Issue: Mar/May 2011
The treatment of society's ‘most vulnerable' – like minor children, mostly poor – is unacceptable when it comes to receiving their inheritance entitlements. Justice Minister Jeff Radebe cannot allow it to continue.
Put policy to the test: first, on accountability and transparency; second, on protecting society's most vulnerable. On both tests, when it comes to the Guardian's Fund, the Department of Justice fails.
Here is a fund (yes, it is "Guardian's" and not "Guardians'") whose primary responsibility, it says officially, is to receive and manage monies due on behalf of persons deemed legally incapable or lacking the capacity to manage their own affairs: "This obligation is a very serious one, especially as the bulk of people falling into this category are orphans and mentally incapacitated people, some of the most vulnerable groups in society."
That sounds wonderful, and it is, if the fund were to be working with anything like the efficiency that it should and the beneficiaries deserve. But plough through the relevant reports – the most recent being for 2007-08 of monies kept in trust by the fund, and for 2009-10 of the Justice Department – and the impression is gained that everything is hunky-dory, or almost.
In the latter, for instance, Justice Minister Jeff Radebe proudly informed parliament: "Long-standing areas of concern in the administration of the fund and financial reporting have either been addressed or action plans have been put in place to solve these issues. A total amount of R1,049bn in beneficiary receipts (24 006 receipts) and R754m in beneficiary payments (52 766 payments) were successfully managed."
Put this in the context of roughly R5bn under the fund's management. In its 2007-08 fiscal, the fund held total assets of R4,73bn and had a liability to beneficiaries of R4,52bn. Of this liability, R559m was paid to beneficiaries; in other words, less than 14% of their entitlement.
Importantly, although the statistics of applications for payment being processed look impressive, they belie the sheer human frustration in actually making the applications at all (see box).
Inevitably, there's a world of difference between the number of people entitled to apply and those who successfully apply. This is either because they simply don't know of their entitlement or because they lack the basic skills properly to comply with the application procedures.
What ends up in the fund falls into two main categories. One is inheritances due to minor heirs – children – where there is no proper will. The other is inheritances due to major heirs who cannot be traced. In practice, these people are predominantly poor and often pathetically so.
The fund is administered by the Master of the High Court. Ask for an interview with Acting Chief Master Leon Basson – how problems encountered with the fund, highlighted last year by Radebe's disclosure of a R80m fraud (TT Oct '10-Jan '11), are being remedied – and sorry, he says, talk to departmental spokesperson Tlali Tlali.
So on to the spokesperson. Asked whether, to improve efficiencies, a review of the whole Guardian's Fund operation is under consideration – by appointment of professionally-qualified trustees, outsourcing of administration to the private sector, tracing beneficiaries and optimising investment returns – Tlali Tlali will go no further than refer to a Radebe speech: "We do not conduct investigations by media."
And what did Radebe say in this groundbreaking speech of last October? Nothing that hasn't been said previously: more promises to strengthen accountability, improve management systems, punish corrupt officials and so on. But there's nothing to suggest that a wholesale review of the fund, that would meaningfully help "the most vulnerable groups", is on the radar screen; apart, that is, from "developing a robust turnaround strategy and consolidated plan" – for the department as a whole, not specifically for the fund – that Radebe will announce after parliament has approved it "in the very near future".
CASE STUDY: A HUMAN STORY
Manzana . . . bureaucratic hardship
Nontembiso Manzana is principal officer of the Vaal Reefs Disaster Trust and a trustee of the Mineworkers Provident Fund. This is her personal experience:
My husband was a member of the Government Employees Pension Fund. He died in October 2004, in the Klerksdorp hospital. Nobody sat with me as a widow, to counsel me about my finances. I was told to deal with the GEPF in Pretoria.
When I went to Pretoria, I was told that my papers weren't there. They told me at the GEPF to resubmit the papers. I battled for a whole year with people who don't explain anything. They don't help you to fill in forms or give you any advice. You stand in queues. When their offices close at 3pm, they tell you to come back the next day.
At the end of 2005, the GEPF told me that the money had been paid into the Guardian's Fund. Why wasn't I consulted? Why was it paid there? I still don't know.
There was a funeral benefit, before tax, of R 7 500. I received it in August 2005, nine months after I'd buried my husband. All the time, I was incurring phone and travel expenses – going up and down to Pretoria – to claim my money. I also had to involve lawyers.
When I tried to find out why my money had been put into the Guardian's Fund, the GEPF told me that this was according to the Act and was the end of the matter.
My lawyers kept corresponding with the Guardian's Fund. They pointed out that payment of pensions money into the fund prevented the smooth running of my late husband's estate and asked that the payment be reversed back into the GEPF or transferred directly into the account of the estate.
Monies must be deposited into the estate's account before distribution. I had been properly appointed as executrix of the estate. The money should not have been paid into the Guardian's Fund. All we got was a letter from the Master in Pretoria that my two sons, then aged 15 and 12, each had become entitled to pension benefits of R74 000.
The Master's office never explained how it had arrived at these figures, or even told me how much had been paid into the Guardian's Fund. The most I got was a fax in 2007 that was impossible to decipher.
All the time, I'm battling to get the money to pay for my children's education. I've had to borrow money because I can't get it out of the Guardian's Fund. I'm tired of dealing with these rude people. Nobody cares; not my late husband's employer, not the GEPF and not the Master's office. Eventually, you feel you can't keep chasing. You just want to give up.
Imagine how much worse it must be for people who don't have my means.
Can government seriously be satisfied with the way that the fund operates? Does it seriously believe that there are only blips to be sorted, and that it's capable of sorting them?
There isn't a chance that a private-sector fund would be allowed to operate in this way:
The Fiduciary Institute of SA has called for the fund's administration to be outsourced, so that responsibility for its functions is placed with a regulated financial institution and run similarly to a bank. Yet, because FISA members must continue working with the Master's office and perhaps also because they don't want to be accused of self-interest, FISA seems loathe to hammer the point. Surely, however, it's preferable for Radebe to explore this option rather than keep trying to fix the mess himself.
"Highest on the agenda is the need to create an institution that competes favourably with the best financial institutions in the country in terms of service and delivery," Simelane promised three years ago. Why compete?
Unfortunately, beneficiaries can't live on promises.