good many years in the Courts indicates that many business men know very little about books. Although they should know something about it they are very often extraordinarily ignorant. But especially in D regard to the complicated books which result in modern day commerce and industry I think most business men rely on the work and the advice of trained bookkeepers and accountants. I would like to say at once that I am satisfied that the accused had not a sufficient knowledge or experience to produce many of the things that have been produced here in E the way of resolutions and accounts. Certainly he could not have produced them unaided, that I am satisfied about.

Now, the business of Continental, as started in about 1950, progressed well. If anything, it may have progressed a little too well for the capital available. And about 1954, apparently, it became obvious to the F persons connected with it, but particularly to Dr. Albergeni who gave evidence here, that further capital was required; and at about that time some conversations took place, personally, between Albergeni and Rizzoli in Italy, and apparently correspondence passed, in regard to the introduction of fresh capital. But Mr. Rizzoli senior was not interested G in putting in more capital. He offered a certain amount - I think it was £50,000 - but Albergeni said that was quite insufficient, and Rizzoli said, 'Very well, then you had better sell' Then efforts were made to sell.

The sale did eventuate in 1955, about June, 1955, in this way: Albergeni and the accused were apparently looking around for purchasers, and a H letter arrived from a firm of attorneys in Johannesburg, Hayman, Godfrey & Sanderson, from Mr. Hayman, making enquiries on behalf of an undisclosed client as to whether this factory was still for sale. This letter was written to the accused, was sent by the accused to Rizzoli, and Rizzoli sent it back to Albergeni. Then discussions took place between them as to who this purchaser could be. I have accepted Albergeni's evidence, I may say, in all these respects; and it was decided that Albergeni should interview the attorney, Mr. Hayman,

Williamson J

who had written the letter; and eventually it was disclosed that it was a company that was the purchaser, known as Custodes Investments (Pty.) Ltd. It has been pointed out that 'Custodes' in fact was the telegraphic address of that particular firm of attorneys, so it was obviously an institution connected with that firm of attorneys.

A The result of this disclosure was that negotiations were continued by Albergeni, and a contract was eventually concluded according to which the whole of the share capital of Continental was purchased by this investment company, Custodes, for the sum of £160,000. That represented the capital investment in the company. These documents were duly signed. The contract was drawn by Mr. Hayman of the firm of Hayman, Godfrey & B Sanderson. It is an exhibit in this case, exh. 'QQ'. It has certain interesting features, from the point of view as to whether Mr. Hayman did not know, at that time, what the accused's position was, what he intended to do. It is quite obvious that Mr. Hayman did know that this undisclosed client was the man to whom he sent the letter, Dr. Jona; C that Custodes was nothing but the accused, under another name, with two nominee shareholders, two partners in the firm of Hayman, Godfrey & Sanderson; that Custodes was merely a cover for a purchase by the accused of all the shares in Continental. One or two interesting features are, for instance, that Mr. Hayman was really to act as the person looking after the interests of the shareholders, for he was to D receive payment and make distribution; and he provided in this contract that in order to protect the interests of the sellers, the shareholders, they had the right to insist, until full payment was made, that Dr. Jona, the accused, should remain as the managing director, not disclosing, of course, that he was the gentleman who was really buying.

E There may have been an explanation as to how that came about, how Mr. Hayman came to put that in, but I mention it because it does give rise to an inference that Mr. Hayman must have had full discussions with Jona as to his whole position and his intentions. I do not know exactly what F was disclosed to Mr. Hayman. I can only say that another witness in this case, Mr. Betty said that a little before this took place he had been approached by the accused to draw such an agreement, which would not disclose that he was the real purchaser of the shares which were to be purchased, and he said that he did not like that sort of agreement and, 'not being an attorney', he would not draw it. The next thing he G knew was that there was such an agreement, and he was asked by Mr. Hayman to act as public officer and secretary of this investment company, Custodes. Having known what had previously taken place, it must be inferred that Mr. Betty knew at that stage what the real position was. Obviously, later he did; whilst conducting the affairs of the H company, such as they were - they were very minor, there was only the one transaction - he obviously learnt at a very early stage that the accused was the purchaser of the shares.

The shares, as I say, were purchased for £160,000. All the shares were purchased. The accused himself appeared upon the register as a shareholder of 15,000 £1 shares. There was some suggestion that he had not paid for them in full; but it is quite immaterial whether he did or whether he did not pay. It was accepted that he was entitled to

Williamson J

15,000 shares and in the final settlement he received a credit for £15,000.

The purchase price was payable in instalments. The first instalment of £16,000 was payable in September, 1955. Two further instalments were payable in March and October, 1956, respectively, in the sums of A £25,000, and the final instalment in March, 1957, of £94,000. The amount of £94,000 was eventually paid, not quite on date but within a few days of the 31st March, 1957, and that meant the whole amount of £160,000 was paid to the shareholders. The £94,000, the final payment, had an adjustment of £15,000, first of all, in relation to the shares of the accused himself, and also an allowance had to be made for a certain bad debt, which I need not refer to at the moment.

B Now, the first point, as one traces the history, was the obtaining by Custodes of the necessary funds to pay for these shares. A great deal of evidence was given of a quasi-technical nature by accountants as to how this amount was paid. A schedule was handed in which disclosed this C in some detail, and I do not find it necessary to trace it. Well, after the amount...