FSB/FSCA: Editorials: Edition: July / September 2019


Credibility at stake

For the accuser as much as the accused.

A fight that neither the Public Protector

nor the financial regulator

can afford to lose.

Tshidi . . . wronged?

Mostert . . . wronged?

The mission and vision statements of the Financial Sector Conduct Authority are explicit. They’re about financial-sector customers being kept “informed and protected”, and to hold accountable “those that jeopardise the financial wellbeing of consumers”. Put to the test by Public Protector Busisiwe Mkhwebane, they’re found wanting.

Encouraging for the FSCA is that the findings were made by Mkhwebane. Her limited abilities have been exposed when far-reaching determinations were thrown out by the courts.

This alone could make the FSCA confident of success in taking on review her report into maladministration and the like at the Financial Services Board, predecessor to the FSCA (see next article ‘Scathing report’, an opinion piece on which the FSCA declined a post-publication invitation to comment).

However, there is at least one Mkhwebane observation that the FSCA might be hard-pressed to refute. It’s that attorney Tony Mostert and then FSB executive officer Dube Tshidi “steadfastly refused to make any disclosure whatsoever of the amounts earned” by Mostert in the numerous funds where he’d been appointed as curator.

Also raised in Mkhwebane’s report is the Saccawu national provident fund, an umbrella arrangement of employers and largely trade-union members, now entering its seventeenth year under Mostert’s curatorship.

If the review process doesn’t manage to prise open the secrecy over Mostert’s fees, nothing will. To be sure, over many years TT tried often and hard enough (TT May-July ’18). Indeed, why there should be secrecy seems itself to be a secret.

With publication of Mkhwebane’s report, we tried again. And once again there’s no joy.

On her conclusion that Tshidi had misled then Minister of Finance Pravin Gordhan on information that the FSB had supplied to him for answering a parliamentary question, we asked the FSCA whether it wanted to correct the schedule previously published (TT Sept-Nov ’11) and further to provide the most recent schedule of fund curatorships undertaken by Mostert that also involved his law firm.

This schedule should include the name of each fund, date of Mostert’s appointment, date of appointment’s termination, recoveries to fund, fees paid by fund to Mostert and fees paid to Mostert’s law firm as well as any comments the FSCA might wish to make on them. Again, no response was received.

Also raised in Mkhwebane’s report is the Saccawu national provident fund, an umbrella arrangement of employers and largely trade-union members, now entering its seventeenth year under Mostert’s curatorship. For this fund, Mostert’s most recent report published on the FSCA website is dated 17 February 2016. It contains no mention of fees that have been charged to the fund.

Perhaps all will be revealed during the review proceedings, to be launched by end-June. There’s much more to this dispute than fees – allegations of legislative contraventions, irregularities in practices and bullying of two financial institutions amongst them – that make for fiery confrontations.

Mkhwebane must be desperate for a win. But then so too must the FSCA, Tshidi and Mostert.

An open question is whether, or when, EFF leader Julius Malema will join them in the ring. Having succeeded with his complaint to the Public Protector, it’s out of character for him to have remained silent for so long. 


Nothing less than a stinging rebuke of the Public Protector’s report was expected from Dube Tshidi. As this TT edition approached deadline, it came. So strong is his 55-page retort, in an application for review by the Pretoria High Court, that he asks for a personal costs order against Mkhwebane on the punitive attorney-client scale.

Had she performed her duties and functions reasonably and in good faith, he argues, this application would have been unnecessary and the report would never have seen the light of day: “The levy-paying institutions subject to the FSCA’s supervision and regulation, and which fund the FSCA’s operations, ought not to be saddled with the costs of the application.”

Supported by FSCA acting commissioner Abel Sithole, Tshidi argues that it was immediately apparent that the report’s conclusions and findings about his conduct are entirely unreasoned. They’d been made without any explanations as to how they’d been reached and why his responses had been rejected.

She’d failed to have proper or any regard to the extensive information that he and the FSCA had put before her. She’d also failed to give any reasoned justification for her findings. They were arbitrary as well as substantively and procedurally irrational.

“The public Protector failed to address or discuss the credibility of the various sources of information she considered, their reliability or the probabilities when faced with mutually destructive versions,” he adds. “It is therefore impossible to discern whether her findings are pursuant to deductive reasoning, inductive reasoning or any reasoning at all.”

The FSB, when previously approached directly by the Economic Freedom Fighters, it had engaged with the EFF in response to the allegations. During these engagements it emerged that the true source of the EFF’s allegations was Simon Nash, a chief participant in a criminal surplus stripping scheme related to pension funds of which Tony Mostert was the curator.

Tshidi says that when he’d met with Julius Malema and other EFF officials to address their allegations, they were accompanied by Nash. Tshidi insisted that Nash be excluded from the meeting because of pending litigation between him and the FSB.

It had been explained to the Public Protector and the EFF that the impropriety allegations by Nash against Tshidi and Mostert were “unfounded and motivated by an ulterior purpose” to obstruct his prosecution and the civil claims against him. Mostert is “actively pursuing the recovery of millions of rand of misappropriated assets” from Nash and his company.

The application by the FSCA and Tshidi is for the Public Protector’s report to be reviewed and set aside, and declared constitutionally invalid, for lack of jurisdiction. In the alternative it wants specific findings and conclusions reviewed, set aside and declared invalid, unlawful and unconstitutional.

If there is no notice of an intention to oppose the application, by the Public Protector and/or presumably the EFF, the notice of motion by the FSCA and Tshidi can be made a court order in November.