Retirement Plan Insurance Benefits Healthcare Concept. Photo: 123rf

By Surprise Seema

Amid the hustle and bustle of South Africa’s relentlessly shocking news, a key judgment was handed down over a week ago, in a dispute around the administration of the multi-billion rand Chemical Industries National Pension Fund. In doing so, the full-bench of the High Court in Johannesburg found some of the fund’s trustees received bribes to dislodge its then incumbent administrator, in favour of a service provider that was willing to bend the rules to get the lucrative contract. Industry observer Surprise Seema argues that the judgment was nothing short of a judicial save from a VBS-like capture of a fund started 35 years ago, with transformation of the pension benefits industry and worker control at its heart.

In late 2018, South Africans were left with their mouths agape with incredulity when Advocate Terry Motau’s Great Bank Heist report into what was an orgy of fraud, corruption and looting at VBS bank was released.
This was nothing short of a financial sector transformation horror story. Here was an institution founded in the darkest years of apartheid’s dispossession and disempowerment of black South Africans, carried over decades on the shoulders of gritty and financially resilient ordinary black investors, stokvels and burial societies, only to be smashed to smithereens by looters who harbour no pretence to conscientiousness about our country’s transformation imperative. Ugly!
It’s against this backdrop that those of us with our antennae attuned to issues of transformation in sectors previously impenetrable by historically disadvantaged demographic groups, watch hawkishly any developments that threaten that goal.
I take this long and scenic route to make the point that about a week ago, another ‘heist’ may just have been averted and an egregious wrong to our transformation imperative thwarted by the full bench of the High Court, Gauteng Local Division – Joburg.
To be clear, the scheme I’m talking about had not yet developed to anything on the VBS scale. But its corrosion of the public interest in the proper administration of the pension funds sector would have been devastating had it gone unchecked. Fortunately, despite our country’s myriad problems, the centre still holds, at least in the administration of justice and due process.
In the hurly-burly of South African news developments, the High Court’s judgment in the matter between Moropa and others v Chemical Industries National Provident Fund and others went under-reported. It could also be that its importance wasn’t fully appreciated. It’s that anomaly I hope to redress in this contribution.
At the outset, a summary of what the case was about and the court’s judgment is appropriate. It stemmed from a November 2019 decision by the board of trustees of the Chemical Industries National Provident Fund (CINPF) to terminate the services of its long-standing administrator, NBC. The trustees then moved swiftly, bulldozing through any due process, to appoint as NBC’s replacement, three service providers: Akani Retirement Fund Administrators, Novare Investments Consultants and Moruba Consultants and Actuaries.
Long story short, it turns out the Provident Fund’s top three officials (Principal Officer, Chairperson and Deputy Chairperson of the Board of Trustees) who championed, cajoled and bamboozled the board of trustees into this decision, had been paid handsomely by a front entity (Neighbour Funeral Scheme) whose sole director was also the CEO of the ‘successful bidder’ for the fund administration contract – Akani.
Okay, paid ‘handsomely’ is perhaps not even accurate, because as it turns out this trio were willing to pervert their fiduciary and statutory duties for the proverbial 30 pieces of silver.
The now late principal officer received the miserable sum of R40 000, while the chairperson and deputy chairperson of the board of trustees each received a measly R25 000. Sadly, the dagger-and-cloak plot couldn’t be consummated fully without sucking into its maelstrom 23 employees of NBC, amongst whom were the two top officials entrusted with maintaining the business relationship with the CINPF, but alas they found the allure of Akani’s dirty-money too tempting.
Needless to say, they’re all former employees today. But the damage done is immeasurable. In the wake of the saga, NBC suffered business losses in the millions of rand and was forced to retrench some of its workers, just some of the real victims of this corn job.
The High Court rightly rejected as fabrications, the explanations proffered by the three-fund officials for why an entity (Neighbour Funeral Scheme) owned by the same owners of the service provider (Akani) had awarded a lucrative contract for the administration of the fund a week prior, was, a week later, making these payments to each of them.
They all fell back to the flimsy cover story that the funds were in lieu of funeral insurance payouts for some relative or another who had apparently died in each of their family circles in that week in late November/early December 2019.
The said relatives, whose relationships with the three fund officials were never explained to the court’s satisfaction, also “just happened” to have been covered by the same funeral insurance company (NFS), on policies also “coincidentally” taken by the CINPF officials separately in exactly the same month (August 2019).
Them taking funeral policies with a company whose sister-entity they were to award a lucrative contract a mere three months later, was also said to have been “coincidental”.
Lately, they tried to weave, but the court said: “…it is so far-fetched that it can and should be rejected…”
A perplexing feature of this scheme is how relatively small the bribe amounts involved are, given how lucrative the contract the three entities were to gain in exchange, and the extent to which the stratagem was going to tear the fabric of trust in the employee benefits system while undermining member-control of funds like the CINPF in one fell swoop.
But, as we have come to appreciate, as we’ve been regaled with apalling stories of bribery and corruption over the last few years, it’s not always the quantum of the bribe that matters. It’s also the betrayal of the legal duty of care and diligence, the erosion of our country’s values of transparency and accountability, and important as the court found in this case; the undermining of human rights, in this case, the right to administrative justice.
The corrosion of our democratic society’s values, rights and principles I describe above is precisely why the court felt public interest was implicated enough in this ostensible mere private-law dispute.
So much so that the court resorted to applying the Promotion of Administrative Justice Act (PAJA) – a tool mainly reserved for judging conduct by organs of state, and which courts use rarely and sparingly to gauge private entities’ behaviour.
It’s also precisely why I believed more ought to be said about this under-reported judicial outcome. See, had the scheme succeeded, who knows what would have been next for its conspirators, who would have been emboldened by their initial “success” in unlawfully elbowing out NBC and entrenching Akani, Novare and Moruba in the fund administration contract?
Here, we’re talking about CINPF, a pension fund whose founding in 1987 and history hitherto has always been about foregrounding control and participation in key decision-making by its mainly blue-collar members in sectors such as petroleum, paper, chemicals, wood and glass.
It’s not far-fetched, I’d argue, that further plots were going to be hatched that possibly would have ended with CINPF members crying as VBS investors and depositors have been in recent years.
South Africans are understandably fed-up with corruption. I believe this judgment, under-reported as it was in the news media, actually carries more significance in its emphasis on what criminology’s broken window theory has always held: “untoward behaviour left unchecked leads to further decay and undermining of laws and values. Fortunately for us as a country, the broken window in this instance was swiftly attended to by a robust system of judicial recourse.” And we’re all better for it.

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