Now+you+see+it,+now+you+dont,+Bruce+Cameron,+Saturday+Star

Saturday Star, Johannesburg, March 03, 2007 //Edition 1//
=Now you see it, now you don't=

//Fidentia CEO played fast and loose with R93m of beneficiaries' money//


 * Bruce Cameron**

In a cruel twist of fate, money that rightfully belonged to tens of thousands of widows and orphans - R93-million - was used by Fidentia to take control of the Living Hands umbrella trust administration company.

This latest twist in the unfolding drama of Fidentia is confirmed in documents in possession of Personal Finance. With amazing sleight of hand, J Arthur W Brown, the executive chairman of Fidentia, managed to delay the cash payment for the trust company until he replaced the directors of the trust administration company and the trustees of the umbrella trust with his own appointees - and only then take the money to pay for the purchase.

He then went on his now well-recorded spending spree, buying up a diverse group of companies, both good and bad, often paying ridiculous amounts with the rest of the R1,4-billion in the trust's coffers.

And to make matters worse, Fidentia Asset Management claimed a R48-million take-on fee and commissions for the main directors, with Brown paying himself R4-million for pulling off the coup.

This week, Old Mutual provided details of how it attempted to block the transfer of the assets of the umbrella trust, which it had been managing on behalf of the previous administrators, Mantadia.

On October 15 2004 Steve de Kock, Johan de Kock and Johan Linde presented Old Mutual with a letter signed by Fidentia director and auditor, Graham Maddock, instructing Old Mutual to hand over the money.

Old Mutual declined and made contact with Mantadia Trust Company, saying it would act only on its instructions.

Five days later, Old Mutual was presented with more documents replacing the Mantadia directors of the trust administration company with Fidentia directors, namely Andrew Tucker, Phillipus Malan and Johan Linde, as well as letters of authority from the master of the High Court appointing Malan as the sole trustee of the umbrella trust.

Malan signed a letter demanding that the R1,3-billion held by Old Mutual be transferred to Fidentia Asset Management.

About 267 retirement funds have been drawn into the debacle.

Many of the funds had placed money in the umbrella trust when it was still managed by Mercantile Bank, which had sold the administration company to Mantadia.

In September 2005 Malan was thrown out as the trustee, and Tucker, a lawyer, and Hjalmar Mulder, who was to become chief executive of Fidentia Holdings, were appointed as the trustees.

Ten days latter Tucker was dropped and Brown and Fidentia's black economic empowerment partner, Danisa Baloyi, became trustees.

Shortly before Malan stepped down as a trustee, he applied to the master of the High Court to destroy all original paper documentation of the umbrella trust, saying it was to be converted to an electronic system.

Altogether 54 000 trusts are involved but most have more than one beneficiary, all of whom are dependants of deceased members of retirement funds.

Many of the funds have comparatively small amounts of money affected. The biggest victims are the beneficiaries of the Mineworkers' Provident Fund (R840-million); the SA Municipal Workers' Union Pension Fund (R109-million), Impala Platinum Workers' Provident Fund (R58-million), SA Breweries Pension Fund (R55-million) and ABI Pension Fund (R37-million).

Personal Finance has also received written evidence of a number of retirement fund administration companies receiving upfront commissions and trail commissions from Living Hands/Fidentia for steering money towards the umbrella trust.

These companies include Alexander Forbes, NMG, Momentum and PSG.

Brown and his cronies - who continued this week in attempts to discredit the Financial Services Board (FSB), the curators of Fidentia and even journalists who have been in the forefront of exposing the excesses of Fidentia - are likely to come under fire next week.

The FSB will be giving evidence to the parliamentary finance committee about the Fidentia debacle and problems with the return of secret profits made by retirement funds administrators at the expense of fund members.

Meanwhile, the curators are understood to have found far more evidence of mismanagement and misappropriation at Fidentia than was exposed in the FSB inspection report that was used as the basis for the application by the FSB to place Fidentia under provisional liquidation.

The evidence will be provided to the Cape High Court when the FSB applies to have the provisional curatorship declared final.


 * From: http://www.thestar.co.za/index.php?fArticleId=3711693**

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