Has justice been served in the Fidentia debacle?
A couple of weeks after I started writing for FAnews Online – in January 2007 – the Fidentia Asset Management scandal broke. The media was awash with stories of billions in misappropriated funds and the likely impact of the fraud on the widows and orphans who were beneficiaries of the Living Hands Trust. It soon emerged the Financial Services Board (FSB) had been on Fidentia’s trail for some time. They learned of irregularities at the group in February 2006, started a six month long investigation in July, and took their findings to the Cape Town High Court in January 2007.
The FSB’s initial report states: “Our analysis indicates that an estimated R689 million of client funds are unaccounted for. We believe these funds were utilised for disbursements by the Fidentia Group (and company executive chairman J Arthur Brown), as well as for the purchase of other assets not disclosed as part of the client portfolio. As such the funds were misappropriated.” Four years later we’re still waiting to learn the true extent of the fraud.
Slow progress
A lot has happened since the FSB investigation. The court installed Dines Gihwala and George Papadakis as curators to oversee Fidentia Asset Management (FAM), Bramber Alternative and Fidentia Holdings early in 2007. And a number of arrests followed. Brown and his former financial director Graham Maddock were arrested in March 2007 and immediately released on bail of R1 million each. Piet Bothma – the suspended chief executive of the Transport, Education and Training Authority (TETA) – was arrested in August 2007 and released on bail of R200 000.
Two of the “accused” have since entered into plea bargains with the prosecution. Maddock (who agreed to repay the curators R6.8m) was sentenced to seven years in prison. And Steve Goodwin – who was “voluntarily” extradited after the FBI arrested him in Los Angeles, received 10 years. Goodwin pleaded guilty to one count of fraud, two counts of corruption and 33 counts of money laundering. He admitted to arranging a R200 million “transaction” between Fidentia and Bothma – and hiding this from the TETA board. He also admitted to receiving R23 million for his part in laundering R93 million.
Justice delayed is justice denied?
An impartial observer to the justice meted out by South Africa’s courts would be very puzzled by the developments since. Maddock is already out of jail for “good” behaviour. The Western Cape High Court ordered his immediate release last Friday, after he served just two years of his seven year prison sentence. His five remaining years were commuted to 12 months house arrest, during which time he would have to do 16 hours of community service each month.
Goodwin, who also struck a plea bargain with the State, will spend 10 years in prison. His sentence included 20 years for fraud, of which 10 were suspended; 15 years for corruption, with five years suspended; and 15 years for money laundering, with seven suspended. The corruption and money laundering sentences would run concurrently with the sentence for fraud.
Meanwhile Brown and Bothma await their day in court. Brown faces charges of fraud, corruption, money-laundering and theft relating to Fundi, Tata, Living Hands, Thabamanzi and Infinity matters in the Cape Town High Court, and will appear separately in the Cape Town Regional Court on matters relating to the Antheru Trust.
Another delay in a four-year process
Although he’s reportedly living the high life in Cape Town, Brown claims not to have enough “loot” to pay his expensive lawyer for a full-length trial. In a letter handed in to the Cape High Court last Friday (a pre-trial hearing before Judge President John Hlophe) Brown said he’d handle his own defence. And he also mentioned ongoing negotiations on a plea agreement for his part in the saga... Could we see another “soft” plea bargain? We wonder who else Brown could implicate in return for leniency! The wheels of justice turn slowly – and we’ll have to wait a while for the next instalment in this saga. Hlophe has scheduled another pre-trial meeting for 31 January next year.
Editor’s thoughts: I reckon the State would have a hard time proving they’re tough on crime. Prominent politicians who appear in court on charges of fraud and corruption attract armies of government-sponsored “fans” to the courthouse – while those guilty of massive financial fraud seem able to plea bargain their way to soft time. Once they’re out they “live it up” on the proceeds of their crime. Do you believe enough is being done to recover the proceeds of white collar crime? Add your comments below, or send them to [email protected]
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