The Financial Services Board (FSB) is investigating the investment in 2007 of R420-million of pension funds belonging to members of the South African Clothing and Textile Workers’ Union (Sactwu).
It is concerned about the recovery of the funds after it emerged that the money had been placed in Trilinear Empowerment Trust, which has invested heavily in struggling Cape luxury property development Pinnacle Point.
The board has been trying to establish whether the pension fund trustees were aware their money was going to be placed with Trilinear Empowerment Trust, which is not recognised by the board as an investment vehicle for pension funds.
“Pension fund investment can either be in the name of the pension fund or it can be held in a nominee account that is registered with the FSB,” said the deputy chief executive of the board, Jurgen Boyd. “So we don’t recognise these type of trusts as an investment vehicle.”
In 2009 the Cape-based Trilinear Empowerment Trust invested R100-million in Pinnacle Point and last year bought Absa’s R150-million stake in the development, making it the main shareholder.
However, in February this year Investec applied for the liquidation of four Pinnacle Point subsidiary companies due to non-payment of debt. The case has been postponed until next month, but Pinnacle Point is reported to have been in talks with Investec to try to prevent the liquidation of some of its assets. It is involved largely in developing golf estates, which have been hit by the global credit crunch.
Boyd said the board was talking to the trustees of a number of affected provident funds, which include the Cape Clothing Industry, the Textile Industry, the Textile Open, the Textile and Allied Workers and Pep Limited.
“Some are claiming the placement of their money in Trilinear Empowerment Trust was contrary to the mandates they had with Trilinear,” said Boyd. “Others alleged litigation would follow as a result of what they claimed was misrepresentation on the part of Trilinear.”
An application has now been lodged by Trilinear Empowerment Trust in the Western Cape High Court to liquidate Canyon Springs Investments, which was allegedly granted a R93-million loan from the provident fund money.
Sam Buthelezi, the director of Trilinear Capital, said this week he was not able to comment on the matter as it was sub judice.
But questions have been raised about why Trilinear gave a loan of R93-million to Canyon Springs Investments 12, a company owned by Thandiwe Godongwana, the wife of the deputy minister of economic development, Enoch Godongwana, and Mohan Patel.
“If you are looking for a quick juicy story that involves a deputy minister’s wife, then I can’t help you,” said Buthelezi. “But if you can wait until our court papers are filed, I will give you the real story. Until then, my lawyers have told me that I can’t comment.”
The Financial Mail has described Trilinear as having established expertise in bonds, cash and equities. Buthelezi said he has been running the company for 15 years. Neither Godongwana nor Patel could be reached for comment, and they did not respond to phone calls.
Sactwu general secretary André Kriel said the pension fund trustees took the decision about where to invest the money, not Sactwu. The union had appointed a legal firm to conduct a forensic investigation.
“The investigation has not yet been completed, but no stone will be left unturned. If any wrongdoing is found, the guilty must go to jail for a long time. The union will do everything in its power to help recover every single cent if it is proved that monies are indeed missing,” he said.
The pension fund money belongs to thousands of clothing factory workers who contribute about 6.5% of their salary to the provident fund. They earn, on average, about R700 a week.