How safe is safe

Abstract

F identia became an active player in the South African financial services industry in 2005, only a few years after its inception. Its dramatic rise was achieved through aggressive takeovers together with the boosting of its public image by employing well-known sports personalities and providing huge sponsorships for sports teams, charities and various events. Its sports involvement included a R4,9 million agreement with the Eastern Cape Warriors cricket team to become the Fidentia Warriors, a R15 million sponsorship for the Boland Cavaliers rugby team, and the purchase of the Durban-based soccer club, Manning Rangers for R1,5 million. On 1 February 2007, however, Fidentia was placed under provisional curatorship by the High Court of South Africa (Cape of Good Hope Provincial Division) on application by the executive officer of the Financial Services Board (FSB). The FSB told the court that its inspectors could not trace over R680 million of the more than R1,6 billion of investors’ funds managed by Fidentia Asset Management (Pty). This came as a severe shock. By this time, the group had grown through takeovers and the establishment of new ventures to an estimated total of 70 companies under the Fidentia banner. Prosperity seemed to be the order of the day. Investors reaped returns of more than 28% per annum on some asset classes. The staff benefited from a restaurant-style canteen and a gym with personal trainers – all paid for by the company – at the group’s luxury Century City office complex in Cape Town.