Fidentia curator unfit for any company's board

Dines Gihwala, former curator of failed investment company Fidentia, has been ruled unfit to serve on any company's board.

In a damning ruling handed down on Thursday, the Western Cape High Court branded him a delinquent director.

This was just hours before Gihwala sent his resignation as Fidentia's curator to the Financial Services Board (FSB).

The court ordered the 61-year- old former chairman of law firm Cliffe Dekker Hofmeyr, and Lance Manala, CEO and founder of the Midrand-based Maredi Technology Group, to repay the millions of rands they misappropriated from Swiss investment firm Montague Goldsmith.

"This court has, in the face of the uncontested evidence pertaining to such serious misconduct, no option but to declare Gihwala and Manala delinquent directors, thus guarding the public against such unscrupulous directors," Judge Burton Fourie declared.

Fourie said they were "simply no longer fit to hold the office of director or to be entrusted with the fiduciary responsibility of managing corporate entities".

The finding will be embarrassing for the lawyer, who previously acted for Trevor Manuel and chaired the Independent Regulatory Board for Auditors, which is responsible for ensuring auditors do not take short cuts that harm investors.

First appointed as Fidentia's curator in 2007, he resigned from Cliffe Dekker Hofmeyr in 2011 due to a medical condition.

The judgment is also likely to attract further scrutiny of the FSB's credibility over who it appoints to important portfolios.

Two weeks ago, the FSB's chief financial officer, Dawood Seedat, quit suddenly under a cloud after businessman Edrees Hathurani accused him of extorting R12-million in bribes to make a tax audit into Africa Cash 'n Carry "disappear".

Seedat has denied the allegations, but admitted he was paid R3-million as a "consultancy fee" for assisting Hathurani on certain non-tax forensic work.

In its statement on Thursday, the FSB did not provide any reason for Gihwala's resignation.

Gihwala's departure will fuel FSB critics, including former Fidentia boss J Arthur Brown.

Brown, who was found guilty on two counts of fraud last year and fined R150000, laid criminal charges against Gihwala in 2011, claiming he had done "dubious transactions" with the FSB's blessing.

This week, Brown said "the chickens have now come home to roost", and that FSB members as well as curators who are "corrupt have now been exposed".

When contacted, Gihwala said that he could not comment before speaking to his legal adviser.

However, he said: "I wouldn't want to pre-empt issues, but an appeal cannot be ruled out."

Manala did not respond before the time of going to press.

The judgment could have further repercussions for Gihwala, who could now be struck off the roll by the Cape Law Society.

Rampela Mokoena, director of the Cape Law Society, said: "The society is aware that the judgment in the matter was handed down yesterday, [but] has not yet had an opportunity to consider the judgment, and is therefore unable to comment."

Legal expert Professor Johan Brink, a partner at Webber Wentzel, said: "The Western Cape Law Society will have to consider whether a delinquency order amounts to unprofessional conduct, and if so institute disciplinary proceedings."

This dispute dates back nearly a decade.

In 2005, Gihwala persuaded Montague Goldsmith, run by his ex-friend Karim Mawji, to invest R14-million in two black-empowerment deals for the JSE-listed Spearhead Investment Property and Scharrig Mining.

Mawji claimed Gihwala controlled the empowerment investment through a special-purpose vehicle, and that R3-million of his cash apparently disappeared.

Gihwala and Manala allegedly then refused to account to Mawji for the missing cash.

Gihwala also allegedly added his family trust, which received benefits, without the knowledge of Montague as a shareholder in the special-purpose vehicle.

The judge found that the pair had "grossly abused their positions as directors".

Speaking after the judgment, Mawji said Gihwala clearly had to resign all his posts as "he can't be a director or public officer".

"There aren't any winners in this. Gihwala just played the system, and used every delaying tactic possible," he said.