Transnet’s R80bn class action

PRETORIA: The North Gauteng High Court has given a lifeline to more than 62 000 cashstrapped pensioners to institute an R80 billion class action against Transnet and their two pension funds in what is likely to be the largest such lawsuit in South Africa’s history.

In giving the green light for the action, Judge Ephraim Makgoba said: “The situation in the present case seems pat- tern-made for class proceedings. This is so in that the class the applicants represent in this case is drawn from the very poorest within our society (pensioners ) – those in need of statutory social assistance.

“They also have the least chance of vindicating their rights through the ordinary legal process. As individuals they are unable to finance a legal action, given their meagre income in the form of pension money. What they have in com- mon is that they are victims of official excess, bureaucratic misdirection and what they perceive as unlawful administrative methods.”

The judge granted the order following an application by two pensioners – Johan Pretorius and Johan Kruger.

They are only two of thousands of Transnet pensioners who had to make do with just a 2 percent annual increase in contributions over nearly a decade.

Some were so down and out that they had committed suicide, while others were forced to beg

The court earlier heard that some of these pensioners had only received R1 after deductions were made from their payslip for medical aid and other expenses.

Judge Makgoba heard that some were so down and out that they had committed suicide, while others were forced to beg on the streets.

The essence of the relief sought by the applicants in the proposed class action is to enforce legislative provisions which they say will create an obligation on Transnet and a guarantee on the state to pay a pension deficit which existed in 1990 and which they say is payable to the Transnet Second Defined Benefit Fund (TSDBF) and the Transport Pension Fund (TPF).

The pensioners accused Transnet of stripping the two pension funds of billions – thus leaving them cash-strapped and unable to pay them what they were due.

They say the total legacy debt owed is almost R80bn.

Currently 80 percent of them earned less than R4 000 a month and 62 percent less than R2 500 a month. Most of the pensioners were between 70 and 90 years old and could no longer find employment. About 30 percent of the Transnet pensioners were black.

Transnet in 2001 exchanged government bonds worth R7.7bn which earned the fund R1.2bn in interest per year for shares in M-Cell, which earned no dividends. The shares were sold in 2006 at a loss to the TSDBF of over R5.4bn.

R800 million in surplus funds, created by the reduction of member benefits, was paid over to Transnet in 2000.

The pension fund, Transnet, and the ministers of Finance and Public Enterprises have

opposed the application. They argue it is bad in law, of no substance and a waste of time, effort and money.

The pensioners will propose to ask the court that the new pension increase policy (in terms of which they may not receive an increase of more than 2 percent) be declared unlawful. They also want an order directing the funds to recalculate members’ pension increase in accordance with the pension increase policy that applied prior to August 1999.

The main defence raised by the pension funds was that “a reasonable pension benefit expectation” did not create a substantive right.

Judge Makgoba said this issue would better be argued more fully at the later trial. “The application (to launch a class action) is approved.”

He gave the two pension funds 30 days in which to furnish the applicants’ lawyers with the details of all the pension fund members on file so that it could be established who they were for purposes of the class action. He said the applicants had to give notice to all the pension fund members of the class action by publishing this notice in various newspapers.

Those pensioners who did not want to participate had 60 days in which to inform the applicants’ lawyers. If they did not give notice of this, they would be bound by any decision the court that would hear the matter makes.

Lawyer for the applicants, Wynanda Coetzee, meanwhile said the class action should be before the court within a year.