Public Protector Busisiwe Mkhwebane released a report on March 28 that instructed the Financial Sector Conduct Authority (FSCA) to take “corrective action” against a member of its transitional management committee, Advocate Dube Tshidi. Tshidi was formerly executive officer of the Financial Services Board (FSB), forerunner of the FSCA.
The Public Protector’s report found that Tshidi, in his capacity as FSB executive officer, had acted improperly in appointing attorney Anthony Mostert as the curator of several pension funds in 2005 and 2006. These funds had fallen victim to a fraudulent scheme.
On Friday Tshidi and the FSCA filed an application to have these findings set aside. In echoes of a number of recent review applications, Tshidi argues that the Public Protector overstepped her authority, did not provide a satisfactory explanation for why she was investigating matters that had taken place well beyond the two-year window that usually applies, and did not properly take into account his responses to the allegations.
“It is immediately apparent from the report that the conclusions drawn about my conduct and the findings against me are entirely unreasoned,” Tshidi says. “The Public Protector failed to have proper regard, if any, to the extensive information the applicants put before her, and she has failed to give any reasoned justification for her findings.”
He says her findings are “arbitrary”, “irrational” and “unjustified”. In particular, Tshidi argues that the Public Protector did not consider the credibility of the different information she received, and failed to weigh which version was more likely to be true.
“It is therefore impossible to discern whether her findings are pursuant to deductive reasoning, inductive reasoning or any reasoning at all,” he notes.
It is clear that Tshidi considers this a critical failing in light of the background to the Public Protector’s investigation, which was premised on a complaint from the Economic Freedom Fighters (EFF). The EFF had already directly approached the FSB with similar allegations, and had left little doubt as to their source.
“It emerged in these engagements that the true source of the EFF’s allegations was Mr Simon John Nash, one of the chief participants in a criminal pension surplus-stripping scheme, known as the ‘Ghavalas scheme’ [named after the architect of the scheme], which the FSB Inspectorate had exposed in the early 2000s,” Tshidi submits. “Mr Nash is currently facing criminal charges of inter alia fraud, theft and breach of fiduciary duties relating to his involvement in the surplus-stripping scheme implemented in two pension funds for which Mr Mostert was appointed curator.”
The allegations brought by the EFF were not only the same as those Nash had already previously aired, Nash even arrived with the EFF for a meeting with the FSB. Tshidi believes the complaint to the Public Protector is a continuation of attempts by Nash to frustrate the proceedings against him.
“That Mr Nash is motivated by a desire to obstruct his prosecution and the civil claims against him, and in so doing resort to false allegations against the FSB, myself and Mr Mostert in this endeavour, is by now a matter of public record,” Tshidi notes.
These attempts have already been aired and dealt with in a number of court cases. Most recently, Judge Fisher of the High Court in Johannesburg dismissed an application by Nash to stay criminal and civil proceedings against him.
In the judgment handed down in February this year, Fisher noted that: “Mr Nash is involved in a campaign designed to delay determination of his guilt and liability. There was clearly never any merit in any of the relief. The relief was fashioned in a cynical way. Its aim has been and is to delay the process.”
It is important to note that Peter Ghavalas has already pleaded guilty to being part of the scheme. He is expected to testify against Nash in the criminal proceedings.
While this calls into question the origins of the complaint to the Public Protector, the appointment of Mostert as a curator has been the subject of controversy for some time. Concerns have been expressed about the apparent close relationship between Tshidi and Mostert, and the scale of remuneration Mostert earned.
However, while the Public Protector concludes in her report that Tshidi was “biased towards the nomination of Mr Mostert” she provides no reasoning to support this finding.
Tshidi also argues that the Public Protector had no jurisdiction to investigate the complaints. Firstly, this is because they relate to something that happened more than two years ago, and there are no special circumstances to warrant her involvement now.
Secondly, Tshidi believes the questions being dealt with are all matters that have been or will be before the courts.
“The allegations that the EFF made in its complaint to the Public Protector have already been raised in the litany of previous litigation involving Mr Nash, including in his criminal prosecution,” Tshidi argues. “The result is that the Public Protector’s investigation entailed a duplication of public investigative and court-governed processes to pursue – and indeed abuse – parallel processes through the Public Protector’s office.”
Tshidi is therefore not only asking that the court set the findings in the report aside, but that a personal costs order be made against Mkhwebane.
“Had Advocate Mkhwebane performed her duties and functions reasonably and in good faith, as she is required to do, this application would not have been necessary,” Tshidi says. “On the contrary, the report would not have seen the light of day. The levy-paying institutions subject to the Conduct Authority’s supervision and regulation, and which fund the Conduct Authority’s operations, ought not to be saddled with the costs of the application.”