Manyane Manyane and Mashudu Sadike
Pretoria - More than 800 current and former employees of a Limpopo government-owned bus company have been left high and dry after R300 million of their pension fund vanished.
This comes after Great North Transport (GNT) Pty Ltd failed to pay their contributions to the pension fund administrators, or made short payments, for 17 years even though it had made monthly deductions from their salaries, in breach of the Pension Fund Act (PFA).
The money was evidently used as cash-flow by the cash-strapped bus company. Despite holding quarterly board meetings between 2000 and 2017, the GNT board of trustees also failed to report non-compliance by the bus company to the pension fund registrar as required by the PFA, according to a draft forensic report by global firm BDO.
The board was obliged by law to report prejudicial material matters and conduct relating to the members’ benefits.
The draft report also found that GNT’s annual benefit statements were unavailable, figures unexplainable, while other provident fund benefits decreased instead of increasing, in violation of the law.
The financial mismanagement and illegal activities by the GNT board and management led to the liquidation of the company’s provident fund last year. The board’s illegal conduct is still continuing today, the draft report added.
According to the documents seen by Independent Media, the scandal affects even workers who have been with GNT from as early as 1990. The company has had nine administrators since 1994, including Alexander Forbes, which administered GNT between 2010 to 2017. Others included Moriting Wealth Managers and Lekana Employee Benefit Solutions.
GNT, led by CEO Dr Matata Mokoele, is a subsidiary of the Limpopo Department of Economic Development, Environment and Tourism (Ledet) and is overseen by one of its entities, the Limpopo Economic Development Agency (Leda). The GNT Board is chaired by Thabelang Ncube.
The Limpopo Treasury appointed BDO to probe the matter in 2020 after Make It Happen Foundation (Mihafo), a social and economic justice NGO, complained on behalf of affected employees in 2016.
The foundation had demanded an investigation after affected workers said they could not access their full pension funds after retirement even though they had been paying monthly contributions.
They had alleged financial mismanagement, corruption and other illegal acts. In the same memorandum, Mihafo MD Harry Masindi had demanded an investigation into the “bus accident at (Ga) Sekgopo Village ferrying ANC supporters to the party’s 108th anniversary celebrations”, which killed six people in January 2020.
Dated May 9, 2022, the draft BDO report confirmed most of the allegations made by the whistle-blowers. Among others, it found that:
*There had over a considerable period of time been late payments, short payments or no monthly payments of provident fund contributions by the employer (GNT) for the specific period of 2000 t0 2017.
*Payslips indicated that a deduction was made from a members’ salaries, although some funds weren’t paid over to the provident fund and or administrator.
*Both the current GNT CEO and CFO confirmed that this was and still is a standard and accepted practice (although non-compliant with legislation).
*Both the current GNT CEO and CFO confirmed that funds were held back and then used as cash-flow for GNT’s day-to-day operations.
*No indication that the board of trustees (having had quarterly trustee meetings) reported non-compliance by GNT in terms of regulation 33(5) of the PFA (reporting relating to prejudicial material matters/conduct relating to the members’ benefits).
There was also no indication that the board of trustees reported non-compliance by GNT in terms of regulation 33(5) of the PFA (reporting relating to late payments – payments outstanding for longer than 90 days to be reported to the NPA).
The board of trustees failed to comply with the provisions of Section 7c and 7d of the PFA (steps required for proper administration of the fund and documentation management).
Affected workers said GNT’s financial irregularities have had a devastating impact on their lives.
Patrick Kopane, 69, who worked for the GNT between 1990 and 2003, said he received R40 000 when he retired almost 10 years ago because of the company’s illegal activities.
“I (retired) in 2003 and received R40 000 despite serving for a long time.
“Now I am struggling and have to hustle so I can feed my children. This is sad because the company deducted our money for pension contributions," said Kopane.
Ravish Thela added that he received his pension fund without interest.
“They took the money from us and they failed to take it to the funds. This is the reason Alexforbes cancelled the contract with them,” he said.
Limpopo Provincial Treasury’s spokesperson Annah Oliphant referred all questions to GNT and Leda spokesperson Mthunzi Dlamini.
He denied that the amounts paid to retired staff were not comparable to their period of service.
“No evidence could be found either by the board of trustees, or the independent auditor tasked to investigate these allegations, that the benefits were inconsistent with the contributions made by the members. No specific members came forward with evidence to substantiate these claims,” said Dlamini.
He denied that GNT failed to pay members’ contributions to the fund, saying the BDO “final report” said “they could not find any evidence of outstanding payments during the period which they investigated – all contributions which were deducted from members were paid over to the fund”.
Dlamini also denied claims that GNT refused to release the BDO report, saying it “was made available to the FSCA as part of the liquidation proceedings and was also made available to the Tribunal that included it in the documentation provided to the parties opposing the fund’s liquidation for their consideration in the upcoming hearing”.
He rejected suggestions that GNT swept the matter under the carpet.
“An independent tribunal has been appointed to look at all available evidence on whether the liquidation of the fund should proceed or not.
“Further, the department commissioned a forensic investigation on the basis of the preliminary outcome (and) is seeking responses from GNT and Leda.”
Ledet spokesperson Zaid Kalla dismissed claims that MEC Thabo Mokone had ignored the BDO findings and failed to release the report.
Kalla said upon receiving the draft BDO report from the provincial treasury, Mokone wrote to the boards of Leda and GNT asking them to respond to the matters raised.
“When they respond, the MEC will make a determination on what (should be done) further. So, the executive authority has not ignored the findings. He is undertaking a consultation process as it is required of him,” said Dlamini.
Masindi said workers approached the NGO after the amounts they received at retirement were not comparable to their periods of service.
He said he advised them to request annual benefit statements dating back to when they joined the fund.
“On inspection of the statements, it became clear that although GNT had deducted monthly contributions from workers’ pay, not all the monies had been paid over to fund administrators.
“In cases where contributions were paid over, payments were made late.
“This had obviously impacted the growth of the provident fund,” said Masindi.
They also went to court, organised protests and wrote to the Limpopo Legislature requesting an intervention, he added. GNT provident fund administrators have denied any wrongdoing and blamed the board and management for the mess.
Moriting Wealth Managers spokesperson Ayesha Martin said they had nothing to report to the regulators because “contributions were always paid and therefore there was nothing to report”.
Asked why the company ended business with GNT provident fund, Martin said: “We were not comfortable with the manner in which the board of the fund (trustees) conducted the business of the fund and therefore decided to withdraw as a service provider.”
Through Sure Kamhunga of PR company Corporate Image, Alexander Forbes confirmed it was GNT’s administrator from April 1, 2010, to September 30, 2017, but denied any wrongdoing.
“We can also confirm reporting non-regulatory compliance to the employer. The fund subsequently moved over to Integrity fund retirement administrators.”
GNT board chairperson Ncube and chief executive Mokwele did not respond to requests for comment on the administrators’ assertions that the board and management were responsible for the financial mismanagement and the illegal activities.
BDO’S terms of reference were to look into the general decline in the status of the provident fund, and probe the non-payment of employee and employer’s contributions to the administrator.
The firm had to determine whether there had been misappropriation of provident funds at the entity by individuals, including management, staff and trustees.
In addition, BDO had to determine whether proper processes were followed in the winding-up or dissolution of any of the funds and, if not, identify who was accountable for the decisions made to dissolve the respective funds.