Sygnia bosses in conflict of interest query
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JOHANNESBURG – JSE-listed asset management company Sygnia’s directors may be caught up in a perceived conflict of interest after chief executive Magda Wierzycka and non-executive director Andre Crawford-Brunt set up a competing registered business in the UK.
Wierzycka and Crawford-Brunt are the two directors of Braavos Investment Advisers, a company incorporated on October 16 last year with the registered office in London, UK.
A conflict of interest describes a situation where two or more interests are legitimately present and competing or conflicting.
At the time Braavos was incorporated Wierzycka was, and still is, the chief executive of Sygnia and, according to a Sygnia investor who preferred to remain anonymous, they might have had board approval “and this should have been announced”.
No announcement was made in this regard.
They did, however, announce a related-party transaction in March where Braavos was entering into a contract with Sygnia Asset Management UK and Sygnia Life, but at no point did they declare a possible conflict of interest by allowing Wierzycka and Crawford-Brunt to set up the competing business in London.
The JSE’s code of ethics dictates that executives should remain transparent and honest in all professional and business relationships and should not allow bias, conflict of interest or undue influence of others.
JSE director of issuer regulation Andre Visser said the agreements were treated pursuant to related party provisions of the JSE listings requirements and accompanied with two fairness opinions from an independent expert.
Visser then referred to the Stock Exchange News Service (Sens) statement announcing the related-party transaction.
When reached, Wierzycka said: “Before you venture down the path of further defamation let me state the following: all necessary disclosures were made to the board of directors of Sygnia Life and the JSE. All necessary approvals were formally granted by the board of directors and the JSE. All disclosures as per the JSE listing requirements were made to shareholders.”
She was responding to questions posed to her on why Sygnia shareholders were not notified at the time of the incorporation of Braavos in October 2019. Wierzycka did not comment on what Sygnia Asset Management’s function was and what clients it currently had.
The concern raised by the investor is that on October 16, when Braavos was incorporated, the shareholders were never informed. They only found out about the Braavos incorporation when Sygnia announced related-party transactions “and that is procedurally flawed”.
The Financial Services Conduct Authority’s (FSCA’s) divisional executive of conduct of business supervision, Kedibone Dikokwe, said financial service providers (FSPs) were required to avoid conflict of interest.
“In instances where this is not possible, to mitigate any conflict of interest an FSP must in writing disclose to clients the conflict of interest and measures taken in accordance with the conflict of interest management policy of the provider to avoid or mitigate the conflict.
"A provider must publish its conflict of interest management policy in appropriate media and ensure that it is easily accessible for public inspection at all reasonable times,” she said.
Dikokwe, however, said there was no requirement for FSPs to make the FSCA aware of the incorporation of off-shore entities. “They only have to notify us if any information that they have provided in their application forms changes. The FSCA would assess whether the entity has disclosed the conflict of interest to clients… and that it does not result in unfair outcomes for investors,” she said.
The Sens announcement stated that Braavos, whose two directors are Wierzycka and Crawford-Brunt, would enter into a services agreement with Sygnia Asset Management UK, a wholly owned subsidiary of Sygnia.
“Sygnia Life Limited, a wholly owned subsidiary of Sygnia, intends making investments into Braavos Capital I Limited Partnership (BC I LP) and Braavos Capital II Limited Partnership (BC II LP). BC I LP and BC II LP are venture capital/private equity funds registered in Guernsey, each having a maximum duration of four and 10 years respectively. The investments into the funds are to be made in the ordinary course of Sygnia Life’s business as a financial institution to maximise returns for its stakeholders,” reads the statement in part.
It turns out that eight months later a fund called Oxford Sciences Innovation in which Sygnia Life has invested R1.6 billion is managed by Braavos. Sygnia Life is charged a 1.8 percent management fee annually and the appointed managers are Wierzycka and Crawford-Brunt.