Johannesburg – The fight for control of the retirement fund for the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union has taken a new twist, with the fund’s board of trustees moving to terminate the administration services offered by Akani Fund Administrators.
Akani started managing the fund in August last year, following a judgment by judge J Vally of the Joburg High Court, which dismissed with costs the NBC Holdings application to hold on to the lucrative R6-billion Chemical Industries National Provident Fund (CINPF) – which they had administered for the past two decades.
Sunday World has seen a letter dated August 10 from the chairperson of the CINPF, Ayanda Sithole, which gives notice to Akani that it had decided to terminate its services.
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“The section 26(2) board of the fund having met virtually on August 6 2021 deliberated on the state of the fund’s services it currently receives from Akani regarding administration services, and thereafter resolved to terminate the administration services in terms of the applicable service level agreement,” reads the letter in part.
Section 26(2) of the Pension Funds Act 1956 empowers the Financial Sector Conduct Authority (FSCA) to intervene in the management of retirement funds by appointing persons to the board of a fund in certain circumstances.
The Sithole-led board’s term ended in February and the same members were appointed by the FSCA as a section 26(2) board while waiting processes to elect a new board unfold.
One of the reasons advanced to terminate the services of Akani is “delay and/or non-payment of benefits and poor reporting of the funds matters”.
The fund’s principal officer, Lucas Mashego, then dispatched a letter to stakeholders telling them: “The board further resolved that the tender process will not be conducted by a sub-committee but will be conducted by the board of trustees from inception until its finality.”
However, two days before the board sat, Akani wrote to the FSCA detailing its frustration with the management and the “flouting” of corporate governance.
An insider said the situation resembled that of VBS Mutual Bank, which was ransacked to the last cent.
Akani’s deputy managing director, Jack Malebane, on August 4 wrote a scathing letter to the FSCA commissioner Unathi Kamlana, accusing the fund’s board of failing to exercise due care.
“The CINPF is not an accredited credit provider. A fund can only provide housing loan or guarantees to its members. On receipt of the financial information from NBC, Akani did not note any loan receivable as it appears to have been deliberately omitted . However, in the June 2020 South African Reserve Bank quarterly report, prepared and submitted by NBC, Akani noted that the fund has provided a loan amounting to R163-million to NBC Finance,” Malebane wrote.
Malebane on Friday wrote a letter to Sithole telling him that the reasons advanced by the board were disingenuous.
“At all material times, the board was fully aware that … NBC failed to hand over a complete and accurate CINPF data to Akani to empower Akani to administer the fund seamlessly and in line with the relevant legislative prescripts.”
Malebane stated that Akani was willing to walk away should it be compensated for all expenses it incurred.
Takalani Lukhaimane, a manger in the Retirement Funds Division at the FSCA, said the authority received correspondence from Akani detailing its perceived lack of governance controls within the fund and also received correspondence from the fund detailing allegations against Akani’s improper conduct in carrying out its administration functions towards the fund.
“The Authority is in the process of investigating all the allegations received. In the event that any contraventions or non-compliances are found, the Authority will take the appropriate regulatory action.”
CINPF books in a mess
Serious questions have been raised on whether the more than 21 000 Chemical Industries National Provident Fund (CINPF) members will be in a position to get their benefits after an independent review by Lunika Chartered Accountants lift ed the lid on the state of the fund.
Lunika was appointed by the board of trustees following the handover of the fund’s books by NBC to Akani.
The investigations revealed that:
• Fund members without ID numbers stand at 1 724.
• 343 fund members have IDs that do not correspond with their dates of birth.
• 20 554 members have invalid tax numbers.
• The fund also has 8 012 members with full names but no membership numbers. Akani deputy MD Jack Malebane said to date, the CINPF data were incomplete.
“On 8 October 2020, the Akani is axed in battle for control of R6bn workers’ retirement fund principal offi cer of the CINPF escalated the findings of the Lunika report to the FSCA [Financial Sector Conduct Authority] for its intervention. However, we have not received any feedback from the FSCA.”
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