The South African Police Service (SAPS) referred the case of fraud and theft the United National Transport Union (UNTU) opened against the Passenger Rail Agency of South Africa (Prasa) on behalf of its members, to the Specialised Commercial Crime Unit (SCCU) in Johannesburg.
The SCCU’s nationwide where established by the National Prosecuting Authority (NPA) to effectively investigate and prosecute complex commercial crime emanating from the SAPS Commercial Crime Branch, thereby contributing to the South African Economy. The SCCU process is reliant on prosecutor guided investigations.
Steve Harris, General Secretary of UNTU, says when the case was opened a month ago, UNTU only had proof that the pension contributions deducted by the employer from the total cost to company packages of 2 383 employees of Metrorail, a division of Prasa, has not been transferred to the Transnet Retirement Fund (TRF).
“After the case was opened, Prasa admitted that the contributions for February 2020 and March 2020 of the rest of its Metrorail employees who belong to the Prasa Provident Fund, has also not been transferred due to the cashflow difficulty the state-owned enterprise (SOE). All 11 275 Prasa employees working for Metrorail is affected.
“Due to the amount involved, which could be more than R200 million, the fact that Prasa’s Head Office moved back to Umjantshi House in Braamfontein, Johannesburg, and because the complaints are nationwide, the SAPS decided to transfer the docket from the Sinoville Police Station in Pretoria.
“Prasa confirmed to UNTU this week that a payment was made towards the funds during the month of April 2020 but it was directed toward February’s contributions. This means that the contributions for March 2020 and April 2020 are still outstanding,” says Harris.
Peet Maritz, Principal Officer of the TRF, explained that this means that currently the affected members death and disability benefits of the TRF are suspended.
The risk benefit of TRF members are the amounts that will be paid to the dependants of an employee upon that employee’s untimely death or to the employee on disability of the employee. These risk benefits are fully insured by the TRF.
“The amounts that are received by the TRF from Prasa are paid over to an insurer as a premium on a policy held by the TRF for the benefit of the employees. If an employee dies or is disabled, the TRF pays the amount received under the policy from the insurer to the employee,” says Maritz.
Members going on pension in this period will also be severely affected as there will be outstanding contributions and interest they would have earned if the money were invested on their behalf as it should have been.
According to Prasa Rail Operations, Prasa will ensure going forward employees’ contributions are paid every month, considering its other critical financial obligations. Prasa plans to pay the outstanding contributions in chunks, depending on its cash flow situation.
“The SAPS warned UNTU that the criminal case will take time to investigate as they will have to obtain statements from affected employees at both funds and must likely request a forensic audit to be done on Prasa’s finances. The law must take its cause.
“Even if the money is transferred to the funds today, UNTU will continue with the criminal charges. This is a matter of principle and a warning to other SOE’s not to unlawfully utilize the pension fund contributions of its employees to subsidize its cash flow,” says Harris.
According to Harris the Administrator of Prasa, Bongisizwe Mpondo, self-inflicted Prasa’s cash flow crisis by making several contract appointments of people to assist him without having budgeted for it and without searching for the required expertise within the SOE itself.
Maritz says no payback arrangement has been made with him. In fact, Mpondo, who is the accounting authority at Prasa under the Public Finance Management Act in circumstances where a public entity fails to meet its pension commitments, did not even bother to respond to the letter the TRF wrote him.
This forces the TRF to also start with legal action against Prasa to retrieve the outstanding contributions with interest that is already over R24 million. The TRF is not able to make loan arrangements with Prasa in terms of the Transnet Pension Fund Act and its rules which it is governed by.
According to Harris UNTU received numerous allegations from members to says that their medical aid contributions to Bonita’s and Sizwe where deducted but not transferred and that their contributions to the Unemployment Insurance Fund (UIF) are not paid up.
Prasa denies this. Harris appealed to UNTU members to check with their medical aids if their contributions were paid and to check if their contributions were transferred to the UIF. If not, members must report this to UNTU by sending an e-mail to firstname.lastname@example.org.
UNTU will continue to keep its members updated on any developments.
Issued on behalf of UNTU by Sonja Carstens, Deputy-General Secretary: Media, Liaison and Communication. For UNTU press releases e-mail Sonja at email@example.com or phone her on 082 463 6806