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African Bank with its unsecured R60 billion debtors book, spread over 2,4 million debtors of which R19 billion consists of non-performing loans (more than 3 months in arrears) this week came tumbling down and in essence affected every single shareholder in losing millions.
The Government Employees Pension Fund being African Banks largest shareholder represented with a 12.4% share of the total holding, which the Government Employees Pension Fund increased in December 2013 with the rights issue at the time, was worth R 1, 28 billion then and now its value stands at R 55 million.
This extrapolated amounts to the fact that the Government Employees Pension Fund has lost members pension fund contributions invested at African Bank to the tune of over R 1,235 Billion.
Ironically the Government Employees Pension Fund Law (Act 21 of 1996) clearly guarantees that the Fund as governed by a Board of Trustees would ensure that the GEPF puts the interest of its members first and act accordingly.
Its decision therefore taken in December 2013, does not resemble that it acted in the best interest of its members, and the Trustees should be held accountable for this bad investment decision and the consequence of their decision to detriment of the members of the pension fund.
It is therefore not strange to note that on the 09th July 2014, Treasury issued a statement that it anticipates to amend the pension regulations, more specifically not to any more pay out lump sum payments of their accrued pension contributions as and when civil servants decide to terminate their employment, but to keep the accumulated funds within the Pension Fund, and such funds then to benefit the members when they reach retirement age.
The whole scenario is reminiscent (evocative, suggestive) of the fact that the Fund by innuendo has suffered such severe financial losses that it can no longer guarantee benefits and payments to members, and now has to devise a ‘modus operandi’ to try and hang on to the reduced capital base that the fund has.
It now under the smoke screen envisages to amend the rules governing the pension fund, with effect from 01st March 2015, as an act in the interest of members, but the truth of the matter is that the fund, through its bad management and governing, has sustained vast financial losses and this amendment is a mere drop to be able to pay benefits to members whom should currently benefit by means of pension from the fund.
We have become accustomed to the fact that government in its administration of affairs, always has a hidden agenda and what it propagates in its announcements, always has a hidden agenda, which it is trying to cover up.
Employees and members of the Government Employees Pension Fund should insist that full clarity and accountability of the financial standing of the fund be declared, and that Trustees as is common practice should be held accountable for all financial losses sustained due to bad investments that it incurred on behalf of the fund and or members.
