| Thu 9 Sep 2010, 8:01 | | SLM - Sanlam Limited - Sanlam: Settlement of disputes on pension fund surpluses |
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SLM
SLM
SLM - Sanlam Limited - Sanlam: Settlement of disputes on pension fund surpluses
Sanlam Limited
(Incorporated in the Republic of South Africa)
(Registration number 1959/001562/06)
JSE share code: SLM
NSX share code: SLA
ISIN number: ZAE000070660
("Sanlam")
Sanlam: Settlement of disputes on pension fund surpluses
Sanlam has reached an agreement with the curators of four pension and retirement
funds ("the Funds") on a settlement of disputes that originated from the removal
of surpluses from these funds in the 1990s. The Chief Executive Officer of the
Financial Services Board ("FSB"), although not a party to the settlement
agreement, played an integral part in the negotiations leading up to the
settlement.
The funds concerned are the Datakor Group Pension Fund and Retirement Fund, the
Cortech Pension Fund (all three under curatorship) and the Picbel
Groepvoorsorgfonds (in liquidation).
Sanlam has made several offers since 2006 to settle the matters as part of an
earlier undertaking given to the FSB and to the National Prosecuting Authority
("NPA"). Sanlam provided an undertaking to participate fully in all
investigations into allegations in respect of the removal of surpluses from the
Funds in the 1990s and to make every effort to see to it that the members of the
Funds are compensated for any losses suffered. Sanlam continues to believe that
it did not participate in any unlawful action involving the surpluses, but that
the settlement is in the interests of the members of the Funds who have incurred
losses.
The settlement agreement provides for Sanlam, without admission of liability, to
pay the Funds the sum of R175 million on specific terms and conditions accepted
by the curators and liquidators. The liquidators and curators have agreed to
continue to take all reasonable steps to recover the losses suffered by the
Funds from all other parties and persons against whom the Funds may have claims
for such losses. The net amount of all such recoveries up to a maximum of R25
million will be paid back to Sanlam.
As reported since its Interim Results and its Annual Report of 2009, Sanlam has
made provision for the payment of a possible settlement amount as a contingency.
Background
During or about 1992 when it was legally possible for an employer to share in
the surplus of a pension fund established for its employees, an illegal scheme,
which became known as the Ghavalas option, was developed by a number of
individuals not related to Sanlam. The purpose of the Ghavalas option was to
remove the surpluses from pension funds in terms of an arrangement that had not
been fully disclosed to the Registrar of Pension Funds ("the Registrar") at the
time.
Sanlam as administrator of the Funds acted upon section 14 certificates provided
by the Registrar in respect of the Funds in good faith as these certificates
were accepted as valid. Sanlam accordingly transferred the assets of the Funds
to the Lifecare Fund and made other payments in accordance with instructions
from the Funds.
Several years later the Ghavalas option was investigated by the Registrar and
curators were appointed to deal with all nine pension funds subjected to the
Ghavalas option scheme, including the Funds. In the case of Picbel
Groepvoorsorgfonds, the curatorship was subsequently terminated and the same
individuals were appointed as liquidators thereof.
During the course of the investigations by the FSB and the NPA, Sanlam however
realised that one of the Ghavalas option schemes involved a subsidiary company
sold by Sanlam. It turned out that a dividend of R44.1 million had been
received within the Sanlam Group as a result of the implementation of the
Ghavalas option in respect of the pension and retirement fund of this subsidiary
company.
Although it was not legally liable to do so Sanlam, without admission of
liability, unconditionally paid the sum of R106 million to the curators of the
two Datakor and the Cortech funds on 14 December 2006 in respect of the R44.1
million. This amount represents the capital amount of the dividend plus
interest thereon from 24 November 1997 to date of payment.
Settlement
Sanlam`s offer of settlement was accepted by the curators and liquidators of the
Funds on 18 August 2010 and Sanlam transferred the settlement amount of R175
million to the Funds on 31 August 2010. The settlement effectively settles,
fully and finally, all disputes and claims of any nature of the Funds against
Sanlam. The Funds, their curators and liquidators thus have no further claim
against Sanlam of any nature whatsoever.
Bellville
9 September 2010
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
Date: 09/09/2010 08:01:01 Produced by the JSE SENS Department.
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