A forensic investigation into the disappearance of about R1-billion in Fidentia investors’ funds will begin in earnest as co-curators Dines Gihwala and George Papadakis delve into the company’s transactions. The two have been provisional curators since February . The Mail & Guardianquizzes Fidentia curator Dines Gihwala about the missing millions and the task ahead.
After two months investigating Fidentia, what is your assessment of the management of the company?
It’s early days yet to make an assessment. It’s been a free-for-all, it’s a cavalier-like, ill-disciplined free-for- all.
What has been the biggest or most shocking revelation during your investigation into Fidentia?
On a personal level, the insensiivity of the people working there — to want all of the luxurious things that they were having and denying the interest of the poor widows and orphans who were going hungry. And they were vilifying us for wanting to pay the widows and orphans, not wanting to trim their spending.
Now that the application for permanent curatorship has been granted, what will you and Papadakis focus your efforts on?
We’ve got to clean this up. We’ve got to find every single cent spent and find out why it was spent and who spent it because we have to account to the people to whom it is owed. It will take years. We will have to conduct enquiries; some people will cooperate, some will not. We may have to force people to cooperate, we may have to take legal action. We’re talking years.
The first million-dollar question in the Fidentia scandal may be: where is the money? But the second million-dollar question is: how did Fidentia boss J Arthur Brown and his associates get away with it?
First of all, it was a pyramid scheme. You take from Peter to pay Paul. People, Fidentia executives, get fairly comfortable with that and when the problems start, the hole is already quite substantial. The Financial Services Board [FSB] was also frustrated for many months, there was frustration, obfuscation and all kinds of objectionable behaviour, which delayed the process. People threatened that they would do this or do that, they threatened to go to court, file papers. At one stage, about mid-2006, the FSB had to arrive with police to do their investigations. Without those frustrations, the hole would not be as big as it is now.
What would you recommend in terms of policy, regulation or legislation to prevent another Fidentia?
It’s early days yet to suggest that, but I would want to make recommendations at the end of it all.
The Fidentia scandal has raised the issue of oversight by various parties, such as trustees, auditing firms and the FSB itself. Do you think that strong oversight could have helped to uncover the problems at Fidentia at an earlier stage?
The problem lies with the trustees. If they were properly doing their work and not as conflicted, it would be a different situation. Danisa [Baloyi] and [Hjalmar] Mulder were severely conflicted, but it goes beyond them. The oversight and governance was, from their point of view, lacking. Problems that were raised, such as those to do with payments, fell on deaf ears.
The curators’ report says that in the face of investors’ claims for up to R1,4-billion, about R1-billion may be unrecoverable. What will the curators do to settle the claims when they have disposed of the assets?
A plan of distribution will be prepared. But because of the co-mingling of funds, it’s going to be very difficult. Unless you can prove who owns what and you can link the assets to the investors, the assets will be pooled and distributed proportionally.
Can you say how the application from the Mineworkers Provident Fund might affect beneficiaries of the Living Hands Trust?
It will not affect the beneficiaries. The application is to remove the trustees from the Living Hands Trust, it’s a pity it is only coming now. It’s a bit like locking the door when the horse has bolted.
Will you produce another curators’ report during the course of your investigation?
In terms of the court ruling, we will report to the court again in November.