No law against coining it from pensions

Supreme Court rules there is no obligation to use the money to benefit the pensioners who invested in it

IT IS technically legal for one person to earn hundreds of millions of rand to manage a pension fund, and there is no obligation to use that money to benefit the pensioners who invested in that fund – as long as a court sanctions such a deal.

This was the Supreme Court of Appeal’s (SCA’S) conclusion last week, ruling on a case accusing an advocate of charging exorbitant fees for one of the 10 pension funds under his curatorship.

The Sable pension fund, its later iteration, and nine other pension funds, including Cadac, have been at the centre of controversy since they were placed under the curatorship of attorney Anthony Mostert between 2005 and 2011, with the agreement of the financial services board (FSB).

However, as part of these agreements, Mostert and his law firm, AL Mostert, were able to negotiate up to 30% claims on surplus earnings in each of the funds – alongside remuneration for legal fees.

A parliamentary query from 2011 revealed that up until that point, Mostert as an individual, together with his firm, had already been paid out at least R164 million on the Sable fund alone.

While a series of legal battles are currently ongoing as to whether such conduct amounts to fraud, there is also an Eff-initiated investigation by the Public Protector into whether there was a corrupt relationship between Mostert and FSB head, Dube Tshidi.

A recent ruling at the high court in Pretoria ruled that regarding the Sable fund, Mostert was not entitled to such vast amounts, and that an agreement for 30% of the surplus was unlawful, prompting Mostert to elevate the case to the SCA.

While the SCA dismissed Mostert’s appeal in its entirety, the presiding panel of judges was only able to do so because of a technicality.

In the SCA ruling, it was revealed that when Mostert initially signed on as curator of the Sable fund, he had agreed by court order to only charge his hourly legal fees – about R2 000 an hour – while acting as curator.

This adds up to a maximum of R320 000 a month. Because of this, Judge Malcolm Wallis and three other concurring judges said that a new payment scheme would have to be decided on between him and the FSB.

Such an agreement would have to be “reasonable”, but could possibly entail negotiations based on how much time he had contributed to the job of curator.

Tshidi, in his own papers, argued that arrangements involving such amounts were not unusual, though admitted they faced “controversy and criticism.”

There was no precedent to declare such arrangements illegal.

“I have no difficulty with the notion that in circumstances such as those that arose… there might be good reasons for a curator to be remunerated on a basis other than the norm, including a fee calculated as a percentage of the amount recovered on behalf of the fund… Nor would I regard it as per se unlawful,” the ruling read.

Meanwhile, Ian Levitt, the lawyer representing the EFF in the Public Protector investigation, said the ruling did not set a precedent that could be used to prevent curators from taking advantage of their positions in the future.

“(The ruling) does not prevent curators from continuing to charge exorbitant, unconscionable amounts. The likelihood that pensioners would bring such matters to court to fight these agreements is extremely low because of the costs (of legal fees),” he said. Queries sent to Mostert about the ruling were not answered by the time of publication.