Benefits paid to 50Â 000 widows and orphans of mineworkers killed in underground accidents, which have been threatened by the Fidentia scandal, are not guaranteed, Mineworkers Provident Fund (MPF) chairperson William Leshilo revealed this week.
This runs counter to claims by the National Union of Mineworkers (NUM) that payouts will not be affected.
Leshilo said the fund had approached the curators of Fidentia for a written guarantee that beneficiaries will continue receiving their monthly payments. To date, this has not been forthcoming.
It has been reported that the Living Hands Umbrella Trust, which is administered by Fidentia, had received only a ”part-payment” for January.
Fidentia was placed under curatorship earlier this month by the Cape High Court for ”misappropriating client funds”. This followed the findings of an investigation by the Financial Services Board (FSB), which were presented to the court.
The report includes claims that transfers have been made to offshore bank accounts held in the name of entities related to Fidentia and Fidentia boss, J Arthur Brown. Brown disputes these claims, insisting he has no offshore assets.
The NUM’s deputy general secretary, Oupa Komane, told the Mail & Guardian that the union had assurances that the widows and orphans who were beneficiaries of the fund would continue to receive their monthly payments.
This was disputed by Leshilo, who stepped out of a trustees’ meeting to talk to the M&G.
He said the MPF had stopped depositing money with Living Hands as far back as November 2005, after the trustees had raised concerns about the fact that the directors of Fidentia were also the Living Hands trustees.
Leshilo said that towards the end of that year the MPF trustees had felt that the relationship with Living Hands needed to be terminated.
The MPF has 10 trustees, of whom five are nominated by the Chamber of Mines and five by the NUM.
Leshilo said that at the time of the decision to suspend payment, the MPF had about R800-million invested in Living Hands. ”We had all our eggs in one basket and decided to find another trust company.”
The fact that the relationship with Living Hands was still in force was a consequence of the need for legal advice and a full investigation. ”We were their biggest client and we were worried that they would fight us in the courts, which would impact on the beneficiaries,” Leshilo said.
The fund’s principal officer, Frans Mahlangu, was suspended on charges that he failed to coordinate the requested investigation into Living Hands.
KPMG finally began an audit in May last year and reported back to the MPF in October. According to Leshilo, the auditors did not highlight any particular irregularities, but they were denied access to documents relating to Living Hands’s investments.
Leshilo said the MPF had started depositing money in a new fund, the Fair Heads Trust, in November 2005, and now had R100-million invested in it.
He revealed that the MPF was in the process of terminating the service agreement and its involvement with Living Hands.
Meanwhile, Brown came out fighting this week, threatening to mount a court challenge to the curatorship and the FSB. However, in an interview with the M&G, he insisted his first priority was to save Fidentia.
Brown claimed the FSB investigation was ”not comprehensive” and was ”one-sided”. He insisted that the R680-million the FSB could not account for was locked up in property and private equity investments.
”The FSB didn’t act responsibly. They were obviously driven by some kind of agenda,” said Brown. ”They have jeopardised the clients they were meant to be protecting.”
It has been reported that Fidentia paid excessive prices for a number of companies it purchased, including R15-million for a 26% share in the technically insolvent Motshati Holdings.
The Saturday Star reported that numerous assets held in the name of Brown or various family trusts are reflected as assets of some Fidentia companies.
Brown told the M&G he had plans for financial institutions to fund the liquidation of Fidentia’s private equity portfolio so that its clients received their money and Fidentia was saved.
Dines Gihwala, chairperson of law firm Hofmeyr Herbstein & Gihwala and one of the Fidentia curators, described Brown’s claim that there were no funds unaccounted for as ”delusional”.
He reiterated that Brown had strayed from the investment mandate of Fidentia’s clients.
”The Transport Education and Training Authority mandate was that the money must be invested in a money market account. I have yet to find the account with the R245-million in it,” said Gihwala.
Gihwala said he would welcome the liquidation of the portfolio. ”If necessary, I would go with him to the banks to facilitate that process. This is a man that wants to create the impression that he has been unfairly treated.”
It was revealed this week in Business Day that the curators have initiated a retrenchment exercise at Fidentia, which will see up to a quarter of its 1Â 200-strong staff fired.