Fidentia boss J Arthur Brown and fellow director Graham Maddock appeared in the Cape Town Magistrate’s Court on Tuesday on charges of fraud and theft involving more than R200-million.
The two men were denied bail and will appear in court again on March 15 for a bail application.
They were arrested shortly after 8am on Tuesday at their homes in the city.
Seta scrutiny
Meanwhile, the collapse of Fidentia has prompted Labour Minister Membathisi Mdladlana to crack the whip on the Sector Education and Training Authorities’ (Setas) financial activities.
Setas will face severe scrutiny as the government considers drastic measures to oversee their current investment arrangements.
Mdladlana on Tuesday released the results of a labour department audit on the investment of surplus funds by Setas.
The audit came in the wake of the transport Seta (Teta) having invested over R245-million with Fidentia. Mdladlana said the likelihood of loss of an estimated R245-million of skills-development funds and mineworkers’ pensions funds through the Fidentia investment ”that went wrong” was regrettable and a serious matter of concern.
”I am following up developments in this regard very carefully. We are also taking other measures to prevent similar occurrences in other Setas,” he said.
Labour department officials were already working with the Treasury to determine whether there was negligence or contravention of regulations, and the extent of compliance with policy.
”We have been furnished with most of the records and correspondence between Teta and Fidentia.
”I am told that Teta is also conducting its own internal investigation to determine what could have gone wrong, including possible culprits who must be disciplined accordingly,” Mdladlana said.
He would engage Setas with a view to revisit the current investment arrangements with the various entities and make sure the Teta debacle was not repeated.
This would also involve discussion with the Treasury on whether to withdraw the current investment exemption to ensure all Setas invested their surplus funds with the Corporation for Public Deposit (CPD) under the South African Reserve Bank or the Public Investment Corporation.
Mdladlana said he shared President Thabo Mbeki’s concerns about the levels of Seta funds being invested in the midst of the current skills shortages.
”Setas are not in the stock-exchange business. Their role is to ensure that funds entrusted to them are used for the purposes that they were meant for,” he said.
The National Skills Authority had been asked to revisit the levy grants to employers and to advise on the best ways to minimise the amount of cash in Seta accounts at any given time.
Labour officials had also been instructed to work closely with the Auditor General in interrogating the Seta levels of commitments, how long some of the projects had been, and whether signed contracts existed against those commitments, ”or somebody is creatively holding moneys under the commitment disguise”, Mdladlana said.
According to the audit findings, an estimated total of R3,8-billion is invested in the different Seta accounts.
Of this amount, R3,7-billion is committed to projects, and there is a surplus of R99-million.
The only Seta without an investment account is the Public Services Seta. – Sapa