Danisa+Baloyi+stands+behind+Fidentia,+Morris+and+Khuzwayo,++B+Rep

Business Report, Johannesburg, February 18, 2007
=Danisa Baloyi stands behind Fidentia boss=


 * By RONNIE MORRIS and Wiseman Khuzwayo**

Cape Town and Johannesburg - Leading businesswoman, Danisa Baloyi, a trustee of a trust associated with Fidentia, has come out in support of Fidentia's executive chairman, J Arthur Brown, and denied that any money was missing from the company.

"The Financial Services Board [FSB] is dragging my name in the mud. Why was the FSB report leaked to the media?" said Baloyi.

An analysis by FSB inspectors found that R689 million of client funds under Fidentia Asset Management, a Fidentia Holdings subsidiary, was unaccounted for. Baloyi and Brown intend holding a joint press conference to state their case.

Baloyi has been a trustee of the Living Hands Trust since July. This is an umbrella trust for widows and orphans of deceased members of retirement funds. The FSB inspectors' report said the trust had R1.2 billion under Fidentia Asset Management's management in July.

Living Hands is the administrator of the trust and Baloyi and Mulder are its officials.

The FSB report said: "Having two of the trustees of the trust … as officials of the administration company and the holding company of the asset manager where funds of the trust of more than R1 billion are invested places them in an untenable position relating to the performance of their fiduciary duties as trustees."

It added: "The status quo exposes the trustees to a situation of conflict of interest. In our opinion they will not be able to exercise their discretion in the manner which will be to the best interest and … welfare of the beneficiaries."

Baloyi said: "I am a trustee, so where is the conflict?"

Brown accused the FSB inspectors and the curators of being irresponsible, presumptuous and of making defamatory statements.

Yet, he said, the group's shareholders had on four occasions offered the FSB a simple solution in that they would raise capital against their property portfolio in 30 days.

Fidentia Asset Management, Bramber Alternative and Fidentia Holdings were placed under provisional curatorship 16 days ago after an urgent application by the FSB.

Brown said the group's property portfolio was going for nearly R1.7 billion and its liabilities at that stage were just more than R1 billion.

"These are some of the best businesses in the country … The curators already had offers from abroad. It is a really good business and if liquidated not only orphans but every client will see their capital and capital appreciation.''

Brown said contrary to what German Anderson, the FSB's deputy executive, said in court papers, the regulator's inspector had commended Fidentia staff for providing tenfold what they had asked for.

"I believe it is not only irresponsible [but] it is also unreasonable to claim that we have not been co-operative."

He admitted that Fidentia's 2004 annual financial statements were overdue but this was because the asset manager at that time had not performed as he should have.

"The other thing to note is that the FSB inspection had caused some commotion and concern with auditors, which slowed the process down even further. So they contributed to the fact that the financials had not been completed prior to the curatorship," said Brown.

Had the FSB read the structure of Fidentia's portfolio and the way that it rebalanced it there would have been sufficient cash available.

There was, however, sufficient cash in the underlying private equity businesses' profits to meet the payment requirements, he said.

As for the allegation that Fidentia would be unable to repay the investment of the Transport Education Training Authority (Teta), Brown said the Teta investment was always in the money market until two months prior to curatorship. The reason it was no longer in the money market was due to FSB's pressure, which reversed an R800 million asset swap transaction.


 * From: http://www.busrep.co.za/index.php?fArticleId=3685946**

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