THE whereabouts of cash that the Financial
Services Board (FSB) had flagged as having been transferred to offshore
bank accounts during the fraud perpetrated by the Fidentia group of
companies is close to being identified. Thanks to the Panama Papers
released globally at the weekend, the case could now be brought to
finality.
Among 11.5-million records and documents — leaked to
reporters at German newspaper Süddeutsche Zeitung and distributed by the
International Consortium of Investigative Journalists — are details of
offshore companies created on behalf of former Fidentia accountant
Graham Maddock and broker Steven Goodwin.
In 2013, while testifying in aggravation of Fidentia mastermind J Arthur Brown’s sentence in the High Court in Cape Town, former FSB chief financial officer Dawood Seedat said its inspection into Fidentia’s affairs had found various transfers were made to offshore bank accounts, held in the name of entities related to the group and to Brown.
"We basically say that these transactions were not yet investigated, and further investigations need to be done on these," Mr Seedat said.
FSB spokeswoman Tembisa Marele indicated on Monday the Panama leaks might prompt further investigation or action from the regulator.
"The FSB investigated Fidentia in 2007-08, and found that while there were foundations set up with Panama links, no funds flowed to those foundations," she said.
"In light of these developments, the FSB will once again look into the matter to see if further investigation or action is warranted."
The Panama Papers leaks show Maddock, who acted as the group’s accountant before he was arrested in 2008, had paid Panama law firm Mossack Fonseca $59,000 to establish two offshore companies including Fidentia North America.
Mossack Fonseca also created offshore structures for Goodwin, who was arrested in 2009 after escaping to Australia and the US, where he tried to dodge extradition back to SA.
Separately from the Fidentia matter, the documents also showed businessman Khulubuse Zuma, a representative of Caprikat — which acquired oil deals in the Democratic Republic of the Congo under a cloud of controversy — had also used Mossack Fonseca’s services.
But his spokesman Vuyo Mkhize said on Monday what was revealed by the Panama papers, at least as far as South Africans were concerned, was not new, and the level of "hype" in the South African media was unusual.
"The matter … has been in the news for the past six years, and Mr Zuma confirmed that as far back as 2010," Mr Mkhize said.
"The use of offshore companies and tax havens is normal in the business world, some of whom operate in the mainstream in the JSE," he said.
"Many of these people (in the Panama Papers) allegedly hold bank accounts; nothing of the sort is alleged against Mr Zuma," said Mkhize. He said Mr Zuma "doesn’t hold an offshore bank account; he doesn’t now, and he never did".
Maddock and Goodwin were sentenced to seven and 10 years, respectively, for charges including fraud, theft, and money laundering, as part of plea bargains with the state. In addition to this, Maddock had to pay back R6.3m of his criminal proceeds.
However, curators appointed to recover about R1.12bn for Fidentia’s victims — including a fund that administers death benefits for the affected widows and orphans of mine workers — from what remains of the group have battled to get Maddock to pay up, according to reports filed with the court. The reports show curator George Papadakis wrote a legal letter to Maddock, demanding payment of the balance of R3.76m from his plea agreement. Maddock declined to pay this.
Mr Papadakis thereafter launched legal action, prompting Maddock to settle the bill with a R2.4m payment.
Brown was sentenced to 15 years in prison two years ago, after the Supreme Court of Appeal overturned the High Court in Cape Town’s four-year suspended sentence and fine of R150,000.
In 2013, while testifying in aggravation of Fidentia mastermind J Arthur Brown’s sentence in the High Court in Cape Town, former FSB chief financial officer Dawood Seedat said its inspection into Fidentia’s affairs had found various transfers were made to offshore bank accounts, held in the name of entities related to the group and to Brown.
"We basically say that these transactions were not yet investigated, and further investigations need to be done on these," Mr Seedat said.
FSB spokeswoman Tembisa Marele indicated on Monday the Panama leaks might prompt further investigation or action from the regulator.
"The FSB investigated Fidentia in 2007-08, and found that while there were foundations set up with Panama links, no funds flowed to those foundations," she said.
"In light of these developments, the FSB will once again look into the matter to see if further investigation or action is warranted."
The Panama Papers leaks show Maddock, who acted as the group’s accountant before he was arrested in 2008, had paid Panama law firm Mossack Fonseca $59,000 to establish two offshore companies including Fidentia North America.
Mossack Fonseca also created offshore structures for Goodwin, who was arrested in 2009 after escaping to Australia and the US, where he tried to dodge extradition back to SA.
Separately from the Fidentia matter, the documents also showed businessman Khulubuse Zuma, a representative of Caprikat — which acquired oil deals in the Democratic Republic of the Congo under a cloud of controversy — had also used Mossack Fonseca’s services.
But his spokesman Vuyo Mkhize said on Monday what was revealed by the Panama papers, at least as far as South Africans were concerned, was not new, and the level of "hype" in the South African media was unusual.
"The matter … has been in the news for the past six years, and Mr Zuma confirmed that as far back as 2010," Mr Mkhize said.
"The use of offshore companies and tax havens is normal in the business world, some of whom operate in the mainstream in the JSE," he said.
"Many of these people (in the Panama Papers) allegedly hold bank accounts; nothing of the sort is alleged against Mr Zuma," said Mkhize. He said Mr Zuma "doesn’t hold an offshore bank account; he doesn’t now, and he never did".
Maddock and Goodwin were sentenced to seven and 10 years, respectively, for charges including fraud, theft, and money laundering, as part of plea bargains with the state. In addition to this, Maddock had to pay back R6.3m of his criminal proceeds.
However, curators appointed to recover about R1.12bn for Fidentia’s victims — including a fund that administers death benefits for the affected widows and orphans of mine workers — from what remains of the group have battled to get Maddock to pay up, according to reports filed with the court. The reports show curator George Papadakis wrote a legal letter to Maddock, demanding payment of the balance of R3.76m from his plea agreement. Maddock declined to pay this.
Mr Papadakis thereafter launched legal action, prompting Maddock to settle the bill with a R2.4m payment.
Brown was sentenced to 15 years in prison two years ago, after the Supreme Court of Appeal overturned the High Court in Cape Town’s four-year suspended sentence and fine of R150,000.
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