Treasury backs financial regulator against corruption charges

Treasury backs financial regulator against corruption charges
Finance minister Pravin Gordhan has come to the defence of the Financial Services Board, as the financial regulator faces a furious onslaught from embittered businessmen it has labelled as crooks.
Image: Gallo
Finance Minister Pravin Gordhan
" Claims were part of a campaign under way to deliberately and publicly smear the Financial Services Board...

Criminal charges of corruption were laid in recent weeks in Durbanville against FSB boss Dube Tshidi and four of his staff by J Arthur Brown, the former CEO of Fidentia.

Brown has already met with Hawks investigators, and is stepping up pressure on the FSB after complaining to Public Protector Thuli Madonsela about the regulator last month.

Separately, new claims that Tshidi's officials acted improperly have emerged from Brown's main accuser, Rudi Bam, and from Simon Nash, a businessman accused by the FSB of stealing pension cash.

But on Friday, Gordhan's department said these claims were part of a "campaign under way to deliberately and publicly smear the FSB".

Treasury said it "rejects the accusations and insinuations made against the integrity of [Tshidi] and the FSB", especially as it came from people like Brown and Nash, who both "face very serious charges".

Fidentia was placed under curatorship in February 2007 after the FSB said it found looting to the tune of R1.9-billion, which some reports called stealing from widows and orphans.

Though Brown was arrested in March 2007 on 192 charges of fraud, the final charge sheet in June 2010 contained nine charges - which will be tested in court next year.

In Brown's 100-page complaint, he accuses Tshidi and his officials of fraud, corruption, criminal defamation against him, and perjury.

Brown says the FSB "misrepresented the financial position of the Fidentia group in order to substantiate a curatorship application".

He claims the FSB "concealed dubious transactions which they entered into (with) the curators", benefited financially by selling Fidentia's assets and that Tshidi lied under oath.

Tshidi, however, says he is "not at all" concerned, calling it simply a case of those accused of corruption turning up the heat on their accusers with trumped-up allegations.

"What they're trying to do is make the FSB lose focus, and begin acting unprofessionally. They want to throw mud, but we won't do that, we'll continue to behave professionally," he said.

Tshidi says any actions the FSB took were "not an abuse of power, but the exercising of regulatory responsibility".

Separately, Tshidi is facing claims that he acted improperly from Simon Nash, a former trustee of the Cadac pension fund, who was arrested in 2006 along with Peter Ghavalas and others for stripping cash out of company pension funds.

While six people including Ghavalas have already pleaded guilty to this, Nash continues to fight. His criminal case is back in court in November.

Nash labelled the FSB's actions in manipulating curatorships as a "disgrace", saying it dragged out the Cadac pension case to bully him into settling.

In particular, Nash has taken aim at Tshidi and Tony Mostert, a lawyer who was appointed curator of the Cadac fund by the court at the FSB's request.

Also at the FSB's request, the high court appointed Mostert as the curator of all the pension funds said to have been illegally stripped of surplus funds.

In January, Nash's lawyers wrote to Gordhan saying there was evidence that Tshidi "may have committed a crime in the execution of his duties".

Nash referred to an incident in January in the Johannesburg Regional Court during his criminal trial when Tshidi was called as a witness. Tshidi was asked if he didn't see a conflict of interest in supporting Mostert's application to be curator of the Cadac Fund, as Mostert was also the curator of another fund claiming money from Cadac.

Tshidi replied that he "prefers to remain silent" as the answer might incriminate him.

Nash wrote to Gordhan that because of this answer, he believed Tshidi "should be placed under immediate suspension".

Of this claim, Tshidi says "there is no merit in what certain parties wish to infer from my evidence".

But he said he couldn't pre-empt "what I may still say, or what will be argued on behalf of the FSB" at Nash's hearing.

Mostert dismisses Nash's claims. "Those tasked with enforcing the law and appointed by courts to take control of hijacked pension funds are often the victims of vilification themselves by the very hijackers (they have) cornered," he says.

Other new accusations against the FSB come from former Fidentia director Rudi Bam - who is no friend of Brown's.

Bam says he blew the whistle on Fidentia by alerting the FSB to Brown's fraud in September 2005, sparking the curatorship.

But when Fidentia's curators asked Bam to repay R8.5-million, he complained to Cape judge president John Hlope.

In one letter to Hlope on April 16, Bam says "the dishonesty (on the part of the FSB and curators) makes Brown look like Snow White".

This week, Bam said "before Fidentia blew up, the FSB played the ostrich and did nothing. Now the curators are doing what they want, and the FSB are again ignoring the abuse".