In a 96-page report, Public Protector Busisiwe Mkhwebane has supported a complaint brought by the EFF, roundly castigating Financial Services Board (FSB) officials for a wide variety of failures over a decade and more.

The report, one of several published in late March, deals with long-standing arguments and complex issues over which there have been a series of accusations and counter-accusations over the years. They involve allegations of favouritism and massive overcharging for legal and administrative services.

Because the subject matter is so arcane, the report has received little publicity, but its implications are significant for the enormous pensions fund industry in which there has been a series of significance scandals and disasters.

Mkhwebane has been pilloried for previous interventions in matters of finance, but this report will arguably boost her standing and its findings are likely to get wide support from the industry, which has for years complained in hushed tones about the bizarre and at times threatening approach of the FSB, which until recently oversaw the non-banking side of the financial services industry.

The issue is somewhat moot because the FSB has been merged into a new body, the Financial Sector Regulation Authority (FSRA), which has a much wider ambit since 2018. But it remains relevant because the main target of the report is former FSB Executive Officer Dube Tshidi, who remains a member of the transitional committee of the FSRA.

The investigation was initiated by EFF leader Julius Malema, and Mkhwebane found overwhelmingly in favour of Malema’s complaints. In a brief statement, the Financial Sector Conduct Authority (FSCA) said it was taking the report on review and it said “Adv Tshidi made comprehensive submissions to which she is yet to respond. The FSCA finds the report to be riddled with inaccuracies which indicate that the PP did not take into account any of the submissions made.”

Yet, at the heart of the report lies longstanding critiques from the press and the industry made against Tshidi for his very close relationship with a high-profile attorney, Tony Mostert, who contrived to corner a fantastically lucrative market working on an unusual set of pension funds assigned to him on the advice of Tshidi.

In one particularly creepy episode, Mkhwebane recorded how Tshidi came close to threatening industry stalwarts Alexander Forbes and Sanlam with the withdrawal of their licences if they didn’t conform with Mostert’s approach in a number of matters.

Tshidi wrote to Sanlam, saying at one point, “your co-operation on this matter will be closely scrutinised by this Office …” to which then Sanlam CEO Johan van Zyl responded, “It is difficult not to interpret it (the comment) as a veiled threat to use your statutory power against Sanlam if we do not act as requested …”. On this issue and many others, Mkhwebane found Tshidi’s approach “irregular”.

The issues involved go back a decade and more. But the central allegation that emerges from the report is that Mostert kept getting appointed a curator of various troubled pensions funds, and in addition managed, for reasons not clarified in the report, to get a fantastically and suspiciously lucrative mandate from the board.

When the allegations arose over the years, Mostert and Tshidi separately responded with vengeful anger, protesting vehemently that they had done nothing wrong and threatening legal action. Much of that approach is visible in the report, and it’s certainly true that the lines in certain cases are blurry, and it’s possible in some areas their arguments are not devoid of truth.

For example, Tshidi agreed to give Mostert a contingency deal in winding up several pension funds. In terms of the deal, Mostert would keep 25% of the fund recovered within certain limits, and he was also permitted to use his own law firm as the acting attorneys, effectively getting paid both as curator and legal enforcer. Later court cases found the FSB was entitled to enter into contingency arrangements, where legal work is done for a proportion of whatever is recovered.

But the report says that by 2011, Mostert was alleged to have earned in person and/or through his firm, close to R240-million (R188-million in curator fees and R45-million in legal fees) over the previous six years. Further, it was suggested that the amounts earned by Mostert between 2011 and 2019 were not known, as both Mostert and Tshidi steadfastly refused to make any disclosure whatsoever of the amounts earned.

Details of these issues became topics of public dispute and the steady undercurrent of publicity resulted in several questions being asked in Parliament. In one, the Minister of Finance was asked what fees had been paid in what cases.

Tshidi’s response was essentially that no fees had been paid, which Mkhwebane classed as evasive. Tshidi’s response in the report was that this was true, because what was gained was earned on a contingency, not fee, basis. Mkhwebane didn’t believe him.

Mkhwebane recommended as remedial action that the FSCA must have a competitive bidding process for curatorships and more active policy for their appointment.

But the significance of the report lies deeper: the conclusion is unavoidable that there is another crucial organisation that was captured, battered and harvested – and the perpetrators have got away with a slap on the wrist. DM