New light on Cadac pension case
JUST about everyone interested in the administration of pension funds has been waiting expectantly for the evidence to be given by Peter Ghavalas in the criminal trial of Simon Nash, executive chairman of Cadac. Nash is charged with fraud, theft, money laundering and for racketeering in respect of the Power Pack and Sable pension funds.
Ghavalas master-minded the arrangements that permitted companies with large defined benefit pension funds in actuarial surplus to make use of legal surpluses in nine smaller pension funds. He emigrated to Australia, and returned to SA to visit his ill mother in 2005, unaware that anything untoward was taking place. He was arrested and held for 40 days awaiting his bail application. Bail of R1m was granted and Ghavalas was required to report to the police daily.
Finally, in 2009, he signed a plea admission, paid a fine of R18.5m, received a suspended sentence and returned to Australia. There was doubt he would return to give evidence-in-chief in Nash’s trial.
As expected, Ghavalas was led through his evidence by the prosecution, and it’s worth noting that this trial, which began three years ago, has heard only two witnesses so far. The first was Cor Potgieter, who produced reports which formed the basis of allegations levelled by the state, and attorney Tony Mostert. These were thrown out in November 2010 by the presiding magistrate who found them of no evidential value (lots of hearsay).
That started a trial within a trial on the basis that the state had obtained documentation from the Financial Services Board (FSB) illegally. It was when the FSB’s executive director, Dube Tshidi, made his famous “I might incriminate myself” statement when asked why he had appointed Mostert as the Cadac pension fund’s curator. The Cadac fund was put under curatorship when Mostert and the FSB alleged Nash was using fund money to pay for his defence on the criminal charges.
The matter of privileged information is regarded as so serious by the magistrate that he ordered a second trial within a trial. This prompted the state to argue that various meetings were covered by the secrecy provisions of the Inspection of Financial Institutions Act (80 of 1998). The magistrate ordered that the matter be resolved in the high court, to be heard next month.
Meanwhile, Ghavalas was crossexamined by Willem de Bruyn SC, appearing for Nash.
Contradicting his 2009 “confession,” Ghavalas told the court on 15 occasions that “I did believe (the pension fund scheme) was legal when I implemented it twice for Nedfin and all the others … I also believed it was legal in 2007 when I signed seven affidavits opposing bail and fighting Mostert. I now state under oath that I believe now on September 19 2013 that it was legal.”
Ghavalas told the court he had signed the confession in “very difficult times,” and after reading Potgieter’s reports. He also said that had Potgieter not earlier signed the required section 14 (of the Pension Funds Act, 25 of 1956, as amended) approvals, the funds’ restructuring would not have taken place. He said that, when Nash approved the deal in 1998, others approving were Neil Davies (then financial director of Altron and a Brait director), and the late Paul Ferguson, former chairman of the JSE.
Ghavalas also confirmed the deals relating to the Picbel pension fund and the Sable pension fund were identical. The only difference was that the Picbel transaction was approved by former judge Mervyn King, and Sable’s by Nash.
Importantly, Ghavalas said Nash could not possibly have known that the cession between two other companies was the instrument removing money from the Sable fund.
There can be little doubt that Ghavalas’s testimony under crossexamination has thrown new light on the facts of this trial. A high-level meeting of the National Prosecuting Authority has been called to review its position.
As with most trials, how this develops is anyone’s guess.