Financial Regulation in South Africa – Brief II of II

This is the second of two briefs looking at South Africa’s financial regulation, specifically the newly formed Financial Sector Conduct Authority (FSCA) and CEO, Dube Tshidi. The first brief looked at the FSCA and its “Twin Peaks” model, querying whether taking on this model of financial regulation was necessary and what the potential consequences might be. This brief looks at the legal woes the CEO of the FSCA has come up against, past and present.
Financial Regulation in South Africa – Brief II of II


With the FSCA having replaced the FSB on 1 April 2019, Dube Tshidi, the former Executive Officer (EO) of the FSB, became the CEO of the FSCA. Tshidi had been appointed as CEO of the FSB by the Minister of Finance in April 2008. He joined the FSB in 1994 as a junior analyst in the retirement funds division, and holds a Higher Diploma in Labour Law, as well as B.Juris, LLB and LLM degrees.

Amid the revelations of capture and corruption at state agencies, a cloud of “systemic corporate governance deficiencies” now hangs over even the Financial Sector Conduct Authority (FSCA), thanks to a recent report by the Public Protector.

The Public Protector Report

The Report by the Public Protector (PP) on allegations of maladministration, abuse of power and improper conduct by former FSB EO Tshidi, now CEO of the FSCA, maintains that a pension fund curator and his firm, improperly favoured by Tshidi, had earned fees of around R240m from 2005 to 2011. The fees earned after 2011, it is submitted, are not known because the curator and Tshidi “steadfastly refused to make any disclosure whatsoever.”1

The Report originated in April 2017, after Julius Malema laid a complaint with the PP, in which Malema alleged that, Tshidi:

  1. In recommending a pension fund curator, improperly favoured attorney Anthony Mostert, who unduly paid himself R188 million in fees;
  2. Intentionally misled parliament;
  3. Refused to answer questions in a criminal matter involving Mostert;
  4. Attended clandestine meetings with malicious intent during the period of the criminal trial;
  5. Threatened to withdraw the operating licences of certain financial institutions if they did not cease civil action against Mostert;
  6. Breached the Inspection of Financial Institutions Act by allowing the falsification of reports, and allowing the State Prosecutor to sit alongside the FSB Inspector;
  7. Allowed non-FSB personnel to complete Inspection Reports;
  8. The FSB failed to accept and inspect whistleblower disclosures;
  9. Failed to ensure reporting in accordance with court orders;
  10. The FSB failed to respond to concerns raised by Cadac Pension Fund members;
  11. The FSB failed to take action against or recover funds from its former CFO, Dawood Seedat, concerning the unconscionable use and misappropriation of funds; and
  12. The FSB Board failed to take action against the EO, thereby violating their fiduciary duties.2

With regards to these complaints, the PP identified four issues for investigation, and in March this year held that:

  1. The allegation that there were improprieties in Tshidi’s nomination of a curator is substantiated;
  2. Tshidi failed to discharge his regulatory duty to manage possible or perceived conflicts of interest between Mostert’s role as curator and the appointment of Mostert’s own law firm in assisting with the curatorship;
  3. Tshidi misled the Minister of Finance by providing him with misleading answers to written Parliamentary questions; and
  4. The allegation that Tshidi acted improperly and / or irregularly in his performance as the EO of the FSB is sustained, and that his conduct constituted maladministration.3

Given these findings by the PP, the remedial action put forward by her are arguably mild; there is no effort to trace or recover any money or proposed action on what remedial actions should be taken against the officials found guilty of misconduct. The PP’s remedial actions are:

  1. Within 90 days the FSCA must start the process of inviting curators through a transparent and competitive bidding process as envisaged in section 217 of the Constitution;
  2. Within 90 days the FSCA must develop and adopt a Policy to regulate the nomination process of curators;
  3. Within 30 days the Commissioner of the FSCA must take corrective action against the officials implicated in this report and put in place preventative measures; and
  4. The Minister of Finance to note the PP’s findings and remedial action and to ensure the FSCA implements the remedial action.4

The FSCA has taken the Report on review – on grounds that the report is “riddled with inaccuracies” and “did not take into account any of the submissions made.” In the FSCA’s favour is the current PP’s poor record. But some argue that this Report is different, as it contains an extensive list of the documents examined and interviews held. Journalists have presumed that the PP was “well fed by representatives of Simon Nash,” who is currently on trial for stripping of pension funds of their surpluses. Tshidi and Mostert contend that the real complainant was Nash rather than Julius Malema, which the PP dismissed as “immaterial.”5

Rosemary Hunter

In January 2016, the deputy registrar of pension funds at the FSB at the time and former colleague of Tshidi’s, Rosemary Hunter, filed an application with the Pretoria High Court, alleging that Tshidi had abused public funds in thwarting her attempts to investigate the closure of 4 600 orphan retirement funds from 2007-13. Hunter’s application did not seek to have the fund closures reviewed, but asked for the FSB board to deal with a complaint she laid against Tshidi with regards to how the funds were closed – claiming that the process was unlawful and the rights of former members to unclaimed benefits may have been compromised.

In 2014 Hunter reported the matter to the FSB board, who appointed retired Constitutional Court Judge Catherine O’Reagan to investigate. Later that year O’Reagan concluded that Tshidi may have acted beyond his powers, and on the former judge’s recommendation, the FSB appointed KPMG to look into a sample of the fund closures.6 From a sample of 510 cancelled funds, KPMG found that about R2.5 billion in financial prejudice occurred when funds were cancelled while they still had assets, eliminating the beneficiaries’ ability to access their money. The FSB then appointed advocate Jonathan Mort to assess the KPMG report, with Mort finding that no financial prejudice existed.

The High Court dismissed Hunter’s application, saying that the FSB had already appointed Mort to investigate any irregularities. Hunter then applied for leave to appeal to the Supreme Court of Appeal, which was refused on the basis that there were no prospects of success.7 Last year she then approached the Constitutional Court, where her leave to appeal was granted.

Five of the eight judges at the Constitutional Court however ruled against Hunter, stating that:

“[There have been] several credible investigations already conducted by people whose capacity to address actual or perceived irregularities is beyond doubt ... even if another investigation were to be sanctioned by this court, it may still not satisfy Ms Hunter’s quest for ‘justice’, as she sees it.”8

The minority judgment by Justice Froneman, on the other hand, stated that given the mistakes which showed up in the KPMG report, that all the cancelled funds should be investigated.9 If one were to extrapolate the R2.5 billion in financial prejudice that was found in the 510 sample of funds investigated by KPMG, to the total 4 600 funds that were cancelled, this would imply financial prejudice of over R22.5 billion – meaning that the members of the funds that were erroneously cancelled will not be able to access the money due to them.


Though vindicated from any wrongdoing in the cancellation of 4 600 orphan pension funds, holding billions of Rands in assets that were due to their members, South Africa’s financial services industry and economy as a whole can ill afford to have a controversial person at the helm of one of its two most important financial regulation bodies. It is therefore critical that all the facts behind the recent damning Public Protector report concerning the FSCA CEO, Dube Tshidi, be brought to light and soundly assessed by a court.


Charles Collocott

Policy Researcher


2 Public Protector Report 46 of 2018/19, p 3-5.

3 Public Protector Report 46 of 2018/19, p 92-5.

4 Public Protector Report 46 of 2018/19, p 95.

8 Hunter and others v Financial Sector Conduct Authority and others [2018] JOL 40462 (CC) at para 46.

9 Ibid at para 133.