R300m of workers’ pension funds vanish
MORE than 800 current and former employees of a Limpopo government-owned bus company have been left high and dry after R300 million of their pension funds vanished.
This comes after Great North Transport (GNT) Pty Ltd failed to pay their contributions to the pension fund administrators, or made short payments, for 17 years even though it had made monthly deductions from their salaries, in breach of the Pension Fund Act (PFA).
The money was evidently used as cash-flow by the cash-strapped bus company. Despite holding quarterly board meetings between 2000 and 2017, the GNT board of trustees also failed to report non-compliance by the bus company to the pension fund registrar as required by the PFA, according to a draft forensic report by global firm BDO.
The board was obliged by law to report prejudicial material matters and conduct relating to the members' benefits. The draft report also found that GNT's annual benefit statements were unavailable, figures unexplainable, while other provident fund benefits decreased instead of increasing, in violation of the law.
The financial mismanagement and illegal activities by the GNT board and management led to the liquidation of the company's Provident Fund last year. The board's illegal conduct is still continuing today, the draft report added.
According to the documents, the scandal affects even workers who have been with GNT from as early as 1990.
The company has had nine administrators since 1994, including Alexander Forbes, which administered GNT between 2010 to 2017.
Others included Moriting Wealth Managers and Lekana Employee Benefit Solutions.
GNT, led by CEO Dr Matata Mokoele, is a subsidiary of the Limpopo Department of Economic Development, Environment and Tourism (LEDET) and is overseen by one of its entities, the Limpopo Economic Development Agency (LEDA). The GNT Board is chaired by Thabelang Ncube.
The Limpopo Treasury appointed BDO to probe the matter in 2020 after Make It Happen Foundation (MIHAFO), a social and economic justice NGO, complained on behalf of affected employees in 2016.
The foundation had demanded an investigation after affected workers said they could not access their full pension funds after retirement even though they had been paying monthly contributions.
They had alleged financial mismanagement, corruption and other illegal acts.
In the same memorandum, MIHAFO MD Harry Masindi had demanded an investigation into the bus accident at (Ga) Sekgopo Village ferrying ANC supporters to the party's 108th anniversary celebrations, which killed six people in January 2020.
Dated May 9, 2022, the draft BDO report confirmed most of the allegations made by the whistle-blowers. Among others, it found that:
•There was over a considerable period of time been late payments, short payments or no monthly payments of provident fund contributions by the employer (GNT) for the specific period of 2000 t0 2017;
• Payslips indicated that a deduction was made from a members' salaries, although some funds weren't paid over to the provident fund and or administrator;
• Both the current GNT CEO and
CFO confirmed this was and still is a standard and accepted practice (although non-compliant with legislation);
• Both the current GNT CEO and
CFO confirmed that funds were held back and then used as cash-flow for GNT's day-to-day operations; and,
• No indication that the board of
trustees (having had quarterly trustee meetings) reported non-compliance by GNT in terms of regulation 33(5) of the PFA. There was also no indication that the board of trustees reported non-compliance by GNT in terms of regulation 33(5) of the PFA (reporting relating to late payments.
The board failed to comply with provisions of section 7c and 7d of the PFA (steps required for proper administration of the fund and documentation management).
Affected workers said GNT's financial irregularities have had a devastating impact on their lives. Patrick Kopane, 69, who worked for the GNT between 1990 and 2003, said he received R40 000 when he retired almost 10 years ago because of the company's illegal activities.
“I (retired) in 2003 and received R40 000 despite serving for a long time. Now I am struggling and have to hustle so I can feed my children. This is sad because the company deducted our money for pension contributions," said Kopane.
Ravish Thela added that he received his pension fund without interest. "They took the money from us and they failed to take it to the funds. This is the reason Alexforbes cancelled the contract with them," he said.
Limpopo Provincial Treasury's spokesperson Annah Oliphant referred all questions to GNT and LEDA spokesperson Mthunzi Dlamini. He denied that the amounts paid to retired staff were not comparable to their period of service.
“No evidence could be found either by the Board of Trustees, or the
independent auditor tasked to investigate these allegations, that the
benefits were inconsistent with the contributions made by the members.”