Private Security provident fund

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22 August 2017
Chairperson: Mr F Beukman (ANC)
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Meeting Summary

The Association of African Private Security Owners of South Africa (TAAPSOSA) briefed the Committee on grievances it was experiencing with the Private Security Sector Provident Fund on Structure and Governance (PSSPF). TAAPSOSA noted the trustee board was supposed to be represented by 50% of trustees who are elected by employers and 50% elected by employees - TAAPSOSA stated this was not being upheld and that black employers were being deliberately excluded. The presentation detailed a number of cases of misconduct and the actions TAAPSOSA felt should be taken to address these problems. It requested the Committee intervene on what was perceived to be a continuous abuse of powers by white employers and institutions of national importance.

The Private Security Industry Regulatory Authority (PSIRA) then explained the background to the Provident Fund’s conception as well as giving an overview of the board’s structure – the presentation noted PSIRA did not sit on the Provident Fund board. PSIRA’s main function was rather to act as a regulator and promote and ensure protection of the rights of security officers and other employees in the private security industry as well as ensuring compliance through active monitoring and investigation of the affairs of security service providers.

PSIRA noted it did not interact with PSSPF and although a Memorandum of Understanding was signed, it was not yet fully implemented. Interaction also took place with a number of other groups including the Department of Labour, the Pension Fund Adjudicator, the Financial Services Board and the South African Police Services (SAPS), all of which helped drive compliance.

The main complaints that PSIRA received against the PSSPF included poor administration, issuing of letters of good standing and exemption criteria - PSIRA tried to facilitate discussions between aggrieved members of the industry and the Fund in order to work towards solutions.

The Committee then heard from the PSSPF Trustees who explained compliance with the Fund was mandatory unless a group was granted exemption. A new board came into place on 1 September 2016 along with a new administrator - the new administrator made steady progress in clearing a backlog of claims.

A new electronic system was being developed to facilitate interaction with the Fund, on behalf of employers and members, and the PSSPF was trying to expand its reach throughout the country with the expansion of a mobile office project. Although unallocated contributions were currently a problem, the Fund aimed to have these cleared by the end of 2017. High levels of non-compliance were a problem, especially where contributions were taken from employee salaries but never given to the PSSPF.

Members of the Committee expressed the view that many of the issues raised fell under the Portfolio Committee for Labour and suggested that a joint sitting with both Committees and the groups attending today would be useful. Members queried the election of trustees and whether or not Annual General Meetings were held. It was agreed that one potential solution would be for TAAPSOSA to have a seat at the National Bargaining Forum and it was suggested TAAPSOSA request to be a part of the Forum.

Meeting report

The Chairperson detailed the programme for this week’s upcoming meetings noting that the next day would include a briefing from the SA Police Service (SAPS) on the first quarterly reports for the 2017/18 financial year, an outstanding briefing from the SAPS management on the Anti-Gang Strategy which had been rescheduled from the previous week and a briefing from the Directorate for Priority Crime Investigation (DPCI) on the logistics issues which were brought up at its meeting with the Committee last week Wednesday. He also detailed that a joint meeting with the Portfolio Committee on Mineral Resources was scheduled for Friday, looking at the issue of illegal mining – DPCI would also be present at this engagement.

The Chairperson highlighted the agenda for today’s meeting would need to be kept concise as the venue was only available for a limited time. Because of the limited time, presentations would be kept to 10 minutes. He hoped there would be still be enough time to run over the presentation from the Private Security Industry Regulatory Authority (PSIRA) on the first quarterly reports of the 2017/18 financial year – if time was insufficient, the reports would be considered in two weeks time.

The Chairperson indicated the Committee received correspondence from Mr Kenny Gontse, from the Eastern Cape, about challenges he was experiencing in relation to the Provident Fund. Members looked at the correspondence and felt it was appropriate to invite Mr Gontse to the Committee as it was important for it to hear the concerns of citizens – this gave rise to the current meeting. The Committee had also invited the Trustees of the Private Security Sector Provident Fund on Structure and Governance (PSSPF) and the Security Industry Authority (SIA).

The Association of African Private Security Owners of South Africa (TAAPSOSA)

Mr Moses Malada, General Secretary, TAAPSOSA, explained the presentation was a submission on behalf of the Association’s members and other interested companies. The presentation covered the background of the Association’s formation – presently, the Association was in the process of finalising registration with the Department of Labour. TAAPSOSA requested the Committee intervene on what it perceived to be a continuous abuse of powers by white employers and institutions of national importance such as the Financial Services Board (FSB).

Appointment of trustees remained problematic as it excluded a significant section of employers and employees who were direct participants in the Fund. The presentation referenced the Pension Fund Act, section 7A, which stated that 50% of trustees shall be elected by employers, who were participating employers, and 50% by employees - this did not appear to be the case as the FSB granted exemption for the participating employers and members by not having the direct right to elect employer and member trustees although the reasons as to why this was done were unclear. Members of TAAPSOSA were not prepared to be represented by the current employer trustees who had deliberately excluded black employers.

Mr Malada suggested the FSB decision to grant exemption had allowed the SA National Security Employers' Association (SANSEA) and the Security Association of SA (SASA) to appoint trustees on behalf of all participating employers. He argued that the FSB should have tested this view with all participating employers and members before arriving at the exemption conclusion. TAAPSOSA cannot see how the FSB can continue to unilaterally decide to grant exemption in the exclusion of majority.

The majority of the employer trustees on the current board were not shareholders or an employee of an employer. If the status quo was allowed to continue, it will allow the liquidation of predominantly black companies by companies which were predominantly white. TAAPSOSA felt its democratic rights to have trustees of its choice were infringed and it was unacceptable that institutions of national importance were used to promote the agenda of the few against that of the majority. The presentation referenced recent court actions by members of the SA National Security Employer’s Association (SANSEA) and Security Association of SA (SASA) against tender boards for awarding tenders in favour of black companies and stated it was proof the PSSPF was used as a mechanism to liquidate black owned companies - the PSSPF should never be used as an intervention tool to block certain companies from obtaining tenders.

Mr Malada suggested the Department of Labour made an error in thinking that the Fund, established in terms of the Pension Fund Act (Private Security Sector Provident Fund), was able to be granted compulsory status because the Fund was not under the Department of Labour. TAAPSOSA requested the Committee step in to investigate the allegations by doing random inspections of all companies where closed shop agreements were signed with the unions currently represented on the board. The list of such unions could be obtained from the Commission for Conciliation, Mediation and Arbitration (CCMA).

Under provisions of the Act, and rules of the Fund, majority of the current employer trustees did not qualify to be trustees as they were not employees, shareholders, or directors of any security company -a person who was not an employee, shareholder or director of any security company should not be allowed to use the representation of legitimate employers whilst also excluding legitimate employers. Based on this, the Committee was called on to disband the board and call on the FSB to appoint an interim board to effect election of permanent trustees by members and participating employers - this would be in the best interest of the members, employers and the public in general.

The Committee was provided with examples of various cases of alleged misconduct and highlighted that the Principal Officer of the Fund was unable to separate his role and the needs of individual trustees that sought to protect big white companies. He argued this made the Principal Officer unfit to lead and that previous attempts for TAAPSOSA to cooperate with the board were unsuccessful. At present the Fund was failing and therefore it would be more beneficial to have a number of competing funds. The lack of Annual General Meetings being held by the Provident Fund at present was also highlighted. Based on this, the Committee was called on to disband the board and call on the FSB to appoint an interim board to effect election of permanent trustees by members and participating employers - this would be in the best interest of the members, employers and the public in general.

Mr Malada also requested the Minister of Police, and any other Minister invited to attend the Bravery Awards, boycott the event as it did not represent the bravery of men and women within the industry but rather was used to abuse the very same fund who sponsored the event in which awards only go to company members of these two organisations. Based on these allegations, TAAPSOSA also requested PSIRA to pull out as a partner and establish an event that awarded men and women across the industry.

PSIRA: Private Security Sector Provident Fund

Mr Stefan Badenhorst, Acting Deputy Director: Law Enforcement, PSIRA, explained the Private Security Sector Provident Fund (PSSPF) came into effect in 2002 where it was registered in terms of the Pension Funds Act, 1956. He gave some background to the Fund’s formation and explained it provided for a range of benefits to its members including retirement, disability, death and funeral benefits. The PSSPF was governed by a board of Trustees. The Trustees consisted of 12 Member Trustees (each of whom get one vote), six Employer Trustees (who get two votes each) and one Independent Trustee. These Trustees have direct control and oversee the operation of the Fund in terms of Fund Rules and Pension Funds Act. They serve a five year term of office. He noted that PSIRA did not sit on the Board of Trustees.

PSIRA was mandated, in terms of the PSIRA Act, to regulate the private security industry in the public and national interest and the interest of the private security industry itself. It had an obligation to promote the protection and enforcement of the rights of security officers and other employees in the private security industry as well as ensuring compliance through active monitoring and investigation of the affairs of security service providers.

There was co-operation between PSIRA and the PSSPF in order to influence compliance with the Fund obligations in terms of labour legislation. A Memorandum of Understanding (MoU) existed between the two organisations which agreed on sharing of information in pursuance of the respective mandates and detection of unlawful activities. One of the big issues the Fund was experiencing was the reporting of members and registration of businesses – liaison therefore took place to ensure numbers presented to the Fund were correct as employers were obliged to report the number of security officers to PSIRA. PSIRA also took part in annual PSSPF member and employer sessions, of which around 60 sessions took place nationally. Part of PSIRA registration requirements indicated businesses must demonstrated they were tax compliant as well as registered with the Provident Fund. PSIRA was obliged to ensure its members were protected. PSIRA had interaction with a number of groups including the Department of Labour, the Pension Fund Adjudicator, the Financial Services Board and the South African Police Service, all of which help drive compliance.

Mr Badenhorst outlined the statistics for the number of prosecutions carried out, based on the violation of the code of conduct for Security Service Providers, since PSIRA’s conception in 2002. There had been a grand total of 6 377 cases, 5 673 of which were finalised as of July 2017. He also highlighted the statistics on non-compliance as well as an analysis of the number of businesses who were complying with the Provident Fund.

He outlined the main complaints which PSIRA receive against the PSSPF which include poor administration; the issuing of letters of good standing; and the exemption criteria. He highlighted that PSIRA try to stimulate discussions between aggrieved members of the industry and the Fund in order to work towards solutions.

Private Security Sector Provident Fund: Structure and Governance

Mr Cobus Bodenstein, Chairman, PSSPF, explained some of the PSSPF presentation overlapped with some content of the PSIRA presentation and therefore he would skip that material. He briefly outlined the history of the Fund and highlighted that every employer and every employee in the private security sector were legally bound to participate in the Fund, the only exceptions being managers and those employed in the Cash in Transit sector. He also noted that employer security service providers that already established a provident fund prior to 30 March 2001, or could produce evidence that they already commenced negotiations to establish their own provident fund by that date, could also apply for exemption. The Fund was considering establishing an independent body to look at exemption applications.

The Committee was taken through the benefits the PSSPF offered as well as stating that current value of the PSSPF investment portfolio was close to R6 billion and was achieving an annual growth of close to 14% net after costs.

A new board came into place on 1 September 2016. On the same date, a new administrator was appointed - Salt Employee Benefits. Since this appointment, the administrator had paid 68 351 claims - this demonstrated steady progress in clearing the claims backlog.

The Fund was in the process of creating an interactive web based system which will make it easier for employers to put payments on as well as uploading schedules. The system will also allow employers to generate their own benefit statements and compliance letters.

The PSSPF was also trying to increase its reach throughout the country by expanding the mobile office project. Access to the Fund was increased through the deployment of these mobile services and other initiatives. The Fund believed in good governance and it assisted the Board of Trustees to deliver long-term stakeholder value. A full time Risk Officer had been employed to provide reasonable assurance regarding the achievement of objectives in terms of effectiveness and efficiency of operations, reliability of financial reporting and compliance with laws and regulations. A complete Risk Management, Compliance and Audit Software Solution will be launched soon. The Fund’s objective was to always attract and retain appropriate skills and talent to ensure the human resource function can support all of the Fund’s business areas.

Unallocated contributions were part of the reason for the change in administrator – the Fund inherited R457 million worth of unallocated contributions from the previous administrator. A special Task Team was set up to reduce the unallocated contributions amount significantly during the current year - presently the unallocated contributions sat at R283m. This showed good progress. The reasons for unallocated contributions included problems with schedules where schedules were not received, were incomplete or did not correspond with the payment. In these cases, the issue must be established with the employer and attempts were made to get the correct schedules and then money can be allocated. Attempts were being made to eradicate both the backlog of claims and unallocated contributions by the end of 2017.

Mr Bodenstein explained the high level of non-compliance in the private security sector was of concern as it deprived employees from the benefits of the Fund. He demonstrated this with statistics for the number of security businesses registered and the breakdown of the figures on the number of complaint businesses.

Mr Anesh Soonder, Attorney for PSSPF, described the issues around non-compliance, types of non-compliance and the actions taken when an employer was found to be non-compliant. As of 10 May 2017, the Fund litigated against 256 non-compliant employers. Judgment was granted against 21 employers - 186 matters were currently within the court process and 100 matters were handed over for criminal litigation. He explained that many members were not aware of the non-compliance as they saw deductions on their salary advices monthly but did not realise they did not enjoy benefits - this presented a serious challenge. The Pension Funds Act had recently been amended to recriminalise the deduction but not the paying of contributions. If an employer was found guilty, the directors of such security company can be criminally prosecuted and could face a fine of up to R10 million and/or 10 years imprisonment.


The Chairperson stated that it was quite clear that some of the issues, especially those raised by TAAPSOSA, fell within the ambit of the Portfolio Committee on Labour - the Portfolio Committee on Labour would be the proper vehicle for these concerns. The Committee would focus on the issues that fall under its mandate from a security point of view. He queried if some of the issues raised by TAAPSOSA could be resolved through the MOU between PSIRA and the PSSPF. He asked why PSIRA did not sit on the board. The previous service provider to the PSSPF had not been sufficient and there was still R91 million unallocated. He highlighted there may be members who were injured and who may die and, with the current situation, there would be no recourse, or these members may not be able to be identified. As it was a matter of urgency, he asked what the Trustees were doing with regards to this.

Ms M Molebatsi (ANC) asked if the information sharing agreement between PSIRA and the PSSPF was adhered to. She requested more information about the Death and Disability Reserve Account from the board. She queried if the board agreed with the idea that some of the shareholders were pensioners. Was any legal opinion obtained over the newspaper reports that the owner of Mvunonala had been deported back to Zimbabwe and the reports regarding the disappearance of funds from the mining funds?

Ms M Mmola (ANC) queried when the MOU between PSIRA and the PSSPF was signed. Was the new administrator coming into place a decision taken by the previous board? She asked how many officers were killed or disabled, on or off duty. How effective had the appointment of a Risk Officer been? She also wanted to know how often the financial statements of the Fund were audited.

Mr P Mhlongo (EFF) asked what role PSIRA played in ensuring total compliance of companies. He noted the disparity in the total number of cases of non-compliance compared to the number of prosecutions - this suggested there was something wrong. People losing benefits when they got their pensions was shocking and it was a serious issue. He questioned if perhaps passing more legislation would empower PSIRA to allow them to deal with these cases more effectively. Where did the problem lay? Was PSIRA lacking capacity? Were there strong, effective and punitive measures in place if people refused to comply?

Mr Z Mbhele (DA) asked for clarification about employer and member representation on the Provident Fund and how that happened. What was the exact process of determining the allocation of both member and employer Trustees? The first presentation raised the grievance of exclusion from the board’s representatives – what was the required process? Was it adhered to or not? Was the process flawed in its design and was this what gave ground to the grievance? How were the members given the chance in the first place to contribute to the selection of the Trustees on the board who are meant to look after their interests? He asked for a descriptive picture of what is meant to happen, so that it becomes clear where things went wrong or if the problem lies with the design of the process.

Mr J Maake (ANC) was concerned that although the role of PSIRA was to ensure security officers were not exploited and to protect and enforce rights of security guards in the industry, the Authority did not seem to have the powers to do so. He asked TAAPSOSA and PSIRA if they felt it was necessary to change legislation in order to streamline the process. He noted there will always be resistance to transformation. When the Pension Fund Act of 1956 came into place, there was not any black security company owners which meant something needed to be changed to cover the new environment. TAAPSOSA and PSIRA needed to identify areas requiring change and then legislators need to make sure that happened.

Mr Malada responded that black owners were the majority but this was not reflected on the trustee board. TAAPSOSA had previously tried to engage with the board but it refused to talk to TAAPSOSA. It was because of this that the issue had now been brought to Parliament. There was a need for legislation to be changed. The problem was that PSIRA had nothing to do with the Provident Fund because of its mandate – the matter fell under the mandate of the Department of Labour. The Provident Fund wanted to become independent in terms of PSIRA. He argued that members of the board were there to serve the interests of their companies and not the groups they were supposed to represent. There was an issue with tenders and issuing letters of compliance. The Provident Fund could not be issuing letters of compliance – it was not the purpose of the Fund. The PSSPF was trying to control the industry above what PSIRA was doing - this amounted to oppression.

Mr Kenny Gontse, Executive Member, TAAPSOSA, added that Mr Soonder had carried out due diligence and it was found, beyond reasonable doubt, that there was a relationship between Mvunonala and Salt. What was found was that the Fund administrator had service providers which were connected to the same people. Fund Trustees were aware of this. He highlighted the difficulties with the issuing of exemptions stating that the Fund was acting as both player and referee. There were situations where people became so indebted to the Fund that it would then offer to buy the company out, to settle the debt, and then one became part of them – this was a real situation and it was even happening within unions and employee associations. The Fund owned a number of black-owned companies as a result of this indebtedness.

The Chairperson asked was vehicle there was for TAAPSOSA to get representation on the board of trustees.

Mr Gontse explained that there was supposed to be a 50/50 split, according to the relevant Act, with members supposed to be elected by employers and employers elected by employees – this was not happening. When the board expired and a new board was supposed to be elected, the former board was simply reinstated.

Mr Mbhele felt the final issue would need to land at a specific individual or office - the board could not just materialise. He asked if the Minister of Labour appointed the members of the board or if there was an appointment or election process. If it was an election process, who gets to attend the AGM?

Ms Molebatsi said it seemed as though the board appeared to simply recycle people. She asked when the last AGM took place.

Mr Maake highlighted the members of private security companies outnumbered both the police and defence force. It was extremely important to empower the black members of these private security companies.

Mr Mhlongo said the Provident Fund Act was very clear on there being a 50/50 split. He queried where a dispute can be lodged. Was this with PSIRA? If one did not recognise the board of the fund did this mean one could lodge a dispute with them?

Mr Malada argued there was no transparency on how the board was appointed – it was imposed on the Fund’s contributors. There was also no AGM held. One member of the board believed his father started the security industry and so this member wanted to remain in control and not relinquish power by allowing others to participate. Mr Malada argued that SALT was a subsidiary of Mvunonala. How did it arrive at that procurement process? There were allegations of corruption and fraud. TAAPSOSA could not go straight to the Fund for engagement as the Fund would ask who TAAPSOSA was. The buying out of companies will lead to monopolisation of the market and therefore a lack of competition.

Mr Gontse highlighted the structure of the board - most members on the board did not own a security company and who they represented was unknown. Members were supposed to be members of security companies and unions but unfortunately even the union had a closed shop agreement so employees did not know what was happening because the union closed them out. Mr Soonder began as a trustee but was then used for legal advice at a cheaper rate. The FSB then realised there was a conflict of interest in being a service provider and a trustee member. This resulted in Mr Soonder leaving his post as a trustee and acting as a legal adviser to TAAPSOSA instead. TAAPSOSA had already discussed the issue with the board - the board asked for the problems to be detailed in writing, at which point the issues would be dealt with. Letters of good standing were drawn up but the issue of compliance was never raised.

Mr Badenhorst emphasised that PSIRA was not involved in the Provident Fund or its establishment. PSIRA cannot enforce themselves as a member. PSIRA’s role was to promote compliance with all the legislation that governed the private security industry. The purpose of the MOU, signed in 2016, was to collaborate with one another and verify if businesses were actually reporting information to the PSSPF and vice versa. The full implementation of the MOU had not materialised as of yet. PSIRA did not share specific information as there was a concern over what happened with the information provided to the Fund, for instance if it was shared with third parties. Discussions about information sharing were however ongoing.

Ms Molebatsi questioned if PSIRA was obliged to question adherence to the MOU.

Mr Badenhorst responded that PSIRA can question the MOU as it was party to the signing of the Memorandum. The Authority needed to be satisfied that, as regulator, information shared with the Fund was not abused. This confidence had not been received yet and therefore the part of the MOU which related to the sharing of information was not yet fully implemented. There was comparison on membership numbers reported by the Fund and the numbers held by PSIRA - the number of people injured on duty was information received from the Provident Fund. For the last financial year there were 1 213 death claims and 270 disability claims reported to the PSSPF. There were 5 705 injuries and 14 fatalities on duty reported to the Compensation Commissioner in the last financial year. PSIRA was in the process of entering into a MOU with the Department of Labour.

Mr Manabela Chauke, Director, PSIRA, added that the Authority was in a difficult position as the regulator. Each time tensions arose, PSIRA ended up in the middle. He emphasised that PSIRA’s mandate was as outlined in the Act – the Act specified that PSIRA’s scope was large but in the main, the aim of the Authority was to promote and ensure compliance. PSIRA must make sure that everyone who played in the private security space was legitimate and to show they complied with the law. There was overlap with the Department of Labour but the roles were not always clear. PSIRA needs to be looking at how best to listen to tensions within the industry.

Mr Mbhele mentioned the issue of security companies being registered only to apply for tenders - when the tenders were not awarded, these companies shut shop but legally, on paper, they still existed. He wondered if this trend might contribute to the difference between the number of companies registered and the number of companies who were complying with the Providence Fund.

Mr Gontse noted that a new company could not be registered with the Fund as it would not have employees to register and therefore it could not have a letter of good standing with the Fund – such a company would be closed out completely. There needs to be intervention - PSIRA should be regulating the industry.

Mr Chauke explained that PSIRA was the only regulator of the industry – it was the authority that licensed people to operate in that space and therefore anyone who was saying one can simply apply for tenders was incorrect. The only letter issued should be coming from PSIRA. This issue was brought up with National Treasury to say a government department could not go out and arrive at requirements that did not exist in law. The only requirement to apply for a tender was registration with PSIRA - PSIRA is the only authority which can issue such certificate. With employees there is the additional requirement that the company must be registered with the Provident Fund. It was very difficult to effectively have the MOU for sharing information so this was a challenge. It was worse when there was an allegation that there was an abuse of power.

Mr Mhlongo referenced the Provident Fund Act and the 50/50 Trustee split - he questioned what it meant to PSIRA if the people on the board were not even players in the private security industry. He asked what kind of incentives were in place to ensure that black emerging companies were sustained. He was concerned that PSIRA was distancing itself from its statutory requirements.

Mr Nhlanhla Ngubane, Deputy Chairperson, PSIRA Council, said the Authority did not legal power over the Pension Fund – to suggest otherwise was inaccurate.

The Chairperson indicated that some of these issues lied with the Department of Labour, the Pension Fund Adjudicator and the FSB – these issues needed to be taken up with these role players including the respective Portfolio Committees. However, from a security perspective, the complaints have been listened to, responses will be heard and then a way forward would be decided upon.

Mr Badenhorst referenced comparison of the numbers and explained there would always be a difference in the numbers between the PSSPF and PSIRA. The total number of registered businesses and registered officers with PSIRA would never compare to the figures of the PSSPF which only focused on the guarding sector. Even with this in mind, there was still a lot of underreporting and non-compliance by businesses in the guarding sector regarding the Provident Fund. PSIRA was in a position, in terms of the code of conduct, to inspect and force those requirements in terms of labour registration. This role was taken very seriously as demonstrated by the over 6 000 prosecutions effected by PSIRA. PSIRA sanctioned those businesses which did not comply specifically for profit maximisation. Profit maximisation, by not paying over the contributions taken from security guards, was the main trend in non-compliance. Although PSIRA had a role to play in this space, it was not the primary function of the Authority.

Mr Bodenstein explained the reason PSIRA was not represented on the board was because it fell under the Department of Labour. PSIRA was the regulator of the industry and therefore it must deal with enforcement of compliance in terms of the Fund. He elaborated on the appointment of the board of trustees explaining the appointment is outlined by section seven of the Pension Fund Act – this section spoke to the potential for the election of board members that were employers and the process to apply for exemption. The board applied for an exemption which was granted - the elections were therefore not required. In 2009 the possibility of having elections in the industry was looked at but the nature of the security industry meant that employees were spread widely over the country. It would be difficult to have such an election due to the spatial distribution and it would cost millions and millions of Rand to do so. The money to do so would also come from members. This was one of the main reasons the exemption was granted by the FSB. The exemption must be reapplied for on a regular basis.

He explained the industry had a national bargaining forum and this forum contained employers and unions who represented the industry. Wages, conditions and benefits were negotiated at this forum with most of the agreements lasting for three years. To establish representation on the national bargaining forum, bodies and unions must submit applications and proof of membership to the CCMA. The CCMA, as an independent body, will verify this and then seats were allocated in the national bargaining forum. These employer bodies and unions then elected who filled those seats from their own organisations. Rules did not allow the owner of a security business to participate as a trustee as this would be an abuse of power. The allocated contributions figure was already lowered by around 50% and there were weekly meetings with the service provider and national operations manager for feedback. Client liaison officers were being used to find the missing information from schedules in order to allocate the money.

He addressed the issue with Salt and highlighted that when the media reports had come out about Salt, the PSSPF made sure its assets were protected and due diligence was carried out. He noted that Bophelo Life was a legal entity on its own which was owned by the Mvunonala group - he explained he was not aware of Salt having any shareholding or ownership in Bophelo Life. The appointment date of Salt was 1 September, the same date of the implementation of the new board. While the term of the previous board came to an end on this date, and there were seven changes in terms of new trustees, the decision to move to Salt was taken by the board prior to 1 September. He highlighted that having a full-time risk officer was a significant help to the board of trustees.

Ms Molebatsi asked if there was an AGM about the new board that came into place on 1 September.

Mr Bodenstein explained the board did not have AGMs. Board meetings were instead held once a month. AGMs were held by different employer bodies and unions. When the new board was decided upon, these bodies and unions were asked to put forward names which would have been decided at their AGMS. The board was audited once a year and its financials have been on time for the past five years. This information published and in the public domain on the FSB website. The only modification from those audits was in terms of unallocated contributions as the allowance was only 2% of total asset value unallocated contributions. This was part of the reason why clearing the unallocated contributions was high priority.

Mr Bodenstein explained there were two forms of compliance documents, one being a compliance certificate (which signalled 100% compliance) and a compliance letter (which stated the acknowledgement of debt and up-to-date payments). There was a disability and death provision account, around R694 million. There was a full-time actuary which helped in making sure the Fund was financially sound in terms of the amount of money which should be held in that reserve account. This was separate from the amount of assets mentioned earlier. If any letters of compliance were being issued with the official protocol, information on this offence would be welcomed although he was not aware of such practice. He was not aware of unions or employee bodies owning companies -information would be appreciated. He mentioned the allegation against Mr Soonder and clarified that he was an independent trustee and as an independent trustee, one must be on the board so that if the member trustees and the employer trustees came to a deadlock on a decision, the independent gets the swinging vote. The board did decide to reappoint due to the potential conflict of interest if Mr Soonder continued as both legal advisor and a trustee. A new independent trustee had since been appointed.

Mr Wahl Baartman, member, SIA, clarified that the board did not buy companies because they were not compliant with the provident fund. The important thing was that the level of compliance was not high enough in the industry. The industry was in a very bad state and drastic measures were needed to sort that out and take it to the next level to increase compliance because people on the ground were being abused and not getting the respect they deserved.

Ms Molebatsi felt the allegations raised in the TAAPSOSA presentation was not touched on – why was TAAPSOSA being treated in the way it was?

Ms Mmola noticed that the board sat weekly – how much did the trustees get paid to meet this often? How many committees did the board have? How much were they paid in the last six months? Was it satisfactory for there to be no AGMs or elections?

Mr Mhlongo queried what criteria were being used if AGMs were not called for in the constitution.

Mr Maake requested a joint session with the Portfolio Committee on Labour, as well as all the parties in attendance today, in order to make sure the issues were followed up on and resolved.

Mr Mbhele questioned what process and system was being used for arriving at the composition of the board of trustees. It was important to stick to the facts and also to what the law allowed. He agreed the mechanics of the problem fell under the Department of Labour. The key issue seemed to be around TAAPSOSA having a seat at the table of the National Bargaining Forum (NBF) as that was the relevant platform which led to the board of the Trustees. What was happening to get TAAPSOSA on the NBF?

Mr Malada raised the issue of procurement and stated it was not right that board members did not know who the owners were. Money was paid but the people who were not the owners of security companies wanted to tell the actual owners how to work with their money. Who did the Board apply to or talk to in order to decide section 7a (of the Provident Fund Act) was invoked so that it did not need to hold AGMs? This was done to exclude black owners.

Mr Gowtse added elections would not be expensive if road shows were already run in every province. With the board meetings, these meetings did not even take place around the same table and the members were being paid to Skype. The Ubuntu Company must be investigated and its employment processes looked into. Protection of the Committee was requested as TAAPSOSA knew making presentations before Parliament could lead to serious consequences.

Requested protection of parliament as they know presenting at parliament could cause TAAPSOSA serious consequences.

Mr Costa Diavastos, Director, SIA, stated that the crux of the issue was TAAPSOSA having a seat at the National Bargaining Forum. As the nominated representative of the NBF, his suggestion was to request a seat. No party had never been turned away from the Forum and participation was open to everyone

The Chairperson noted the input from all three parties. Most of the issue related to the FSB, the Pension Fund Adjudicator and the Department of Labour and therefore the proposal was to have a joint session on the matters in the fourth term. He referenced section seven of the Provident Fund Act and highlighted the need for representation as a matter of urgency. He apologised for running out of time but gave assurance that a date for the joint meeting would be communicated in due course.

The meeting was adjourned. 

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