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Likhwane Beneficiary tells FSRA to unfreeze accounts

By Silindzelwe Nxumalo

Following the dismissal of the case between FSRA and the Likhwane Beneficiary Fund, the Fund has demanded three things from the regulator.

The Fund has demanded that the FSRA allow them to operate normally by withdrawing the urgent notice to retirement funds and insurance companies stopping the companies from doing business with the Fund.

The Fund management has also stated that they now expect the FSRA to unfreeze all the bank accounts to enable Likhwane Beneficiary Fund to execute her duties.

ALSO READ: Likhwane fires opening salvo at FSRA

Further to that the Fund has mentioned that they now expect the FSRA to issue a press statement informing guardians and principal officers on a way forward.

In the same notice, the Fund also mentioned that they had welcomed the decision by the high court where the case instituted by FSRA against Likhwane was dismissed with costs.

FSRA had applied to the high court to get Likhwane Beneficiary Fund Liquidated on grounds that they suspected fraudulent and unlawful activities in the fund.

The case had gone on between the two until it was joined by seven local entities’ pension funds all against the liquidation of the fund because of all the investments they all had in it.

On October 24, 2023, High Court Judge Bongi Magagula ordered FSRA to first account for how it fulfilled its objectives of supervising the safety and soundness of ESW Investment before liquidating the Likhwane Beneficiary Fund.

In his judgement, Magagula had ordered the regulator to also account for how they protected the Fund and the other seven entities’ pension funds Respondents as stakeholders.

Magagula stated that the FSRA in terms of 56 of the FSRA Act, was accorded wide powers to regulate the industry.

The Judge also said that it was a common cause that ESW formerly the Ecsponent was a financial services provider, licensed by the FSRA and it was also a common cause that the Likhwane Beneficiary Fund invested its funds in ESW.

“I see no reason why the Applicant should not bear the costs occasioned by the unsuccessful Application. To further burden the costs of this litigation on the minors who are the ultimate beneficiaries of the 1st Respondent, would not be in their best interest,” said Magagula in his judgment.

The judge also stated that the circumstances of the present case viewed in totality were such that it was not in the best interest of the Fund, the intervening parties, and mostly the beneficiaries of the Fund (the minor children) that the Rule Nisi be confirmed.

The judge mentioned that the FSRA was not in a position to point an accusing finger at the Likhwane Beneficiary Fund when it had not accounted for the role it had played in discharging its supervisory powers to both the Likhwane Beneficiary Fund and ESW Investment group, the party that currently holds the investments which had ultimately affected the liquidity of the Likhwane Beneficiary Fund.

ALSO READ: No order effecting freezing Likhwane accounts – Mdladla

“It is therefore not unreasonable that before the FSRA could decide to apply for the liquidation of the Likhwane Beneficiary Fund on the strength of Section 73(2), it must first account on how it fulfilled its objects of supervising the safety and soundness of ESW Investment,” read the judgment.

Furthermore, the High Court Judge ordered that the rule nisi be granted on August 16, 2023, and is hereby discharged. He also ordered that the FSRA’s application be dismissed and the FRSA was to bear the costs occasioned by the application.

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