Edition: Sep - Nov 2014


Dark places

Another instalment in TT versus the FSB executive officer. Is there something to hide? Check the correspondence and draw your own conclusions.

Tshidi...unhelpful answers

Dear Mr Tshidi

We used to be on first-name terms, but I notice from your letter of May 29 (attached) that we aren’t any longer. Still, nothing turns on it.

The “measure of agitation” you express hardly compares with the measure of frustration that I feel at your refusal to answer straightforward questions (TT June-Aug). These are clearly in the public interest because so many members of pension funds are affected by the mega-millions of rand involved.

Your refusal casts a strange light on the purported commitment to transparency and accountability that the FSB annual report proclaims. It also sets a poor example for the transparency and accountability you expect of the institutions you regulate.

Your letter is pure obfuscation. Let me explain why:

  1. The only reason for my continued correspondence is that you have not provided access to the information requested. Had you done so the first time I’d asked, there would have been no need for the correspondence to continue. All you did, over several months, was say each time that you were preparing to provide the information by a certain date. Once each date elapsed, I asked again. That’s within my rights, just as I suppose that the continued making of empty promises is within your rights;

  2. Your contention that the “matters have already received widespread publicity and where the FSB has stated its position” is evasive. Neither the “widespread publicity” nor the FSB’s “position” make anybody any the wiser on the amounts recovered for the respective pension funds, on the amounts paid in curatorship and legal fees, and the amounts that beneficiaries have ultimately received (or, further, what happens with the monies between the times of recoveries by curators and receipts by beneficiaries);

  3. Once these amounts are known, and related to one another, it will be possible to take views on their reasonableness. This might then become the subject of “debate” – I hope neither to last “indefinitely” nor to be “ongoing” -- in which you might or might not wish to participate. So far, there’s been no debate;

  4. Far be it for me to expect preferential treatment. Quite the opposite. What I do expect is that curators’ reports are made equally available to everybody at the same time, via publication on the FSB website, once the reports are to hand. You don’t explain why or how you decide selectively to publish some reports but not others. My questions related only to curators’ reports that, for reasons begging explanation, you have elected not to place in the public domain;

  5. Your attempt to tar me with the brush of Simon Nash is a cheap jibe, unworthy of a person in your position, and framed not to elicit a response. It doesn’t deserve one anyway;

  6. It’s unsurprising that you will not comment on my remark about the FSB having “threatened” well-known financial institutions in their decisions to settle claims by curator Tony Mostert. It would then have opened you to a debate on what other interpretation could be placed on certain letters, later filed in court papers, that you wrote during 2009;

  7. Since you decided in your wisdom to have no further “interaction” with me on the matter of the Mostert curatorships, I was tempted to test you. This I did by subsequently asking you (twice, by email) to let me see a copy of the final report of Mostert in his curatorship of the CAF Pension Fund. It was the first of his big curatorships, more than a decade ago, where he’d succeeded in the Supreme Court of Appeal for an order that Old Mutual compensate the fund over assets stripped by the Korsten brothers.

Since you wouldn’t previously disclose other Mostert reports on the basis that the FSB was still verifying the figures, I thought it safe to assume that this curatorship was concluded. The SCA judgment had been handed down in 2001, so every cent paid by Mutual should by now be accounted for. Yet you saw fit not to reply.

As far as I could find, there has never been a public accounting of disbursements made from the Mutual payment. It cannot be right that you have discretion to withhold such information.

Finally, on a more recent topic, I empathise with the FSB’s embarrassment over the corruption charges brought against erstwhile FSB chief financial officer Dawood Seedat. It’s reassuring to note your announcement: “In line with the FSB’s complete intolerance for corruption of any nature, we have launched a comprehensive investigation to determine whether Mr Seedat may have performed his support role at the FSB in any way that breached the integrity of his role”.

This brings me back to the outrage that the FSB expressed over the non-custodial sentence imposed on J Arthur Brown in the Fidentia fraud. Seedat, the court pointed out, had led the investigation into the affairs of Fidentia and his report had been handed to the Director of Public Prosecutions.

Yet, instead of being the first witness called, Seedat only testified in aggravation of sentence after Brown’s guilty pleas on relatively minor charges had been accepted. Judge Veldhuizen observed: “If the facts related by this witness are correct (that there had been a R406m shortfall), then something is sorely wrong and I can only think the prosecution case has been poorly handled.”

Prior to Seedat’s arrest, this observation might have been taken only to reflect prosecution incompetence. But subsequent to his arrest, given Seedat’s previous position as head of forensic accounting at the National Prosecuting Authority, the observation has a sinister taint. It’s therefore presumed that the FSB investigation will explore possible dealings between Seedat, the NPA and the Fidentia joint curators.

The Fidentia curators weren’t called to testify at all. Dines Gihwala resigned as a joint curator in June, following a judgment that he was unfit to serve as a director of his own company. Yet the FSB continued to retain him as a Fidentia curator, despite being aware of a High Court judgment a year earlier on the same commercial dispute (TT Sept-Nov ’13).

Compounded by a decision in the Supreme Court of Appeal (TT June-Aug), it’s difficult to fathom why he wasn’t kicked out before resigned. The FSB can argue, as it does, that curatorship appointments are the subject of court orders. But it’s almost a formality that the courts order what the FSB asks them to order.

Remaining as Fidentia joint curator is George Papadakis, allegedly linked to Seedat through work for the SA Revenue Service. Media reports to this effect, the FSB announced, are being investigated. So we’re talking here not only of the whole Fidentia/NPA/Seedat controversy but also about how the FSB handles curatorships.

It is appreciated that, as you say, the FSB and its officials “have their hands full with performing their statutory function of regulation”. Those hands will probably be a lot fuller now.

Allan Greenblo (but do call me Allan)