OLD Mutual said it will appeal a court ruling in the Living Hands Umbrella Trust matter where it was found liable for over R1.7bn as it believes it acted in the correct manner in the case.
On Wednesday, Judge Thina Siwendu of the Gauteng High Court ruled Old Mutual must pay R854.6m in capital and R854.6m in interest to the trust. Old Mutual also had to cover legal costs. The judge said the sheer size of the portfolio, material risks and detrimental consequences in the matter were foreseeable and would have been foreseen by a prudent manager.
The Living Hands Trust had accused Old Mutual of allowing convicted Fidentia fraudster J Arthur Brown and his cohorts, who became Matco’s directors between October 2004 and January 2007, to access its funds without performing any due diligence or exercising proper precautions.
Old Mutual said it was "deeply concerned" about the ruling.
"Quite apart from Old Mutual, the direct cause of the loss and pain suffered was the fraudulent actions of Fidentia well after Old Mutual had transferred funds following a formal client instruction to do so. In the circumstances and following our verification of the authenticity of the transfer of ownership, we were legally obligated and had no other option but to transfer the money,” the group said.
"We are resolute that Old Mutual is not liable for the damages being claimed," the company said in a statement.
Old Mutual said it was also concerned about the precedent, which the High Court sets for the rest of the financial services industry as it relates to managing funds on behalf of trustees. Brown was sentenced to 15 years jail for his part in the Fidentia scandal.
Old Mutual said it believed there were reasonable prospects another court would come to a different conclusion.
BUSINESS REPORT