Recently I interviewed Trevor Manuel on his 10 years as the Minister of Finance. We spoke of cabbages and kings, things of the financial services industry and of the arrest a few weeks ago of a number of leading people in the industry in connection with a massive pension fund surplus rip-off scheme.
Arrested and marched into court in leg irons were Peter Ghavalas, a former employee of Nedcor, who allegedly devised a scheme to skim off pension fund surpluses; and several others who were were also part of the scheme. The other people allegedly involved in the scheme were Aubrey Wynne-Jones of retirement fund administration company Wynne Jones and Company, Anthony Dixon-Seagar, managing director of Lucas Automotive, and two former employees of the country's biggest retirement fund administrator Alexander Forbes, Peter Martin (an actuary) and Neil van Hees. The last two were employees of Alexander Forbes at the time the alleged offences took place in the 1990s.
Manuel made some interesting comments about the arrests. He says it is never nice to see people put in leg irons but he is encouraged that this did in fact happen.
He says that the way the highflyers of the financial services industry are normally treated in the justice system exposes a contradiction, namely that the people with wealth expect to be treated differently from other members of society, particularly the poor.
He asks why a person who survives on the margins of society, who steals food to feed his family, should be treated as more of a criminal than a person who flaunts their wealth to the poor.
He might have added that their wealth sometimes comes at a high cost to the poor or at least to many low-income earners.
Let's look at the exposé by Personal Finance in the March 18 issue which revealed the bulking of retirement fund assets by Alexander Forbes to make extra secret profits at the expense of hundreds of thousands of retirement fund members.
How many of those rands in secret profits came from people who face the prospect of an impoverished retirement? The few hundred rand taken from each of them will have left them that little bit more worse off than they would otherwise have been in their retirement years. Will such a loss eventually force them into stealing that loaf of bread? Will they end up in leg irons as a result?
The question must also be asked whether criminal charges are as assiduously applied to captains of industry as they are against someone who steals a loaf of bread?
There is a reason why the symbol of justice is a blindfolded woman. As Justice, she must treat all, both rich and poor, as equal before the law. She must see no difference between rich and poor, the educated and the uneducated or be influenced in her final decision by anything else that sets one person apart from another.
The arrests of those involved in the pension fund surplus scam must come as a stark warning to all those people in the financial services industry who have forgotten that they are the custodians of our savings. Some of these people seem to have forgotten that we as ordinary hard-working people have given them our trust and our money.
Peter Moyo, the new head of Alexander Forbes's African operations including South Africa, says he does not want to look back into the past as far as the secret profits scandal is concerned. I think he is wrong.
Way back in 1996, the staff lawyers at Alexander Forbes advised that the practice of bulking was not lawful .
Its outside lawyers gave the company the same advice in 2002. However, the practice only stopped in 2004.
And, according to my information, this was not the only not lawful activity taking place at Alexander Forbes during this period.
If something is not lawful, as it was put by Alexander Forbes's lawyers, Routledge Modise Moss Morris, then surely there must be an investigation into who committed these not lawful acts.
And if not lawful acts were in fact committed, then surely the people who committed them should be charged with breaking the laws?
Or are we going to see favourable treatment being applied here and with any other retirement administration company involved in the same not lawful practices?
Alexander Forbes and other companies involved in similar practices also need to tell us how much money its senior executives personally made over the years as a result of the not lawful bulking and other not lawful acts at the expense of retirement fund members.
It is simply not good enough for these captains of industry to make obscene amounts of money and then live off the proceeds like the emperors of Ancient Rome.
One of the underlying problems at many financial services companies is that there are too many lawyers, accountants and actuaries who have helped their bosses to take advantage of people who do not understand the workings of the industry. They intimidate ordinary people with their superior education and leave them feeling exploited yet not quite understanding how they were exploited.
There are also just too many people in the financial services industry who:
- Look to maximise profits and their personal wealth, by both legal and not lawful means, at the expense of people who may in the end be forced to steal a loaf of bread in their old age because someone plundered their pension funds.
- See us as mere numbers and callously claim the industry's failings affect just a small percentage of us.
- Have gone unpunished for the crimes they have committed in the financial services industry and who continue to be employed by this industry.
There is nothing wrong with making a fair profit. There is a lot wrong with people who seek to make unfair profits and thereby enrich themselves with extravagant salaries, perks and share options by taking advantage of people who are vulnerable.
So are we to be forever left at the mercy of the unscrupulous?
Methinks not.
Recently I attended the annual Starlight Classics concert sponsored by Rand Merchant Bank on the beautiful Vergelegen wine estate outside Somerset West. One of the songs performed was written on the eve of the first democratic elections in 1994.
The song is entitled Window of Hope. It gave me hope.
What I can tell you is that there is a window of hope for all of us when:
- Personal Finance is provided with the damning information that confirms what we have long suspected about the way Alexander Forbes and others have done business for many years.
- A major investigation is launched by the Financial Services Board (FSB) into the retirement administration industry as a result of our exposé on Alexander Forbes's not lawful secret profits.
- Members of retirement funds fight back as they have been doing since we exposed the Alexander Forbes's practice. Our information is that many of you have been demanding that your retirement fund trustees establish the facts and have your money returned to you.
- Personal Finance can get advice both directly and indirectly from lawyers to help us fight off attempts by other lawyers who have vainly attempted to prevent us from publishing the truth concerning the activities of companies like Alexander Forbes.
- Actuaries like Rob Rusconi blow the whistle on the high costs in the retirement industry.
- People of enormous skill and talent are prepared to work for the National Treasury, the FSB, the offices of the Pension Funds Adjudicator and the Ombud for Financial Services Providers for less than what they would earn from working directly in the financial services industry.
- Some of the captains of industry realise that what has happened in the past is no longer acceptable and are now prepared to do the right thing.
- Politicians start to look after the interests of ordinary folk.
There is a significant window of hope when we have a finance minister like Trevor Manuel, who for 10 years this month has been prepared to stand up to those who have unduly taken money from our pockets.