Fidentia boss J Arthur Brown last year offered to quit his position in a bid to stave off curatorship, according to a document handed in at his bail hearing on Thursday.
The document, a letter from Fidentia’s lawyers to the Financial Services Board (FSB), was attached to an affidavit by Brown setting out the reasons he thought he should be granted bail.
Brown and his co-accused, Fidentia’s former accountant Graham Maddock, face charges of theft and fraud that currently total just more than R200-million.
The two men, who have spent the past eight days in jail after being arrested by the Scorpions, were handcuffed together when they were led into a courtroom packed with family, supporters and journalists in the Cape Town Magistrate’s Court on Thursday morning.
The letter, dated December 6 last year, outlines ”a summary of our discussions as to how our client [Fidentia] might exit its asset-management business”.
It says the FSB agreed that if a particular ”plan of action” could be achieved, it would not place Fidentia Asset Management (FAM) under curatorship.
The lawyers proposed an agreement under which Fidentia would exit the asset-management business.
”This will be achieved by way of an orderly realisation of all the assets held by FAM, and the return to investors of their funds,” the letter said. ”Arthur Brown will, with immediate effect, no longer be involved in any aspect of the management of FAM, but will assist in the realisation of the assets.”
Brown himself would undertake to pay the shortfall to investors if the sale of Fidentia’s assets turned out to be less than the amount to which investors were entitled.
FSB spokesperson Russel Michaels told the South African Press Association on Thursday that these suggestions had come from Brown, not from the board.
”Obviously we didn’t fall for that: that’s why we went for curatorship,” he said.
Witnesses’ fears
Scorpions investigator Geoffrey Edwards, called to the witness stand, told the court indications were that Brown would interfere with witnesses if he was freed.
None of the people he had interviewed in his investigation, who included Fidentia employees, were afraid of Maddock. ”[But] everybody that I spoke to who was linked to Fidentia was afraid of Mr Brown,” he said.
This fear appeared to be generated by two men, Ray Nelson and Jacques Malan, who had been described to him as Brown’s ”goons” or ”henchmen”.
”They would be armed, walk around the offices with their firearms on display. People felt intimidated by these two,” he said.
He said Brown had two South African passports, which was irregular, and that it was ”strongly suspected” that both men had funds stashed in offshore banking accounts.
According to the FSB, a total of R680-million was unaccounted for, he said.
”Any amount of bail set now would be negligible should they decide to flee,” he said.
Under questioning by advocate Pete Mihalik, for Maddock, Edwards said the R200,3-million was money belonging to the Transport Education and Training Authority that, according to a non-discretionary mandate, should have been put into a money market account, but was not.
Instead it went into a trust and was ”dissipated” on travel and Fidentia’s operational expenses.
In an affidavit handed into court on his behalf, Maddock revealed that though he and his immediate family own property worth R8-million, including a house in Constantia, he has overdrafts totalling R460 000 at three different banks.
He said Fidentia had received about R1,3-billion from investors, which it invested in the money market, immovable property and private equities.
”The fact of the matter, and to the best of my knowledge and belief, is that all amounts received by the group can be accounted for and there are no ‘missing millions’,” he said. — Sapa