Tongaat Hulett accused of short- changing pensioners

Irate Tongaat Hulett (TH) pensioners are taking the company and its former pension fund to court over what they believe is an attempt to short-change them.

Former Tongaat Hulett directors, pension fund trustees and senior managers are among former employees and 11 widows who are supporting two former trustees who have filed papers in the Durban High Court alleging that the company has diverted pension fund profits for its own use, instead of sharing them with pensioners.

Led by Willem Hazewindus, a former director of TH subsidiary African Products, and Bruce Moor, a former director of TH Sugar, the group have spent well over R1m of their own money so far, hiring advocates and senior counsel to bring the matter to court.

There are two pension funds involved – The TH Pension Fund and its successor, the TH Defined Benefit Fund, which continued for company employees after Hulamin split from the group in 2007. This fund had assets of nearly R6bn and catered for about 2 300 pensioners and 800 current employees. In 2012, in-service members were transferred to a new fund and pensioners were outsourced to an Old Mutual pension fund.

The argument is over fund surpluses generated from exceptional investment returns on the assets of the fund. In pension fund terms, an actuarial surplus is an amount by which the value of a company’s pension fund exceeds the amount it must pay out in benefits. The Pension Fund Act provides that an actuarial surplus may be shared between the company and pensioners.

In papers filed at the Durban High Court, the pensioners accuse the pension fund board of trustees of maladministration of the TH Defined Benefit Pension Fund and of undue influence by TH management.

“Through a systematic and well planned strategy, the company has contrived to transfer all or most of the surplus assets of the two funds to the employer surplus account and to the company, with no allocations or surplus to members or a member surplus account.”

Hazewindus and Moor claim this was made possible by the appointment to the board of trustees of the company’s CEO, Peter Staude, and CFO, Murry Munro, and other senior managers.

The dispute concerns surplus allocations of R300m in 2009 and 2010, and R363m in 2012, that were transferred from the old fund to the company but not shared with pension fund members.

Complaints to the fund’s principal officer and the Pension Funds Adjudicator were not successful, so the pensioners turned to the courts.

Tongaat Hulett and the fund are vigorously opposing the case. Samantha Davidson, principal officer of the TH Defined Benefit Pension Fund, maintains in an affadavit that she has operated strictly within the law and that the pensioners are wrong. She maintains they are mistaken over what funds may be retained by the company in a surplus account and what is excess to requirements, which may be shared out to pension fund members.

When the case appeared before Justice Lopes in the Durban High Court on April 1, only technical objections by Tongaat Hulett were considered. The judge rejected these and ordered that the company pay the pensioners’ wasted legal fees and travel costs, but granted Tongaat Hulett a postponement to allow it to file another affidavit.

Moor and Hazewindus, who had flown in from Johannesburg for the case, said later they were not disheartened by the delay.

“It would have been nice to have the case concluded, but at least our costs for the day have been covered by the respondents. We are now more confident than ever that we are doing the right thing for us and our fellow pensioners. We believe that the Fund was there for the benefit of the employees, not for the company.”

The case is expected to resume in August.

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