Watchdog orders massive fines, removal of trustees from security guards' retirement fund

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The Private Security Sector Provident Fund has around 600 000 members.
The Private Security Sector Provident Fund has around 600 000 members.
  • The FSCA has found that trustees of the fund that oversees the retirement savings of security guards "consistently" flouted procurement policies.
  • The regulator has ordered that five trustees be removed, while six current and former board members were fined up to R230 000.
  • Trustees received almost R8 000 for attending a golf day in 2017.

SA’s financial watchdog has ordered that five members of the board of trustees of the Private Security Sector Provident Fund (PSSPF) be removed for improper conduct.

Five former and one current trustee were also fined up to R230 000, for, among other things, flouting procurement and tender policies between 2011 and 2017. 

The privately administered fund oversees retirement, funeral and death benefits for South Africa’s security guards. It has around 600 000 members and assets worth R10 billion.

"Board members who continue to serve on the PSSPF have been asked to vacate their positions within 10 days of receiving their sanctioning letters from the authority," said the Financial Sector Conduct Authority (FSCA). The members in question are Cobus Bodenstein, Zithulise Mqadi, Marchel Coetzee, Anna Maoko and Jonnes Hlatswayo.

READ | EXCLUSIVE : Security guards' retirement savings 'blown' on overseas junkets, drinks, cars, FSCA finds

"Those members who have already left the board have been served with penalty fines ranging from R10 000 to R230 000," said the regulator. 

The current and former trustees who have been fined are Bodenstein, Zazi Zulu, Bonginkosi Qwabe, Simon Jackson, Hennie Myburg and Sipho Miya. The FSCA did not say what they had each been fined. 

All trustees found guilty of wrongdoing can appeal to the Financial Services Tribunal.

Long-running probe 

The FSCA started probing the fund in 2017 following allegations of wrongdoing. In 2018, following an initial investigation, it reached an agreement with the fund to have two statutory managers appointed to oversee it. At the same time, some trustees agreed to step down.  

The watchdog then ordered that a follow-up probe be launched by its enforcement division. Meanwhile, the two statutory managers commissioned their own independent forensic investigation.

The regulator said that the two probes found that trustees: 

  • consistently deviated from procurement policy, which was not noted in board minutes, 
  • engaged in tender negotiations after the deadline for bids had passed,
  • were paid rates that were "inconsistent" with the fund’s remuneration policy, 
  • were paid R8 000 each for attending a golf day, and 
  • received a fixed monthly fee of R7 450 in addition to what they earned for attending board meetings. 

"We remain committed to protecting members of retirement funds against any reckless or intentional conduct by trustees which could compromise retirees’ savings, and we will take action where justified," said FSCA Commissioner Unathi Kamlana in a statement. 

"Those trustees who do the right thing or make genuine mistakes without personally benefitting from them should not worry."

The PSSPF did not immediately reply to a request for comment. 

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