International financial- and risk-services group Alexander Forbes (AFB) denied reports on Monday that it was the subject of an investigation by the Financial Services Board (FSB) into the alleged skimming of pension fund surpluses.
The group said that since 2000, the FSB has been conducting an investigation relating to alleged illegal accessing of pension fund surpluses during the mid 1990s, reportedly amounting to some R213-million.
“This has culminated in the arrest this past week of several individuals including, regrettably, two former Alexander Forbes employees,” it said in a statement.
But it added: “Alexander Forbes is not the subject matter of the FSB investigation as suggested by the article.”
The group said it had co-operated fully with the FSB’s investigators and would continue to do so if and when it was asked.
“Alexander Forbes received absolutely no compensation in excess of administration and consulting fees in line with industry norms. The company is not aware of any impending arrest of any current or other former Alexander Forbes employees,” it added.
Alexander Forbes also defended a second issue raised in the article — which is unrelated to the FSB investigation — regarding an arrangement with banks referred to as ‘bulking’.
It said that the ‘bulking’ of bank accounts was highly beneficial to its retirement-fund clients and their members in that it enabled Alexander Forbes’s clients to secure higher interest rates on current accounts than would otherwise have been paid by the banks.
“As compensation for the arrangement, Alexander Forbes received income from the banks.”
Following receipt of legal advice the group said it had started rolling out new service-level agreements more than two years ago, which disclose the nature of the bulking arrangements and the fact that it received payment.
“Virtually all our clients have received new service-level agreements and agreed to this arrangement,” the group added.
“After careful review of further legal advice, and considering the complexities of complying with new Financial Advisory and Intermediary Services requirements, in September 2004 Alexander Forbes stopped receiving payment but ensured that the bulking arrangements continued for the full benefit of our clients.
“On reflection Alexander Forbes recognises that in relation to this matter it has not, in the past, met the disclosure standards it aspires to.
“We are serious about governance and integrity and in the interest of open communications and continuing to maintain good relationships, we will be contacting all funds impacted by this to brief them fully and ensure that this matter is dealt with to our clients’ satisfaction,” Alexander Forbes said. — I-Net Bridge