Old Mutual has been rapped over the knuckles by a High Court judge for negligence in handing over pension fund money under its administration.
In a judgment delivered in the Cape High Court late in December, Justice Blignaut said Old Mutual had committed a delict in the Corporate Acceptance Finance Pension Fund case, but that it was not liable for the losses of the fund. He also found that the life assurer had not committed a breach of contract.
Old Mutual was being sued by the fund for R65 million. The fund's curator, Johannesburg attorney Tony Mostert, had claimed that Old Mutual wrongfully paid out pension fund money in 1994 to the employers of the fund's members, Laurie and Jan Korsten.
The Korstens, who owned Corporate Acceptance Finance (CAF), had bought a US company called AM International in 1994, changing the name to AMK Technologies. After the deal they applied to the Registrar of Pensions to convert the CAF-AMK pension fund, then under the control of Old Mutual, into a private fund. Permission was granted in June 1995 - but by then Old Mutual had paid the money to CAF. The Korstens used the money to finance their companies, which were later placed in liquidation.
The fund has been under curatorship since March 1997.
The Korstens were acquitted of criminal charges in the Johannesburg High Court in September.
Judge Blignaut said Old Mutual had breached the Pension Funds Act and the Financial Institutions Act by paying money into an account held by CAF.
The judge also found that Old Mutual had committed a delict by paying CAF before the CAF Pension fund had been converted to a privately administered fund.
But, he said, Old Mutual had not caused and was not liable for the fund's losses. The unauthorised borrowing from CAF by the Korstens had been the real cause of the loss and would have taken place even if Old Mutual had paid the money into the fund's account after the conversion of the fund.
After the judgment, Old Mutual's chief legal adviser, Koos Stassen, said his company had reviewed processes to ensure that statutory duties were complied with and the interests of pension funds and their members were safeguarded.
But Old Mutual could not stand in for losses caused by others and for which the life assurer was not responsible, he said.
Mostert said he would apply for leave to appeal.