Edition: December 2015 / February 2016
Editorials

SURPLUS STRIPS

Wynne-Jones wins

Another prosecution for the ‘Ghavalas option’ bites the dust.
From the once-long list, there hasn’t been a single
conviction and only one trial still remains.

So much hoopla over so many years. So many allegations in so many headlines. What’s to show for them? No jail time. Not a single conviction, unless one is eventually secured against the indefatigable Simon Nash, for purported frauds running into around R1bn over the stripping of surpluses from a host of defined-benefit retirement funds.

Now that charges against employee benefits consultant Aubrey Wynne- Jones and his company have been dropped, the Financial Services Board and lawyer Tony Mostert (curator of the funds that had adopted schemes initiated by erstwhile merchant banker Peter Ghavalas) might have their knickers in a knot.

Although home
free, his direct
or indirect
costs amount
to many millions
of rand.

They’re within their rights to believe that the National Prosecuting Authority was incompetent. For its part, the NPA might simply have concluded that the chances of successful prosecution were close to zero.

Unless charges are reinstated, Wynne-Jones is home free; free to pop the champagne but also to lick his wounds.

Almost 10 years ago, he was subjected to a highprofile arrest. Since then, to the detriment of his business – which had to be sold – he spent literally hundreds of hours with teams of lawyers preparing to defend criminal and civil cases. Aside from his own time, he reckons that legal fees for the criminal case alone have cost him some R5m and the civil case (covered by insurance, fortunately for him) about R3,2m.

There was also the loss of profits and income as well as the fire sale of his company and the rushed sale of a Houghton office building. Total prejudice he puts at R35m-R40m. It’s too soon to say whether he’ll launch any civil claims for recompense.

In preparing for the trials, Wynne-Jones compiled databases (see tables) that include curator and legal fees, parties accused and respective outcomes, surpluses claimed and amounts recovered.

AMOUNTS SUED FOR AND SETTLEMENTS
Name* Amount sued for Amount settled Date settled Plea bargain? Other
Alex Forbes R937 000 000.00 R325 000 000.00
R75 000 000.00 paid by AF
& balance by
insurers
Feb 10 Yes
No admission of guilt
 
Dixon Seager (see Lucas) ? ? ? ? FD of Lucas arrested
with Martin & Wynn-
Jones. No charges
Ghavalas Unknown. Earned
R65.2m
R18 500 000.00
R6 000 000.00
fine suspended for 6 years
never paid)
15 years jail (suspended)
Feb 09 Yes Deal meant he kept some
R6.4m with state approval (plus of
course an additional
R40m making
R46 618 506.00 in all)
Jacques Malan ? ? ? ? Charges withdrawn
plus R100 000.00 bail
refunded 2008/9. He
was paid R100 000.00
commission
Picard Unknown R31 000 000.00 Aug 08 Yes  
Lifecare Company N/A R60m May 08 N/A  
Lifecare Pension Fund N/A R27 600 000.00 May 08 N/A  
Lucas SA Pension Fund ? R14 900 000.00 ? ?  
Martin (AF) N/A Oct 13 No Charges withdrawn
McEvoy R2 450 000.00 R1 000 000.00
(41%)
5 years jail (suspended)
Feb 10 Yes  
Mitchell Cotts R188 000 000.00 R45 000 000.00   Yes  
Nightingale (Datakor) N/A N/A N/A Asked to plea
& refused
Arrested & charges
withdrawn 2008
Nash N/A Ongoing Ongoing Ongoing Ongoing
Pettitt (Datakor) R2 450 000.00 R1 000 000.00 (41%)
5 years jail (suspended)
Feb 10 Yes  
Sanlam R700 000 000.00 R106 000 000.00 Dec 06
Sep 10
No No admission of
guilt
Somerville (Lifecare) N/A R1 200 000.00 Dec 13 Yes Guilty of
“negligence”
Van Hees (AF) N/A N/A N/A State witness Arrested, charges
withdrawn
Wynne N/A 23 Oct 15 No Charges withdrawn
* “Name” represents an individual person, a fund administrator or a retirement fund as the case may be.
AF” stands for Alexander Forbes.

Largest of the latter were the noguilt settlements by the curator with Alexander Forbes and Sanlam, possibly facilitated by their awareness of the FSB’s power to withdraw retirementfund administration licences. Several other accused opted for plea bargains in preference to the expense and stress of trials. Notable beneficiary of the whole palaver was Ghavalas himself.

Some of Wynne-Jones’ data is incomplete and some is a little dated. Some might be a little inaccurate. They nevertheless provide a broad picture that isn’t pretty for anybody affected by the wholesale mess.

Now to see what happens with sole defendant Nash in one of the longest of long-running trials.

GHAVALAS OPTION FINANCIAL BREAKDOWN
Supplied by FSB, up to November 2011

Fund Surplus Recovered Curator Legal fees Date Cur Basis
Mitchell Cotts R23 600 000.00 R152 705 668.00 R23 768 487.00 R8 823 377.00 15 Mar 05 Norm until liquidation
Datakor PF R70 000 000.00 R261 565 049.00 R59 187 055.00 R8 318 544.00 21 Apr 05 25% up till R140m then
16.66%
Datakor Ret Fund see Datakor PF R27 174 361.00 R6 141 947.00 R1 049 880.00 21 Apr 05 25% up to R140m then
16.66%
Cortech PF see Datakor PF R70 161 919.00 R15 902 896.00 R15 902 896 21 Apr 05 25% up to R140m then
16.66%
Picbel Groep R28 800 000.00 R97 008 640.00 R12 770 398.00 R6 985 701.00 01 Jun 05 Norm until liquidation
Lucas SA PF R14 900 000.00 R94 226 673.00 R19 257 902.00 R6 459 690.00 14 Feb 06 Norm until liquidation
Powerpack PF R41 800 000.00 R106 886 022.00 R23 895 371.00 R4 676 638.00 04 Oct 06 Norm until liquidation
Prestolite   R13 979 907.00 R3 974 108.00 R20 986.00 14 Feb 06 Norm until liquidation
Sable Ind PF R36 000 000.00 R122 010 365.00 R23 651 656.00 R7 215 244.00 20 Apr 06 Various
Cadac PF         22 Dec 10 Capped at R320 000 pm
TOTAL R215 100 000.00 R945 718 604.00 R188 549 820.00 R59 452 956.00