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The South African justice system has a, let’s say, inconsistent ability to serve justice on some of the most seemingly obvious of crimes. So it is with great relief that the prison sentence served on J. Arthur Brown, former Fidentia boss and plunderer of the Living Hands Trust, was received. The first time around Western Cape High Court Judge Anton Veldhuizen initially sentenced Brown to a R150 000 fine or a jail sentence for two counts of fraud to which he had admitted guilt. Fortunately the National Prosecuting Authority saw fit to appeal this ‘slap on the wrist’ and as of Monday, the rest is history. Alec Hogg talks to Gerry Anderson, chief operating officer of the Financial Services Board about this new verdict. – CP
ALEC HOGG: The Financial Services Board has welcomed the sentencing. The Body’s Chief Operating Officer; Gerry Anderson is with us in the studio. Justice, Gerry?
GERRY ANDERSON: Firstly, good afternoon, Alec. Yes, we welcomed the verdict and we believe that after a long slog, of eight years, white collar crime has been punished.
ALEC HOGG: How did it happen that he got that slap on the wrist first time round, and that you had to go through this whole appeal process to see justice done?
GERRY ANDERSON: Prosecuting Authority, I think, vindicated itself by going to the Appeal Court. Things happen and justice must take its turn, but I think at the end of the day, everybody that was hoping that vindication will come for taking and destroying hundreds of millions of Rands of Widows & Orphans Benefits has, eventually, succeeded.
ALEC HOGG: Have you done anything in changing the regulations or the laws, to prevent this happening? Both of us have been around the block a few times. I remember talking to Rob Barrow at length, about Fidentia, before the whole scandal broke, and at the time, there wasn’t a lot you could do. I think he did investigate, but it was difficult to close them down early enough.
Watch Power Lunch from Tuesday:
GERRY ANDERSON: Well, let’s just go through the background a little bit. We were informed – Rob and I – at the same time, by each receiving an anonymous letter in February 2006, that something is not right here. We launched an investigation after engaging with the company, and the investigation took a whole lot of months from May to about October, and then we presented them with our findings. From then on, it led into a curatorship, which was eventually done to try and preserve the monies for the beneficiaries, in February 2007.
ALEC HOGG: Rudi Bam, former Director of the Johannesburg Stock Exchange who, somehow, got himself involved with Fidentia…he was the whistleblower. Has any support been given to him, subsequent to this?
GERRY ANDERSON: My understanding is that Rudi finds himself in Australia now, and the curators were seeking to recover funds from him.
ALEC HOGG: From him as well?
GERRY ANDERSON: As well… It was a fallout because he was one of the early directors of Fidentia Asset Management.
ALEC HOGG: So he’s not squeaky clean either?
GERRY ANDERSON: Well, I can’t…
ALEC HOGG: What do you think of J. Arthur Brown? I ask this because in what he said to the court. First of all, he contradicted himself a lot, i.e. ‘I have a BCom degree. Sorry, I only went to university for two years. I didn’t pass all my subjects’. Then he talks about Warren Buffett as being his role model, and completely gets wrong what Buffett was doing. You’ve had a chance to analyse him carefully. Is he a genius, criminal mastermind or just a crooked fool?
GERRY ANDERSON: That’s a heavy question and I don’t think I want to be led into that, but we feel that he didn’t deal, as you’ve read in the Judgement of the Appeal Court. He was dealing with Trust money… Trust money of whom very poor people were beneficiaries, and he should have had the savvy (I believe and in my personal view), to deal with that Trust money as he should have, and he didn’t.
ALEC HOGG: But you’re being very generous. It came out in court papers that he bribed people, the trustees, to turn their head the other way for instance, so that he could take that Trust money and use it elsewhere. This is a pretty open and shut case, Gerry.
GERRY ANDERSON: Well, that’s the evidence and that’s the evidence that was part of our inspection findings as well, that things were not right and that he should serve his time for doing that. However, it must also serve as a warning to other white-collar criminals, who think they may get away with trying to feast money out of poor individuals. These weren’t even investors.
GUGULETHU MFUPHI: To go back to Alec’s question, certainly this has raised loopholes, from a regulatory perspective, that maybe we need to tighten here.
GERRY ANDERSON: Yes, I’ve got two answers for that. First of all, up to 2008, Beneficiary Funds were not regulated. One of the early actions we took was to bring Beneficiary Funds under the regulation of the FSB, the Savings Pension Fund, so from 2008 onwards that’s the law and Beneficiary Funds, like the Living Hands Trust, are now required to be regulated. Otherwise, Pension Funds can’t place beneficiaries’ monies into the Trust Fund.
ALEC HOGG: So it can’t happen again.
GERRY ANDERSON: It can’t happen again.
ALEC HOGG: The other question, Gerry, is what happened to all those people who were around Brown? We know Maddock went to jail. What about Danisa Baloyi?? She brought him huge amounts of credibility and she seems to have got away with this scot-free even though she stood with him – very close to him – during those early days.
GERRY ANDERSON: I’m sure the NPA has looked at her activities and taken a decision, which is in their domain.
ALEC HOGG: So are you saying that one guy did all of this? Those who stood…
GERRY ANDERSON: No, it was his team and a lot of them have either paid it back or got fined, like Mr. Maddock, Mr. Goodwin, etcetera.
ALEC HOGG: Some of them went to jail as well.
GERRY ANDERSON: Some of them went to jail. Maddock went to jail.
ALEC HOGG: And he’s now got 15 years. Do you believe that the sentence befits the crime now?
GERRY ANDERSON:I believe so, yes.
GUGULETHU MFUPHI: Well, on that note, certainly justice has been served. Thank you so much to Gerry Anderson, COO of the FSB.
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