The Financial Sector Conduct Authority (FSCA) is taking the Public Protector report on the conduct of its erstwhile executive officer, Dube Tshidi, on review.
Public Protector Busisiwe Mkhwebane found that several complaints laid against Tshidi by EFF leader Julius Malema had been substantiated following her office’s investigation. The complaints mainly centred on the nomination and recommendation for appointment of curators once pension funds have been placed under curatorship.
The complaint was laid in 2017 and accused Tshidi of acting improperly in the appointment of a “particular” attorney, Anthony Mostert, who, in his role as curator, allegedly unduly paid himself an amount in excess of R188 million in curator fees and almost R45 million in legal fees.
Tshidi, now a member of the Transitional Management Committee of the FSCA (previously the Financial Services Board), referred to the official statement of the FSCA when asked for comment.
Public Protector ‘yet to respond’
In the statement, the FSCA states that Tshidi has made comprehensive submissions to which the Public Protector is yet to respond. “The FSCA finds the report to be riddled with inaccuracies, which indicate that the Public Protector did not take into account any of the submissions made.”
As part of the remedial action following her investigation, the Public Protector wants the FSCA to start with a process that will ensure “wider and a representative” number of curators to nominate from.
She also calls for “corrective action” against the officials implicated in her report, but fails to mention who they are.
Ghavalas funds’ curator
The complaint stemmed from the appointment of Mostert as curator in all the so-called ‘Ghavalas funds’, named after ex-banker Peter Ghavalas who devised the scheme that saw several pension and provident funds being stripped of their surpluses.
In the scheme, pension fund money was illegally released to the controlling company of the funds. Ghavalas received 30% of the surplus and the balance was channelled to the employers who participated in the scheme.
Ghavalas has turned state witness in subsequent ongoing and protracted criminal and civil court proceedings against Simon Nash, one of the alleged beneficiaries of the scheme. Nash – together with his company, Midmacor Industries – is accused of fraud, theft and various statutory contraventions. Nash has denied these allegations.
Mostert’s first appointment as curator was in 1998, when he was appointed curator of the Corporate Acceptance Finances (CAF) Pension Fund. In 2005 he was appointed as curator of the Mitchell Cotts Pension Fund, apparently the first victim of the Ghavalas scheme. This was the first of many funds to end up under curatorship.
Tshidi said in his submissions to the Public Protector that the appointment of Mostert did not fall foul of the legal framework within which the Financial Services Board (now FSCA) nominates and recommends curators who are then appointed by the high court.
His attorney – in response to the allegations that Tshidi favoured Mostert – said that the nomination of one suitable experienced and skilled person as a curator in [multiple] funds affiliated by the same unlawful scheme is “reasonable, rational and logical”.
However, Mkwebhane found that based on the information and evidence obtained during her investigation it could be concluded that there were improprieties in the nomination and recommendation of people to be appointed as curators.
Conflict not illegal but ‘frowned upon’
She also found that Tshidi failed to discharge his regulatory duty to properly manage the perceived conflict of interest between Mostert’s role as curator and the appointment of his own law firm.
Although the high court did not find this illegal, it did say that there is the perceived view that Mostert benefitted twice. In an earlier case between Tshidi and the Cadac Pension Fund, the court found that the practice of a curator appointing a law firm in which they have a direct interest should be frowned upon.
Mkhwebane found that the court had already “determined” that there was a conflict of interest between Mostert being a curator and using his own firm to litigate on behalf of the pension funds under his curatorship.
“It can thus be concluded that the EO [executive officer, Tshidi] failed to properly manage this conflict.” She also found that he misled the minister of finance and Parliament when he answered questions relating to the administration of the funds under curatorship.
Substantial submissions made
Mostert told Moneyweb last week that he had submitted “detailed and lengthy” submissions to the Public Protector in March this year.
He previously brought an interdict against the publication of her interim findings, but withdrew the application following her undertaking to give him the opportunity to make further submissions.
Mostert said that despite his additional submissions, which included “some 12 000 pages of affidavits filed in previous court proceedings”, the Public Protector simply repeated the interim findings in her final report.
“The Public Protector’s findings are premised on false and factually incorrect allegations, the integrity of which have been placed into question and appears not to have been properly investigated and considered by the Public Protector,” Mostert said.
“There is little doubt that the finding of the Public Protector will be set aside on review,” he said.