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Akani to take legal action following the FSCA’s search and seizure operation

Akani Retirement Fund Administrators says it intends to take legal action following what it called the FSCA’s “unlawful” search and seizure operation at its premises.

It said this action would include applying to set aside the search warrant, which it said the FSCA had obtained without notice to Akani.

In a brief media release dated 14 July, the FSCA said the purpose of the operation was to gather facts and information to assist the Authority in its investigation into the entity, after the FSCA received complaints that contained sufficient information to create a reasonable suspicion that Akani might have contravened financial sector laws.

The Authority said it was not at liberty to disclose any details of the investigation, citing section 251 of the Financial Sector Regulation Act.

“This information will be shared once the outcomes are carefully considered and due process is followed with regard to any subsequent decisions or actions, as required by the relevant laws.”

In a statement, Akani said the FSCA’s search and seizure operation was “unfortunate”, given the administrator’s past co-operation with the FSCA.

Akani criticised the FSCA for releasing its statement about an investigation that has not been concluded, saying “the FSCA’s decision to publish it at this stage is incompatible with its statutory duty to be fair and independent”.

Akani, which is the largest black-owned and managed retirement fund administrator in Southern Africa, said it would continue to co-operate with the FSCA and its investigation.

The FSCA has not responded to Moonstone’s request for it to shed some light on the source of the complaints that gave rise to its investigation. Akani, similarly, has not disclosed why it is being investigated.

CINPF bribes

Early in July, Akani said it would appeal a judgment by the South Gauteng High Court, which found that three officials of the Chemical Industries National Provident Fund (CINPF) received bribes from Neighbour Funeral Scheme (NFS), a company related to Akani.

The court found that the purpose of the bribes was to secure the removal of the fund’s administrator, NBC Holdings, and appoint Akani.

The provident fund holds some R6 billion in assets on behalf of its members, predominantly blue-collar workers in the chemical, pulp, paper and pharmaceutical industries.

At the end of June, the full bench of the High Court upheld an appeal against a previous High Court decision and set aside Akani’s appointment.

But Akani’s deputy managing director, Jack Malebana, was quoted as saying: “The judgment is moot, as the CINPF board terminated their administration mandate with Akani in November 2021. That said, the judgment made certain incorrect findings in law and fact, which if left unchallenged, may be misconstrued as ‘gospel truth’ by our stakeholders and [the] broader retirement industry.”

The CINPF was established in 1987 by NBC and trade unions in the chemical sector. These unions merged to become the Chemical, Energy, Paper Printing, Wood & Allied Workers’ Union (Ceppwawu).

In 2020, the Labour Court placed Ceppwawu under administration after it failed to submit audited financial statements to the Labour Registrar for four years as prescribed by law.

At the same time, the union’s leaders and members were embroiled in a dispute over a multibillion-rand investment fund, as well as the appointment of the CINPF’s administrators.

‘Remarkable coincidence’

The three CINPF officials who received “corrupt payments” were the fund’s principal officer, Bonginhlanhla Dangazele, and the chairperson, Reginald Sema, and the deputy chairperson, Ayanda Sithole, of its board of trustees.

Judge Leicester Adams wrote: “As submitted by NBC, there are obvious questions left unanswered by the explanation by Akani and the CINPF. Those included the remarkable coincidence that all three joined the same funeral scheme, independently of one another, three months before they were instrumental in the appointment of Akani, which happens to be appointed to administer the scheme.

“Despite the remarkable coincidence that they all three lost ‘family members’ within weeks of one another and all received their payments on the same day, they failed to state how they are, in fact, related to the deceased.

“The version which Akani and the CINPF wants the court to accept is that Messrs Dangazele, Sema and Sithole all subscribed for funeral policies from NFS, all in August 2019, and all independently of one another, notwithstanding that there are 11 100 registered FAIS representatives licensed to sell funeral policies in South Africa.

“There is no explanation as to why, of all the funeral policy vendors in the country, all three obtained funeral policies within days of one another, from the same one. This, despite the fact that Mr Dangazele lives in Durban, whilst Messrs Sema and Sithole in Kempton Park and Orange Farm respectively, and NFS is based in Kempton Park in Gauteng.”

Judge Adams said: “In my view, these payments were corrupt payments constituting bribes for the roles played by Messrs Dangazele, Sema and Sithole in the decision to terminate NBC’s services and in the appointment of Akani, Novare [Actuaries and Consultants] and Moruba [Consultants and Actuaries]. Therefore, in my judgment, the termination of NBC’s services is tainted with fraud and corruption.”

The court ordered the fund to remove Sema and Sithole as trustees. Dangazele has passed away.

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