In this week’s newsletter we will continue to look at Fidelity claims.
Another example of a fidelity claim that we received involved the dishonest chairman of a body corporate. The chairman purported that unit owners had complained to him about damages to their units. The chairman subsequently appointed suppliers to attend to the repairs and instructed the managing agent to pay the so-called contractors.
The arrangement for authorising payments for this complex was that payments below R50 000 were not required to be signed off by the other trustees but could be authorised by the chairman alone. The chairman therefore authorised 22 different payments for amounts of less than R50 000 for service providers who do not exist and for work that was not done – into his own accounts.
At the AGM unit owners raised questions regarding the amount of money being spent on repairs during the year. The unit numbers affected by the repairs were read out and owners of the respective units indicated that these repairs had never been done at their properties. The chairman was immediately vacated from his position and further criminal proceedings against the chairman are pending.
To make this type of dishonesty more difficult to carry out we have introduced the requirement that payments, transfers or changes of banking details are authorised by two bank signatories who are not related by birth or marriage and do not live in the same household.
In the next newsletter we will look at legislative requirements in terms of Fidelity.
Please feel free to get in touch should you have any queries