Business Maverick: Old Mutual Unit Trust Managers found liable for R1.7-billion loss related to Fidentia scandal

The South Gauteng high court this week found Old Mutual Unit Trust Managers liable to pay R1.7-billion to the Living Hands Umbrella Trust following the losses the trust suffered in the Fidentia fraud scandal more than ten years ago.

In a 62-page ruling, Judge Thina Siwendu said it was clear that Omut acting as the administrator was the owner of the investment portfolio, acting administratively for the trust and its beneficiaries. She found that as such, Omut owed a direct duty of care to the trust on whose behalf the assets were being managed.

About 80% of trust assets or R860-million held on behalf of beneficiaries of deceased members of the Mine Workers Provident Fund was squandered after Fidentia, led by criminal mastermind Arthur Brown, took control of the trust administration company. Brown waslast year after serving seven years of a 15-year sentence.

Omut should reasonably have known or suspected that Fam did not have the authority of the Matco Trust to present correspondence to Omut and that Fam had not been appointed as investment manager nor had it received an investment mandate.

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