Members of the provident fund of the South African Commercial, Catering and Allied Workers' Union (Saccawu) do not need to panic as the fund is still solvent and their benefits are not at risk, Tony Mostert, the fund's provisional curator, said this week.
The provident fund has almost 70 000 members.
Mostert says he has obtained assurances from Old Mutual, which is responsible for the fund's accounting and administration, that the fund is still solvent.
This is despite the fact that Mostert has uncovered irregularities, which he estimates have placed about R80 million of the fund's assets at risk.
However, this is only about three-and-a-half percent of the fund's R2.3 billion net assets. According to Mostert's report, the fund's current commitments to its members leave it with a R60 million surplus.
While Old Mutual administers and is responsible for some of the fund's investments, other money has been moved away from Old Mutual and it is with these investments that Mostert has found irregularities.
In his report, Mostert says there are indications that the fund's assets have been mismanaged and misappropriated; that control of the funds has been lost; and that there has been inaccurate and inadequate accounting; and a failure to comply with statutory requirements.
He also says he had found evidence of the payment of substantial fees and commissions associated with the investment of these assets.
Mostert says he has not yet completed his investigation, but has brought the matter to the attention of the Pretoria High Court because the court was due to decide whether to make the provisional curatorship order final, and the fund's trustees had opposed this.
The matter was postponed until February and Mostert will continue to administer the fund until then.
The provisional curatorship order was made last month, after a Financial Services Board (FSB) investigation into a steep rise in the fund's expenses from R318 000 for the quarter ended March 31, 2000 to R1.7 million for the quarter ended March 2001.
Abe Mosiuoa, the principal officer of the fund, was suspended in August 2001. The FSB found that Mosiuoa had taken a personal loan from the fund which he never repaid, and had used the fund to pay for a holiday for himself and his family. Mosiuoa also used the fund to make other unauthorised payments, such as those for office equipment and car rentals.
Despite the fact that Mosiuoa was suspended, the FSB found that the trustees had not taken action to recover money from Mosiuoa. Mostert says this still has not been done.
Mostert was previously appointed curator of another fund administered by Old Mutual - the CAF fund.