HOW FIRST NATIONAL BANK RESPONDED

The office of the financial advice ombud, Noluntu Bam, invited First National Bank (FNB) to deal with its alleged liability as De Ghee’s employer, but “such attempts came to nought”.

Bam was then compelled to issue a statutory ruling calling on the bank to furnish a formal response. The response was that De Ghee had neither actual nor ostensible authority to render advice to clients on financial and investment opportunities. The bank contended that:

◆ De Ghee was acting outside the course and scope of his employment;

◆ De Ghee was not authorised to render financial advice, as his duties as a branch manger involved the overall management of the branch;

◆ De Ghee acted for his own benefit and not in the bank’s interest;

◆ Keshwar failed to prove that De Ghee acted as an agent of FNB when the scheme was presented, “if there was such a scheme”;

◆ There was no insignia, trademark, symbol or document produced by Keshwar that suggests that FNB was the benefactor of the money invested, and all account numbers were either in the name of De Ghee or his family members.

◆ Keshwar failed to question the authenticity of the investments and accepted so-called interest of approximately R94 000, which was paid to him within three months of making his investment;

◆ Keshwar must have known that he was investing in a scam or pyramid scheme; and

◆ The issues raised in the complaint could only be tested under cross examination in a court of law.

Determinations made by Bam have the same effect as a civil judgment. Any determination can be taken on appeal to an appeal tribunal, but only with the leave of the ombud.

PROBLEM EMPLOYEE

FNB paid five claims related to De Ghee, the bank told Personal Finance this week.

De Ghee’s employment contract with FNB was terminated on December 30, 2008 after an internal investigation into his conduct, Lytania Johnson, the head of risk and compliance at FNB Retail, says. He was arrested, and in March 2012 was sentenced to six years’ imprisonment.

“We carefully audit all officials who offer investment advice to customers,” Johnson says.