Andy Duffy
A CRACK squad of advisers led by the Ministry of Finance’s highly-paid consultant Charles Stride has gone into Transnet to help fill the R12-billion hole in the parastatal’s pension fund.
The ministry said this week Deputy Finance Minister Gill Marcus had recruited Stride following the roasting she gave Transnet in Parliament six weeks ago. The pension crisis is the key obstacle to government efforts to privatise Transnet.
Human resources boss Joe Ndhlela is the only Transnet executive involved in the project. Gloria Serobe, responsible for Transnet’s pension fund, has been excluded.
Instead, Stride has recruited 12 outside advisers, including merchant bankers, accountants and an auditor provided by the British government.
“This is not a Transnet operation,” he says. Stride, who earns R380 an hour from the ministry, is to report back to Marcus next month.
The pension fund hole dates back to Transnet’s creation in 1990, when it took over the pension fund from South African Transport Services.
The deficit is spread across subsidiaries such as South African Airways, Spoornet and Portnet, rendering it virtually impossible to strike a price in any privatisation sale.
Stride says on paper the fund has an actuarial deficit of R3,24-billion -the figure shown in Transnet’s latest accounts. But the real deficit is R12-billion as Transnet cannot meet the interest payments on debentures worth R8,5-billion, issued as an initial attempt to bring the deficit down.
The government had ordered Transnet to pay part of its earnings each year to the fund to fill the hole. Stride says there was never any “reasonable expectation” it could meet that goal. The parastatal suffered a R253-million loss for the year to March, after paying nearly R2-billion in pension fund costs, including R423-million in interest on the debentures.
Stride says a solution will involve the taxpayers’ pocket and a reduction in pension fund benefits. He declines to be drawn beyond saying the plan will be “fairness all round”.
Among Marcus’s concerns raised in Parliament was that former managing director Anton Moolman, former chairman of the pension fund, had received a lump sum payment of R3- million and R62 600 a month as pension. Transnet was also paying out R185-million a year in pensions to people who were not yet 50.
Marcus challenged Minister of Public Enterprises Stella Sigcau, who is responsible for Transnet, to solve the fund’s problems. Sigcau’s representative says she approached the finance ministry for help before Marcus’s challenge.
* A preliminary investigation at Transnet subsidiary Portnet’s head office in Johannesburg has concluded it has no proper controls over outside consultants it employs.
“We noted two cases where confirmation of engagement was signed … without the mention of the assignment to be done and the amounts to be spent. The consultants had been given delegated authority to sign for payment on behalf of Portnet for expenditure up to R100 000,” internal documents state.