Edition: September / November 2017
Editorials

A board that wonít be bored

Fundís principal employer Impala loses appeal on appointments by Registrar. He can act “notwithstanding” fund rules.

From the workplace perspective, where intense rivalry between the Association of Mineworkers & Construction Union and the National Union of Mineworkers has blown into the pension-fund space on the North West platinum belt (TT June-Aug), there are potentially disturbing features to the judgment of the FSB Appeal Board against Impala Platinum.

In effect, Impalaís unsuccessful appeal has ratified the decision of the Pension Funds Registrar not only to displace employer-appointed trustees of the Impala Workers Provident Fund but also to replace the entire board with three trustees of the Registrarís nomination.

One of the three is Amcu general secretary Jeff Mphahlele who Impala believes to have a “serious and unmanageable conflict of interest”. Of the fundís 32 000 members, roughly a third arenít Amcu members.

The rules of the IWPF provide that its management board must comprise 14 trustees, half appointed by Impala as the employer and half elected by members. Since the member-elected trustees had been dismissed from Impalaís employment, they were automatically disqualified as members or trustees of the fund.

On their dismissal, the IWPF no longer had a properly constituted management board and was unable to conduct an election of member trustees within the required 90-day period. The three trustees appointed by the Registrar were then to comprise an interim board. On the argument of Impala, he should have appointed trustees only to fill the vacancies; in other words, not to have removed the Impala trustees already in place and to have sought agreement on the new trustees.

By his action, however, Impala contended that the Registrar had ignored the workplace structures set up for collective bargaining between Impala and Amcu. Theyíd agreed to consult on all issues affecting employees.

Impala also complained that the Registrar had not given it adequate notice and a reasonable opportunity to make representations about his intention to remove the Impala-appointed trustees. These trustees were lawfully in office and the Registrar could only supplement their numbers, not appoint a board of his own choice.

The FSB Appeal Board, sitting under the chairmanship of retired judge Louis Harms, cited from s7A of the Pension Funds Act: “Notwithstanding the rules of a fund, every fund shall have a board consisting of at least four board members, at least 50% of whom the members of the fund shall have the right to elect”. The Registrar, he held, is entitled to act “notwithstanding” a fundís rules.

Harms turned to s26, showing that the Registrar had discretion to create an interim board that supplants a board not properly constituted: “Two boards existing side-by- side is unthinkable. Once the interim board constitutes a board that complies with s7A, the interim board is relieved of its duties and dies a natural death.”

The idea was “ill founded” that the seven employer-nominated trustees should remain in place until a board compliant with s7A has been constituted. The Ďremovalí of these trustees, Harms added, was “simply a consequence of the demise of the original board and the appointment of an interim one”.

The Registrar appoints an interim board. It is a completely different board. Its primary function is to 8 Todayís Trustee September/November 2017 constitute a proper board, Harms said.

Mphahlele. . . contentious trustee

On the “irrationality” alleged by Impala over the Mphahlele appointment, he found that the Registrar had taken into account that Mphahlele is general secretary of the majority trade union and that a large proportion of the fundís members are also members of this union: “In spite of the list of nominees prepared by the rump board, the Registrar considered it more appropriate to appoint a senior office bearer of the union as such a person would have the necessary support to successfully assist in arranging and finalising the election of new board members.”

The Registrar must be confident that he will do so without bias against members of NUM. In the hothouse atmosphere of the platinum belt, it might have been preferable for him rather to have appointed a trustee where no anticipation of bias could be perceived. Even if there is, two other trustees were appointed by the Registrar to the interim board. One is an Impala employee who was an Impala-nominated member of the then existing board. The other is an advocate described as an expert in the supervision of retirement funds. They imply checks and balances on the board as a whole.

Thatís over and above their fiduciary duties, on which Impala will doubtless keep an eagle eye.