Whistleblower pilloried by FSB
Regulator tried to buy off, then fire, registrar over pensions inquiry
● Rosemary Hunter, who paid a heavy price for blowing the whistle on the cancellation of thousands of dormant pension funds by the Financial Services Board (FSB) — now known as the Financial Sector Conduct Authority (FSCA) — says she feels vindicated by Liberty’s recent admission that their deregistration was wrong.
Liberty says it has begun reinstating them and locating beneficiaries.
“This confirms the concerns I raised that the cancellation of these funds had not been conducted in a way that was protecting the interests of the funds and beneficiaries,” Hunter says.
Other retirement fund administrators should now follow suit, she says, because thousands of impoverished beneficiaries of these funds were left high and dry.
One of the most respected and experienced employee benefits and pension fund lawyers in the country, Hunter was appointed deputy registrar of pension funds at the FSB by then minister of finance Pravin Gordhan in 2013.
She found that at least 4,600 funds had been cancelled since 2007 without securing the interests of beneficiaries, and halted the process. “I said: ‘Where’s the paper trail, the financial statements to show where the money’s gone and how people have been looked after?’”
No such information was available.
“I was just told there were these certificates from administrators saying that the funds had no assets or liabilities. I didn’t think that was good enough. I wanted more evidence.
“The FSB are regulators. They’re not supposed to just take somebody’s say-so. They should ask for substantiation.”
The old boards of trustees were told everything had been sorted out when employees of these mostly small, stand-alone funds were moved to umbrella funds administered by the likes of Liberty, Alexander Forbes, Sanlam and Old Mutual.
She found that the FSB’s CEO and registrar of pension funds, Dube Tshidi, had irregularly appointed employees of the fund administrators to act as trustees of the funds. They certified that the funds had no assets and asked the FSB to cancel them. “They were wholly conflicted,” she says. Nothing was done to track down the beneficiaries, many of them migrant workers. Their old employers, who might have helped, were not even told the funds were being cancelled.
“That’s really appalling,” Hunter says. “Most employers, I think, would care enough about their ex-employees to want to help.”
Judging by a preliminary investigation by KPMG she believes the cancelled funds may have had assets of more than R20bn unaccounted for in the records of the FSB when their registrations were cancelled. “The majority may have had no assets and been shell funds, but the point is we don’t know.”
She got a legal opinion confirming her view that the cancellations were unlawful and needed to be investigated to find out what had happened to the money.
“It shouldn’t have been allowed to happen. There should have been careful scrutiny of where the money was.
“The FSB has considerable powers which are supposed to be exercised to protect fund members, and it hasn’t been doing so.”
When she raised her concerns with Tshidi he offered her a R6m golden handshake. When she refused to go away or be silenced he got forensic investigators to dig up dirt on her so she could be fired.
When she went to the board it also tried to get her to leave, and when she refused it got permission from finance minister Nhlanhla Nene to start disciplinary procedures against her.
She says the methodology the FSB used to deal with dormant funds “seemed to me designed to make life very convenient and easy for the administrators” rather than to protect the interests of members and beneficiaries.
The possibility that the FSB might have been captured by the industry did not seem entirely implausible given its violent reaction to her concerns.
In 2016 she asked the high court to order an investigation into the conduct of the FSB.
“Because why on earth would a regulator not want to know this information, why would they want to buy me off, why were they so keen to get rid of me that I had a disciplinary inquiry set down for five days but they couldn’t sustain the charges?
“Why would they put me through hell for trying to do my job?
“The behaviour of my superiors, including the board, was shocking. When I raised these irregularities I got into trouble very quickly. When I tried to get help from the board by blowing the whistle there, it decided that I needed to go as well, and also tried to buy me out. So, frankly, there is something very odd there. I find it hard to believe it was just negligence if there was such vehement resistance to my attempts to do what a regulator should do.”
In his answering affidavit, Tshidi said Hunter was an “angry [and] vengeful” woman who had lodged her whistleblower report and grievance “as an outlet for her emotions”.
She approached the Hawks in 2015 because the “hostility” of the FSB towards her for doing her job as a regulator made her suspect corruption. She says she was obliged in terms of the law to report her suspicions even if she had nothing harder to go on.
“The level and scale of the resistance to what I was trying to do was perplexing, to say the least. And horrifying, actually.
“They could have just said: ‘We made a mistake.’ That would have been the right attitude. I mean, people do make mistakes. But you don’t try to get rid of the person who’s said: ‘Here’s a mistake, let’s try and fix it, let’s investigate and see if anybody has been prejudiced.’”
After applications to the High Court and Supreme Court of Appeal for an investigation of the FSCA failed she approached the Constitutional Court which is yet to deliver judgment.
None of this has come cheaply. She says the lack of support for whistleblowers in the industry is disturbing.
“We have to build structures and get funding for whistleblowers. It’s a risk management tool. If you’re in the industry and want to promote integrity this is the way it needs to be done.”
Where’s the paper trail to show where the money’s gone and how people have been looked after? Rosemary Hunter
Deputy registrar of pension funds at the FSB