Early in February, the high court in Mahikeng approved the regulator's application to appoint Tony Tshivhase and Malcolm Campbell as joint curators to run the fund.
"An on-site visit to the fund was conducted in August 2017, and the matters emanating from this on-site visit formed the basis for the application to place the fund under curatorship," says Corlia Buitendag, head of pension surveillance & enforcement at the FSB.
The on-site visit found serious lapses in governance at the fund, the FSB says.
"The visit revealed several matters that were prejudicial to members' interests in the fund, and the [pension funds] registrar considered that the board of trustees was not adequately or appropriately addressing them, and that curators needed to be appointed to protect members' interests," says Buitendag.
But what is concerning is that the curatorship comes nearly six years after the FSB reported senior executives of Kopano Employee Benefits (KEB), a subsidiary of trade union federation Cosatu's investment arm, and certain other individuals to the Directorate for Priority Crime Investigation (Hawks) for plundering more than R120m from the provident fund.
The financial services regulator also withdrew KEB's licence to administer retirement funds at the time. This followed a damning report arising from an inspection of the operations of Kopano ke Matla - Cosatu's investment arm - and Westside Trading, a consulting company Bosele paid to trace beneficiaries.
Kopano was irregularly appointed as Bosele's administrator, and minutes were fabricated to make its appointment appear legitimate, according to the report.
Inspectors recommended that the companies, and certain key individuals working for them, be investigated for "unusual and suspicious transactions and payments", including R123m paid to companies within the Kopano group, with more than R57m ending up with top Kopano executives. A Kopano executive then paid R6.9m of Bosele's own money to the fund's board of trustees.
The FSB says it acted on the report. However, industry insiders say the fund should have been placed in curatorship a long time ago.
"After finalisation of the 2010 inspection report the registrar took regulatory action, including the removal from office of the then trustees and principal officer," says Buitendag.
"The FSB referred the report to the Hawks during May 2012,and to the Asset Forfeiture Unit during April 2014 for criminal investigation."
But Hangwani Mulaudzi, spokesman for the Hawks, said in response to the Financial Mail's questions that he was hearing about the referral for the first time.
He undertook to inquire about the case, but had not found it by the time of going to print.
Luvuyo Mfaku, spokesman for the National Prosecuting Authority, under whose ambit the Asset Forfeiture Unit falls, refused to answer repeated questions.
Evidently the FSB's action had little impact on the fund'sgovernance.
Says Buitendag: "There were several attempts by subsequent boards of management to bringthe fund back to acceptable levels of governance, but the registrar concluded after the last on-sitevisit that these actions were not yielding the desired results, and the members of the fund were suffering.
"Consequently, the registrar formed the view that good cause existed to place the fund under curatorship," Buitendag says.
"The effect of the curatorship order was that the management and control of the fund now vests in the curators, and the trustees of the fund were divested of their powers."
Fund administrator Alexander Forbes has refused to comment.
For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.
We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.
Go to: http://www.inet.co.za
