Wanted: thick-skinned lawyer to right wrongs

2009-09-19 14:13

WHOEVER takes over from Mamodupi Mohlala, the outgoing pension funds adjudicator, will have to be thick-skinned and not easily swayed by the powerful interests of the life insurance companies and fund administrators.

This is the view of Vuyani Ngalwana, Mohlala’s predecessor, who is best known for hitting life insurers with a string of rulings that eventually forced them to pay out R2.6?billion to disgruntled clients.

At this stage it is not clear who will replace Mohlala, who is leaving her office at the end of the month to take up a director-general role at the communications department. However, Mohlala has recommended Makhubalo Ndaba, a senior assistant adjudicator in her office, for the job. There is also speculation that Ngalwana may make a comeback to the job he vacated in early 2007.

Finance Minister Pravin Gordhan will make the appointment after taking recommendations from the outgoing adjudicator and the Financial Services Board (FSB).

A source familiar with the process, who did not want to be identified, says Gordhan may have to appoint an internal candidate to act as an adjudicator in the meantime.

“In Mohlala’s office there is enough talent to pick an acting ­adjudicator while the process of finding a permanent adjudicator is ongoing. The job has not yet been advertised,” the source says.

Ngalwana believes that the new adjudicator would need a thick skin and be competent the realm of pension-fund law.

“You need to be thick-skinned because you have to right the wrongs and there are a lot of wrongs in those industries,” he says.

“You are also dealing with people who are comfortable with the way they do things and they are going to attack you if they believe you want to change their way of life.”

Ngalwana believes that a ­pension-law background is crucial for any adjudicator and may help an incumbent to not easily be swayed by the powerful interests of the pension fund administrators and life insurers.

Mohlala, who began her tenure as adjudicator in June 2007, disagrees that pension law is a key requirement for the position.

“For this job, it is important to have a strong legal background, perhaps in labour law. I think you also need to have analytical skills and some background in litigation,” she says.

Before he became adjudicator, Ngalwana was a pension-law practitioner and the editor of Juta’s Pension Law Bulletin.

“I did not come into the office wet behind the ears,” he says.

If the rumours that Ngalwana may return as adjudicator are true, there is an expectation that he will pick up from where he left off. During his three-year stint as adjudicator, Ngalwana shook the industry and struck fear in the hearts of the chief executives of big life insurance companies. He made high-profile judgments against the likes of Liberty Life, Old Mutual and Sanlam which had heavily penalised retirement annuity savers for terminating their policies early.

He quit after a spat with former finance minister Trevor Manuel over his refusal to give him more financial resources to cut the backlog of complaints.

“I was not surprised. Manuel did not want to go after the life companies because he was afraid to kill the goose that lays the golden egg.”

Ngalwana says Manuel was ­reluctant to go down in history as the minister who presided over the collapse of the South African financial services industry. In other words, Manuel felt that Ngalwana’s rulings posed a “systemic risk” to the sector.

Although Ngalwana’s biggest legacy was to force life insurers to settle with retirement annuity investors to the tune of R2.6 billion, he still has misgivings about the quantum of the settlement.

“The manner in which they ­arrived at the R2.6 billion is questionable. The damage they did was far more than that,” he says.

Mohlala has made some hard-hitting rulings during her tenure, but has never commanded the kind of media attention that Ngalwana did.

She will be best remembered for significantly slashing the huge backlog of complaints that she inherited from Ngalwana. When she took over in 2007 she had a staggering 10?000 complaints and received a further 5 000 last year. She is leaving behind 3?800 complaints.

Mohlala has also been credited with imposing a higher interest rate – from 15.5% to 25% – on pension funds and administrators that stall in paying out benefits.

In September last year she introduced a scorecard to monitor the performance of pension funds and their administrators in terms of complaints and the speedy resolution of those complaints. The scorecard names and shames funds and administrators who don’t have satisfactory track records.

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