A clause in the FPJ’s trust was designed to indemnify its trustees . Justin Pearce and Pat Sidley report
THE trustees of Allan Boesak’s Foundation for Peace and Justice attempted to indemnify themselves against allegations of fraud after R400 000 of Children’s Trust money had already been removed from its account into that of the Foundation. This is among the disclosures made in the evidence collected by lawyers investigating the financial affairs of the FPJ on behalf of its Scandinavian funders and released on Thursday.
The foundation’s legal papers constituting the FPJ as a trust were drawn up twice — at its formation in 1985 and again in 1991. They were altered again in 1993 to insert a clause in which trustees stated that they would not be liable for losses caused by “improper investments” made in good faith, or caused by anybody employed by the trust even if fraud was involved.
Among the trustees at that stage was Boesak, who may face criminal prosecution for his role in the misappropriation of the money.
The investigating lawyers have slammed the conduct of the trustees who failed to ensure that the huge amounts of money involved did not go astray.The chairman of the board of trustees, Ds Jan de Waal, has previously told the Weekly Mail & Guardian that he did not believe the trustees could be held responsible for any problems that occurred in the running of the foundation. And both De Waal and Boesak have tried to defend themselves by blaming the bookkeeper, Freddie Steenkamp, for the amounts missing.
But the lawyers investigating the case on behalf of DanChurch Aid note in the 600 pages of documented evidence that the Trust Property Control Act is likely to preclude the validity of such an indemnity. They believe Boesak could not defend himself with the indemnity clause.
In April 1991, according to the investigators, R447 111,99 was removed from the Children’s Trust account, placed in the account of the FPJ and used to credit staff loans. Very little of this money was ever used by the children for whom it was intended, despite pleas to the trust for small amounts to feed starving and destitute children in townships.
In the year in which the foundation paid from the Children’s Trust such small amounts as R1200 for “children’s reports” and R643,61 for the Bhongolethu Child Care Centre, the FPJ paid itself R53 066,02 as administration costs for running the Children’s Trust books.The report says Boesak, while initially co- operative with the investigation, suddenly appeared to become less co-operative early this year. The report suggests that it was the disclosure that the Children’s Trust money had been diverted from its intended purposes that might have accounted for Boesak’s lack of co-operation. He had spoken to the investigating lawyers on December 23 1994 but declined an invitation to talk to them again on January 27 1995.
According to the report, Boesak, together with Steenkamp and a Mr Mukadan of FPJ’s auditors Mustaq Brey and Associates, decided two or three years ago to increase Boesak’s monthly salary from R8000 to
R20 000. This decision was taken on the grounds that Boesak “had sacrificed a lot financially for the struggle” and that he had been offered overseas jobs which would have paid in excess of R20 000 a month.
A conscious effort was made to conceal the salary increase from the donors, and this was effected by paying Boesak’s home bond repayments and other accounts from FPJ funds.
Boesak had often said he would like an increase in the salaries of other low-paid FPJ staff but always told them there was insufficient funding for this.
The report says the auditors were aware of the disappearance of money into “staff loans”, but let this by on the understanding that these loans were a front for the funding of political activities: the “struggle bookkeeping” which channelled foreign funds to anti- apartheid activities in the 1980s. On the books, these loans would be written off as expenses.
The report confirms a WM&G report in January that Boesak and Steen-kamp set up the Rural Ministries and Development Trust as a means of channelling funds to profit-making self-sustaining development projects.
The RMDT was established at the request of the Cross Times Trust, which asked FPJ to help secure loans to capitalise development projects. Since such funding did not fall within the scope of FPJ activities, Boesak and Steenkamp set up the RMDT without the knowledge of FPJ’s overseas funders. At least R441 000 of FPJ money was channelled into RMDT projects, for the Kings Hotel project in East London and the San Sebastian residential development project in Cape Town.
The report also indicates that the FPJ purchased a house in Guguletu which is currently occupied rent-free by senator Christmas Tinto.
It also tells of FPJ funds being used for a trip to Egypt for Allan and Elna Boesak, a trip to Altanta in the USA for Boesak’s personal assistant Norman Michaels, and travelling expenses for ANC election
Among the other FPJ staff members who reportedly received “loans” from the FPJ are Boesak’s secretary Lucille Fester and staffers Leslie Liddell and Sandra Vlotman, who last month went to the press with allegations of mismanagement at FPJ.
The report includes evidence of numerous instances in which foreign donors called on the FPJ to account for its spending, requests which were repeatedly brushed aside by Boesak and Steenkamp.
In the most recent reply to funders, Boesak warns that an investigation would lead to a repeat of the situation which occurred, he says, when the former South African government attempted to investigate the FPJ, resulting in “highly inaccurate but extremely damaging speculation.”