South Africa 17.5.2018 04:34 pm

Probe starts into R340m SALA investment deal

Financial Sector Conduct Authority logo.

Financial Sector Conduct Authority logo.

The board of the municipal workers pension fund allegedly wasn’t properly constituted, amid further allegations of corruption.

The Financial Service Conduct Authority (FSCA) is investigating allegations of corruption and maladministration in the South African Local Authorities (SALA) deal with an investment management company.

At the centre of the allegations of impropriety is Sampada Private Equity, which some senior managers at the municipal fund claim entered into a questionable deal said to be worth R340 million with SALA in 2015.

The managers, who have requested anonymity, want the deal terminated and the funds returned to SALA – a municipal workers pension fund with about 20 000 members and assets worth R16 billion.

Now, the FSCA says the allegations are being looked into so that they can be interrogated and has also asked the board to prepare an exit report on matters at SALA including the Sampanda investment.

Speaking on the matter in an exclusive interview, FSCA’s head of pensions enforcement and surveillance Corlia Buitendag said: “The authority is aware of the fund’s investment in Sampada Private Equity, which was initiated by the previous trustees of the SALA fund.

“The SALA fund reported its Sampada investment in its annual financial statements. At the time of the financial reporting to the FSCA, we were not aware of the specific allegations relating to the deal …”

Asked if the said investment deal was under investigation by the FSCA or had been referred to a relevant authority for a further look for possible wrongdoing, Buitendag responded “yes” but she declined to elaborate.

The authority also pointed out that the board which approved the investment deal was “not properly constituted” that is why it had to appoint a section 26 board.

Records indicate that the SALA board led by Bongani Maphanga as executive chairperson was dissolved in late 2016.

“The Registrar of Pension Funds became aware that the board of management of the South African Local Authorities Pension Fund was not properly constituted and used his powers in terms of section 26(2) of the Pension Funds Act, 1956 to replace the improperly constituted board with appointees in terms of section 26(2) of the Pension Funds Act,” explained Buitendag.

The new board, which was a section 26(2) one and chaired by Jan Mahlangu, took over in December 2017.

However, Buitendag said: “The section 26(2) board is in the process of being relieved from their duties as they have completed the elections to constitute a board in terms of the fund’s rules. The new board constituted in terms of the fund’s rules, will take over as soon as the section 26(2) board is relieved. This transition is imminent.”

Contacted for comment this week Sampada Private Equity CEO, Bafedile Mafologele said he was not aware of any investigation by the FSCA.

Previously he has admitted his company entered into an investment deal with SALA, which he said was above board. He, however, would not be drawn to say how much money was involved.

Mafologele said: “The FSCA has not notified us of any investigation. I am certain if that was the case, we would have received a letter from them informing us of the investigation”.

African News Agency (ANA)

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