Woes are piling up for former Fidentia curator

Dines Gihwala, former curator of Fidentia, is embroiled in yet another legal battle as the Liberty Medical Scheme is claiming R10-million from him for alleged "negligence" when he acted as curator of failed medical scheme Medicover 2000.

This is another blow to the 61-year- old Gihwala, former chairman of lawfirm Hofmeyr Herbstein & Gihwala and former legal adviser to Trevor Manuel, after the High Court last week declared him a "delinquent director" unfit to sit on company boards.

This week, Liberty Medical Scheme's principal officer, Andrew Edwards, confirmed the scheme wanted damages from Gihwala due to what it claims was professional negligence.

"The relief sought is payment of money that Medicover 2000, under curatorship, 'lent' to various companies and close corporations by way of loan agreements," Edwards said.

Edwards confirmed that the claim amounted to "approximately R10 million, including interest".

Medicover, which had 27000 beneficiaries and was first placed in curatorship in April 2001, was merged with Liberty in January 2010.

Gihwala said: "There's a contention that I was negligent and, arising out of my negligence, the firm of which I was chairman is being sued.''

But he argued that, according to his recollection, Ernst & Young were the auditors at the time, and gave the company an unqualified audit.

"They gave me a clean bill of health for the period I was there," he said.

Gihwala said that trustees were also appointed about three years into Medicover's curatorship, and the transactions took place under their authority.

The Council for Medical Schemes supports Liberty's legal claim.

"The causes for complaint took place after Joe [Seoloane, appointed as co-curator] had long left the office and some time after February 2005, but before curatorship was lifted," said spokeswoman Elsabé Conradie.

"The Council for Medical Schemes did receive complaints with regard to Gihwala in addition to raising a concern of its own regarding a conflict of interest due to Gihwala's use of his own law firm, Hofmeyr, Herbstein & Gihwala Inc," she said. He appointed Bell Dewar & Hall to represent him. Further complaints related to the long tenure of curatorship, she said.

This revelation comes after the Financial Services Board (FSB), the regulatory body that appointed Gihwala as curator of Fidentia in 2007, said it was investigating his conduct when curator.

Gihwala expressed surprise on learning of the board's probe. He said the investigation "is absolute news to me. I would welcome that. At least once and for all we can clear the air."

At the same time, the board said it would also investigate Dawood Seedat, its former chief financial officer who quit suddenly under a bribery cloud.

Seedat resigned after African Cash 'n Carry tycoon Edrees Hathurani claimed Seedat "extorted" R12-million from him, saying it was based on the threat to close down Hathurani's business through a tax audit. But Seedat said in a signed statement that while he did "consulting work" for Hathurani and was paid R3-million, this was strictly for nontax work.

Dube Tshidi, CEO of the FSB, confirmed this week that the regulator had launched internal and external audits into financial statements submitted during Seedat's tenure.

Both high-profile resignations have raised questions about the FSB's credibility.

In his ruling last week, Judge Burton Fourie said: "This court has, in the face of the uncontested evidence pertaining to such serious misconduct, no option but to declare Gihwala and [his partner Lance] Manala delinquent directors, thus guarding the public against such unscrupulous directors".