Fidentia chair finally speaks out

Some two weeks after his company was placed under the care of curators, Fidentia Holdings chairman Mr J Arthur Brown finally spoke to the press earlier this week. The most worrying aspect of his response is the timing of it. Why did Brown wait so long

One would have expected Brown and other senior Fidentia staff to have issued statements and press releases on the day of the court ruling. Instead, nothing was forthcoming at all.

Fidentia chairman denies any wrongdoing

In a radio interview with Bruce Whitfield, Brown spoke about the various allegations directed at him and his various companies.

Brown denied any wrongdoing and suggests that the FSB and press have been distorting the facts and painting Fidentia in a bad light. When asked if the allegations that he used company funds for his own enrichment were true, Brown said:

"Look, I can't comment on what the curators say or didn't say, because whenever I ask the curators whether they made the statement, they claim not to have. However, the facts are quite simple. I don't have any personal assets that I didn't acquire through my salary or my dividend that I received out of the company, which isn't grossly inflated."

The rest of the interview revealed some interesting insights into the man who headed a company responsible for billions of rand in investor funding. He believes that investments in private equity companies constitute a conservative investment strategy, and claims that unit trusts did not offer good returns over the past 5 years.

The Financial Services Boards responds

Brown's comments to various newspapers and his interviews on radio spurred the Financial Services Board (FSB) to issue a media statement justifying their actions.

"With reference to the media statements and interviews by Mr J Arthur W. Brown, the Financial Services Board reiterates that based on the information in its possession, which mainly emanated from an extensive inspection into the affairs of Fidentias licensed investment management company, there was every justification for the FSB to have applied to court for a provisional order placing Fidentia's financial services business into curatorship."

The FSB goes on to mention that no less than four meetings were held with Fidentia's legal representatives between the time that the FSB inspection report was completed and the matter was brought to the High Court. Fidentia was unable or unprepared to provide information to refute any allegations contained in the report.

Playing the waiting game

Nothing is certain in this case except that it will take time to unravel. The FSB's inspection started in July 2006 and took almost 6 months to complete. We will have to wait for the curators to report back to the High Court before we gain more insight into the magnitude of the Fidentia scandal.

The curators will report back to the Cape High Court on 27 March 2007, at which time a further decision will be made on Fidentias future. There has still been no indication as to whether criminal charges will be brought against any of Fidentia's staff.