Court bid over dormant pension billions

Angelique Serrao

JOHANNESBURG: A Financial Services Board (FSB) executive has urged the minister of Finance to investigate how an estimated R22 billion from dormant pension funds went missing.

Rosemary Hunter, the deputy registrar of pension funds, filed responding papers in the high court in Pretoria this week to compel Pravin Gordhan not to ignore the “unlawful” closing of 4 600 dormant pension funds.

Hunter alleges that the FSB has been illegally cancelling dormant pension fund schemes, and that it has failed to properly check whether the assets of the funds were either non-existent or properly disposed of.

Hunter said it had taken two years for her to come out publicly with the allegations because her attempts to expose the so-called cancellations project investigations had not been fruitful.

Hunter took the FSB, its chief executive, Dube Tshidi, FSB board chairperson Abel Sithole, previous FSB board chairperson Abel Sithole (now the deputy registrar of collective investment schemes) and Finance Minister Pravin Gordhan to court.

She asked that they investigate the conduct of FSB employees in the cancellations project, and attempts to frustrate and discredit the results of such investigations.

Gordhan, Boyd and Tshidi said they would oppose the application. They believed the FSB board had done enough to ensure the cancellations project was being investigated, and that Hunter’s actions were acrimonious.

Tshidi and Boyd said they had acted in a proper manner when cancelling dormant pension funds.

Hunter said she had been shown part of the KPMG report into their investigation of 510 of the 4 651 cancelled funds. It revealed that the registrar had sufficient information in only 10 of them to satisfy him that the fund had no assets, liabilities or members, such that it had “ceased to exist” and its registration could be cancelled.

The aggregate value of the assets reflected in the most recent financial statements for 498 funds was R2.5 billion.

Hunter said that assuming the results of the review could be extrapolated to the other 4 000 funds cancelled, “it may be that there are assets with an aggregate value of some R22.5bn”.

Gordhan said in an affidavit the FSB had gone to great lengths to resolve matters with the cancellation project. “The O’Regan and KPMG reports were expected to shed light on whether any personal enrichment of FSB employees took place.”

Hunter, however, said that was not a part of their mandate.

Boyd said that at all times, he and his officials acted in a way they believed was legal. “The project achieved substantial success.”

Tshidi described Hunter’s affidavit as “vexatious, scurrilous and even scandalous”.

The affidavit “leaves one with the impression of an angry, distrustful and vengeful woman resorting to unbridled accusations, intemperate language and wholly unsubstantiated conclusions. The application bristles with conspiracy theories at every turn”.

Tshidi said there was proper processing of documents, and checks and balances in place. He said it was not embarked upon recklessly or mindlessly.

He accused Hunter of using the court to publicly air her grievances, adding that it had caused “serious disquiet in the financial services industry”, which had raised concerns that their confidential information could be made public.

Tshidi said KPMG did not consult either him or Boyd, and he saw their report as “inherently flawed”.

Hunter asked Gordhan to act. “The honourable minister, as an executive authority in relation to the FSB, is not entitled to adopt a hands-off approach to the matter when serious allegations against FSB officials and office-bearers are brought to his attention.”

She said that in her position, her principal function was to protect pension funds and their members, particularly the most vulnerable.

“It is a matter of considerable concern to me to have my conduct in seeking to address a multibillion-rand financial scandal as ‘a fixation on issues related to dormant funds’.”