PEN­SION SCAM

Echoes of Fi­den­tia dis­as­ter as Boph­elo Ben­e­fi­ciary Fund’s fail­ure to pay work­ers’ pen­sion money leaves fam­i­lies dev­as­tated

CityPress - - Front Page - SIPHO MA­SONDO sipho.ma­sondo@city­press.co.za

In a case rem­i­nis­cent of the heart­break­ing Fi­den­tia scan­dal, a pen­sion fund ad­min­is­tra­tor has lost R255 mil­lion worth of mine work­ers’ money. There are now fears that the amount lost by the Boph­elo Ben­e­fi­ciary Fund (BBF) could be as much as R560 mil­lion – a dev­as­tat­ing blow to the fam­i­lies of de­ceased mine work­ers who rely on the money to sur­vive. Three wid­ows told City Press this week that they were bat­tling to feed and clothe their chil­dren, and send them to school, while fund staff come up with ex­cuses (see page 2).

In the 2007 Fi­den­tia scan­dal, the com­pany’s boss, J Arthur Brown, squan­dered about R1.3 bil­lion in in­vest­ments, leav­ing more than 47 000 ben­e­fi­cia­ries – mainly mine work­ers and their fam­i­lies – des­ti­tute.

In this case, pen­sion money be­long­ing to work­ers at An­glo Plat­inum was in­vested in the BBF, which is ad­min­is­tered by Boph­elo Ben­e­fit Ser­vices, a sub­sidiary of Mvunon­ala Hold­ings.

Although it is un­clear what hap­pened to the money, a City Press in­ves­ti­ga­tion has found that, in try­ing to hide the lost R255 mil­lion, the BBF, which holds the funds on be­half of the Am­plats Group Prov­i­dent Fund (AGPF) and its 7 229 ben­e­fi­cia­ries, ap­pears to have cooked its fi­nan­cial state­ments for last year.

The fund falsely claimed to own two “in­vest­ment prop­er­ties” in Jo­han­nes­burg – the Park­to­nian Ho­tel in Braam­fontein and an of­fice block on Grayston Drive, Sand­ton. The BBF’s fi­nan­cial state­ments for the year end­ing Fe­bru­ary 2016 claimed the prop­er­ties were worth R255 mil­lion. The fund’s fi­nan­cials re­flect a bal­ance of R578 mil­lion – R323 mil­lion in eq­ui­ties and R255 mil­lion in “in­vest­ment prop­er­ties”.

But a se­nior AGPF of­fi­cial told City Press this week that the fund could be bare, say­ing: “In fact, we are told that there may be noth­ing left in the fund.”

Mvunon­ala Hold­ings was founded by Bon­gani Mh­langa, a for­mer em­ployee of Man­ta­dia As­set Trust Com­pany, which was bought out by Fi­den­tia. Man­ta­dia was the ad­min­is­tra­tor of R1.3 bil­lion worth of pen­sion funds stolen in the scan­dal.

Mvunon­ala Hold­ings also owns Mvunon­ala As­set Man­agers, a com­pany the Public In­vest­ment Cor­po­ra­tion (PIC) tasked with in­vest­ing R3.5 bil­lion in gov­ern­ment em­ploy­ees’ pen­sions. The PIC also owns a 30% stake in an­other Mvunon­ala sub­sidiary, Boph­elo In­sur­ance Group.

AM­PLATS IN­VES­TI­GATES BBF

The AGPF has launched an in­ves­ti­ga­tion into the BBF, which ad­min­is­ters about R564 mil­lion in mine work­ers’ pen­sions.

A se­nior AGPF of­fi­cial said: “We picked up the prob­lems in Novem­ber last year. We dis­cov­ered that about 2 000 ben­e­fi­cia­ries [of de­ceased mine work­ers] who had come of age had not been paid. When ben­e­fi­cia­ries come of age, they have to be paid a lump sum of their re­main­ing money. “We asked Boph­elo why, and they told us that they couldn’t trace them. In De­cem­ber and Jan­uary, we started en­gag­ing with Boph­elo, but it was all to no avail.” The AGPF now fears that the BBF will not be able to ac­count for the money. “In fact, we are told that there may be noth­ing left in the fund,” the of­fi­cial said. AGPF prin­ci­pal of­fi­cer Mot­latjo Seima said his or­gan­i­sa­tion was “con­cerned about the high num­ber of ter­mi­nated trusts and ben­e­fi­cia­ries that have not been paid, in some in­stances for years”. “This, cou­pled with nu­mer­ous com­plaints of non­pay­ment made by ac­tive ben­e­fi­cia­ries, has led us to en­gage in dis­cus­sions with Boph­elo. The re­sponses we re­ceived failed to [sat­isfy us],” Seima said. Af­ter the BBF failed to pro­vide the AGPF with in­for­ma­tion about the fund’s fi­nan­cial health and le­gal com­pli­ance, Seima con­tracted au­dit firm KPMG and law firm WMK At­tor­neys in Fe­bru­ary to con­duct a “for­mal foren­sic in­ves­ti­ga­tion”. “The ap­pointed at­tor­neys wrote to Boph­elo de­mand­ing the same in­for­ma­tion, and we were baf­fled when Boph­elo re­sponded by ad­vis­ing us that we were not en­ti­tled to it as we are a third party,” Seima said. Pre­lim­i­nary re­sults have re­vealed non­com­pli­ance with reg­u­la­tions and a pos­si­ble breach of gov­er­nance pro­ce­dures. This week, the AGPF con­sulted coun­sel with the aim of bring­ing an ur­gent ap­pli­ca­tion to force Boph­elo to pro­vide the in­for­ma­tion, Seima said. “By our own cal­cu­la­tion, and us­ing the lat­est re­ports from Boph­elo, the AGPF con­tri­bu­tions ac­count for ap­prox­i­mately 90% of the to­tal mem­ber­ship and as­sets of Boph­elo, some R564 mil­lion in re­spect of 7 229 ben­e­fi­cia­ries and trusts.”

THE DE­PORTED CEO

The Mvunon­ala group is fac­ing many other woes. Ear­lier this month, the depart­ment of home af­fairs de­ported Mh­langa, the com­pany’s founder and group chief ex­ec­u­tive, back to his home coun­try, Zim­babwe. Home af­fairs spokesper­son David Hla­bane said Mh­langa was de­ported be­cause “he was in the coun­try il­le­gally and with fraud­u­lent doc­u­ments”.

Mh­langa owns a string of prop­er­ties in South Africa – in­clud­ing a pala­tial home on Umh­langa’s ex­clu­sive Ridge Road with a view of the In­dian Ocean. Deeds of­fice searches also re­vealed that he owns an­other home in the ex­pen­sive Mey­ers­dal Eco Es­tate in Al­ber­ton, south of Jo­han­nes­burg, where prop­er­ties are on the mar­ket for be­tween R7 mil­lion and R25 mil­lion. Mh­langa also owns two other homes: in Mul­bar­ton, south of Jo­han­nes­burg, and in Boks­burg, east of Ekurhu­leni.

Af­ter he was de­ported, Mh­langa re­signed as the com­pany’s group chief ex­ec­u­tive.

Al­most two weeks ago, in an email to se­nior ex­ec­u­tives, he wrote: “It is with se­ri­ous re­gret and a heavy heart that I an­nounce my step­ping down as group chief ex­ec­u­tive of Mvunon­ala Hold­ings with ef­fect from May 1 2017. I will, how­ever, stay on as ex­ec­u­tive chair of the group.”

AU­THOR­I­TIES ZOOM IN ON MVUNON­ALA

The Fi­nan­cial Ser­vices Board (FSB) said it was in­ves­ti­gat­ing the BBF’s com­pli­ance with the Pen­sion Funds Act.

FSB Pen­sion Sur­veil­lance and En­force­ment head Cor­lia Bui­tendag said: “Fi­nally, I can con­firm that we are mon­i­tor­ing com­pli­ance by the fund with all pro­vi­sions of the Pen­sion Funds Act.”

A source close to the Am­plats-com­mis­sioned in­ves­ti­ga­tion said the FSB should also be held li­able for the prob­lems at the BBF. “They knew about the prob­lems as far back as 2014. In fact, the FSB wrote a let­ter to Boph­elo rais­ing con­cerns about com­pli­ance is­sues in 2014.”

Mean­while, the Com­pa­nies and In­tel­lec­tual Prop­erty Com­mis­sion (CIPC) said it had al­ready re­ceived a re­quest from the depart­ment of home af­fairs to have all com­pa­nies as­so­ci­ated with Mh­langa dereg­is­tered.

CIPC com­mis­sioner Rory Voller said: “The com­pa­nies will be dereg­is­tered as they were reg­is­tered us­ing fraud­u­lent doc­u­ments. The as­sets will be dor­mant and, if prop­erty is not claimed by le­git­i­mate means, it will be ... for­feited to the state.”

PIC spokesper­son Deon Botha said the PIC would like Mh­langa to be given the op­por­tu­nity to re­spond to the al­le­ga­tions, and it would in­ves­ti­gate be­fore de­cid­ing what to do.

“How­ever, it is im­por­tant to stress the fact that the funds man­aged by Mvunon­ala on be­half of the PIC for its clients are lim­ited to one as­set class, namely lo­cal JSE-listed eq­ui­ties. These funds are man­aged in line with the client man­dates and in­vest­ment guide­lines pre­scribed by the PIC, and are mon­i­tored through the PIC’s in­ter­nal sys­tems and pro­cesses on a daily ba­sis,” he said.

“Fur­ther to this, these eq­ui­ties are reg­is­tered in the name of the spe­cific clients and are held in safe cus­tody by the PIC’s mas­ter cus­to­dian.”

In the event that Mvunon­ala is no longer able to man­age these port­fo­lios, they will be man­aged by the PIC’s in­ter­nal eq­uity team with­out any losses to af­fected clients, Botha said. He added that the PIC re­mained com­mit­ted to en­trust­ing funds with black-em­pow­ered as­set man­agers in line with its trans­for­ma­tion agenda.

BO­GUS BUILD­INGS

In­for­ma­tion ob­tained from the deeds of­fice and a lease agree­ment ob­tained by City Press re­veal that the Sand­ton of­fice block that the BBF claimed to own and that is re­flected on its bal­ance sheet is, in fact, owned by the Gov­ern­ment Em­ploy­ees’ Pen­sion Fund (GEPF).

The Park­to­nian Ho­tel, op­er­ated by the Protea ho­tel group, is a sec­tional ti­tle prop­erty. Its web­site states that a trust as­so­ci­ated with the man­age­ment com­pany re­tained 165 of the 300 sec­tional ti­tle units, hav­ing sold off 135 units to in­vestors a few years ago.

Protea Group spokesper­son Bonny Feldman de­clined to com­ment.

Botha con­firmed the Sand­ton of­fice block did not be­long to the BBF.

“The prop­erty sit­u­ated at 72 Grayston Drive forms part of the GEPF di­rectly held prop­erty port­fo­lio,” he said.

“The prop­erty was pur­chased in the 2007/08 fi­nan­cial year when the GEPF ac­quired the CBS Prop­erty Group. Mvunon­ala As­set Man­age­ment is the ten­ant.”

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