Transnet faces biggest class action in SA history over stripping of pension fund assets

2014-07-20 06:00

Transnet is planning to dissolve the pension fund into which it transferred 65 000 pensioners from the apartheid years and then stripped it of its assets.

The legal team bringing a class action against Transnet to try recover the stripped assets plus interest amounting to almost R80 billion last week discovered documents showing that the fund’s trustees – all employees of Transnet – are amending the fund’s rules in such way that they can dissolve the fund.

The lawsuit, which is being led by two of the country’s top advocates, Jaap Cilliers, SC, and Leon Kellerman, SC, begins in the North Gauteng High Court tomorrow. They will ask the court for approval to bring a class action on behalf of the 62 160 severely impoverished pensioners to claim around R79.963 billion – in assets and interest – from Transnet.

If the court approves the application, it will be the start of by far the largest class action ever in the country’s legal history. The average age of the pensioners is 77, but their average pension is R2 850 per month. The legal team was also promised an early court date because delaying tactics by Transnet and some of the other respondents in the case have already delayed the case unnecessarily.

An angry Brian Molefe, Transnet’s CEO, earlier made it clear to City Press’ sister paper Rapport that the plight of the pensioners did not concern him because they are “beneficiaries of apartheid”.

A total of 33% of the pensioners are black.

Rapport received copies of the documents from the legal team on Friday. The amendments to the fund rules allow for the fund to be dissolved on the instruction of Transnet.

Amendments to the Transnet Pension Fund provide for the liquidation of the fund.

On Friday, Transnet said through spokesperson Viwe Tlaleane it is not aware of any “formal process” to amend the rules of the fund or the Transnet Pension Act. “Talks on this are internal [among] the fund’s board of trustees. The documents are therefore confidential,” Tlaleane said.

But the board of trustees is still fully under Transnet’s control. Four of the six board members are employees of Transnet. The chairperson of the board is a nonexecutive member of the Transnet board. It is therefore impossible that Transnet’s top level does not know of the plans.

The fund and its administrators, Metropolitan, are the first respondents in the court application. The other respondents are Transnet, Minister of Public Enterprises Lynne Brown, Minister of Finance Nhlanhla Nene and President Jacob Zuma.

There were initially 65 000 pensioners, but because of deaths they have now been reduced to 62 160. Several committed suicide because of their desperate circumstances.

Johan Pretorius (69), one of the two pensioners who is bringing the claim on behalf of the 62 160 pensioners, said in a sworn statement the deficit in the pension fund arose because in 2001 Transnet exchanged the fund’s key asset, debentures valued at R7.7 billion, for shares in MTN – at the time M-Cell, whose value in 2001 was R1.395 billion.

Until 2001, the debentures provided the fund with an annual income of R1.2 billion. But there is no indication that the fund earned any income from the M-Cell shares.

Since the debentures were exchanged for the M-Cell shares, the increases for the initially 65 000 pensioners were limited to 2% per annum. This is inconsistent with previous decisions that the annual increases of pensions must cover at least 70% of the inflation rate.

The stripping of the fund’s assets only came to light last year when the two advocates, Cilliers and Kellerman, gained access to the fund’s statements.

Cilliers and Kellerman are providing their services pro bono. If the case is successful, they will be reimbursed at ordinary rates under the supervision of the General Council of the Bar, but if the case fails, they get no compensation.

- Jan de Lange, Rapport

Transnet responds:

Dear Editor,

Your story "Transnet faces biggest class action in SA history over stripping of pension fund assets" makes a number of inaccurate, baseless and unsubstantiated claims against Transnet.

Before we address the substantive matters that form the crux of your article, we would like to address the continuous, wearisome and libellous reporting of remarks, which your publication falsely attributes to the Group Chief Executive, Mr Brian Molefe.

Your paper quotes Mr Molefe as saying: “the plight of the pensioners did not concern him because they are “beneficiaries of apartheid”.

As stated previously, we reiterate that Mr Molefe made no reference to previous “beneficiaries of apartheid” and, crucially, it is a falsehood to say that Mr Molefe was not concerned about the plight of white pensioners. In the course of a discussion with your correspondent sometime last year, Mr Molefe asked why the publication was not concerned about the plight of black pensioners who have no pensions because they were prohibited from belonging to the fund under apartheid.

For the record, Mr Molefe did not make these statements which are now being picked up by various media and repeated unremittingly as fact.

On the face of it, the statements are intentionally harmful and insulting both to the image of the Group Chief Executive, Mr Brian Molefe, and the reputation of Transnet.

Further to the article, we would like to point out that it is not correct to report that Transnet is planning to dissolve the fund. We made this clear to your correspondent. Transnet has not received any such proposal from the TSDBF Board of Trustees for consideration. In spite of your correspondent’s best attempts to besmirch Transnet’s image, our goal has always been to act in the best interest of the Fund and its beneficiaries.

With regards to the allegation of stripping of assets, this is another invention by your newspaper. The Board of Trustees of the TSDBF have, over the past few years, worked diligently on seeking to improve the position of the pensioners of the TSDBF. This dedicated work has resulted in the following improvements:

• a financially stronger fund;

• a far more stable fund;

• surplus assets for the benefit of pensioners;

• bonuses to substantially supplement pensions into the future; and

• pensioner elected trustees.

Finally, it is disingenuous and dishonest to claim that The Board of Trustees of the Transnet Second Defined Benefit Fund is fully under Transnet’s control. The Fund is an independent body, subject to its own fiduciary duties and responsibilities. With effect from 1 April 2014 the Board of Trustees comprises 50% elected trustees by the pensioners (4) and 50% appointed by Transnet (4).

Finally, we wish to point out that these Trustees are bound to act in the best interests of the Fund and its beneficiaries. The Chairman of the Fund is not a member of the Board of Trustees, and accordingly has no vote except in the event of a deadlock, in which case he would have the casting vote.

Kind regards,

Mboniso Sigonyela

Spokesman, Transnet SOC Ltd

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