Rosemary Hunter. Picture: FINANCIAL MAIL
Rosemary Hunter. Picture: FINANCIAL MAIL

Whistle-blower turned activist Rosemary Hunter lost her legal battle to force the pension funds’ watchdog to do more work investigating the closure of dormant pension funds.

The case relates to a project by the then Financial Services Board (FSB), which saw the cancellation of more than 4,600 dormant retirement funds between January 2007 and December 2013, moving all their assets to unclaimed benefits funds. In September 2017, the FSCA said there were R42bn unclaimed benefits in SA. These funds are administered by various private and public sector funds.

Hunter approached the Constitutional Court for leave to appeal earlier judgments made by the high court in Pretoria and the Supreme Court of Appeal in a bid to compel the FSCA to do more investigations into the funds cancellation project.

Five of the eight judges ruled against her. This means that thousands of people who had their benefits moved to various public and private sector unclaimed benefits funds will likely never recoup the money.

"Finding unclaimed benefits is a very complicated process and many of the beneficiaries are either in rural areas, Malawi or other African countries.

"Although I’ve been doing a lot of training to show some of the activists how to find and claim these benefits, there’s still a question of whether they [companies holding unclaimed funds] care enough. We are sitting with R43bn of unclaimed benefits in SA, while some of the beneficiaries live in poverty," Hunter, a former FSB executive, said after the ruling.

Pressured by noise created by Hunter’s case, financial services group Liberty in August ordered the reinstatement of 130 funds, which had about R100m in assets and 3,000 beneficiaries when they were cancelled.

"That’s just the tip of the iceberg. I’m sure there are many other hundreds of millions [of unclaimed funds] there," Hunter said.

The majority of the judges felt the FSCA had conducted enough investigations. "[There are] several credible investigations already conducted by people whose capacity to address actual or perceived irregularities is beyond doubt … even if another investigation were to be sanctioned by this court, it may still not satisfy Ms Hunter’s quest for ‘justice’, as she sees it," read the majority judgment, written by judge Sisi Khampepe.

The three other judges disagreed, saying the procedural route Hunter followed was appropriate. "There were many mistakes made in the course of the project. There are potentially hundreds of errors that will go undetected without further investigation," read the minority judgment, written by judge Johan Froneman.

Treasury deputy director-general Ismail Momoniat welcomed the ruling, saying it will allow government to continue with its retirement reform plans and the consolidation of retirement funds.

Three investigations commissioned by the FSCA on the matter yielded different results.

The first report found unlawful practices in the appointment of people who assessed the financial state of the cancelled funds and recommended that the FSCA appoint an independent auditing firm to conduct further investigations.

The FSCA then appointed KPMG to investigate a sample of 510 cancelled funds. This report was taken on review and the FSCA subsequently accepted a report which concluded there was no evidence of any material financial loss by beneficiaries.

September 21 2018 Correction:
A previous version of this article wrongly stated that the FSB held R42bn in unclaimed benefits in September 2017. The unclaimed funds are in fact administered by various private and public sector funds. We regret the error.