COSATU statement on bulking 23 - 03 - 06

COSATU statement on 'bulking'

The Congress of South African Trade Unions is deeply disturbed at the allegations in the Saturday Star's Personal Finance supplement of 18 March 2006, that Alexander Forbes 'skimmed off' millions of rands in 'secret profits' at the expense of the members of 950 pension and provident funds.

According to the article's author, Bruce Cameron, Forbes is the subject of "major investigations into the 'not lawful' plundering of retirement fund savings".

COSATU deplores any form of fraud but these allegations are especially serious, since the victims are thousands of workers, whose hard-earned money, saved up for their retirement, has been stolen.

For most workers, retirement is already a difficult period. They have to struggle to survive on what is usually too little money, as a result of the low wages they received during their working life and also the excessive costs of running retirement funds. It is absolutely intolerable that they should have to try to survive on even less, because a few officials stole their money, so that they could live a life of luxury at the workers' expense.

Another concern is that fund trustees were kept in the dark. The transactions in question were not disclosed to the trustees, as fund administrators are obliged to, under the Financial Advisory and Intermediary Services Act and other relevant laws. The scam, which is known as 'bulking', involved negotiating with banks higher interest rate payments for the money in the retirement fund bank accounts without ever explicitly informing the retirement fund trustees of the secret profits that this created, or asking them for their approval.

COSATU is passing on to its members and all other retirement funds members the advice given by Bruce Cameron to all pension and provident fund trustees and members. He advises them to:

1. Ask your fund's trustees if they are aware that Alexander Forbes may have been making secret profits at your expense, resulting in you receiving a potentially lower pension benefit.
2. If the trustees of your fund are not aware of this, ask them what steps they will take to establish whether your fund has been affected and what they will do to recover the money.
3. If the trustees of your fund are aware of the secret profits, ask them what steps they have taken to recover the money, and if no steps have been taken, ask them why they have not taken the necessary step

Can any retirement fund member ever trust Alexander Forbes to administer their funds in their best interest? COSATU and its affiliates will do everything possible to see that justice is done and to defend their members' interests. Every cent that is proved to have been unlawfully accumulated must be returned to the members and those found guilty of taking this money severely punished.

COSATU welcomes steps taken by the Registrar of Pension Funds to investigate all these allegations and take appropriate action through law enforcement agencies against all culprits. However, we demand that these investigations should cover the whole industry, because we are not sure if they are confined to one company only.

It is pathetic for Alex Forbes MD, Peter Moyo, to try and justify stealing from poor workers by stating that it will be difficult to distribute these moneys to clients, while it was easy to pocket them.

COSATU rejects with contempt insinuations that these moneys were 'fees' from banks, which, if true, would elevate and legitimise stealing from the poor as a norm.