Court orders Mafube  to pay  pension fund R37m it owes

The Bloemfontein High Court has ordered a Free State municipality to pay up more than R37.7-million in pensions of employees it allegedly embezzled.

The court also  directed the director of public prosecutions to consider instituting criminal proceedings against  the municipality.

The matter was brought to court by the Municipal Worker’s Retirement Fund (MWRF) after Mafube Local Municipality failed to deposit employees’ pension funds to its bank account.

In a scathing judgment, acting judge Thiloshni Ramdeyal said “the practice by the municipality seems to have continued over the years; frivolous defences and non-payment of its employees’ pension fund contributions still remains unabated”.

She also directed the registrar of the court to bring the judgment to the attention of the national director of public prosecutions for consideration to pursue for breach of the Pension Funds Act.

In August, the court ordered the municipality and instructed the court registrar to inform the National Prosecuting Authority about criminal activities that the municipality committed in embezzling the funds.

The municipality was ordered to pay the MWRF an amount of R37 795 476.32, with interest and costs. After failing to do so, Mafube’s bank accounts were attached by the MWRF.

While the sheriff executed the writ, it was found that only R97 000 was available in the municipality’s bank account.

Despite having less than R100 000 in its bank account, the judgment debt still stands for  the arrears in pension fund contributions from the municipality for its employees.

MWRF told the court that it was now attempting to retrieve the arrear amount for its members, by seeking past and future information in respect of the municipality’s bank accounts to give effect to the court order.

The MWRF said Mafube had not disputed that it had deducted pension fund contributions from the salaries of its employees and failed to pay them over to the fund.

“However, no explanation appears to be forthcoming about what happened to the money deducted.

“It is also not in dispute that the municipality receives an equitable share annually for the previous financial year an amount of R128-million, and for the 2024/2025 financial year an amount of R138-million.

“Arrear pension payments are still not forthcoming, despite these large amounts of equitable shares received and to be received by the municipality,” reads the application by MWRF.

The fund contended that the municipality has the money it received from its employees and has moved cash from one account to another to avoid attachment of its bank account.

“The fund, therefore, seeks an order to [be] furnished [with] a full accounting of each and every withdrawal, payment or transfer from Absa Bank accounts as well as FNB of the respondent from  October 10 2023 to date,” said MWRF.

It also sought an order from the Bloemfontein High Court to obtain copies of bank statements of the relevant accounts and copies of bank statements for the account/s where the equitable shares are held as well as the dates expected by the municipality to receive such shares.

In her judgment, Ramdeyal said there was an ongoing non-compliance from the municipality to pay pension fund contributions to the fund.

She said an application was launched in 2011 by the MWRF for non-payment where judgement was granted in 2015 and the municipality eventually made partial payment.

She said in 2019, the fund brought a similar application against the municipality, seeking judgment for R25 411 872.20 and an order against Absa for disclosure of the transfer of monies by the municipality to another account.

Ramdeyal said although Mafube asserted that it did not in any way try to escape liability for any payment due, it still did not pay the arrear contributions.

Instead, it brought an application for leave to appeal against the court’s judgment, which was dismissed in December 2021 by judge Pitso Molitsoane.

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