Edition: December 2015 / February 2016
Registrar must please disclose why, and until when,
the Saccawu fund needs the protection of a curator.
Enough is enough. After 13 years under curatorship, the national provident fund of the
Cosatu-aligned SA Commercial, Catering & Allied Workers Union (Saccawu) should qualify for
mention in the Guinness book of records.
Begun in September 2002, the curatorship
continues unabated. This is despite curator Tony
Mostert having signalled, back in 2011, that he
wanted it to end and that he was prepared to
resign. But he simultaneously stipulated conditions,
importantly amongst them being the finalisation
of certain litigation that he’d instituted. His latest
available communication to fund members – dated
24 August 2011 – identified three matters as pending:
- “recent” High Court judgment where it was
found that former Saccawu fund trustees had
acted contrary to fund rules. This, he said, was
taken on appeal and heard by the Supreme Court
of Appeal on 24 August 2011;
- A trial involving Standard Bank, Wip Capital and
Saccawu Administration Company, over some
R500m, that had “commenced” on 2 September
2011 (before the date of his communication); and
- A further trial, due to commence on 5 October
2011, by Saccawu Investment Holdings (in
liquidation) against the union for payment of
On the first, the consequences for the fund
and the curatorship aren’t clear. Neither is
the outcome of the appeal, nor whether the appeal
was eventually heard. Despite searches for the SCA
judgment, it couldn’t be found. In any event, this
matter should be now have been finalised.
On the second, the curator lost ages ago in his
R500m claim. There was a costs award against the
fund, the costs possibly totalling well over R15m (TT March-May ’14). So that’s finalised.
On the third, the situation is more curious.
Although the curator’s memo of August 2011 referred
to an amount of R16,5m, media reports in late-March/
early April this year referred to R30m. They stated that
Mostert had agreed to let the union pay off its debt in
monthly instalments of R500 000 with a bulk payment
of R5m due at end-September. Should the trade union
default on a single payment, Mail & Guardian quoted
Mostert as having said, “it is instant liquidation”.
Immediately after the end-September deadline, TT asked Financial Services Board deputy registrar for
retirement funds Rosemary Hunter:
Saccawu workers can get angry
- Has the fund been paid by the union in accordance
with the schedule and, if not, what consequences
are likely to ensue?
- For the union to have paid the fund at R500 000
for five months, from April to August 2015,
equates to R2,5m. With an additional payment
of R5m at end-September, the total equates to
R7,5m. How does this R7,5m reconcile with the
R30m purportedly owed by the union to the fund?
Further, unlike the reports of curators in several
other funds, the FSB website contains no reports
of the Saccawu fund’s curator. Since such reports
should surely be in the public domain, could she
kindly release a copy of at least the latest report?
At time of writing, no response had yet been
received. (However, see next article headed ‘Stop
All that appears about the Saccawu fund on the
FSB website, which has a special section for curators’ reports, is a June 2012 media release. In it the FSB
welcomes the ruling by the North Gauteng High
Court for the fund’s continued curatorship “pending
the finalisation of litigation involving the fund”. The
welcome was a little strange in that the curator had
successfully opposed the FSB’s own application for
the curatorship to be lifted.
So on we go, trying to piece together bits of
information from inside and outside the public
domain. That the fund has over 100 000 members, of
whom about two-thirds are also Saccawu members,
heightens the need for serious scrutiny.
For context, the costs of this curatorship should
be measured against its benefits. To begin with
the former, after nine years the curator’s fees
had reached R10,1m. Legal fees, substantially to
Mostert’s own law firm, had come to a further
R11,9m (TT Sept-Nov ’11).
Now look at some particular periods. The fund’s
financial statements for the year to end-December
2013 reveal curator’s fees of R4,04m and legal fees of
R10,96m. Statements for the year to end-December
2012 show curator’s fees of R2,01m (2011: 1,22m)
and legal fees of R6,44m (2011: R5,50m).
Note that these accumulations preceded the
costs award against the fund in the Standard Bank
litigation. Note too that Mostert was subsequently
cautioned, in an unrelated matter, by the South
Gauteng High Court for appointing his own law firm
to act in his curatorships.
“Although this in itself is not prejudicial or
necessarily results in conflict,” believed Judge Heaton
Nicholls, “there is no escaping the inference that this
may create an incentive to litigate unnecessarily.” She
found it “disturbing”.
On the benefits side, it’s possible only to identify
some indicators. According to the FSB four years
ago, R250m “was recovered from the realisation
of various companies that had been acquired by
Saccawu’s investment company with money from
the fund” (TT Sept-Nov 2011).
True, there was the 2002 inspection by the FSB
that caused it to place the fund under curatorship.
The inspection found significant non-compliance
with fund rules, unauthorised expenditures and
personal abuse of fund monies by the then principal
officer as well as various trustees.
Critical for fund members is the R250m noted by
the FSB as recovered. This money is understood to lie
in a trust.
It apparently originated from a R75m loan, prior
to curatorship, by the fund to Saccawu Investment
Holdings for the acquisition of three industrial
companies. The loan to SIH was against fund rules
and the R250m was realised when the companies
were sold by the SIH liquidator. Not a bad profit.
At date of curatorship in 2002, the value of the December 2013, it had mushroomed to slightly over
R5,8m. This would be due partly to the performance
of investments, externally managed, and partly to a
significant increase in fund membership, suggesting
that there’d been an active recruitment drive.
An April 2004 report by Mostert and then
principal officer Pat Ngqola indicated that the fund’s
membership had increased from approximately
53 000 at the time of curatorship to 70 000: “It is
anticipated that the fund will continue to grow and
reach 80 000 (members) by 2005, if not sooner.
The growth of the fund is a clear indication that
confidence in the fund has been restored.”
Since then, it’s grown much more. In the five years
to 2014 that Mafa Dlamini was its principal officer,
he reckons that the number of members increased
from around 70 000 to 110 000. Notwithstanding his
efforts, Dlamini was then fired from his position by
the curator (see below).
Statement by TT editorial director Allan Greenblo, Oct 30: The other day I was kicked out of court. Well, it wasn’t literally by the seat of my pants and it wasn’t exactly a court in the commonly-understood sense. It was an arbitration hearing at the Commission for Conciliation, Mediation & Arbitration (CCMA).
Does the principle of ‘open justice’, enshrined in our Constitution, apply to CCMA arbitration hearings? Possibly, you don’t know. Certainly, I don’t know. And it’s now evident that the CCMA doesn’t know either.
What I’d done was walk into a hearing – the matter had to do with the curator of the SA Commercial, Catering & Allied Workers Union national provident fund and its dismissed principal officer – in the same way that I’d walked on previous occasions into dozens of High Court proceedings. That’s what the media and the public do routinely.
But not this time. I was told by the commissioner to identify myself. Handing her my business card, I explained that I was representing a publication that reports on matters pertinent to retirement funds.
Counsel for the curator took umbrage. The commissioner went into a tizz. They accused me of not having observed “relevant protocols”. When I asked what these were, the commissioner directed that I leave the room and wait in the corridor. She then also left the room, perhaps to consult with somebody.
About a half-hour later, she returned. Apparently not in the best of moods, she told me to return too. I could not stay, she said, until I had filled in a form at the CCMA legal department applying for permission to attend. Once I had completed the form, she said, the parties should have an opportunity to object. She was aware, she said, of problematic timelines in that the permission process probably wouldn’t be concluded before the hearing had been concluded.
So down several Johannesburg blocks I traipsed, from 127 Fox Street to 28 Harrison Street, where I was courteously received by a lady in the CCMA legal department. There was no such thing as an application form, she told me, and therefore no way in which I could apply for permission. Further, she elaborated, the CCMA had no policy on the attendance of media or the public at arbitration hearings.
Back at my desk, I lodged a complaint with the CCMA against the commissioner. First, she had given me an instruction that was incapable of fulfilment. Second, she had effectively prevented my attendance at the hearing.
A fortnight later, this response was received: “Kindly be advised that the CCMA is in the process of making a formal ruling on media access to CCMA hearings.”
I can understand that CCMA conciliation and mediation proceedings should be confidential, but arbitration is different. The rules of conduct for CCMA hearings, gazetted by the Department of Labour in March, do provide for confidentiality on conciliation and mediation. On arbitration, however, the rules are silent.
My argument is that a reason for the CCMA having been established to hear arbitration matters is for the parties to avert the greater expense of litigation before the Labour Court, a specialist division of the High Court. Accordingly, the media and public should have a right of access to CCMA arbitrations – including attendance and sight of filed documents – in the same way as in the Labour/High Court.
Moreover, parties to CMMA arbitrations have rights of review and appeal. This requires the keeping of records. They automatically become public, except in the unusual circumstance of a judge specifically ordering otherwise, once the matter is referred to a higher court. Keeping them secret at the trial stage is therefore inconsistent, and access to hearings equally inconsistent, as between the High Court and the CCMA.
At time of writing, it’s believed that a High Court judgment on ‘open justice’ at CCMA arbitrations is imminent. It concerns the dismissal by the SA Revenue Service of a senior executive. One party wants the hearing to be closed and one wants it open.
The membership increase, coupled to the health
of assets under management that today are probably
in excess of R6bn, suggest that confidence has
been restored even further. Which makes it hard to
understand why the fund has not yet been released
Dlamini . . . line of fire
Over three years ago the FSB announced that it
was “looking towards the future of the fund and
in particular the normalisation of (its) governance”.
That must be taken to mean the replacement of the
curator by a board of trustees and the appointment
of a principal officer. Being a defined-benefit
umbrella fund, the board would need to comprise representatives of participating employers and fund
members in equal measure with the board entitled to
appoint the principal officer.
Why then is “normalisation” taking so long?
Participating employers and fund members,
predominantly Saccawu trade unionists, are owed an
explanation. It must come from the FSB.
Mafa Dlamini, principal officer of the Saccawu
fund from 2009 until 2014, wants his job back. He
claims to have been unfairly dismissed. The matter
is the subject of arbitration proceedings before
the Commission for Conciliation, Mediation& Arbitration (see box).
An internal disciplinary inquiry, earlier this
year, found against him. Then there was an attempt
at conciliation. However, according to Dlamini,
the non-attendance of curator Tony Mostert at the
hearings (he’d sent a candidate attorney) rendered the
conciliation a non-starter. Thus now the arbitration.
Being heard by a commissioner, the unavailability
of Mostert on scheduled dates caused
proceedings to be postponed until October. Then
there were hearings over four days, sometimes
attended by Mostert. Because of his unavailability
for the rest this year, their continuation has been
postponed until next year.
The curator, presumably to appear or to have
appeared as a witness, is represented by an advocate
and an attorney. Dlamini is represented by an
attorney only. Until the commissioner makes an
award on costs, those of the former will have to
be borne by the fund and those of the latter by the
dismissed employee personally.
Until the matter is concluded, it cannot be
guessed what costs award might be made.
Neither, given the uncertainty about public access,
can filed records be perused for publication. Nor
whether there can be media reporting on any
information that comes to hand.
What also remain secret are the charges and the
defences; even the identities of the witnesses. Secrecy
probably extends additionally to the record of the
disciplinary inquiry. Only once the commissioner has
made a ruling, and there’s been a review or appeal
process (if any), will non-parties be able to take a
view on the substance of the dispute.
Meanwhile, costs mount.
The Financial Institutions (Protection of
Funds) Act places the curator under the control of
the Registrar. Explicitly given the right if not the
responsibility to intervene, implicitly FSB executive
officer Dube Tshidi has either not exercised this right
or has approved the continuing litigation.
It’s reasonable at this stage to call for the
Registrar’s accountability on his oversight function.
More than this, good cause should be shown for the
delay in appointment of a principal officer and an
end to the curatorship.
As this TT edition was reaching its deadline for editorial production, something
unusual happened. A report of Saccawu
fund curator Tony Mostert, dated 31 October
2015, was published on the Financial Services
Board website. In all the years of the fund’s
curatorship, it’s the first.
Apparently, according to Mostert, there are
cogent reasons for the curatorship to continue.
The reasons are for the FSB to accept or reject
because essentially they imply that the R6bn
fund remains incapable of putting together a
competent board i.e. honest trustees selected by
participating employers and elected by members
who meet with FSB approval.
Either this or the curatorship would have to
continue, with its attendant costs that the curator
considers to be in the interests of the fund. A
governance structure that’s “normalised”, to
use FSB parlance, should be better positioned to
make the calls and be accountable to the FSB for
Not yet, says Mostert. In support, he
extensively cites a judgment in the North
Gauteng High Court which had directed that the
curatorship continue. It held: “No undertaking
was given or envisaged that (Saccawu) would
in future desist from attempts to influence the
trustees appointed by it to secure investment of
fund assets in a fashion that might expose the
fund to unusual risks, arising from the intention
to aid (Saccawu) rather than to advance the
interests of the fund’s members. On the contrary,
it is clear that Saccawu is of the opinion that it is
entitled to control the fund and to use the fund’s
assets to benefit itself.”
That was in 2012. Since then, Mostert
contends, the need ultimately to “wind down” the activities of the curatorship towards successful
self-governance must be balanced against
the interests of all stakeholders (presumably
participating employers, Saccawu unionists and
members who don’t belong to Saccawu). The
frustration of the curatorship with particular
regard to the litigation (against Saccawu
Investment Holdings), he says, demonstrates that
the interests of fund members are considered by
the union as secondary to those of the union.
“The reintroduction of the union into a
governing position should not be permitted,” he urges. “The rules of the fund should be
amended to protect the members from the
union exercising its (sic) influence over the
fund.” So amend them then. But why? Aren’t
trustees, irrespective of who nominates or elects
them, obliged by law to act in the interests of
the fund alone?
Apart from the arbitration involving dismissed
principal officer Mafa Dlamini, there’s still
pending litigation against SIH (delayed for more
than five years by Saccawu’s “spoiling tactics”);
against Absa (a counter-claim for refund of
instalments paid), and against Merit Asset
Managers (to do with an “interlocutory issue”).
There’re additionally “various incidents of
fraud” that continue to be uncovered. Other
irregularities, he says, are also under investigation.
Mostert makes numerous recommendations
for bringing the fund out of curatorship.
Fundamental amongst them is succession
planning to ensure a smooth transition and the
pending litigation being concluded. He further
wants to “report on any role that (Saccawu)
should or should not have in the management
and control of the fund”.
On a brighter note, Saccawu won’t be
liquidated. Thanks to the approach by an
unnamed outside party, a settlement agreement
was reached with Mostert after the union had
been unable to conduct business due to its bank
account having been attached.
From the attached account, R4m was released
to the fund. This was followed by monthly
instalments of R500 000 (the report doesn’t say
from when) with a R5m lump-sum payment in
It’s all been paid, leaving one mountain fewer
still to climb.