FSB: Plea settlement and statement of civil claims involving Alexander Forbes Group

18 March 2011 FSB

Following many years of civil litigation between the Court appointed curator of seven pension funds and the Alexander Forbes Group, and criminal charges against certain companies within the Group and former employees, all issues between the curator, the Group, the Financial Services Board and the National Prosecution Authority have been finally resolved.

The Johannesburg High Court today sanctioned a plea settlement between the NPA and the Group companies involved, the settlement having been given FSB support.

The earlier civil settlement, in which the FSB played a facilitating role, resulted in payment by Alexander Forbes to the curator for the benefit of the deprived pension funds of an amount of more than R 342 million the bulk of which will find its way to pensioners of those funds.

One of the major beneficiaries of the settlement is the Mitchell Cotts Pension Fund, whose surplus apportionment scheme has been approved by the Registrar and the distribution to pensioners has accordingly commenced. Similar schemes in respect of the remaining funds have been submitted to the Registrar for approval. These relate to the following Funds:

Picbel Group Provident Fund;

Lucas SA Provident Fund;

Sable Industries Pension Fund;

Datakor Group Pension Fund;

Datakor Group Retirement Fund; and

Cortech Pension Fund.

Their distribution will follow in due course.

In terms of the Plea Settlement sanctioned today, the licensed entity at the time, Alexander Forbes Consultants and Actuaries (Pty) Ltd, pleaded guilty to several charges of the contravention of provisions of the Financial Institutions (Protection of Funds) Act, 2001. The company admitted to dealing with trust property (pension fund assets) without observing the utmost good faith and not exercising its fiduciary duties of proper care and diligence in respect of those assets.

While denying any self-enrichment, the company conceded that through its actuaries the Registrar’s office was intentionally misled in the submission of certificates eventually approved by the Registrar. As a consequence, surplus assets of the seven pension funds were illegally accessed for the benefit of participating employers of the funds.

The Alexander Forbes company was appropriately fined R 5.5 million, almost all of which will also be used for the benefit of pensioners of the funds concerned.

In supporting the plea arrangement the FSB stated that it was heartened by the “openness and commitment on the part of the present management of the Alexander Forbes Group, which not only resulted in reasonable compensation to the subject pension funds being paid, but also augurs well for the future conduct of the Group
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