It’s a scandal that has largely remained out of the headlines until now, even though insurance giants Santam, Hollard, Old Mutual and Guardrisk have, between them, lost R944-million as a result. But behind closed doors, it has rocked the industry, rattled the regulators, and led to the– Charl Cilliers and Diane Burns, directors of Insure Group Managers – being debarred as financial service providers, based on their lack of honesty and integrity.
Cilliers, as CEO of Insure, is a chartered accountant – an industry that can hardly afford any more bad publicity – while Burns was the “director for strategy and compliance”. The FSCA says this practice of “rolling over” premiums – in which a particular month’s premiums are used to pay the previous month’s debt – is unlawful. This is because it’s only sustainable if the money coming in exceeds the amount that has to flow out to your clients; it leaves no cushion, should anything go wrong.
“It is evident,” the FSCA argues, “that Cilliers and Burns were no longer fit and proper with regard to the personal character qualities of honesty and integrity. The debarment of both individuals was an appropriate administrative sanction.” However, in a 33-minute interview with Scorpio, Burns strongly denied claims of illegality, misappropriation, or that she and Cilliers were the “directing minds” of the company. Neither she nor Cilliers did anything wrong, she insists.
Nonetheless, she says that being on the receiving end of this grand conspiracy has affected her “mental health” – though again, she declines to explain why, or how. Thanks to their weighty capital buffers, all these insurers told Scorpio that the loss wouldn’t impact their solvency, liquidity, or ability to pay out claims. However, some acknowledged they may never get the money back.
Privately, the insurers blame the FSCA for poor oversight and lax controls, which they say allowed this to happen in the first place. Fred Robertson, chair of the board of Lion of Africa, said Insure’s inability to pay the premiums owed to it wasn’t the only factor prompting the decision, but it “was certainly a contributing factor”. At that stage, Lion of Africa couldn’t afford another setback.
Then when VBS collapsed in March 2018, it meant Insure couldn’t call on its extra credit with the bank. Six months later, in September that year, Insure’s years-long secret bubbled to the surface, when it couldn’t pay its debt.‘Rolling’: How did Insure work the scheme?
PaulivW Not all the skelms are in government. Jail time please.