Curbing corruption in retirement funds

//Curbing corruption in retirement funds

Curbing corruption in retirement funds

When is a benefit equal to bribery? 

The Prohibition on the Acceptance of Gratification Directive from the Registrar of Pension Funds highlights questionable conduct by officials or service providers to a retirement fund.  In this newsletter, I take a closer look at what that behaviour might look like.

The first quarter of 2018 is about to conclude, as the leaves are starting to brown, we can reflect on a positive and hopeful start to the year.

New leadership, proposed land expropriation without compensation, the exposure of some the State Capture specialists, white slime from Brazil and unsavoury behaviour on the cricket field are some of the newsworthy items that have trended since January.

What constitutes “gratification”?
In the world of retirement funds, the Registrar of Pension Funds issued a final Directive 8 called “Prohibition on the Acceptance of Gratification”.

In summary, this directive provides that officials and service providers to a fund must not be involved in any conduct constituting bribery, fraud or corruption, and any such involvement will affect such a person’s fitness to hold office.

The Directive goes on to qualify what constitutes gratification. It is a long list that includes cash, gifts, interest in property, right or privilege and any valuable consideration or benefit of any kind, including any discount, commission, rebate, bonus, deduction or percentage.

The same officials and service providers have a duty to report any corrupt transactions to the Registrar and the police. Any report to the Registrar can be a protected disclosure, which gives protection to the person submitting the report.

This Directive should not come as a shock to the industry as Trustees already had a duty under the Pension Funds Act to inform the Registrar of material matters that may prejudice members.

In addition, the Prevention and Combating of Corrupt Activities Act requires fund officials and service providers to report corrupt transactions to the South African Police Service.

We are often questioned by members of retirement funds as to the security and wellbeing of their hard-earned retirement savings and it does beg the question as to why suddenly this Directive has been issued at a time when the veil on corruption and State Capture in South Africa seems to be lifting. We hope that members retirement fund savings have been correctly accounted for and there has been no unnecessary leakage or corruption that has prejudiced members.

In conclusion
We hope that into the future, if there is indeed adherence to this Directive, the inducements of the past that may have swayed certain decisions at the Board of Trustees meetings will no longer be tolerated and members will be the recipients of objective and sage decisions.

2018-04-11T15:38:57+00:00

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