FSB bribery scandal casts doubt on watchdog

2014-06-22 15:00

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Dawood Seedat, the former chief financial officer of the Financial Services Board (FSB), has got himself entangled in a bribery scandal – raising questions about the integrity of watchdogs.

His resignation from the financial services regulator – charged with ensuring financial service providers abide by the law, that directors of JSE-listed companies do not trade shares using insider info and that they tell the truth in their regulatory releases to the market – comes less than a year after former SA Revenue Service (Sars) commissioner Oupa Magashula resigned, reportedly to protect the reputation of the taxman ­after a jobs-for-pals scandal.

Seedat – who led the FSB investigation into the Fidentia group of companies that helped convict CEO J Arthur Brown on fraud charges late last year – quit in the wake of “corruption allegations that have been levelled against him in his personal capacity”.

On Friday, The Star newspaper ­revealed the extent of the allegations, posting a video on YouTube of Seedat taking delivery of two boxes from the envoys of Africa Cash & Carry CEO Edrees Ahmed Hathurani.

Hathurani alleges that inside the ­boxes were the last instalments of a R12 million bribe Seedat extorted from him to make a tax audit of more than R200 million go away. Hathurani has had previous run-ins with Sars, which obtained a judgment of more than R580?million against him four years ago.

Seedat previously worked as a ­specialist consultant at Sars.

The financial services regulator would not be drawn on what took place in the video: “The FSB is not in a position to comment on the nature of the activity that appears in the YouTube video ­involving Mr Seedat,” said Tembisa Marele, its spokesperson.

Asked if it was enough to accept a person’s resignation without first conducting a full investigation, she said: “The FSB had no reason not to accept Mr Seedat’s resignation as he had stipulated the reasons were of a personal nature.

“The FSB has said in a statement that an investigation is currently under way to ascertain whether the allegations against Mr Seedat had any impact on his employment relationship with the FSB.”

The findings of this investigation would be dealt with within the parameters of the regulator’s mandate, she said.

The JSE, which works closely with the FSB, would not answer questions on how the allegations against Seedat ­affected its working relationship with the regulator. Michelle Joubert, its head of communications, referred questions back to the FSB.

Sars spokesperson Marika Muller said taxpayers should be aware no single ­individual in or outside Sars could make an audit go away. “Audit and settlement procedures are established in law, and technical and oversight committees ­exist within Sars to ensure proper internal governance procedures are adhered to,” she said. “Sars’ efforts to ensure proper governance standards over its processes and to build institutional ­integrity are reviewed by the Auditor-General’s office annually.”

This left little room for abuse, but Sars could only caution taxpayers to be aware that anybody offering to fix tax problems by bribing officials was ­attempting fraud and corruption.

Seedat and his attorney did not ­respond to requests for comment by ­Friday afternoon.

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