Fidentia: now for curators' cut
The potential windfall from the billion-rand claim against the former shareholders, trustees and directors of the Living Hands Trust looks massive for the trust's beneficiaries, who have so far received little of their money. That is until you look a little closer.
The trustees are suing altogether 19 defendants in the case - including Investec Bank, Old Mutual, J Arthur Brown and prominent businesswoman Danisa Baloyi - for acting recklessly or negligently in the sale of the then Mantadia Asset Trust Company (Matco) to the Fidentia Group.
This, they said, led to a loss of R1.1-billion in beneficiary funds.
They are also claiming damages of R93-million, bringing the total claim to about R1.2-billion.
But if the trustees win, the beneficiaries will see only just under half of that money. In an addendum to a report of the Fidentia curators dated April 2011, four short paragraphs explain how the litigation will be funded.
The co-curators, Dines Gihwala and George Papadakis, had entered into a funding agreement with the Global Distressed Alpha Fund III Partnership Limited, a little-known fund that was registered in the Bermuda islands, in April 2010.
In terms of the deal, the fund would finance the litigation in return for half of the net proceeds from the claim. It would also pay Gihwala and Papadakis R100000 a month each from January 2011 for their "assistance with the litigation". This would rise 10% each year.
So far, the curators have pocketed R3-million each, despite the case hitting many speed bumps since summons was issued in October 2010. By March, the trust had lodged an amended claim, and was awaiting a court date.
Wilna Lubbe, one of Living Hands's current trustees, said the court battle would take a long time, costing a lot of money.
"I couldn't in my right mind, after over 20 years of litigation in private practice, expect the trust to fund this litigation."
In some of the cases she took on, claimants would spend years in court, at great cost, and end up with "absolutely nothing". For this reason, she believed the Global fund was justified in taking a 50% cut.
"Why would an international fund take this kind of risk for 10%?"
She declined to comment on the curators' cut, saying this was between them and the fund. "We had no say in that."
Gihwala said Papadakis worked out the deal with Global.