JOHANNESBURG – The latest court ruling in the battle between NBC Holdings and Akani Holdings over control of a R6 billion workers’ pension fund has all but obliterated NBC’s hopes regaining control of the fund that was snapped up by Akani Retirement Fund Administrators in March.
The NBC’s application for leave to appeal was on August 24 dismissed with costs by Judge Bashier Vally of the Local Division of the South Gauteng High Court after a protracted battle to stop the migration of the Chemical Industries National Provident Fund (CINPF) to Akani.
This after a scathing 52-page judgement, July 31, against the NBC and nine others whose conduct and reasons for their interdict application to oppose the decision of the CINPF trustees to terminate NBC’s services were characterised by Judge Vally as “woefully inadequate, abuse of court process, destructive, disruptive”.
Commenting on the decision, which has largely been described as a victory for black workers, Akani managing director Zamani Letjane said: “We will continue to defend the correct decision of the CINPF trustees to appoint Akani as we believe they followed due process as stipulated in the rules of the Fund. It is my hope that NBC will see the light and drop this unnecessary litigation as they have no legal standing in this matter.”
The NBC was found wanting after CINPF resolved to terminate its services with the employee benefits group in December 2019 after an investigation by Gobodo Forensic and Investigative Accounting (GFIA) found that NBC had charged excessive fees.
The GFIA said the fees charged by NBC were not market-related and therefore not in the best interest of the CINPF
“We further conclude that the current fee[s] being charged by NBC are based on an assessment of market offerings not in the best interest of CINPF, with it being apparent that were CINPF to test the market they would be able to negotiate a better fee structure,” reads the report, which then recommended that the CINPF consider going to the market with a view to securing better rates.
The GFIA report detailed that the investigators did not receive full co-operation from NBC and from NBC’s auditors, Grant Thompson. Nevertheless, they uncovered a string of problems, resulting in them making a number of recommendations.
The GFIA said the fees charged by NBC were not market-related and therefore not in the best interest of the CINPF. The fees charged for “Admin” increased by 25.4 percent between 2017 and 2019 and that fees for “investment consulting” increased by a whopping 336.11 percent between 2016 and 2017.
NBC was levying fees of R700 000 per month for members who no longer belonged to the CINPF and the GFIA was not sure if this was legally permissible. NBC levied a separate fee of R4 231 724 for the administration of one of the services (“Agterskot payments” made to qualifying members) it provides and recommended that the board investigate the matter internally and satisfy itself that it had approved the payments.
However, NBC argued that the CINPF resolution to terminate its services was as a result of betrayal, executed over time by its former employees, Victor Chaane and Sipho Ginya, who were consultants to the CINPF and managed the relationship between NBC and the fund.
Chaane and Ginya were accused of selling trade secrets and Akani was accused of conspiring with Chaane and Ginya, and other trustees to wreck NBC’s relationship with the CINPF with the objective of securing Akani’s appointment in its place.
The conspiracy claims stem from Akani paying Chaane and Ginya some monies, to which Chaane and Ginya responded by stating that there were now employed by Neighbourhood Funeral Scheme (NFS), which is associated with the main shareholder of Akani.
NBC rejected this explanation and insisted that NFS was not a real business and the employment contracts were “a sham”. However, after more evidence presented Judge Vally concluded that the claim that the contracts were “a sham” lacked cogency.