Goodwin probed on financial licence

Cape Town 310111 Former Fidentia boss J Arthur Brown, who is facing multiple fraud charges leaving the Cape Town High Court penniless not able ot pay for the leagal fees. picture : neil baynes

Cape Town 310111 Former Fidentia boss J Arthur Brown, who is facing multiple fraud charges leaving the Cape Town High Court penniless not able ot pay for the leagal fees. picture : neil baynes

Published Mar 6, 2013

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Cape Town - A broker for Fidentia sold investment services on behalf of the company without seeing its financial licence, the Western Cape High Court heard on Wednesday.

Steven Goodwin was asked by former Fidentia boss J Arthur Brown's lawyer whether the business had a licence to operate from the Financial Services Board.

Goodwin replied that when the Transport, Education, and Training Authority (Teta) asked him whether Fidentia had a licence at the end of 2006, he reverted to Fidentia and they forwarded him a copy.

“You sold Fidentia to pension funds. How, possibly, could you sell that to them 1/8before 2006 3/8 and not know if they had a licence?” lawyer Braganza Pretorius asked him.

Goodwin said he believed they had one because that was what he was told.

“I assumed the licence they had was a licence to sell funds.”

Pretorius showed a copy of Fidentia's financial services provider licence, stated the licence number was 569, and that it was certified in September 2004.

It listed Fidentia as a discretionary financial services provider.

Pretorius and Goodwin agreed this meant an investment manager could decide what to do with a company's funds without contacting it for approval every time.

The lawyer said the licence gave Fidentia broad authority in dealing with money market instruments, which were linked to a fixed capital or yield.

He asked Goodwin for examples of these instruments.

“A promissory note would be one,” he replied.

A bond or secure deposit were other such instruments.

Pretorius asked if it was acceptable to put these instruments in the name of a nominee or leave it blank, rather than put it in the name of the original investor.

“That's common practice,” Goodwin replied.

The lawyer asked if this would apply to Fidentia Asset Management (Fam), if it had put investments in other names.

“That may be a transgression of the mandate (between Fam and a company) but not of the licence, bearing in mind that I'm not an expert. I'm on thin ice here,” Goodwin said.

“So what you're saying is we can take your opinion with a pinch of salt?” Judge Anton Veldhuizen asked. Goodwin agreed.

Brown sold Teta's promissory notes worth R100.3 million, allegedly without Teta's approval, and the money was placed in his accountant's account.

The State alleges that instead of re-investing this money for Teta, he used some of the proceeds for other purposes, including buying vehicles and properties. - Sapa

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