Gupta-linked fund man­ager on its deathbed

Pen­sion fund turns to courts to re­claim hun­dreds of mil­lions


Nearly half-a-bil­lion rand in re­tire­ment funds be­long­ing to thou­sands of Transnet work­ers landed up in the bank ac­counts of Gupta-linked com­pa­nies, in­clud­ing a Bank of Bar­oda ac­count, and the funds are be­lieved to have been used to buy Op­ti­mum Coal Mine.

The Gup­tas’ pur­chase of Op­ti­mum has been steeped in con­tro­versy, with this new in­for­ma­tion adding to it.

The em­ploy­ees’ pen­sion fund has ap­proached the courts in a bid to force Gupta-linked Tril­lian and its direc­tor, Eric Wood — and other com­pa­nies — to re­pay more than R300-mil­lion, plus in­ter­est, it says it is owed.

The Transnet Sec­ond De­fined Ben­e­fit Fund, which has 51 000 mem­bers, is the first state-linked in­sti­tu­tion to take le­gal ac­tion against Gupta as­so­ciates ac­cused of be­ing in­volved in at­tempts to cap­ture the state for com­mer­cial ben­e­fit.

Seek­ing R1-bil­lion from Tril­lian

Eskom an­nounced on Thurs­day that it would be seek­ing R1-bil­lion from Tril­lian and McKin­sey, but the power util­ity stopped short of say­ing if it would ap­proach the courts to get the money back.

The Transnet em­ploy­ees’ pen­sion fund is haul­ing the em­bat­tled Wood, along­side Reg­i­ments Cap­i­tal and its di­rec­tors, Litha Ny­ho­nyha and Niven Pil­lay, to court.

Kuben Mood­ley, a Gupta as­so­ci­ate and for­mer spe­cial ad­viser to Min­eral Re­sources Min­is­ter Mosebenzi Zwane, and his com­pany, Al­ba­time, are also cited as re­spon­dents in a case lodged by the pen­sion fund at the High Court in Jo­han­nes­burg.

Some of the em­ploy­ees on the fund are re­tired and have been re­ceiv­ing pen­sions since Novem­ber 1 2000.

Pa­pers filed by Moeti Kanyane, of Gilden­huys Malatji Inc, in Au­gust on be­half of the pen­sion fund state that the fund ac­cused Reg­i­ments of mak­ing un­law­ful pay­ments of more than R500-mil­lion from the fund’s ac­count to Tril­lian and Al­ba­time be­tween De­cem­ber 2015 and April 2016.

The fund en­tered a con­tract with Reg­i­ments in Au­gust 2014 to man­age a port­fo­lio of its as­sets and in­vest on its be­half. The con­tract was ter­mi­nated on Septem­ber 30 2016.

State of Cap­ture ac­count pops up

The fund says in its court ap­pli­ca­tion that Reg­i­ments was given full “pow­ers, with­out prior ap­proval or con­sent from the fund, to deal with the port­fo­lio in what­ever man­ner it deemed nec­es­sary or ap­pro­pri­ate in or­der to achieve the fund’s in­vest­ment ob­jec­tives”.

Reg­i­ments went on to make pay­ments to Tril­lian and Al­ba­time — even though the fund had no con­tract or obli­ga­tion to make any pay­ments to ei­ther party.

In ad­di­tion, it is al­leged that pay­ments of R1.6-mil­lion and R42-mil­lion were made on or about De­cem­ber 4 2015, three days “before in­voices were is­sued”.

Al­ba­time was paid R50-mil­lion be­tween De­cem­ber 4 2015 and April 14 2016. Of that, R42-mil­lion was paid by Reg­i­ments into a Bank of Bar­oda ac­count num­ber 1454095326 — the same ac­count for­mer public pro­tec­tor Thuli Madon­sela flagged in her State of Cap­ture re­port as hav­ing been used to raise funds for Gupta com­pany Tegeta to buy Op­ti­mum.

Transnet said it only be­came aware of the pay­ments af­ter be­ing alerted by the pen­sion fund. “No pay­ments were au­tho­rised by Mr Garry Pita or any­one at Transnet to pay Tril­lian,” it said.

How­ever, this was con­tra­dicted by a let­ter, seen by the Sun­day Times, writ­ten by Pita, who is Transnet’s chief fi­nan­cial of­fi­cer, to the pen­sion fund in Au­gust last year.

In the let­ter, Pita con­firmed that the trans­ac­tion had been prop­erly au­tho­rised, as well as all fees due to Tril­lian.

“The fund has merely fa­cil­i­tated the pay­ment of these fees, in the same way that banks would have fa­cil­i­tated,” read the let­ter.

The Sun­day Times un­der­stands that a le­gal opin­ion was ob­tained in July last year, which con­firmed that Reg­i­ments was en­ti­tled — with­out prior ap­proval from its client — to deal with the port­fo­lio in any man­ner to achieve in­vest­ment ob­jec­tives.

Ny­ho­nyha, Reg­i­ments’ ex­ec­u­tive chair­man, said the com­pany was un­able to re­spond to ques­tions due to con­fi­den­tial­ity.

“How­ever, we will say that we are con­fi­dent that the claims against us are with­out any merit and, if the mat­ter pro­ceeds, we will de­fend the ac­tion vigourously. We have al­ways acted in full com­pli­ance with our con­trac­tual, le­gal and reg­u­la­tory obli­ga­tions and we are ex­tremely proud of our per­for­mance,” he said.

Pay back the money

Mood­ley said on Fri­day his com­pany de­served all the pay­ments it had re­ceived as it had a con­tract with Reg­i­ments at the time.

But the pen­sion fund wants Wood and Tril­lian to pay back R179.5-mil­lion and an ad­di­tional R81.5-mil­lion which, it ar­gues, Wood, who was a Reg­i­ments direc­tor when the con­tract was signed, un­duly and un­law­fully ben­e­fited from.

“There was no le­gal ba­sis for the fund to pay the Transnet trans­ac­tion fees to one or more of the Tril­lian com­pa­nies be­cause at no time was there any con­tract . . . Wood was an agent of the fund un­der the port­fo­lio man­age­ment agree­ments . . . and owed the fund fidu­ciary duty,” said Kanyane.

Un­til March 1 2016, Wood worked for Reg­i­ments and was among ex­ec­u­tives who ne­go­ti­ated the con­tract be­tween the pen­sion fund and Reg­i­ments.

He went on to start Tril­lian af­ter re­la­tions soured.

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