Up to a billion rands of funds invested in Fidentia are unlikely to be recovered, say the financial group’s curators. One curator, Dines Gihwala, of Hofmeyr, Herbstein & Gihwala, says the company is expecting to recover only a further R300-million of the missing money to add to the R300-million already paid to investors.
The curators are believed to be in negotiations with one of the architects of the Fidentia scandal, who, having fled the country in March this year, now lives in Australia.
This follows further appearances in court by Fidentia boss J Arthur Brown and financial director Graham Maddock in late August when they faced additional charges relating to the missing funds from the Transport Education Training Authority (Teta), which were invested in Fidentia.
Appearing with Brown and Maddock was suspended Teta chief executive Piet Bothma, who also was charged with conspiracy to commit fraud.
Of the original R197-million invested by Teta in Fidentia, only R16-million has been paid back.
Gihwala told the Mail & Guardian this week the curators now knew what had happened to the money invested in Fidentia, but said most of the funds were lost in trading operations and the “lavish lifestyle” that Brown and his employees enjoyed.
“They were burning money,” said Gihwala. “The canteen they ran in the Fidentia head office cost R500Â 000 a month alone.”
With up to a billion rands unlikely to be recovered, it appears investors will receive only 20c to 40c of every rand that was invested in Fidentia.
Gihwala said the curators were dealing with Fidentia’s assets “systematically” to get maximum value for all the assets that need to be sold. “People who think they are going to get a bargain can think again,” said Gihwala.
He said the curators recently sold the Facets building in Century City, which had previously housed a day-spa business run by Brown’s wife. “We sold it for a lot more than they paid for it,” said Gihwala, who refused to disclose the sale price.
The sale of the building follows the sale of Fidentia Rangers, the football club owned by Brown, which was offloaded for R2,5-million.
Gihwala said they are busy negotiating the sale of the Fidentia head office and the Sante Winelands Wellness Centre, a resort in Stellenbosch, owned by Fidentia.
One setback to the curators was the ruling in the Cape High Court to dismiss an application by Gihwala to confiscate two seaside homes, valued at R20-million, which were owned by a trust of which Brown was a trustee.
The curators argued that the properties were bought with money that had been misappropriated from Fidentia.
Brown argued the money used for the properties came via Fidentia, but that it was money owed to him personally by a third party.
“That’s bullshit and the court believed him,” said Gihwala, who recently told the parliamentary standing committee on public accounts that Brown had attempted to frustrate their work at every step of the process.
However, Gihwala told the committee that the court’s decision would not stop the curators from suing the respective entities for the money.
“We took the short cut because we thought we had an unanswerable case,” said Gihwala.
He said a court case was not the first choice, because of the inherent delays, and that January 2009 remained the earliest likely date for a trial.