Financial Services Board (FSB) chief executive Dube Tshidi says the financial services industry regulator will apply to the Pretoria High Court to strike out “scurrilous and scandalous” accusations made against him by a senior FSB executive in her application to the court.
In an application filed in January, Rosemary Hunter, the deputy registrar of pension funds, alleged that Tshidi had abused public funds to frustrate her attempts to investigate what she regards as the “unlawful” closure of thousands of dormant retirement funds between 2007 and 2013.
But Tshidi’s replying affidavit filed this month describes Hunter as an “angry, distrustful and even vengeful woman resorting to unbridled accusations, intemperate language and wholly unsubstantiated conclusions”.
Her application, he says, “bristles with conspiracy theories at every turn”, but fails to challenge the FSB’s decision to close the dormant funds.
Tshidi says whatever he, as the registrar of pension funds, has done in the process of cancelling the registration of thousands of “aimless” retirement funds – dubbed the “cancellations project” – holds good until it is set aside by the FSB Appeal Board or reviewed by the High Court.
However, Hunter’s application does not seek to have the cancellations project decisions reviewed, he says. It seeks to compel the board of the FSB, to whom Tshidi reports, to deal with grievances she lodged against him and notices of his and other officials’ alleged failure to comply with the law. She also seeks the unconditional release of two reports commissioned by the FSB’s board.
In her application, Hunter alleges that, shortly after coming to office in August 2013, she formed the view that funds had been closed in a process that did not comply with the pension law and that the rights of former members to unclaimed benefits in these funds may have been compromised.
She obtained legal opinion from Advocate Andrew Breitenbach that supported her view, but claims that her refusal to continue with the project was met with much resistance from Tshidi and other FSB officials.
The court papers reveal that Hunter was subject to a disciplinary hearing instituted by the board and had her requests for additional staff to investigate the project denied.
In her affidavit, Hunter says resistance to her investigation of the cancellations project led her to believe “that Mr Tshidi and/or other FSB employees and/or office bearers have personal interests in ensuring that defects in the conduct of the cancellations project are not exposed to the public and/or in protecting those responsible for such defects from being held to account”.
In July 2014, Hunter reported the matter to the FSB’s board, chaired by Abel Sithole. The board appointed retired constitutional court judge Catherine O’Regan to investigate.
According to Hunter’s affidavit, in November 2014 Judge O’Regan concluded that Tshidi may have acted beyond his legal powers as registrar in closing the funds. On Judge O’Regan’s recommendation, the FSB’s board appointed KPMG’s forensic auditors to look into a sample of the fund closures. Hunter’s application alleges that KPMG also found evidence that Tshidi did not have enough information to satisfy himself that members’ rights were protected when the funds were closed.
But in his replying affidavit, Tshidi says the large number of dormant funds was “an acute and pressing problem” that made the FSB’s role of overseeing retirement funds impossible.
The regulator needed a solution that was both practical and practicable and the project was a bona fide interpretation of the relevant laws.
Tshidi strongly refutes Hunter’s allegation that the project was implemented recklessly or mindlessly.
He says that Judge O’Regan and Breitenbach had expressed their legal views, and although these were “weighty”, there are many legal views and they may differ. He also says he has been advised that certain aspects of Breitenbach’s opinion are incorrect.
Tshidi says Breitenbach and Judge O’Regan have expressly found that he, as registrar, did not act dishonestly when closing the funds.
He also says Hunter’s allegation that he frustrated her efforts to investigate the cancellations project is “vexatious”. He says he facilitated Breitenbach’s meetings with FSB staff, allowed Hunter to publish a draft circular on the cancellations project and took guidance from Breitenbach’s views.
In his affidavit, he says he did not knowingly cancel the registration of any funds that had assets in them, but subsequently the administrator of 76 of the 6 757 funds that had been closed found assets owing to the funds, and these were re-instated. Tshidi says he responded positively when asked to re-instate these funds.
He says in a significant number of cases the funds had no assets, because they had been transferred to other funds, often umbrella funds that cater for many employers and can be more cost-efficient. The trustees had, however, failed to close the remaining dormant funds.
Tshidi also says he in no way obstructed Judge O’Regan’s investigation of the cancellations project and even made a submission to the former judge. He was not, however, asked to participate in the KPMG investigation and is of the view that KPMG’s report is inherently flawed.
Tshidi says in his affidavit that, while practising as an attorney, Hunter had frequently been pitted against the FSB and the registrar and the deputy registrar of pension funds. When she was appointed, she regarded herself as reporting to National Treasury rather than to him, he says.
Her stance on the cancellations project was one of “complete intransigence and she brooked no debate”. This set her against all the officials who had been involved in the project for many years and this, in turn, led her to believe there was a “grand conspiracy against her”, he says.
Tshidi says in his 20 years at the FSB he has never had difficulties with any senior executives or staff, but since August 2013 Hunter has had difficulties with him and various executives at the FSB, and a number of senior staff have expressed their frustration over working with her.
One senior staff member laid a complaint against Hunter, and Tshidi appointed a forensic auditor, who found that Hunter had sent improper emails. A disciplinary hearing was held, but the matter was settled.
Hunter’s application also reveals that a R6-million offer was made to her to terminate her employment before her contract was up. Tshidi says in his papers that the working relationship between him and Hunter was “strained, if not irretrievably broken down”, and, because she also had issues with other staff, he thought it best that a separation be negotiated.
He denies that he offered Hunter a R6-million handshake to leave.
The FSB has formal protocols and procedures for dealing with employment complaints and grievances, but Hunter’s application is not based on any of these, he says. Hunter should have sought relief in the appropriate labour forum, and what she is asking the court to do is “manifestly overboard”, he says.
Hunter has taken a broad swipe at FSB officials, but has not had the courage to name them in her application, and this is “unacceptable behaviour by a senior FSB official, he says.
Earlier this month, Finance Minister Pravin Gordhan, who is named as a respondent in the application, filed his replying affidavit. He said there was no cause for Hunter to call for him to intervene in the way the FSB’s board had dealt with the matter, because the board had taken “extensive steps” that were not unreasonable to deal with her complaints and Judge O’Regan’s and KPMG’s investigations were not complete.
The FSB’s board has yet to file its responding affidavit to Hunter’s application.
Hunter’s contract with the FSB expires at the end of July.
* Paragraph 26 of this report was amended after first publication to provide clarity.