More trouble brewing in the financial services industry

13 May 2008 Gareth Stokes

Late yesterday it emerged that the Pretoria High Court has ordered curators to take over the affairs of Progressive Investment Trust, Progressive Asset Management, National Financial Partners and Progressive Investment Holdings. The Financial Services Board (FSB) approached the Court after “an in-depth inspection into the affairs of Progressive Investment Trust and its associated institutions at the instance of the Registrar of Financial Services Providers.”

The court appointed Advocate Neville John Melville and forensic accountant Jabulani Mahlangu to act as curators of the business affairs of both the companies and trust. A return date is scheduled for 7 July 2008. At this stage the FSB has not released any further information as to the nature or findings of its investigation.

PAM managed two unit trust funds

Progressive Asset Management is (according to its website) a subsidiary of National Financial Partners. It offers two unit trusts, which are listed with the Association of Collective Investments (ACI). These trusts were Regulation 28 compliant as of 30 September 2007. They are both asset allocation funds. The PAM Balanced Fund is a Prudential Medium Equity fund and was placed 3 out of 43 funds for the quarter ending 31 March 2008. And the PAM Wealth Preservation Fund is a Prudential Low Equity Fund ranked 3 out of 40 funds for the same period.

The company also offered a Progressive Personalised Portfolio to investors with lump sums of more than R500 000. Investors could take advantage of a customised solution to fit their unique requirements. The investment could be tailored to include all asset classes in a mix appropriate to the return and risk expectation of individual clients...

It is too early to speculate as to the nature of transgressions that prompted the FSB to take action. We will have to wait for the FSB to release further details of their investigation, and for the curator’s presentation to the courts in July to learn more.

In other news – the case against Fidentia boss is ongoing

In other news, Fidentia boss J Arthur Brown is in court again. He was arrested last Friday on ‘fresh’ charges of fraud, theft and money laundering. National Prosecuting Authority (NPA) spokesperson Tlali Tlali advised that: “J Arthur Brown was arrested on the strength of a warrant following the investigation that was carried out on a separate leg of the bigger Fidentia investigation.” It emerged that Brown’s wife (Susan) and children have left South Africa, though the NPA would not say whether Susan was under investigation for any connection to the Fidentia debacle.

As if this were not enough, Brown is already facing a string of charges for his involvement in Fidentia and related affiliate companies. He will appear in Court on 30 May to answer various fraud and related charges involving R2m from the Transport Education and Training Authority (TETA). He still has to answer allegations in the regional court relating to R5.5m allegedly diverted from the Infinity loyalty programme to pay Fidentia operating expenses.

A final decision on the sequestration of his and his wife’s joint estate should be returned by the Supreme Court by 26 May… So it looks like Brown will have his hands full to avoid the fate of co-accused Graham Maddock. Maddock entered a plea bargain with the state in February and is serving an effective seven years in jail.

Editor’s thoughts:
Just when we thought things had settled down on the financial front the outcome of the latest FSB investigation was announced. Although the results of the investigation are not yet known there could be an increase in such cases due to tougher economic conditions. Do you think we will experience an increase in financial scandals as the current economic conditions take hold? Send your comments to or add them below.


Added by JH, 16 May 2008
Why will we not experience more and more scandalous conduct from businessmen in positions of trust when many of the prominent leaders of the country openly get involved in scandalous practices? However, I believe there are still many financially viable and sound investment opportunities available in SA. Not every advisor come business leader come investment company are fraudulent. Many are trustworthy and stable-the challenge is to find them! My philosophy in life is: “Focus on what can be changed! Accept what cannot be changed. Therefore-to stay positive, one needs to be able to adapt or die to changing circumstances.” In other words, there will always be unscrupulous characters out there (cannot change that) It doesn’t mean however, that I should fall prey to them (can control that) Thank you for your news letters.
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Added by TL, 16 May 2008
Why are we complaining?, the people in this country only follow the example that the government has placed there for them. To fix the problems in this country our ministers must start to set an example. Dont we learn from our fathers and other role models—good or bad???. One big difference---If we make an mistake (fica or otherwise we lose everything) If the arseholes in the government screw the whole country it is absolutely nothing and we must shut our faces and smile. Before government and company starts to wave fingers they must sort out the huge stuffed up idiotic mess that they have created.
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Added by JS, 13 May 2008
Verseker is dit net die begin.Met die huidige rentekoers verhogings,inflasie,olieprys en Escom asook die markpryse wat op en af beweeg is dit die tyd dat die Skarmunkels uit hulle gate gerook gaan word.Ek wonder wat word nou van arme Joost vd Westhuizen die aangewese bedryfshoof van die Groep,Mooi le voor.
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