Orphans’ fund has R385m stuck in VBS

• Beneficiaries are children of deceased mine workers • FSB in talks to recover the money

A fund, the beneficiaries of which are children of deceased mine workers, has about R385m on deposit with VBS Mutual Bank, which the Reserve Bank placed under curatorship on Sunday.

The Financial Services Board (FSB) confirmed that the Bophelo Beneficiary Fund, which with its administrator, Bophelo Benefit Services was placed under curatorship by the board in June 2017, had R385m deposited with VBS.

The board was in talks with the Bank to recover this money for the orphans’ fund, Olano Makhubela, acting deputy executive officer for retirement funds, said on Tuesday.

The latest development concerning its cash will add to Bophelo’s woes. It was placed under curatorship after it emerged that at least R255m was missing from the fund, which holds money for orphans of Anglo Platinum mine workers. This funds the schooling and living expenses of the orphans, with the balance paid when they reach the age of 18.

The amount missing from the Bophelo Beneficiary Fund was in fact closer to R685m and not only the R255m that Bophelo falsely claimed had been spent on investment properties, Makhubela said.

Curator Juanito Damons had recovered about 88% of this amount (about R603m), twothirds of which was held in VBS, he said.

In terms of VBS’s curatorship, which was precipitated by a cash crunch after municipalities started withdrawing funds, retail deposits of up to R50,000 per depositor are guaranteed.

The deposits of institutional investors, such as municipalities and pension funds, are not guaranteed. But the Reserve Bank has said that the curator

would act “in the best interest of all creditors”.

While the Bank had not made any commitment in terms of money belonging to Bophelo beneficiaries, “concern was registered”, said Makhubela, who met Bank governor Lesetja Kganyago on Sunday.

“I really see the orphans as a special case,” Makhubela said, suggesting that they should be treated in the same vein as retail depositors, rather than institutional investors.

The FSB was preparing a fact sheet on the Bophelo matter for the Bank, he said.

Bophelo was not the only pension fund with money in VBS and the FSB was still assessing exposures.

Vele Investments, VBS’s 53% shareholder, bought Bophelo’s parent company, Mvunonala Holdings, for R300m in late 2017. In a January report, Damons said that this payment would be used to fund shortfalls both in the Bophelo Beneficiary Fund and Bophelo Beneficiary Services.

“I still undertake that all payments to beneficiaries will be made as they fall due,” he said.

Damons said that forensic audit of Bophelo’s books was under way to verify areas where “criminal or civil litigation may be warranted”.

Trustees were appointed to the fund, and no agreements have been reached to dispose of any of the fund or its administrator’s assets.

Business Day reported on Tuesday that Vele’s chairman, Tshifhiwa Matodzi, who is also chairman of VBS, had quit.

VBS’s curator, SizweNtsalubaGobodo’s Anoosh Rooplal, is expected to brief the media later this week on the curatorship, which is SA’s second bank curatorship in less than four years.

This was the first time that the audit and advisory firm had been appointed curator of a bank, said CEO Victor Sekese.

African Bank was placed into curatorship in August 2014 after it collapsed beneath a mountain of bad debt.

BOPHELO WAS NOT THE ONLY PENSION FUND WITH MONEY IN VBS AND THE FSB WAS STILL ASSESSING EXPOSURES