The joint estate of former Fidentia boss J Arthur Brown and his wife, Susan, was on Tuesday placed under provisional sequestration by the Cape High Court.
This followed an application by the curators of the Fidentia group of companies, who claimed that the Browns owed Fidentia just over R24-million.
Judge Dennis Davis said in his ruling that Brown had given an unsatisfactory explanation for the bulk of alleged debt, and there had been contradictions in his papers on whether there was a loan account in his name on the books of any of the companies in the Fidentia group.
And though Brown denied insolvency, he had not provided details, merely asserting that his assets exceeded his liabilities.
In the absence of any evidence in rebuttal, the court could draw no other conclusion than that the estate was insolvent.
Davis said that this was ”an exemplary case” where provisional sequestration would be to the advantage of creditors.
The curators had raised the most serious allegations, which went to the heart of South Africa’s financial regulatory system.
These allegations related to the misappropriation of funds and the disappearance of ordinary investors’ hard-earned money.
The curators alleged Brown treated the Fidentia companies as his own fiefdoms, and that he and his wife had squandered money with cavalier disregard for the owners of those funds.
In the face of these allegations, there was a need for proper legal control over the estate to see whether money could be recovered to pay outstanding claims.
Davis ordered the master of the high court to appoint a trustee within 24 hours, and set January 15 as the return date.
The trustee and the curators will now be able to investigate the affairs of the Browns and try to recover assets and cash.
Brown is on bail of R1-million after being arrested on two sets of fraud and theft charges related to Fidentia funds.
Fidentia curators George Papadakis and Dines Gihwala have been tracking down over R1-billion of investors’ funds. — Sapa