In a plea bargain deal yesterday, Alexander Forbes admitted guilt on criminal charges for its role in facilitating the stripping of surpluses from numerous occupational retirement funds, mainly to the advantage of sponsoring employers.
The saga, known as the Ghavalas-Lifecare option, was named after the architect of the surplus stripping, Peter Ghavalas and the Lifecare hospital group, through whose retirement fund the surpluses were allegedly “laundered”.
Ghavalas has already been convicted of fraud and theft.
Alexander Forbes pleaded guilty in the South Gauteng High Court to six counts of contravening the Financial Institutions (Investment of Funds) Act. The financial services firm was fined R10 000 and ordered to pay a further R5.49 million to Tony Mostert, the curator of the affected retirement funds, for distribution to pensioners.
This is on top of a R342m civil claim settlement Alexander Forbes reached with Mostert last year.
One of the high profile employers, Simon Nash, is on trial for fraud, theft and contravening the Prevention of Organised Crime Act for the stripping of surpluses from the Sable Industries Pension Fund, the Power Pack Pension Fund (later the Cullinan Group Pension Fund) and the Cadac Pension Fund.
Former Alexander Forbes senior staff involved in facilitating the alleged fraudulent action, Gerald Nightingale and Peter Martin, are still to face criminal charges, while charges against an employee, Neil van Hees, have been withdrawn on condition he provides evidence for the State in various related court cases.
According to the plea bargain agreement, the State said it was prepared to accept the plea bargain because those at fault were former directors or servants of Alexander Forbes and their actions dated back up to 20 years, when the company had different shareholders and directors.
“The current shareholders and directors are taking responsibility for something that did not happen under their watch, and over which they had no control at the time.”
The agreement further states that among the reasons for the plea bargain is the fact that Alexander Forbes considers the welfare of the pensioners – many who are of advanced age while others have already died – of the affected retirement funds to be an urgent and primary consideration in settling the matter.
The plea bargain settlement document contains a lengthy description of the arrangements that were used to remove the surpluses from the various retirement funds and the role of employees of Alexander Forbes, which never benefited from the transactions, in arranging the fraudulent approval for the transfers from the funds.
Alexander Forbes was involved as the administrator of the Lifecare retirement fund.
Its shares remained unchanged yesterday at R9
. - Business Report