FSB’s Barrow reappointed to drive Fidentia probe

Finance Minister Trevor Manuel wants Barrow to continue driving ’a number of significant regulatory investigations and initiatives’. According to a Moneyweb report, Barrow confirmed that this included the Fidentia matter, involving the looting of R1.4bn in cash, of which R1.2bn belonged to orphans and widows. There is also a parallel investigation into Ovation, which, like Fidentia, is under curatorship. Barrow confirmed that the Fidentia/Ovation investigation was the subject of an unprecedented joint investigative effort involving the FSB, the Reserve Bank, the SARS, the Financial Intelligence Centre and the Scorpions. The joint team has started to issue subpoenas in an effort to speed up the investigation. Meanwhile, notes E-Brief News, the Fidentia curators are stepping up their pursuit of the plundered millions. Apart from businesswoman Danisa Baloyi, who recently was pressured to repay a R8m interest free loan she took from Fidentia, the curators have focused their efforts on the firm’s shareholders and employees. Full Moneyweb report on Barrow’s appointment

Among them are Fidentia’s Sandi Dekker, Sandra Burger and Simionne Maritz – all Brown Brothers shareholders, the major shareholder of Fidentia. They have been ordered to repay hundreds of thousands of rands to the curators. Moneyweb notes that Dekker, who headed the Santé Winelands Hotel & Wellness Centre, Software Futures’ boss Burger and Fidentia human resources head Maritz were all given 2% shareholdings – through personal trusts – in Brown Brothers. Through these trusts, they received just under R1m each in dividends after being told the company had made a profit. This money is over-and-above magnificent monthly salaries, says the report. The curators are arguing that the dividends they received were paid from money belonging to the investors who entrusted Fidentia entities with their savings – and they want it back. Full Moneyweb report

Good news for more than 57 000 widows and orphans who have been left devastated by the scandal is that they can expect some payout this month. The curators, notes Moneyweb, have been shoring up money. The R1.2bn Living Hands umbrella trust is one of the biggest victims of the Fidentia plundering. The widows and orphans rely on modest monthly stipends from the fund for survival. When co-curators George Papadakis and Dines Gihwala stepped in, in February, they said the financial cupboard was almost bare. Papadakis said beneficiaries had not been paid for June, but that so far the curators were only about a week behind with payments, having caught up with other money owed to these beneficiaries. Papadakis said the curators had been clearing up debtors’ books, recovering VAT claims, bringing down the expenses of certain companies and generally ‘cleaning up’. In addition to the summonses issued to Brown Brother’ shareholders, former senior employees are expected to return amounts ranging from R800 000 to many millions of rands. Full Moneyweb report

Seta boss Bothma is licking his wounds after being suspended this week. According to a report on The Times site, Bothma says he is being made a scapegoat. The Transport and Education Training Authority that Bothma heads invested R250m in the now bankrupt Fidentia. But Bothma claims that it was the board, and not he, that approved the investment. He said he was suspended when the authority’s board was handed a preliminary report into the investment. He said he felt he was a victim of the Fidentia debacle. Bothma has yet to read the report. Full report in The Times

Meanwhile, he remains on ‘extended leave pending the outcome of the KPMG audit into his role in the affair. Teta pumped nearly 75% of all its funds into Fidentia, despite the company’s almost non-existent track record. Investigators now say this cash has been ‘misappropriated’, says Business Day. This twist is likely to shed new light on exactly why Teta placed so much money with Fidentia, especially after it emerged that its first R88m investment in Fidentia took place without a proper risk assessment. The report also notes that questions are expected to be asked about Bothma’s links with a broker who introduced Teta to Fidentia, Steve Goodwin. The report quotes sources as saying a year after Teta placed its money with Fidentia, Bothma sold 25% of a property company he owns, Fire Wings Properties 35, to Goodwin for R5m. While he was not a director of Fire Wings, Goodwin is a director of Worthtrade 135, which brokered Fidentia’s investments. Full Business Day report

Teta anticipates recovering only 70% of the R245m investment it made with Fidentia. According to Business Report, this was admitted by chairman June Dube, who said the investigation is continuing and the decision to place Bothma on leave was based on ‘operational dynamics and in the spirit of good governance’. Dube said the forensic investigation would ‘leave no stone unturned’ and Bothma was to date the only Teta employee affected by the investigation. Full report in Business Report See THIS WEEK’S ANAYLYSIS (below)