The bean spilling on Fidentia has encouraged would-be whistleblowers to claim instant hero status, but the record shows that the first hardcore cases of alleged fraud were outlined late in 2005.
The man in focus is Hendrik Roedolf Bam, who worked in and around the Fidentia group between December 22 2002 and December 9 2003. Bam, determined to expose the rot in Fidentia, eventually deposed several affidavits at a Cape Town police station, backed up by extensive annexures containing accounts and much other sensitive information.
As Bam was to discover, and whether he liked it or not, he was a director of Fidentia Holdings from January to December 2003 and of Fidentia Asset Management (FAM) from February to August 2003. Graham Maddock, who was many things to Fidentia, had put in papers appointing Bam to these positions without Bam’s knowledge.
In his affidavits, Bam seeks to illustrate how Brown and Maddock “will go to any lengths to falsify records or any other evidence in order to escape prosecution”. Bam continues that, “on the premises, I respectfully request the [South African Police Services] to initiate investigations” into the affairs of Brown, Maddock and Fidentia Holdings.
As is well known by now, Maddock, an accountant and auditor, and resident of Strawberry Lane, Constantia, was on a mission of his own. None other than this Maddock, of Maddock Incorporated, signed the audit report of Fidentia Holdings for the year-end February 29 2004, on March 31 2004.
Yet Maddock had been appointed as a director of Fidentia Holdings on March 15 2004. Maddock signed off the audit report of Fidentia Holdings after he had already been appointed a director of the company. Worse, he was listed as a director of Fidentia Asset Management even before that.
To Bam, it’s even worse. Bam shows that Maddock was not only auditor for Fidentia Holdings, he was also a director, employee and shareholder in the Fidentia group through Bonus Way (12) (Pty) Ltd.
Bam alleges that Maddock and Brown were involved in “so many instances of fraud that it would be impossible to unravel, if one does not start at a point”.
Bam forewarns police that “during your investigation” it would be realised that client funds were handled out of Maddock’s statutory trust account by Brown and Maddock without client permission and utilised for personal expenses, company expenses (including operating expenses), and “repaying other clients whose money they used” where earlier-dated money had fallen short.
“When I asked Brown ‘why the company did not have its own banking accounts,’ Brown said for security purpose, safeguarding client funds. It later became clear that it was done to facilitate fraud of client’s funds,” says Bam.
In one instance, Bam alleges that Maddock and Brown defrauded the Fidentia group of R11,2m during 2003 following alleged “collusive and other illegal transactions”.
Bam continues that “as a director at the time, I was not aware of any board meeting approving such transactions”. Brown, Bam alleges, never had a loan account anywhere near the size claimed, so, asks Bam, “where did the funds come from to pay for his two houses (private and bed and breakfast)?”
Maddock – auditor/employee/director – allegedly concealed the transaction in the books of the company showing it as an investment for and on behalf of the company. Worse, the company financial statements were never released, and were approved by the board. “Shareholders of the company are in the dark about the transaction”, Bam complained.
Bam states that he “later determined that the funds were utilised for the purchase of Brown’s private home (in a trust) and a bed and breakfast home (also in a trust)”.
On November 28 2005, Bam delivered a letter and certain documentary evidence to both Brown and Maddock, asking them for clarification, “because as a member of the company I have some interest”. Both men, states Bam, treated the documents “with the greatest arrogance”. There was also an “indirect message and threat”.