SAB+could+not+get+its+R80m,+Alec+Hogg,+Moneyweb

Moneyweb, 15 February 2007
=SAB couldn’t get its R80m=

//Fidentia founder claims empire built on admin skills. SAB suggests not.// **Alec Hogg** //reports.//

The local subsidiary of global giant SAB Miller tried unsuccessfully for almost a year to extract R80m from Fidentia-managed Living Hands which houses the trust funds of 1 900 widows and orphans of deceased SAB workers.

SAB had no notion of the imminent scandal. The brewer wanted to take the money out because of Fidentia's poor administration.

Spokesman Michael Farr tells Moneyweb that only in December 2005 did SAB discover its widows and orphans' money was with Fidentia. It had originally been invested in another umbrella trust unrelated to Brown's operation.

Attention was drawn by erratic payments to SAB dependent widows and orphans. Many of the monthly payments were late.

On the //RSG Geldsake met Moneyweb// radio programme Wednesday, Fidentia founder J Arthur Brown claimed his company's explosive growth over the past three years was built on "administrative excellence".

In 2003 Fidentia was a struggling eight person import/export firm. Three years later Brown's business employed 1 100, owned a rugby (Boland) and soccer (Manning Rangers) franchise, paid over-the-top salaries and occupied plush offices in Cape Town's Century City.

Brown, a former instant lawn salesman with abundant self-confidence, is accused by the Financial Services Board of having funded this growth through looting at least R689m from trust funds of widows and orphans.

Farr says after the concerns had been raised by the SAB widows and orphans: "We investigated and found Living Hands' administration to be unsatisfactory. By March we ensured fresh contributions went into a different trust. We also started negotiating to switch to another trust our roughly R80m still in Living Hands."

To withdraw monies from any such fund, however, requires signed agreement by the trustees. Achieving this proved difficult as Brown and his cronies employed what Farr reckons "seemed like delaying tactics".

Farr explains: "During 2006, several meetings were held with Living Hands regarding the (poor) administration, but to no avail. At each of these discussions Living Hands sent in totally different representatives, which made it difficult to make progress."

He adds: "As one would expect, we are seeking legal advice on the issue from an SAB perspective. However, this is complicated by the fact that in terms of sect 37C of the Pension Fund Act, once the funds are paid into the Trust, SAB does not have any legal claim to the funds as they do not belong to SAB, but to the widows and orphans."

SAB's fund was originally placed in the Mercantile Asset Trust Umbrella Trust during the mid-1990s. SAB financial manager Priya Garach says a comprehensive Due Diligence was done at the time.

However, says Farr, "In 2005 the trustees of Mercantile Asset Trust sold their businesses to Living Hands, a subsidiary of Fidentia Holdings. The SAB retirement funds were not advised of the sale of the business. SAB was not notified of this change, did not choose to invest with Living Hands and had no control over the sale transaction."

Beneficiaries of the SAB fund are now starting to suffer the consequences of unwittingly sponsoring the Fidentia founder's fantasies. There is only enough money available this month to fully pay those at the bottom end. Other beneficiaries will receive payments based on a sliding scale.

Whether or not the SAB widows and orphans receive anything in March is still a moot point. What if, as the co-curators Dines Gihwala and George Papadakis have said, the cupboard is bare?

"We can't make any statement on this until more information is provided to us. We will be meeting with the curators on the 20th," says Farr.


 * From: http://www.moneyweb.co.za/mw/view/mw/en/page1655?oid=71313&sn=Detail**

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