Canyon Springs: Actuary tells of irregular investments
An independent actuary told the Canyon Springs Investments 12 insolvency inquiry in Cape Town on Thursday how she found irregularities in investment statements when she went to work for Pan African Benefit Services, a company started by former minister of economic development Enoch Godongwana.
Fagmeedah Petersen Lurie quit consulting for the company after only six months due to her concerns around the irregular statements. “It was clear that the numbers were not real,” she said in the evidence she gave to the inquiry.
Pan African Benefit Services is a fully-owned subsidiary of Canyon Springs, although it emerged at the inquiry that this fact was kept from its own employees.
More than R100-million of clothing factory workers’ pension fund money was sunk by Trilinear Asset Managers into Canyon Springs, based on the strength of a verbal agreement.
However, court documents revealed that R25-million of the pension fund money was moved from Canyon Springs to start up Pan African Benefit Services.
At the start, the directors of Pan African Benefit Services were Godongwana, his wife Thandiwe and a Canyon Springs director Mohan Patel.
Godongwana later resigned as a director of Pan African Benefit Service, when he took up his top government post in 2009. Last year he told the Mail & Guardian he did not know the source of the funding as it was already in place when he joined Canyon Springs.
Petersen Lurie told the inquiry she had been introduced to Pan African Benefit Services by the deputy secretary general of the South African Clothing and Textile Workers Union (Sactwu), Wayne Van Der Rheede, but was not made aware of its connection to Canyon Springs. Pan African Benefit Services is still operating and offers actuarial, administrative and consulting services.
Van Der Rheede has since been suspended by the union. No reasons have been supplied to the media about why he was suspended, as the union considered this an internal matter.
After she left the company, Petersen Lurie said she had “lobbied” for other provident funds not to make investments in Trilinear Empowerment Trust, the vehicle used for the pension funds.
With the scandal around the missing pension funds growing, Godongwana resigned from his top post two weeks ago, citing his wish to pursue personal interests and ANC work.
Godongwana fell under the public spotlight after he revealed to the Mail & Guardian that he and his wife owned 50% of Canyon Springs in a family trust.
The current chief operating officer for Pan African Benefit Services, Jaco Pretorius, also gave evidence at the inquiry today, shedding further light on the Godongwana’s role in the company.
Asked about the role of Godongwana in Pan African Benefit Service, he said he had played a “passive role” in the company.
“During the time I was there, I saw him very seldom, said Pretorius. “He was not very operational, nor did he spend too much time in the office. Mohan Patel was the contact point.”
Pretorius said the expectation had been that Godongwana was “very well connected with political influence” and he was expected to assist the small BEE company to build up its profile.
His wife Thandiwe was considered to have experience in marketing, and it was hoped she would drive the business process, he said.
Asked if things had materialised that way, Pretorius said Thandiwe later stopped spending time in the office but continued to draw a salary.
“She is still the chairperson and director,” said Pretorius. “She has been very uninvolved for the past eight months and I believe Mohan Patel has tendered his resignation.”
Pretorius said he believed Thandiwe Godongwana was earning around R65 000 a month, and he had overstepped his responsibilities and recently taken her off the payroll. He later asked for the inquiry to rule that this fact not be published by the media, as he feared it would come back to “haunt him”. But the commission of the inquiry, Jan Reitz, declined to make this ruling.
Outside the inquiry, Pretorius told the Mail & Guardian that he and other employees were trying to buy Pan African Benefit Services, as it was still a going concern. Their offer had been handed to the liquidators of Canyon Springs.
Provident funds belonging to workers who are members of Sactwu were still its biggest client, said Pretorius.