Fraudster wins pension fund claim from employer she stole from

The Office of the Pensions Fund Adjudicator (OPFA) has just awarded more than R367 000 pension payment to a convicted fraudster who stole R1.8 million from their employer.

Employers can’t just withhold pension earnings if an employee has committed a crime against the
establishment, suggested the recent ruling by Deputy Pensions Fund Adjudicator, Advocate Matome Thulare.

The Johannesburg employee was convicted of fraud against her employer and was sentenced to seven years imprisonment in 2014.

But a tribunal found there was no compensation order made by the criminal court entitling the employer to a deduction from the employee’s pension benefit. The complainant was a member of the GTC Umbrella Pension Fund, the first respondent in the case and which was administered by GTC Employee Benefits Administration.

The woman was employed by Sterklewies, which was the third respondent, for 12 years until she was found guilty of fraud in June 2014 and sent to prison for seven years.

According to labour expert Advocate Solly Mosomane, the case did not appear to have far-reaching consequences because of all the unique circumstances. Ordinarily, a convicted fraudster who stole from their employer would not usually try and make such a claim, but would steer clear of the legal scrutiny.

“This seems to be a complicated matter because the BCEA (Basic Conditions of Employment Act) would answer questions of when an employer deducts one’s salary without consent. For instance, it says it can only happen through a court order or there has to be an agreement,” he said.

“But now, one of the issues that would normally arise is that of prescription. By when was the employee supposed to get this money from the employer, when the employer was expected to get their money back from the employee and so forth. It is not a straightforward matter because of the question of prescription.”

Prescription in this context relates to the statute of limitations for a claim to have been made by the owed party.

“The fact that three years had lapsed because she was in prison is not sufficient and I don’t think this adjudicator made a good award in terms of procedure although substantially they were correct,” said Mosomane.

When she left her employment before her jail sentence, a withdrawal benefit became due and payable to the complainant from the first respondent, the pension fund.

According to the OPFA, the complainant’s fund credit as of 27 July this year was R367 431.19. The first respondent withheld the complainant’s withdrawal benefit when the employer became pursuant to section 37D(1)(b)(ii) of the Pension Funds Act. This piece of legislation allows for the deduction of compensation in respect of damages caused to the employer by reason of the employee’s theft, dishonesty, fraud or misconduct.

The complainant submitted she did not receive payment of her withdrawal benefit after she resigned in 2014. She told the tribunal she never signed an acknowledgement of debt in order for the third respondent to withhold the payment of her withdrawal benefit.

The pension fund submitted that the employer requested that the complainant’s fund credit be paid to it in terms of section 37D(1)(b)(ii) of the Act. The fund submitted that the complainant was convicted of defrauding the third respondent in the amount of R1.8 million and sentenced to imprisonment and that the employer suffered a loss due to the complainant’s theft.

In his determination, Thulare said that as a general principle of law, pension benefits were not reducible, transferable or executable save for certain exceptions as outlined in sections 37A and 37D of the Act. Thulare found that Section 37D(1)(b)(ii) was unambiguous.

“It provides that in order for a deduction to be lawful, the member must have admitted liability to the employer in writing or that judgment must have been obtained against the member in respect of damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member,” he said.

Thulare found that there was neither an admission in writing by the employee nor was there a judgment in respect of the damages caused to the employer.

He said the employer failed to institute civil proceedings, and even if it did so now, such proceedings would not likely survive a defence of prescription.

Simnikiweh@citizen.co.za

For more news your way, download The Citizen’s app for iOS and Android.