AGGRIEVED public sector pensioners have petitioned the High Court to order a forensic audit to investigate how NBC Lesotho has repeatedly been awarded the Public Officers’ Defined Contribution Pension Fund’s (PODCPF) administration contract despite being licensed only as a life insurance service provider.
NBC Lesotho is a subsidiary of South African registered NBC Holdings (NBC South Africa) and has been administering the M7 billion fund since 2014.
This is contained in the papers filed in the High Court by Public Officers’ Defined Contribution Pension Association (PODCPA) and a group of aggrieved pensioners. The two are requesting the court to “stay and interdict” the decision of the PODCPF to award NBC Lesotho the contract to administer the fund from 2020 to 2023.
They also want the decision to award NBC Lesotho the contract to administer the Fund corrected and set aside. The complainants also want NBC Lesotho to be blocked from performing its duties as administrator of the Fund.
The papers were filed on 27 March 2020 but a hearing date is yet to be set.
The PODCPF board of trustees, the PODCPF, NBC Lesotho Life Insurance Company and the president of the Lesotho Institute of Accountants are cited as first, second, third and fourth respondents respectively.
The fund’s board awarded the administration tender to NBC Lesotho on 26 March 2020.
Among other things, the members claim that they have been receiving poor services from the fund under NBC Lesotho’s administration.
They also said there was a need to protect the fund’s resources and the members’ benefits in light of the negative effects of NBC Lesotho’s credibility and maladministration.
They say the board’s decision to award the tender to NBC Lesotho was irregular and illegal.
In his founding affidavit, secretary general of PODCPA Molise Chabana said the board’s decision “in the circumstances of the case was irrational, irregular and illegal”.
“The board failed to consider important factors identified in the audits and the reports and rendered the decision irrational,” Mr Chabana said.
“This is… considering that the business activity of NBC (Lesotho) is… “life insurance” according to the company extract; and not to administer the pension fund benefits.
“The engagement and appointment of NBC (Lesotho) in the business which it is not empowered by its memorandum of is beyond its competence and function and therefore irregular and illegal.
“To my knowledge, NBC (Lesotho) is not licensed to carry out the functions and responsibilities of an “administrator of a fund” contrary to the prescripts of section 58 of Pension Funds Act 2019.”
Mr Chabana said the pensioners were worried that their funds could be in danger if NBC Lesotho continued administering the fund due to allegations of fraud and misrepresentation of its parent company in South Africa.
“We hold reasonable fear and apprehension based on the fact that NBC (SA) is the controlling company of NBC (Lesotho), the malfeasance occasioned by the NBC (SA) through serious misconduct, fraud and misrepresentation, the NBC (SA) continued further with its unlawful crusade through its satellite company NBC (Lesotho) to maladminister the fund, misappropriate its funds and the pensioners’ benefits.
“Furthermore, all pensioners and members of the fund are entitled to regular annual fund information and benefits statement but this has not been compiled by NBD Lesotho since 2014.”
In such circumstances, there is need for an extensive forensic audit to be undertaken from the date on which NBC Lesotho was first appointed to administer the fund, Mr Chabana said.
“…(the) audit should be undertaken by independent auditors appointed by the president of Lesotho Institute of Accountants… and make available a copy of the report to the applicants.
“We aver that it would be in the interest of justice that the fees of the appointed editor(s) be paid jointly and severally by PODCPF and NBC Lesotho.”
He added that the decision to award the tender to NBC Lesotho had divided the fund’s board.
He said an independent trustee who sits in the board, Futho Hoohlo, even wrote to Prime Minister Moeketsi Majoro (at the time the principal secretary in the Ministry of Finance and the chairperson of the fund’s board) in 2014 and warned “strongly against the award of the tender to, or appointment of, NBC Lesotho as the administrator of the fund”.
In his supporting affidavit, Mr Hoohlo confirms Mr Chabana’s assertions.
“…I confirm that I raised the aforesaid risks, concerns and maladies associated with NBC Lesotho and NBC South Africa with the (former) Minister of Finance (Dr Majoro), represented by the PS Finance in the board, and also in several meetings of the tender and evaluation boards, as well as the board that resulted in the decision to award the tender and/or appoint the NBC (Lesotho) as the administrator of the fund.
“Notwithstanding the objections, which were based on the forensic reports and due diligence reports characterising NBC Lesotho inappropriate and improper to administer the fund, the board continued to appoint NBC Lesotho as such,” Mr Hoohlo said.
The decision was gravely inconstant with the fiduciary duties of the board and its members to act in the best interests of the fund, its members and pensioners “particularly the latter who would gravely be affected and suffer injustice as a result of the improper administration of the fund”. He said the decision was therefore irrational and against “all known principles of good governance”.
“I am making this affidavit in support of the prayers sought in the notice of motion,” Mr Hoohlo said.
Mr Hoohlo also said NBC Lesotho’s appointment as the administrator of the fund has also split the board with four members opposing it and five others supporting it.
He said an independent consultant provided the fund’s evaluation committee with a detailed report on “the current status of the NBC Lesotho, highlighting specified risks and areas of concern, highlighting massive challenges that would impact on NBC Lesotho business continuity”.
“It was improper and irrational for the board to act to appoint NBC Lesotho as administrator of the fund, ignoring the report indicating the risks…
“Consequently, the board did not act in the best interests of the fund, its members and the pensioners (beneficiaries), acted irrationally and inconsistent with good governance,” Mr Hoohlo said.