Controversial manager hit with pull-outs

2017-05-28 06:00

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Panicking investors want their money back amid reports that a provident fund administrator cooked its books after ‘losing’ nearly R255m.

Concerned investors are withdrawing their money invested at Mvunonala Holdings after revelations that a subsidiary of the holding company had cooked its books in an effort to hide about R255m that it cannot account for.

City Press can confirm that 27four Investment Managers has withdrawn the funds it had entrusted to Mvunonala Asset Managers, a subsidiary of Mvunonala Holdings.

A client of Sygnia Asset Management has also asked the company to withdraw its funds from Mvunonala.

A senior executive at Sygnia told City Press that the company was instructed by its clients to divest more than R200m from Mvunonala Asset Managers.

“We invest on behalf of clients and if clients instruct you to withdraw, there is nothing you can do. The client was no longer comfortable with Mvunonala following the reports,” said the executive.

Mvunonala’s attorney, Tshepo Mathopo, denied that Sygnia had disinvested from the company. “Sygnia has not divested any mandate from Mvunonala Asset Managers. They have, however, requested Mvunonala to provide them with information on any trading activity that happens on the absolute return mandate only.”

Although 27four head of risk management Vic du Preez declined to comment, Mathopo said the company had disinvested as a result of City Press’ “inaccurate reporting”.

Last month, City Press reported that Bophelo Benefit Fund, which is administered by Bophelo Benefit Services – another subsidiary of Mvunonala Holdings – had cooked its financials and claimed to have acquired two properties worth R255m.

However, City Press had found that the fund, which was looking after more than R500m on behalf of beneficiaries of the Amplats Group Provident Fund, didn’t own the two buildings.

Emails seen by City Press reveal that, two days following its report last month, Implats, another mining giant, panicked and instructed Sanlam to stop paying beneficiary monies to Bophelo, which also administers the Impala Platinum Beneficiary Fund.

However, correspondence seen by City Press shows that Impala Workers’ Provident Fund administrators reversed the decision and asked Sanlam to continue paying funds to Bophelo. The provident fund’s administrators, appointed by the Financial Services Board (FSB), are Advocate Matome Thulare, Johan Emmenes and the Association of Mine Workers and Construction Union general secretary Jeff Mphahlele.

The FSB has placed both Impala’s provident and beneficiary funds under administration. Mvunonala and Impala Platinum officials said they had no knowledge that a decision to stop paying monies over to Bophelo had ever been made and then reversed.

How the FSB dropped the ball

The FSB, which regulates the financial services sector, has admitted that it had failed Amplats’ beneficiaries, whose funds are administered by Bophelo.

The regulator has told City Press that, as early as 2015, it was aware that the Bophelo Beneficiary Fund’s financials were not in order.

Last month, City Press revealed that, in 2015, the Bophelo Beneficiary Fund’s financials showed that the fund had invested some 28% in unlisted properties. The Pension Funds Act forbids funds from investing more than 15% in unlisted properties.

FSB spokesperson Nokuthula Mtungwa said: “Following analysis of the 2015 annual financial statements, queries were raised in this regard with the fund”.

However, the Bophelo Beneficiary Fund’s financials reveal that last year, the fund increased its investments in unlisted properties to over 50%.

When pressed about this, Mtungwa said: “The registrar is investigating the matter and, to this end, [has] appointed a statutory manager to investigate and make recommendations about the most appropriate regulatory action.”

The FSB only appointed the statutory manager, Advocate Henry Msimang, following City Press’ reports last month.

Mtungwa also said the Bophelo Beneficiary Fund’s auditors had misled the regulator about the fund’s financials.

“According to the auditor’s report, there were no breaches of regulation 28. However, subsequent information suggests that this was incorrect and the registrar is currently investigating these matters.”

Salt’s bid for Amplats’ pensions

Amplats has also blocked a questionable bid by Mvunonala to take over the administration of the company’s pension fund, through another entity called Salt Employee Benefits.

In October last year, Anglo Platinum had rushed to the High Court in Johannesburg to prevent Salt from taking over the administration of the Amplats Group Provident Fund. At that time, Mvunonala had begun a process of acquiring Salt.

A senior Amplats executive told City Press that the company was opposed to Salt’s bid as there were rumours that the company was being taken over by Mvunonala Holdings.

A senior manager at Mvunonala confirmed that the company was in the process of acquiring Salt. “Some time ago, we paid R36m to acquire some of the company’s shares. Two weeks ago, we paid R3m All in all, we have to pay R50m in order to acquire all the company’s shares.”

Another source with intimate knowledge of the sector said: “It is a foregone conclusion that Salt is being acquired by Mvunonala.” However, both Salt and Mathopo denied that the company was being taken over by Mvunonala.

Salt’s chief executive, Eddie Strydom, said: “Your information is incorrect ... neither Salt Employee Benefits, Salt Invest No 3 nor Salt Invest Holdings is in the process of disposing of any of its equity [shareholding] to Mvunonala Holdings.”

Mathopo said: “There is no relationship between Mvunonala Holdings and Salt Employee Benefits. Mvunonala Holdings does not own, or intend to own, any stake in Salt. Mvunonala only introduced Salt to an external women empowerment company that wished to acquire a stake in Salt. The R36m paid by Mvunonala to Salt was financial assistance to the women empowerment company for the acquisition of shares in Salt.” Mvunonala, he said, was also not involved in Salt’s bid to administer the Amplats Group Provident Fund.

In court papers, Amplats financial director Ian Botha argued that Salt’s appointment did not follow proper processes, a move that he claimed would imperil Amplats. “The knock-on effect this will likely have for many thousands of employees of the applicant – who rely upon the good and proper governance of Amplats so that their pension benefits might be secured – is enormous.”

This week, Amplats spokesperson Mpumi Sithole said: “Amplats launched the proceedings as an interested stakeholder in the Amplats Group Provident Fund, as it had concerns with the appointment process and the ability of Salt to administer a fund [of that size].”

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