Thursday, August 4, 2011
Hawks investigate Fidentia Curator
De Wet Potgieter
Embattled Cape Town lawyer Dines Giwhala not only faces criminal charges following his co-curatorship over the controversial Fidentia financial scandal, but it was also confirmed on Wednesday that the Hawks were investigating a wide range of criminal allegations against him in another multimillion rand case.
Gihwala has acted for former finance minister Trevor Manuel and provided legal advice to Frene Ginwala on axed prosecuting head Vusi Pikoli.
The New Age on Wednesday revealed that the former boss of the Fidentia Asset Management Group, J Arthur Brown, had laid a wide range of criminal charges against the curators of his multibillion rand group of companies, which were put under curatorship by the Financial Services Board (FSB) in 2007.
Brown, who was arrested in 2007 and initially charged with more than 190 charges, now faces criminal charges ranging from fraud, corruption, money laundering and theft. Giwhala is co-curator of Fidentia with George Papadakis.Johannesburg criminal defence lawyer, Ian Small-Smith, acting on instructions from Swiss-based investment bankers Montague Goldsmith AG, made a formal report earlier this year to the police against Giwhala and Rivonia businessman, Lancelot Manala.
It was confirmed to TNA on Wednesday that Hawks’ Commercial Crimes Division in conjunction with the NPA Specialised Commercial Crimes Unit were investigating the report, in which Small-Smith laid criminal complaints of fraud, theft and various statutory criminal breaches, involving the misappropriation of millions of rands, against Gihwala.
According to the Swiss company’s CEO, Karim Mawji, Giwhala used R21073.82 from the trust account of legal firm, Hofmeyr, Herbstein and Giwhala (HHG), of which he was the chairperson, in August 2005 to pay for tuition fees at Stellenbosch University. He transferred a further amount of R57182.66 to the Dines Giwhala Trust’s account. “This is a clear case of theft,” Mawji declares in an affidavit handed to the police earlier this year.
The 2010 financial statements of Seena Investments, a dormant company owned by Giwhala and Manala, show the two men awarded themselves R5.5m in “directors fees” and a further R1.1m each as “administration fees”. The charges by Montague Goldsmith against Giwhala relate to a debt of about R10m owed by him to the Swiss-based investment bankers at the time he was appointed as co-curator for Fidentia. to the Swiss bankers he claimed he took the money as an advance on his fees.
Within months of becoming the curator he withdrew R10m from Fidentia and paid it over to Montague Goldsmith. In a letter to the Swiss bankers he claimed he took the money as an advance on his fees.
It was thereafter discovered in a forensic audit of Fidentia’s accounts that the R10m refund was not withdrawn from Giwhala’s attorneys’ trust account – where it should have been – but from Fidentia’s bank account which was being managed by Giwhala and Papadakis.
The law firm Hofmeyr, Herbstein Giwhala Inc, who were later incorporated as Cliffe Dekker, Hofmeyr, it’s suggested, should be criminally charged as they are implicated in the indictment. Giwhala was subsequently released from the firm as its chairperson.
Brent Williams, CEO of Cliffe Dekker, Hofmeyr, said yesterday that his firm acted on behalf of Giwhala in his capacity as co-curator of Fidentia, not in the matter with Montague Goldsmith.
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NEWS & SPECIAL INSIDE ! *
Fidentia Accused lays charges against curator's heafty takings
De Wet Potgieter
The former boss of the Fidentia Asset Management Group, J Arthur Brown, has laid a wide range of criminal charges against the curators of his multi-billion rand group of companies, which were put under curatorship by the Financial Services Board (FSB) in 2007.
The Fidentia issue was described at the time as “the largest investment scandal” in South African history.
Brown, who was arrested in 2007 and initially charged with more than 190 charges, now faces criminal charges ranging from fraud, corruption, money laundering and theft.
He appeared in the Western Cape High Court on Monday when his counsel, Jantjie van Niekerk, told Judge Robert Henney media reporting and the alleged misconduct of the curators would result in Brown receiving an unfair trial.
Brown’s lawyer, Bertus Preller of Abrahams and Gross Inc, yesterday confirmed the charges of theft, fraud, corruption, money laundering, contraventions of the Prevention and Combating of Corruption Act, as well as statutory infringements in terms of the Companies Act, have been laid with the police against curators Dines Gihwala and George Papadakis.
Gihwala faced criminal complaints earlier this year. Criminal defence lawyer Ian Small-Smith, acting on instructions from Swiss-based investment bankers Montague Goldsmith AG, made a formal report to the police in terms of the act.
In the report, Small-Smith laid criminal complaints of fraud, theft and various statutory criminal breaches, involving the misappropriation of millions of rands, against Gihwala over that matter.
In addition, the Antheru Beleggings Trust, which invested millions in Fidentia, applied at the start of the year to the Western Cape High Court for the company to be put into liquidation, rather than remain under the joint curatorship of Gihwala and Papadakis.
In support of the application, the Antheru trustees alleged that the curators had sold assets (purchased by Fidentia with investors’ funds) to their friends for amounts far below their true market value and have helped themselves to millions in fees.
In the latest development, Brown highlights in his founding affidavit to the police “various instances of gross misconduct on the part of Gihwala and Papadakis”.
According to Brown, Papadakis was closely associated with Clint Nassif, the man who said he assisted Brett Kebble to commit suicide, during the SARS investigation into the slain man’s financial affairs and therefore “did not meet the requisite fit and proper criteria to be appointed co-curators of the Fidentia Group”.
Among the charges levelled by Brown against the two curators in his statement to the police are:
• The curators stole at least R10m from the estate of Fidentia and attempted to conceal the theft by charging fees.
• They misrepresented the financial position of Fidentia and misrepresented and attempted to conceal various transactions they entered into and misrepresented facts.
• The curators have acted in concert with their firms and other third parties to maximise fees, enter into intolerable transactions to the detriment of the Fidentia estate. The curators created fictitious documentation, financial records and used the same to further their objectives.
• Allegedly committed perjury by giving false evidence, failed to comply with court orders and “wilfully misled” the court in their reports and affidavits.
• Defeated the ends of justice by instituting false charges against Brown and intimidated various people into giving false evidence. The curators also allegedly created fictitious documentation such as financial records and used it to further their objectives.
According to Brown, Gihwala and Papadakis gave false and defaming evidence in various affidavits.
“It is clear the curators are permitting the firm, of which Giwhala is the chairperson, to generate generous and indeed luxurious legal fees,” said Brown.
According to Brown’s statement, the curators to date have earned R92m in direct fees, while legal fees amount to about R22m.
The charges by Montague Goldsmith against Gihwala relates to a debt of about R10m owed by him to the Swiss-based investment bankers at the time he was appointed as co-curator for Fidentia. Within a few months of becoming the curator he withdrew R10m from Fidentia and paid it over to Montague Goldsmith.
In a letter to the Swiss bankers he claimed he took the money as an advance on his fees.
Numerous attempts to contact Gihwala were unsuccessful. When asked for comment, Papadakis referred The New Age to the Financial Services Board (FSB), which said yesterday it was unaware of the charges laid by Brown. A spokesperson for the FSB, Logan Ramalu, said yesterday the FSB was not aware of criminal charges against Papadakis and Gihwala.
“It must be pointed out, however, that there is currently a criminal case pending against Mr Brown, among others, in which, according to the FSB’s knowledge, Mr Brown is raising some of the allegations as a defence to the charges against him,” said Ramalu.
“The correct forum to respond to these allegations would therefore be in court.”
It must also be emphasised that curators are appointed by court on recommendation by the FSB.
Similar allegations concerning the appointment of the curators were made in court papers in which the liquidation of Fidentia Asset Management was sought in the Western Cape High Court during 2010.
2011 TNA Media (Pty.) Ltd. All rights NEWS & SPECIAL INSIDE ! *
Fidentia curators probe 'significant entity'
CAPE TOWN, SOUTH AFRICA - Jun 22 2009 15:29
Fidentia's curators have been probing a deal involving "a significant entity in the financial-services industry", according to a report made public on Monday.
In the report, dated March 10, curators Dines Gihwala and George Papadakis detailed how they had recovered, or had firm agreements on, about R160-million of Fidentia cash.
They also listed a number of assets that still had to be sold, including the Sante Winelands Hotel and Spa at Franschoek, and Fidentia's former headquarters in Cape Town's Century City, for which they are seeking more than R53-million.
"There is also a transaction involving a significant entity in the financial-services industry, which may be liable to the curators in a transaction that appear[s] to be a sham," they said.
"Inasmuch as the curators are still investigating this claim, they are reluctant to disclose the identity of such entity to ensure no reputational damage is suffered by such entity, just in case it turns out that the information at the disposal of the curators is unreliable and/or inaccurate."
Former Fidentia boss J Arthur Brown is currently facing criminal charges related to the Fidentia debacle.
One-time Fidentia accountant/financial director Graham Maddock is behind bars after entering a plea agreement with the Scorpions, which involves testifying against Brown.
The curators said in their report that Maddock had undertaken in the plea agreement to pay them R6,3-million.
Of this they had so far received R2,8-million, from the sale of the Maddocks' Constantia family home.
An associate of Brown's, Louis Koen, had agreed to repay R10,9-million, and had so far handed over R3,2-million of this.
Johan Linde, who received R5,1-million as purported dividend and restraint of trade agreements, had paid over the entire amount to the curators.
These amounts make up part of the R160-million total.
The curators said summonses for similar payments, totalling more than R20-million, had been issued against Johan de Jongh, Hjalmar Mulder and Zacharias Brown.
Also unresolved were claims of R8,5-million against former Fidentia director Rudi Bam, R24,7-million against Brown and his wife, Susan, and R77-million against businesses formerly controlled by broker Steve Goodwin.
Goodwin was jailed two months ago, in another Scorpions plea agreement, after being apprehended in the United States.
Gihwala has previously said that the shortfall on Fidentia's books could be as much as a billion rand.
The publication of the curators' report, available on the Financial Services Board's website (www.fsb.co.za), follows an order made by the Cape High Court last week. -- Sapa