'Millions missing' at Fidentia

[Dave A]

The knock on effects of the Fidentia case are far from over.

Businesswoman Danisa Baloyi has relinquished all her posts with companies and non-governmental organisations (NGOs), she said through her spokesperson on Tuesday.

"Due to the sustained media attention on my person and now my qualifications, it is apparent that my contribution to the organisations I serve cannot continue in the positive spirit I originally intended."

Baloyi's move follows her removal last Tuesday from the board of the Absa Group and Absa Bank due to public disclosures related to irregularities at Fidentia.

She has also "stepped aside" as chancellor of the University of Fort Hare and director of Metrofile Holdings.

"I have ... decided to resign from all boards and positions that I hold in public and private organisations in order to dedicate all my energies to the challenges I face."

Although the Don Group said it had decided to retain Baloyi as director of the hotel group, she said she was withdrawing from all 16 companies, as well as the NGOs she served "until all matters relating to the alleged irregularities with respect to Fidentia have been resolved".
full story from M&G here

[Yvonne]

Todays news said Danisa Baloyi will be requested to repay her interest free loan from Fidentia.
Her legal spokesperson said something along the lines that an offer of settlement would be made?????
It was interest free, and now a "settlement" figure would be offered?

Will that be a few million, and then a claim will be made that she settled all outstanding amounts, and owes nothing, therefore she is able to accept further highly lucrative positions?

Yvonne

[duncan drennan]

Todays news said Danisa Baloyi will be requested to repay her interest free loan from Fidentia.
Her legal spokesperson said something along the lines that an offer of settlement would be made?????
It was interest free, and now a "settlement" figure would be offered?

Will that be a few million, and then a claim will be made that she settled all outstanding amounts, and owes nothing, therefore she is able to accept further highly lucrative positions?

Yvonne

It will be interesting to see how this pans out. I suspect the curators are not going to accept a "settlement offer" - they have widows and orphans waiting for money at the end of next month (SARS bailed them out this month by refunding tax that was paid).

I think that if she doesn't cough up and pay within 90 days they will sue her.

The interesting spin off of this is that BEE partners may be more circumspect when accepting positions on boards, and as trustees. Turns out there is a bit of responsibility and liability involved...

[Dave A]

The interesting spin off of this is that BEE partners may be more circumspect when accepting positions on boards, and as trustees. Turns out there is a bit of responsibility and liability involved...

You mean there's more to being a board member than getting multi-million rand interest free loans that you don't have to repay

[duncan drennan]

I found this bit about the repossession of the Facets property which was owned by Brown's family trust quite intriguing. The big question on my mind � who are the other trustees, and what does this mean for them?

It seems that the Brown Family Trust was used for siphoning off money,

Gihwala said it seemed clear that the family trust was created at least in part for the purpose of hiding the theft of funds from Fidentia.

"The trust is to all intents and purposes Brown's alter ego," he said.

Full story on M&G

[duncan drennan]

As this thing unfolds the blatant fraud that has occurred becomes clearer and clearer,

Also implicated in the scandal this week is Andrew Tucker – who has two Cape Town residential addresses, one in Table View and the other in Milnerton, and is a trustee of the Brown family trust along with Arthur and Susan.

The capital beneficiaries of the trust, meanwhile, are Brown, his wife and Brown’s descendants.

The trust bought Facets for R24,5m with “investor funds which were misappropriated from Fidentia Asset Management (FAM)�, said the papers.

The bank account used to buy the building was the account of Fidentia Capitalwise Securities.

Brown, meanwhile, was a director of FAM and Fidentia Capitalwise Securities, controlling them and treating them as “one company�.

Capitalwise, previously known as Brown Brothers Securities (Pty) Ltd, was a subsidiary of Fidentia Holdings.

The curators said that as they could not “establish the existence of any real, autonomous and/or independent existence of the trust�, they had come to the “inescapable conclusion� the trust is Brown’s alter ego.

“Brown registered the property into his family trust in circumstances which were both fraudulent and in flagrant breach of Brown’s obligations to FAM and Capitalwise as a director of both companies.�

Brown also controlled the trust, with the help of his wife, and is also its primary capital beneficiary.

Full story on MoneyWeb

[Dave A]

It makes you wonder about just how much protection by separation trusts really offer nowadays.

[duncan drennan]

Well, it doesn't matter what structures you have in place, if money was obtained criminally (as was the case) then no protection is provided (and none should be).

[Dave A]

But then why this statement:

The curators said that as they could not “establish the existence of any real, autonomous and/or independent existence of the trust”, they had come to the “inescapable conclusion” the trust is Brown’s alter ego.

I understand when we're talking about criminal activites, the culprits should not be hiding behind trusts. But on the flip side trusts can't be held accountable for the actions of their trustees either.

[duncan drennan]

I hear you. The structure that many people are pushing is this one with trustee plus independent trustee (which he had), but it is definitely open for abuse. I suppose it rests on the strength of the independent trustee, and the documentation.

I suppose in the case where a trust has been used like this for legitimate reasons, and all the signed resolutions and minutes are available, then, if nothing else, it makes it far more difficult for a creditor to try to liquidate. First they have to prove the trust was not autonomous, which costs a lot. It may (even if the trust is not autonomous) at least buy some time, or leverage.

The whole situation does bring into question the structures that have been sold to many people (including myself). Maybe the important thing here is to get a really worthwhile independent trustee, rather than just appoint the lawyer who set it up for you.