Seven months after he was personally handed a ZAR 2.5m (£123,000, $148,000, €140,000) penalty and debarred for a period of five years by the South Africa financial watchdog, DeVere Group chief executive Nigel Green has succeeded in challenging both.
However, while the Tribunal has the authority to ‘set aside’ the penalty decision, it “does not have the same competence in relation to the debarment order”, according to the decision document. As such, the “debarment ‘matter’ is remitted to the Authority” to reconsider.
Green’s case formed part of a broader investigation by the country’s Financial Sector Conduct Authority (FSCA) into DeVere Investments South Africa and DeVere SA Acuma between February 2010 and August 2015.
The core issue related to the marketing of foreign collective investments schemes that the regulator said were not approved by the Registrar of Collective Investments Schemes.
The companies, which were sold to Brite Advisors in November 2019, were fined ZAR 10m after being found to have “contravened various financial sector laws”.
In light of his role as a director of the businesses, the FSCA concluded Green ‘caused or permitted the contraventions’.
When the initial decision was announced in May 2022, a spokesperson for DeVere said they were “shocked and disappointed” and confirmed an appeal would be lodged.
Section A or B?
At the Tribunal, Green’s representative argued that the South African regulator had acted without regard to the facts of the law and that his client had not broken the law.
There was some confusion relating to the specific charges levelled at Green, with the FSCA citing section 2(a) of the Financial Institutions (Protection of Funds) Act in its initial correspondence with the DeVere Group chief executive in 2019, but later admitted it should have referenced section 2(b).
Section 2 states a financial insitution or director ‘who invests, holds, keeps in safe custody, controls, administers or alienates any funds of the financial institution or any trust property –
(a) must, with regard to such funds, observe the utmost good faith and exercise proper care and diligence;
(b) must, with regard to the trust property and the terms of the instrument or agreement by which the trust of agency in questions has been created, observe the utmost good faith and exercise the care and diligence required of a trustee in the exercise or discharge of his or her powers and duties’.
Presiding over the tribunal, judge Harms concluded, without stating a specific clause, that Green ‘did not contravene section 2 of the Financial Institutions (Protection of Funds) Act, during the period he had been a director of DeVere SA’.
According to the decision document, Green’s representative also argued that the FSCA did not have jurisdiction to impose any administrative penalty on or take any other administrative action against him because he was not living in the jurisdiction of the court.
The Tribunal agreed: “We do not believe that Mr Green’s assistance with the investigation and submitting to a summons to give evidence and giving evidence already during 2016 on a general compliance topic of DeVere SA amounted to his personal submission to jurisdiction for purposes of the imposition of administrative penalties and action.”
‘Failing to understand its own laws’
Following the publication of the Tribunal’s decision, Green said: “All accusations and charges that were made against me in South Africa by the regulator have been dropped. The file is now closed. Whilst we were surprised by the FSCA’s initial decision, we are not surprised by the Tribunal’s ruling.
“It’s clear that the case was overturned on the basis of both factual inaccuracies in the FSCA’s case against me and an incorrect application of laws.
“As per the Tribunal’s final ruling, it was found that I did not contravene the law and, therefore, that regulator was wrong to consider any action against me.”
He continued: “In addition, the FSCA was criticised by the judge at the Tribunal for changing the alleged offences of which I was accused on several occasions – even up to two weeks before the case was heard – and for failing to understand its own laws. By doing this, the regulator was shown to be on a mission to discredit me, come what may.”
Green added: “The Tribunal has come to the only sensible decision. In this case, the South African financial regulator appears to have lost the objectivity and impartiality expected of a public body discharging a public function.”
