Fidentia boss: I‘m ready to go into battle with curators

Brian Hayward WEEKEND POST REPORTER haywardb@avusa.co.za

DISGRACED former Fidentia boss J Arthur Brown is preparing to do battle for the company he claims has been sunk by its curators, who say as much as R1,6-billion is missing and owed to investors, including thousands of widows and orphans.

In a rare interview, Brown, who started out as an instant lawn salesman in Port Elizabeth before heading to Cape Town to start financial services and technology company Fidentia, said he was in the process of mounting a legal battle against the “questionable curators” in a bid to have them removed, to save what was left of the company.

Brown, 38, along with his lawyer Rashad Khan, is busy preparing an application due to be presented to the Cape Town High Court early next month in which he requests that all the charges against him be consolidated, ending what he called “constant re-arrests for ambiguous allegations”.

He is also asking the judge for a full- blown, independent investigation into how Fidentia curators Dines Gihwala and George Papadakis, appointed by the Financial Services Board (FSB) in February last year, have sold off Fidentia assets and companies at a fraction of their worth – in some cases as little as 10 per cent of their values prior to curatorship – in an attempt to recoup investors‘ money they say is missing.

“Under a normal curatorship, the investors are the claimants and must be given the first option with their investments, but (the curators) have been intent on knocking the companies down with no interest in preserving investors‘ money,” Brown said. “We have written the FSB many letters saying I am willing to show how to manage the assets and find the value to pay the investors. There was enough to pay the investors twice over (before curatorship).

“Instead, Mr Gihwala has said I am a nuisance. They did not understand or even accept our biz model.”

After about 22 months of curatorship, just over R300-million has been recovered.

One of the Fidentia-owned companies waiting for answers from curators is Antheru Investment Trust, consisting of about 200 entities, trusts, as well as private investments. According to trustee Herman Heydenrich, curators have kept mum about their non-payment to investors.

Brown also questioned the friendship between Gihwala and Finance Minister Trevor Manuel, as well as his friendship with former FSB head Robert Barrow, calling it a conflict of interests – accusations Gihwala has called “scurrilous and malicious”.

“I have known Trevor Manuel for many years. I do not regard him as a friend,” Gihwala said. “I have no close friendship with Rob Barrow as is being suggested. Mr Brown has frustrated the disposal process endlessly. We have sold assets at the highest possible price through a transparent process.”

Gihwala said investors would receive “some return”, though he could not say exactly what the amount would be. By law, curators – instructed to control, manage and preserve the assets on behalf of the investors – stand to make up to 10 per cent commission on sales of company assets.

Brown believes Fidentia was “maliciously targeted” by the FSB after the company wrote a letter to the watchdog questioning “large institutions breaching the Unit Trust Act” prior to their investigation by the FSB in 2006.

“We raised the issue with the FSB, but we were ignorant to think they would take them (the big companies) to task. It has cost me and my staff dearly,” Brown said.

After spending almost six months in Cape Town‘s notoriously violent Pollsmoor Prison, Brown was granted R10000 bail late last month, after several previous applications were denied. He is due to appear in the Cape regional court on December 10 for the first of three embezzlement cases involving Fidentia companies Fundi and Infinity.

But although his incarceration was not without trauma – he was allegedly raped en route to court in the back of a police van in May – Brown remained resolute about his goal to clear his name and meet his “moral obligation” to see that investors are paid their dues and family and friends who have stood by him are vindicated.

“The difference between a successful life and one that isn‘t is how you handle the tough situations,” he said this week. “If I‘m going to lie down and do nothing, then I will be showing no character.

“I would be lying if I said this wasn‘t tough or didn‘t have a profound effect on my life, (but) I have an obligation to (former Fidentia) staff and to the pensioners who invested with the company, to ensure they are paid out. I also have an obligation to my family and those who have stuck by me to get the truth out.”

Brown said he wanted his day in court. “The fight with the curators and the FSB is not personal or to get even,” he said. “I have never been given an opportunity to answer to the allegations – and they are just allegations. The curators were supposed to do an investigation. The normal course (of curatorship) would include the defendant‘s having the chance to answer the FSB in court, but to date I have not had that chance.”

Brown maintains the money was never missing and just before Fidentia was plunged into curatorship last year, the company was worth a whopping R3,5-billion plus a further R1-billion portfolio value. “They (the curators) have manipulated public opinion and made irresponsible statements, such as me stealing billions where there‘s nothing to show I have stolen even R1-million.

“What it‘s worth now I can only speculate, but the curators believe they can only get back R300-million and they‘re selling companies off at only 10% of their value. Those companies are worth a heck of a lot more than what we paid for them. If we were involved in the process, those companies would have seen their full value realised.”

Because of the high-profile case, Brown‘s wife Susan – whose parents live in Port Elizabeth – and the couple‘s two children, have moved to Australia until the case is over, which could take three years or more.

“I cannot visit them because of my bail conditions, so this is far from an ideal situation,” said Brown, who has taken up consulting for emerging businesses.

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