Orphan benefits: where is the money?
Fund that has allegedly lost millions owed to children of deceased mineworkers is being investigated
The Financial Services Board (FSB) has placed the award-winning Bophelo Benefit Services, a subsidiary of Mvunonala Holdings, under statutory management following allegations that Bophelo had neglected to pay mineworkers’ orphans millions in death benefits.
Bophelo won the Imbasa Yegolide Award for best trust and beneficiary fund administrator of 2013.
Mvunonala CE Angel Nyathela was appointed last week to replace Bongani Mhlanga, whom Nyathela said had been deported to Bulawayo with regard to identity document transgressions.
Nyathela confirmed on Monday that the fund administrator had been placed under the statutory manager, who has veto powers over every decision taken by Bophelo’s executives.
"We were prudent in that we approached the FSB about the way forward when [the matter came to our notice]," says Nyathela. "We have agreed with it that [Bophelo should be put] under statutory management."
The matter Nyathela refers to is the alleged disappearance of at least R255m in lump sums placed in trust for minor beneficiaries of Anglo Platinum (Amplats) mineworkers who have died.
Amplats pays retirement fund contributions to the Amplats Group Provident Fund, which is administered by Sanlam. When a member dies, the member’s beneficiaries are eligible for a lump sum death benefit. If these beneficiaries are under 18, Sanlam pays the benefit to Bophelo, which is meant to make distributions to the children for their education and upkeep. It pays them the balance when they turn 18.
Motlatjo Seima, principal executive officer of the Amplats provident fund, says his fund became worried when it heard allegations that Bophelo had been failing to make payouts to beneficiaries who had reached adulthood.
"[The provident fund] raised its concerns with [Bophelo] in January regarding the high number of terminated trusts and beneficiaries that were [reportedly] not being paid out," he says. "We did not receive a satisfactory response and followed up in March with a due-diligence questionnaire."
When Bophelo failed to respond, the provident fund asked auditors KPMG and WMK Matlala Attorneys to investigate.
Seima says the investigation has used only publicly available information as Bophelo was not forthcoming, and that the probe is ongoing.
It may well find no assets. Research by the Financial Mail found that none of the Mvunonala entities owns any properties, which Nyathela admits. This is despite Bophelo’s financial statements for the year to February 2016 stating that it owns 72 Grayston Drive in Sandton and the landmark Parktonian Hotel and residential development in Braamfontein, Johannesburg.
Units were purchased in September 2015, according to the financial statements.
Mvunonala Asset Managers occupies offices in the Sandton building, and Nyathela says: "We do not own any properties. I am still waiting for paperwork on the Parktonian transaction."
Why it claimed to own both properties, and why its auditors, Balushi, signed off on this, remains a mystery. Bophelo’s financial statements were submitted to the FSB in December.
The Parktonian Hotel is a 300-unit sectional title property, with 165 units owned by the Braamvest trust and the rest by private co-investors.
Parktonian financial manager Klaus Kubirske says its management company has held on to the units it owns since it began the co-investment scheme in October 2006. "There are some current investors who are selling," he says. "These are private sales of which we don’t know [the details]."
While the investigations unfold, the children of deceased Amplats mineworkers need support, and Seima says that though it is Bophelo’s legal responsibility to pay the money out, the provident fund is considering interim measures to assist.
"Bophelo has issued a public statement insisting that it is able to pay the beneficiaries and that there are no issues relating to its solvency," he says.