Media statement issued 20 September 2018
The Constitutional Court today closed the door on the skeletons that the Financial Services Board has been trying to hide in its judgement on Rosemary Hunter’s application for the cancellations by the FSB of 4,600 funds to be investigated. Beside the R250-million of Nkandla, the R5-billion graft of the arms deal or the billions lost to Gupta-ite capture, the pillaging of potentially hundreds of millions of rands of workers’ savings in provident and pension funds that are unpaid will remain hidden for now. The Court judged that the FSB (now known as the Financial Sector Conduct authority, FSCA) had done enough to review the cancellations and had acted in good faith, despite:
- The FSB’s offer of R6-million to Hunter, its former deputy registrar of pension funds, as hush money and hiring forensic investigators to dig up dirt on her when she refused;
- The premature end of a disciplinary process against Rosemary Hunter for lack of evidence;
- Investigations by Constitutional Court Judge O’Regan, KPMG and Jonathan Mort, into the circumstances and facts surrounding the FSB’s cancellation of the registration of sampled sets of funds, flagged irregularities, and then,
- Refusing to share reports from these investigations and only relenting after she sought a court order for their disclosure; and
- The finding by Jonathan Mort that funds cancelled by the FSB at the requests of Liberty and other fund administrators did indeed have assets, and Liberty’s subsequent court application to set aside some of the erroneous cancellations.
In their dismissal of her application, the majority of the Concourt judges appear very deferential to the Financial Sector Conduct Authority (legal successor to the FSB), saying:
“These kinds of investigations [into the likelihood that people were prejudiced by irregularities in the conduct of the pension funds cancellations project] must at some stage come to an end. Mr Mort’s expertise is beyond reproach. Subject to some concerns that he has expressed, reasonably satisfactory investigations have now been conducted. And Ms Hunter must live with that reality. It seems to be irreconcilable with an assumption or acceptance that the FSCA is run by responsible and competent people to order them to conduct investigations additional to those already conducted.”
But we of the UBC are not prepared to “live with that reality”. As three of the judges said in their minority judgment, “the cancellations project was infested with unlawfulness” and “the FSCA had a lax approach to lawfulness in the cancellations project”. So the fact that only a small minority of the cancellations have been investigated and the FSCA and the majority of the judges think that that is good enough is deeply disturbing.
Rosemary Hunter’s courageous fight to open the cancellations of thousands of pension funds to scrutiny is one that the UBC has supported, at the court in our numbers and by way of Right2Know and the Casual Workers Advice Office, as amici. This is only legal recognition of what has, over the course of our campaign building, become comradeship. Rosemary has contributed her expertise to the UBC, provided training for our affiliates in Johannesburg, Cape Town, Durban and Pretoria on investigating and filing claims at the same time as she has had to wage this legal battle. Her commitment to seeing the restoration of stolen monies to their rightful beneficiaries is undoubted and we cannot but be disappointed in the judgement.
The failure of the court to extrapolate from the initial evidence the full extent of the pillaging of pension and provident funds will do nothing to assuage the anger that exists amongst old, retired workers for the loss of their benefits. For years and years they have been disappointed by employers and state and private compensation schemes, preyed upon by opportunistic tracing agents, lawyers and all kinds of false prophets, paying extortionate fees to never hear from them again. They have trusted the system, to the extent of submitting their claims together with their original employment or medical records, only to be told they aren’t on the system and their claims cannot be filed – if they get any response at all. So it should be no surprise if, after such betrayal, many of our members in the UBC are weary. The snippets of evidence provided by the past investigations instituted by the FSB Board – and the stubborn refusal by the FSB to make all of these reports available – strongly suggest a scene of a crime and the efforts to cover it up.
Charges must arise from the evidence gathered so far.
Just on the basis of Jonathan Mort’s inspection reports (on samples of cancelled pension and provident funds) that have been released begrudgingly by FSB, there are grounds to charge the Liberty Group with theft. In one case, when transferring assets from one fund to another as required by Bidvest, Liberty held on to some R14 million and then asked the registrar to cancel the first fund’s registration in 2012. Although Bidvest protested, Liberty did nothing to fix the problem until November 2017 when it applied to court for an order that the de-registration be set aside. From the affidavit by the fund’s sole FSB-appointed ‘trustee’ and Liberty employee, Chantal Hugo, in support of the application, we know that the de-registration of the fund was based on false statements that the fund had no assets or liabilities. Similar charges could be brought against Alexander Forbes which asked the registrar to cancel the registrations of funds when it knew that it had not paid them refunds of the ‘secret profits’ it had creamed off the interest earned on their bank deposits over several years.
While the Constitutional Court disappointed us today, the imperative to pursue the evidence and expose regulatory capture and the malfeasance in fund administration remains. Justice in this case was always going to take a much longer time to achieve than the court’s pronouncement. The UBC will continue to mobilise and organise claimants to access their unpaid benefits – whatever the sentiments of the courts.