Top law firm caught up in Fidentia saga

A Moneyweb report points out that lawyers are obliged to alert the FIC about so-called suspicious transactions – funds that may be the proceeds of crime or terrorism-related. If they don’t report to the FIC, and it is found they should have, the law firm can be fined up to R10m and the lawyer sentenced to up to 15 years in jail, according to the FIC, whose director Murray Michell was quoted recently as saying it ‘fully intends to pursue alleged failures to comply with the FIC Act in relation to the Fidentia matter’. It will ‘provide the investigators and relevant supervisors with its full support to ensure that those responsible for compliance failures of this nature are held accountable’, he said. The Moneyweb report notes Cliffe Dekker didn’t call the centre when Brown got a Fidentia company to pay for a building purchased in the name of his family investment trust about 18 months ago. As reported in Legalbrief Today this week, Fidentia’s curators obtained a forfeiture order allowing them to sell off the building in order to help recover some money for the hundreds of thousands of beneficiaries of the Living Hands Trust. Mike Collins, the Cliffe Dekker lawyer who processed the transaction, is quoted as saying there were some unusual aspects to the deal, but that at the time he didn’t smell a rat. Hence, he did not alert the authorities. In addition, Collins said that Cliffe Dekker’s know-your-client policies were such that he does not believe it was his duty to interrogate the origins of the money used to buy the building. As he was acting for the seller of the building, and the Brown trust was the buyer, it was not his responsibility. However, a FIC official said conveyancers had an obligation to report to it in terms of buyers and sellers – regardless of whom the conveyancer represented. Full Moneyweb report

Fidentia’s curators are beginning to get some idea of where the R1bn in missing funds have gone to, according to a report in today’s issue of Legalbrief Forensic. It quotes curator Dines Gihwala as saying he has thus far found none of the cash-flush bank accounts that Brown insisted were there for the finding, but says he has ‘some idea’ as to how the roughly R1bn in funds disappeared from the Fidentia group of companies and funds. This weekly newsletter covers issues relating to fraud, corruption, governance, cybercrime, transparency, risk management etc in SA and elsewhere. Order a month\'s FREE trial today by e-mailing forensic@legalbrief.co.za