Finance Minister Pravin Gordhan has asked the Pretoria High Court to dismiss the section of the deputy Registrar of Pension Funds’s application to it that seeks to compel him to investigate allegations about the Financial Services Board’s (FSB’s) dormant pension fund cancellation project, saying the application is factually and legally flawed.
Rosemary Hunter, the deputy registrar, launched the Pretoria High Court application in January this year against her employer, the FSB, demanding the investigation of grievances she lodged with the FSB’s board about her boss, FSB chief executive Dube Tshidi, and the release of two reports relating to the closure of thousands of dormant funds between 2007 and 2013.
Hunter initially lodged her grievance with Abel Sithole, the chairperson of the FSB’s board, in July 2014, less than a year after taking up the role of deputy registrar of pension funds. Her grievance is also a report of non-compliance by FSB officials with the relevant laws and codes of conduct, and she alleges that the FSB’s executive officer, Dube Tshidi, sought to undermine her investigation of the cancellations project.
Soon after taking office in August 2013, Hunter sought legal advice about the manner in which dormant funds had been closed. Based on that advice, she believed that the funds had not been closed lawfully and that former members may have been prejudiced.
Her court application alleges that her grievance has still not been dealt with fully and seeks to compel the board to investigate.
Alternatively, Hunter seeks an order against Gordhan, compelling him to investigate her grievance against Tshidi and other FSB officials.
In an affidavit to the court, Gordhan argues that Hunter fails to make a case for him to intervene, because the FSB board’s response to her grievance was not unreasonable and did not constitute wilful or negligent failure to investigate an allegation of an irregular expense.
The court papers reveal how, in response to Hunter’s allegations, the FSB’s board engaged retired Constitutional Court judge Catherine O’Regan to investigate. Hunter participated in O’Regan’s inquiry and O’Regan completed a draft report in November 2014.
According to Hunter’s application, O’Regan agreed that the Registrar (Tshidi) may have acted beyond his powers when closing some of the funds.
O’Regan recommended that the board appoint forensic auditors to investigate the circumstances under which the funds’ registrations were cancelled.
The board appointed auditing firm KPMG, and a report was completed in July last year. Only a small sample of fund cancellations were reviewed, but Hunter says she was informed by the KPMG team that the Registrar did not have enough information to satisfy himself that members rights were protected when the funds were closed.
Hunter’s application seeks an order from the court releasing both O’Regan and KPMG’s reports.
O’Regan’s report was offered to Hunter on condition she sign a confidentiality clause. Hunter states in her affidavit that she considered it “unconscionable” to sign the non-disclosure undertaking, as it would have prevented her from complying with her legal duties.
Gordhan’s affidavit says the O’Regan and KPMG investigations reveal that the FSB’s board took “extensive steps” to address Hunter’s issues and it also says it is deceptive to convey the impression that both the O’Regan and the KPMG investigations have been completed.
He says it would be premature for him, as the minister, to intervene at this stage.
He also states that Hunter’s decision to resort to litigation to get “attention” is not appropriate, particularly as the FSB Act provides for an executive such as her to consult with the minister.
He says it was not unreasonable for the board to defer dealing with the allegation that Tshidi and the FSB had spent money irregularly until the O’Regan and KPMG reports shed light on any personal enrichment of FSB officials from the cancellation project.
This issue is now, however, being investigated by the Auditor-General’s office, because Hunter laid a complaint against the FSB with the Auditor-General and opened a criminal case with the Hawks.
“This pattern of pursuing multi-track recourse against the FSB is significant,” Gordhan says.
His replying affidavit notes that the dormant funds issue is a complex one with a number of possible approaches and solutions.
The FSB’s board plans to oppose Hunter’s application, but has yet to file its papers. A letter from the board included in Gordhan’s replying affidavit gives some insight into how the board is likely to respond.
The board sent the letter to the former Finance Minister, Nhlanhla Nene. After approaching the board in 2014, Hunter approached Nene in May last year, requesting that he investigate the FSB’s alleged misconduct in relation to the cancellations project. Nene referred the matter back to the FSB’s board.
The board’s letter states that “Hunter seems to want to dictate to the board how it must address her [grievance]. She seems to conclude that if the board does not follow a process that accords with her wishes, it follows that the board has acted improperly. This is an assertion the board rejects.”
Hunter alleges in her application that Tshidi spent the FSB’s money irregularly on unjustified disciplinary action against her in an attempt to frustrate her investigation of the cancellation project.
However, the FSB board’s letter included in Gordhan’s affidavit refers to the disciplinary action against Hunter, saying the board took disciplinary action against her “as it had good cause to do so” and this was “made clear” in the settlement agreement it reached with her. “The board’s settlement agreement with her must not be misconstrued as an indication that the disciplinary action against her was baseless or that she was absolved of all the charges against her,” the letter says.
Gordhan says in his affidavit that Hunter’s application makes no case that the expenditure on the disciplinary procedures violated any legislation.