Old Mutual and Southern Life have been accused by a Johannesburg attorney of
negligence in the handling of retirement fund money and summoned to pay back
a total of R61 million.
Tony Mostert, an attorney who is curator of the AMK Pension Fund, is suing
Old Mutual for R55 million and Southern Life for R6 million on behalf of the
pension fund.
According to papers filed in court, both life assurers handed over money
from the pension fund to Corporate Acceptance Finance, the holding company
for the Korsten group of companies of which AMK Technologies (formerly AM
International) was part.
The argument is that this contravened was in contravention of the Pension
Funds Act which states that retirement fund money can only be invested in
recognised insurance policies.
Old Mutual is accused of handing over R32,5 million and Southern Life R3,2
million. Taking into account growth on the policies, Mostert estimates that
this would now be worth a total of R61 million.
Old Mutual and Southern Life are opposing the curator`s claim and deny that
they acted in contravention of the Pensions Funds Act. Old Mutual says the
money was invested with it in terms of a policy contract between Old Mutual
and AM International. AM International terminated the contract and
instructed Old Mutual to pay the policy proceeds to Corporate Acceptance
Finances, as the new fund managers of the AM International South African
pension fund. Similarly, Southern Life says it was instructed to pay the
proceeds of its policy to Corporate Acceptance Finances.
A date for the hearing has not yet been set.
Mostert was appointed curator of the AMK Pension Fund in March 1997
following the liquidation of the Korsten companies. Laurie and Jan Korsten
were charged with fraud 18 months later, in September 1998, and released on
bail.
The case against them was to be heard in the Johannesburg Regional Court
last month, but the Korstens were granted a further postponement to prepare
their defence.
They are due to appear in court again in August next year.
The chairman of the AMK Pensioners` Committee, Eric Cowling, has written to
the Director of Public Prosecutions complaining about the delays in the
hearing.