FSB boss in cleanup mode

2014-07-06 15:00

Financial Services Board (FSB) boss Dube Tshidi was in cleanup mode on Thursday, defending the regulator against attacks on its reputation after the resignations – under a cloud – of Dawood Seedat and Dines Gihwala.

Seedat quit as finance boss after allegations, first reported in Joburg daily The Star, that he took a R12?million bribe from a tax dodger to make a tax audit disappear.

Tshidi said the corruption allegations against Seedat were unacceptable but he needed facts in order to act. To be on the safe side, the regulator has launched an internal audit.

“Without pre-empting the outcome, I think there is no question of the FSB having appointed [the] wrong person; and the investigation will reveal that in time,” Tshidi said.

But convicted fraudster J Arthur Brown, who was handed a “shockingly lenient” suspended sentence and a R150?000 fine for two counts of fraud related to his Fidentia group of companies, claimed it was not the first time Seedat had become entangled in allegations of bribery, and that it did affect his role at the FSB.

“This information was part of many court cases,” said Brown, relating how Seedat only testified in aggravation of sentencing at his criminal trial, making it impossible to cross-examine him.

Seedat previously headed the FSB inspectorate that helped convict Brown, but his testimony in aggravation prompted the judge to say the state mismanaged the case because Seedat should have been the first witness.

Asked if Seedat’s alleged past played a role in this turn of events, Tshidi said: “No inspection at the FSB is done by one individual. It is done by a team.”

The state’s case, filed at the Supreme Court of Appeal, where it is seeking a stiffer sentence for Brown, shows it believed Seedat’s evidence merely confirmed prior testimony by Brown’s co-conspirators, Steven Goodwin and Graham Maddock.

That, together with Brown’s guilty admissions, was enough to send Brown to jail for a long time, the prosecution argued. But the judge disregarded the evidence and focused only on the admissions, resulting in a shorter sentence.

Gihwala resigned as curator of the Fidentia group of companies, where he was appointed by theFSB through a court order, shortly after the Western Cape High Court declared him a delinquent director. The declaration makes him ineligible to hold a directorship for seven years.

Caroline da Silva, the FSB’s deputy registrar, said the board would apply for a provisional order appointing a new curator, then publish this for public comment.

But Gihwala and his co-curator, George Papadakis, struck a deal with the Bermuda-based Global Distressed Alpha Fund to finance a R1.2?billion loss and damages suit against the former trustees and shareholders of the Living Hands Umbrella Trust, which was sold to Brown years ago.

In terms of the deal, Gihwala and Papadakis would be paid R100?000 a month from January 2011 for their assistance with the litigation.

Amish Kika, the trust’s attorney, didn’t respond to requests for comment.

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