Heat+on+Baloyi+over+Fidentia+stake,+R8m+loan,+Rob+Rose,+B+Day

Business Day, Johannesburg, 20 February 2007
=Fidentia heat on Baloyi over stake, R8m loan=


 * Rob Rose, Chief Reporter**

BUSINESS magnate Danisa Baloyi said yesterday the widening storm over her role in the Fidentia scandal made her believe “someone is out to get me”, as Absa said its bosses would meet to discuss the matter, given Baloyi’s position as a director of the bank.

Yesterday, Baloyi denied claims she acted improperly by taking an R8m loan from Fidentia, and had a “material conflict of interest” that prevented her from properly looking after R1,47bn in cash belonging to widows and orphans. Fidentia was put under curatorship three weeks ago amid claims that R689m in client funds was “unaccounted for” and that its bosses had “misappropriated client funds” and used the cash to fund a spending spree.

With less than R8,5m in cash, and monthly bills exceeding R10m, curators Dines Gihwala and George Papadakis have already retrenched more than 400 Fidentia employees. Yesterday, the curators axed half the staff at Fidentia’s five-star Santé Hotel in the Cape winelands.

Until now, all suspicion had fallen on Fidentia’s chairman, J Arthur Brown, but Baloyi has now been sucked into the storm.

A January report from Financial Services Board (FSB) inspectors said Baloyi had a “material conflict of interest” as she was a shareholder and official of Fidentia Holdings, as well as a trustee of Fidentia’s largest client, the Living Hands Trust. Baloyi effectively owns 10% of Fidentia.

The Living Hands Trust invested R1,47bn with Fidentia, cash needed to fund monthly payments to widows of deceased miners. But it is now unclear if any of this cash remains.

The inspectors said Baloyi was “in an untenable position relating to the performance of (her) fiduciary duties” as a trustee. It said she would “not be able to exercise (her) discretion in the manner which will be to the best interest and general welfare of the (Living Hands beneficiaries)”.

But weekend reports now claim Fidentia also gave Baloyi an R8m loan, which she had not repaid and which the curator was now claiming from her.

Since 2004, Baloyi has been a nonexecutive director of Absa. Absa said that CEO Steve Booysen and chairman Danie Cronje would meet to discuss this issue.

Spokesman Errol Smith said Absa was “considering the FSB report into Fidentia and our legal team will meet soon with (Booysen) and (Cronje) to examine our options and see what decisions need to be made”.

Baloyi is also a nonexecutive director of the Don Group and Set Point.

Yesterday, Baloyi dismissed the claims, saying she was “waiting for the curators to come up with their report” on March 27 before commenting.

“I personally do not see a conflict of interest of any sort ... at the end of the day, we all need to see the (curators’) report, so I will also be able to defend myself,” she said.

Yesterday, Brown said claims that the R8m loan had been written off — which could have effectively given Baloyi the money — were “totally incorrect”.

He said the loan was “properly constituted ... and was for (Baloyi) to capitalise her own independently valued business assets”.

He said it “was never a soft loan”, and it bound Baloyi and Fidentia “in terms of performance”.

Yesterday, the curators axed 120 of the 220 staff at Fidentia’s Santé Winelands Hotel, which was burning R1m a month.


 * From: http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A390274**

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