Cape-based financial services and technology company Fidentia has been placed under provisional curatorship by the Cape High Court in what could be the biggest scandal to hit the financial services sector in recent years. In its application for the curatorship yesterday, the Financial Services Board told the court that its inspectors could not trace R680-million of almost R2-billion taken in from various investors by its asset management subsidiary, Fidentia Asset Management. Much of the money is owed to widows and orphans of deceased members of the Mineworkers Provident Fund.
Based on the papers before the court, the scandal could be even bigger than the Masterbond, Owen & Wiggens and FundsTrust scams that rocked Cape Town in earlier years. With hours of the successful court application, curators Dines Gihwala - a top attorney - and one of the country's outstanding forensic accountants, George Papadakis, entered the opulent Canal Walk headquarters of Fidentia to take control. In their hands was a report of an FSB inspection team which has been trying to unravel the mess for the past six months. The report which accompanied the legal papers in the court application spells out a litany of mis-management and misappropriation of investors' money; total disregard for laws protecting investors; and significant contraventions of the financial licence conditions of Fidentia Asset Management. And the executive chairman of Fidentia Holdings, Arthur Brown, is accused in the report of using millions of rands invested with Fidentia Asset Management for himself, channelling the money through various family trusts.
Over the past two years the company has bought up a diverse group of companies, ranging from the Sante Winelands Health Centre to parts of the imploded financial services company MCubed, paying amounts which, at the time of the purchases, were considered to be excessive. The purchases raised suspicions because the source of the money used by the company, which was operating out of a rented garage at the upmarket Sunset Beach development as recently as four years ago, was not apparent.The inspection team's report indicates that the money came from two main sources: R150m from the Transport Education and Training Authority and R1,4-billion from a umbrella trust fund established to pay pensions to widows and orphans of retirement fund members.
The Cape High Court placed the financial services business of Fidentia Asset Management (Pty) Ltd, Bramber Alternative (Pty) Ltd and Fidentia Holdings (Pty) Ltd under curatorship. The curators have until March 27 to report back on what they find. At that date the court will make a further decision. Russel Michaels, FSB chief communications officer, said to-day that under the provisional order, the curators must take immediate control of, manage and investigate the business and operations of the companies, with a view to conserving the business and not alienate or dispose of any of the property of the companies. "In exercising their powers, the curators have been directed to give consideration to the best interests of investors in the companies." Michaels said members of the public should not attempt to approach the curators for information, "as their time will be fully occupied by this assignment. Progress with the curatorship will from time to time be made available through the media".
The court has ordered that the curators should, at their discretion, continue to make periodical payments to the thousands of pension fund beneficiaries whose money was invested with Fidentia Asset Management. The court has authorised the curators to conduct any investigation required to track down assets and exercise powers to take control of or freeze banking accounts of all the entities involved.
Source: Business Report
No comments:
Post a Comment