Fidentia affair after the second curators report 02-04-07

 

The Fidentia affair after the second Curators' Report

The Congress of South African Trade Unions is appalled at the latest report by the curators of the Fidentia companies, filed in the Cape High Court, which reveals that the amount of money alleged to have been stolen from 47 000 widows and orphans of mine workers killed in mine accidents and other beneficiaries has now risen to R1 billion.

We are pleased that J Arthur Brown and Graham Maddock have been arrested and charged with theft and fraud, but it is clear from the curators' report that these two individuals are not the only ones implicated, and we look forward to all those involved being prosecuted.

COSATU's primary concern is that everything possible is done to safeguard the defrauded beneficiaries - the widows and orphans of deceased members of members of our affiliated unions, who paid contributions out of their wages so as to secure the continued welfare of their loved ones. They must not be abandoned.

The curators have said that they are unlikely to recover sufficient assets from the Fidentia companies alone to make good the total loss to the beneficiaries. COSATU notes however that the journalist Bruce Cameron of "Personal Finance", who has played an outstanding role in the exposure of this and other cases, has suggested, in relation to Fidentia, "there are, and could be, major implications for the financial services industry in a number of sectors, (including) those retirement fund administrators (Alexander Forbes, Momentum, Lekana and NMG) that took commissions and fees from the Living Hands Umbrella Trust, which was plundered in the Fidentia scandal, leaving 47 000 widows and orphans out of pocket.

" . the curators of Fidentia would do well to look to these retirement fund administrators that channelled money to make good on any shortfalls that will surely occur when they have finished realising the assets that Fidentia bought with some of the plundered funds.

" It is not merely a matter of paying back the commissions/fees received, as some are planning to do. It is a matter of making good on the total losses, particularly as it appears none of those who received the fees and commissions did any real due diligence in assessing that the monies would be properly and prudently invested."

COSATU therefore urges the curators to take legal action against any of these retirement fund administrators, against whom there is a prima facie liability for negligence, and who do have sufficient assets to make good the total losses to the beneficiaries.

COSATU does not believe that the Fidentia case shows that elected trustees are in general corrupt or lazy or incapable of carrying out their duties. On the contrary it has strengthened the argument that elected lay oversight of group benefit schemes is the only way to ensure that the system serves the beneficiaries properly. They should not be replaced by 'expert', 'independent' or paid trustees. Such a course of action would only compound the present difficulties, and open the way for even more corruption and theft. The Fidentia affair has rather highlighted the need to preserve and strengthen the principle of democratic control of retirement funds, through worker-elected trustees, in line with COSATU's fundamental principle of worker control.

COSATU demands a full investigation of all transactions in the Fidentia story to discover if any individual trustees could have facilitated the transfer of assets to those who misappropriated them, in exchange for a reward. We will demand that any such tainted trustees be at the least removed and replaced, so as to restore confidence in the integrity of all the affected schemes. Should any evidence of any criminal conduct be uncovered among either trustees or fund administrators, the National Prosecuting Authority must enforce the law against those implicated, regardless of who they are.