The Transport Sector Retirement Fund which recently changed its name from the Road Freight and Logistics Industry Provident Fund to the Transport Sector Retirement (RFLIPF) because the fund expanded its sphere of operations to encompass the broader transport sector is facing fresh allegations of possible corruption after a deal involving 10 million euros (R160m) for a property supposedly owned by the fund in London, Chelsea suburb, purchased in 2008 was cited as one many investment deals that are questionable. It is alleged that the Principal of the fund Joe Letswalo used a "now liquidated company to execute this deal and made a massive commission for himself." The allegations contained in an 8-page dossier say various attempts by the current board to get clarity on the ownership of this property have proved fruitless. "The executive, Joe Letswalo, (has total control of Investment mandates. He decides which Asset Managers are appointed to manage RFLIPF's R 7billion in Assets." RFLIPF has now joined a growing list of pension fund schemes that have made headlines in recent weeks on corruption allegations.
Allegations of shocking widespread corruption, fraud, theft and mismanagement of hundreds of millions of rand at the Municipal Councilors' Pension Fund (MCPF) have been reported to have been referred to the Hawks by its curators.
At the same time, South Africa's leading daily The Star also reported that that the Financial Sector Conduct Authority (FSCA) blocked the SA Local Authority (Sala) from investing some of its R16billion assets in four companies after it discovered that proper risk assessments were not conducted. Sala has about 20000 members, who are municipal workers. Now, as the allegations at the RFLP one of the current sitting trustees on the board confirms to Business Gazette that they as the board have little or no input as to who gets appointed. The same trustee confirmed that due to the "low level of literacy amongst the union trustees" and the absence of employer trustees from the board (there are no employer trustees at the board), the executive uses this to get his way around.
"None of them is sophisticated enough to understand the fund's investment strategy as well as the appointment of Asset Managers. It is this crack that the named executive manipulates. He then goes and negotiates "cuts" from Asset Managers," the trustee said. The fund has over 200 000 members with billions in assets. The dossier seen by this publication says the executive at the centre of the allegation was originally employed in a senior role at the bargaining for the Road Freight and Logistics industry.
RFLP hadn't commented on the matter despite being approached to do so. The dossier reads: "At the time the Industry had established its own provident fund to cater for its 200 000 odd employees. The executive doubled up as an executive at the council and at the fund." The dossier details that at the time the fund fell under the labor relations act and therefore could not be regulated by the Financial Services board. At the same time fund was also under self-administration. "concerned about lack of corporate governance, the absence of regulation as well as a mountain of member complaints, the Bargaining Council applies for inclusion under the Pension Funds act which ultimately leads to the Fund falling under the FSB regulatory authorities," it reads further. In June Letswalo was in Russia attending the world cup as a guest of one the Fund's service providers. -Staff Writer