Lethal blow for PP and Venda Pension Fund members

The Public Protector suffered a devastating defeat in the Gauteng division of the High Court two weeks ago when the remedial action imposed in the Venda Pension Fund saga was set aside. The court ruling may very well also mean an end to the dreams of thousands of pensioners who believed that they could claim back the millions lost when the Venda Pension Fund was migrated to a centralised national fund.

Judge Norman Manoim, who presided in the case, took some time to explain the background to the matter. This complex case started in 1992 when the Venda civil servants were given an option to become part of the integrated centralised national pension fund or cash out and join a private fund. Many of them chose the latter option, especially since many of the private options available also involved cash pay-outs. During a period of uncertainty, many believed that the private sector was a safer option. “With the benefit of hindsight, it turns out that those who opted for the privatisation option turned out to have made a sub-optimal choice,” said Judge Manoim.

Another problem that was quickly spotted, was that the formulas and dates used to calculate the accrued benefits were not consistent. This became the subject of the first dispute that ended up in court. The Supreme Court of Appeal (SCA) eventually decided in 2000 in favour of the “Dali group” and ruled that these pensioners were entitled to 100% of their accrued benefits.

The Dali group also asked that they be compensated for the losses suffered during the transition period. This concerns the “losses” they suffered for joining a private fund. The SCA, however, did not agree with this and said they had to live with the choices they had made.

Another group representing concerned pensioners, the Dabalorivhuwa Patriotic Front, also took the matter to the court. Not having much success, this group asked the then Public Protector (PP), Selby Baqwa, to intervene. He filed a report in April 2002 wherein he recommended, among other things, that the relief offered in the Dali case be extended to all others in similar circumstances. As far as the others were concerned, he seemed to agree that they had made a choice and had to live with it.

In November 2008, another complaint was filed with the Public Protector. The three complainants argued that they had been influenced to accept the privatisation scheme by the then Venda government. The process, they argued, was not conducted properly and, as a result, was defective.

Baqwa's successor Adv Thuli Madonsela’s team took three years to investigate and make a finding. She noted that the recommendations of the Baqwa report had not been implemented. Her own recommendations included that a task team be appointed to review the matter and consider changes, also in legislation, to assist the affected people. The PP “asks the Ministers to look at a solution for the plight of those who chose the privatisation route by rewinding the history, but this has the rider attached to it that it is feasible,” said Judge Manoim.

The matter then landed on the desk of the current PP, Adv Busisiwe Mkhwebane. She pressurised the National Treasury to implement the remedial action contained in the Madonsela report. A task team was compiled, and options were investigated. Right from the start, the time lapse clearly caused immense problems. Data could not be retrieved and people working with the pay-outs had either died or could not recollect the exact details of what was decided. A firm of actuaries was appointed to assist, but even that could not provide clarity. A second firm later estimated that the remedial action could cost anything between R1,113 billion and R6,326 billion.

What happened next was a bit of a political side-show, with Mkhwebane “naming and shaming” the departments involved and applying pressure on the government to give effect to the remedial action ordered. This, unfortunately, also caused a stand-off with the National Treasury, who indicated that the remedial action was not implementable. The department found that, despite all attempts to consult and try and move forward, “no compensation could be justified”.

On 11 March 2019, the dispute between the department and the PP led to an application in the High Court to have the remedial action in the reports of Madonsela and Mkhwebane set aside.

Judge Manoim first had to rule on the issue of expiration. The PP’s office has a two-year limit in which it must investigate complaints. The Venda Pension Fund issue fell well outside that time frame. “The facts of this case justify the policy rationale behind the two-year limitation period. Not only do the memories of the complainants fade, but as in this case, data becomes irretrievable or no longer exists,” said Judge Manoim. He felt that neither Madonsela nor Mkhwebane had attempted to show special circumstances as to why the reports had been filed out of date.

The PP argued that the Minister (of Finance) had put together a team and started with the process to look at how the pensioners could be paid out. This, she argued, showed that the Minister had agreed to the process and attempted to comply with the remedial action. Judge Manoim did not agree and said that the minister had gathered facts, following which a decision had to be made.

In his conclusion, Judge Manoim said that the remedial action related to complaints concerning matters that arose in the 1992-to-1994 period. “That period is in excess of the limitation that the Public Protector has to entertain a complaint in terms of section 6((9) of the Public Protector Act. No special circumstances were advanced to justify doing so. On the contrary: all the facts point to the fact that the subject matter was no longer capable of proper investigation by the time the reports were written, even in 2002, let alone in 2012 and 2016. This renders her report ultra vires and hence unlawful,” he said.

As far as costs in the case are concerned, Judge Manoim did not want to award a personal cost order against Adv Mkhwebane. The PP’s office will be liable for the cost of the application, including the costs of two counsels.

The legal representative for a large group of the pension-fund members, Mr Hennie Erwee of Musina, expressed his disappointment with the ruling this week. He described it as a sad blow to the thousands of pensioners who had lost what was due to them. Erwee said that they were in discussion with the Public Protector’s legal team, who indicated that they were studying the ruling and would consider their options.

(Click here to read the full ruling of Judge Manoim)

News - Date: 03 December 2021

Anton van Zyl

Anton van Zyl has been with the Zoutpansberger and Limpopo Mirror since 1990. He graduated from the Rand Afrikaans University (now University of Johannesburg) and obtained a BA Communications degree. He is a founder member of the Association of Independent Publishers.

Email: