trustees to be prosecuted
21 July 2004
pension funds that suffered losses of more than R18 million while under the
administration of investment manager Stuart Deel-Smith are being liquidated.
Financial Services Board (FSB) today said officers of the funds who may be
criminally liable for the loss suffered by the funds would be prosecuted.
The Commercial Crimes Court is investigating the case.
High Court in Pretoria authorised the liquidation of the Small and Medium
Enterprise Independent Preservation Pension Fund; Small and Medium Enterprise
Independent Pension Fund; Small and Medium Enterprise Independent Provident
Fund; Small and Medium Enterprise Independent Retirement Annuity Fund and Small
and Medium Enterprise Independent Preservation Provident Fund.
funds were previously administrated by two of Deel-Smith's companies, Benefit
Administrators and Deel-Smith and Company. Deel-Smith and Company was not
registered as an investment manager as is required in terms of section 13B of
the Pension Funds Act 24 of 1956 (PFA).
Howard of Cheadle Thompson & Haysom Inc, who had been the curator of the
funds since November 2002, was appointed as liquidator of the funds.
during the curatorship revealed that the funds suffered a loss of approximately
R18.2 million, leaving more than 350 members with practically no retirement
funds. Many of the members, after a
lifetime of saving for their retirement, are now destitute.
remaining in the funds amounted to less than R1.5 million.
reasons for the loss were that the assets of the funds were not invested in
accordance with the PFA and appear to have been utilised by the investment
manager of the funds, Stuart Deel-Smith, to fund various investments managed on
behalf of persons other than members of the funds.
assets were subsequently lost through these investments, which were futures and
Benefit Administrators administered the funds, while the investments were
administered by Deel-Smith and Company. The
two companies belonged to a group of five companies placed under the curatorship
of Ms Barbara Richmond of Deloitte.
at December 2002, the directors of Deel-Smith Benefit Administrators were Mr PP
Eloff, Mr TD Storbeck, Mr SD Deel-Smith and Mr GJJ Boshoff.
The directors of Deel-Smith & Company were Mr PP Eloff, Mr HJ Van
Loggerenberg and Stuart Deel-Smith.
was the only remaining trustee after the funds were placed under curatorship.
Former trustees of the funds were Mr GJJ Boshoff, who resigned as a
trustee in 2001; Mr GA Rennie, who resigned as a trustee in August 2002,
immediately prior to the funds being placed under curatorship; and Mr JPW
Knight, who resigned as a trustee in October 2002 immediately after the funds
were placed under curatorship.
principal officer of the funds was Karen Todd.
funds were insured for loss resulting from the negligence, fraud and dishonesty
of officers of the funds for a sum of approximately R17.1 million.
May 2003, however, attorneys acting on behalf of the insurer notified Nikki
Howard that the insurers elected to avoid the funds' policy on the basis that
there were material facts in existence prior to the inception of the policy,
which were not disclosed by the funds to the insurer.
appeared that no significant assets were recoverable. As no further monies were
available for distribution to members, Howard was authorised by the FSB to
recommend to the High Court that the funds be liquidated.
to editors: The FSB is a statutory body
responsible for supervising the non-banking financial services industry.
The FSB's regulatory objectives are:
efficiency and transparency
of financial markets
media release was issued by the FSB's Communication & Liaison Department,
Tel (012) 422 2823.