R80bn class action against Transnet gets green light

2014-07-31 13:28

Two Transnet pensioners have been given leave to institute an R80 billion class action suit against the parastatal and their pension funds.

Judge Ephraim Makgoba granted an order in the North Gauteng High Court in Pretoria today to pensioners Johan Pretorius and Johan Kruger to launch a class action on behalf of Transnet’s 62 000 impoverished pensioners, in an attempt to recover close to R80 billion in assets and interest.

The group has accused Transnet of stripping the Transnet Pension Fund and Transnet Second Defined Benefit Fund (TSBF) of its assets and mismanaging them to such an extent that the funds were unable to meet their obligations to members.

They have also accused Transnet of attempting to dissolve the pension fund.

Increases to pensions have been limited to 2% for close to 10 years, leaving most of the pensioners in poverty.

The court was told that numerous pensioners received only R1 a month.

Currently, 80% earned less than R4 000 a month and 62% less than R2 500 a month.

Most of them were between 70 and 90 years old and could no longer find employment.

The vast majority often had to beg for the most basic means and a number had committed suicide as a result of being unable to live with dignity.

About 30% of the Transnet pensioners were black.

Transnet in 2001 exchanged government bonds worth R7.7 billion, which earned the fund R1.2billion in interest a year for shares in M-Cell, which earned no dividends.

The shares were sold in 2006 at a loss to the TSBF of more than R5.4 billion.

R800 million in surplus funds, created by the reduction of member benefits, was paid over to Transnet in 2000.

The pension fund, Transnet, and the ministers of finance and public enterprises have opposed the application. They argue it is bad in law, of no substance and a waste of time, effort and money.

Judge Makgoba said in his view the papers before court identified a triable issue between the parties.

He directed the administrator of the pension funds, Metropolitan, to help the applicants give notice to members of the funds of the envisaged class action. A notice also had to be published in newspapers.

The two pensioners were given 60 days to institute the class action. Transnet and the pension funds were ordered to pay the legal costs of the application.

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