Chris Van Gass
18 January 2006
Johannesburg — AN investigation lasting six years will end in March with the prosecution of a businessman on charges related to laundering pension fund surpluses worth at least R175m.
Peter Ghavalas, out on R1m bail, faces charges of laundering funds that could have been paid out to as many as 500 pensioners of the Picbel Group Provident Fund and others in the late 1990s.
The case comes after a deliberate effort by authorities to protect the rights of pension fund members and former members who stand to benefit from the distribution of surpluses.
It relates specifically to hundreds of pensioners who in the mid-1990s were denied benefits as surpluses were siphoned off.
In one case documented by authorities, Ghavalas allegedly arranged for the Picardi group of companies, with a R30m pension fund surplus, to revive a dormant company within its group and make that company the principal employer of the Picbel Group Provident Fund.
That company and the surplus were then sold to Lifecare, a privately owned health services group.
Picardi Group told the registrar of pensions funds that Picbel's fund was merging with Lifecare, but this did not happen.
Lifecare then paid the holding company, Pichold, R28,8m. Pichold in turn paid Ghavalas' company, Soundprop, a dividend of R9,1m.
Andrew Chauke, head of the South African Police Service Special Commercial Crimes Unit in Johannesburg, last week said the investigation could widen to include other companies or individuals who, with Ghavalas, allegedly whisked away millions of rand in surplus pension fund money for their own benefit.
The Financial Services Board (FSB) alleges that other pension fund surpluses laundered in this way over six years were Mitchell Cotts (R23m); Lucas SA (R14,9m); Jacaranda pension fund, a subsidiary of Finansbank (R1m); Sable Industrial Pension Fund (R36m); and Datakor (R70m).
Ghavalas emigrated to Australia in 1998 and was arrested last year when visiting SA.
Sanlam was the administrator of the Picbel fund and Alexander Forbes was administrator of the Lifecare fund. The transaction was initiated by Nedcor Investment Bank, where Ghavalas was GM.
Former judge Mervyn King and Tinus Slabber, a Cape Town businessman and former partner of law firm Webber Wentzel Bowens, were both trustees of the Picbel fund.
Authorities allege that Jan Pickard, son of former Springbok star Jan Pickard, and a trustee and CE of Pichold, changed documentation, without their knowledge, that King and Slabber had approved. This was to facilitate the laundering of the fund.
King said that changes to documentation that smoothed the way for the alleged laundering were done without his know-ledge or consent. Slabber said he found the transaction "disturbing and new to him".
Johannesburg-based Lifecare still exists, but in a different form.
In 2001 it was acquired by Afrox Healthcare, which was itself sold in March last year to Bidco, an empowerment consortium.
Chauke said it was "not apparent at this stage" if Lifecare in its current form would bear any liability for past actions.
Sanlam, Alexander Forbes and Nedbank have all said they have given the FSB and the police their "full co-operation".
Details of the scheme, which took place during the latter part of the 1990s, emerged in court documents filed by the FSB, which applied in the Cape High Court for a curator to be appointed to safeguard the interests of pensioners of the Picbel Provident Fund.
The investigation by FSB inspectors began six years ago.
Pickard said in an affidavit he had relied on the advice of his advisers "and had no reason to doubt the validity or legality of the structuring employed for the agreements".
Howard Walker, MD of Alexander Forbes financial services, said there was no reason for the company to "collude" as it did not and could not benefit financially.
"The report confirms our findings that Alexander Forbes received absolutely no compensation in excess of administration and consulting fees in line with industry norms," he said.
A Sanlam spokesman said the company would continue to help investigators and would act within the framework of its code of ethics if impropriety on the part of any employee was proven.
Nedbank's chief legal officer, Willem Kruger, said his bank had also co-operated and would continue to do so.
Ghavalas, through his lawyers, said he was "bouncingly" confident that he would be acquitted.
He said that "since that time" the Pensions Act had changed and "they're looking at historical events through the prism of a changed set of legislation".
Ghavalas said what he had done was lawful and the exercise against him was one of "trying to garner in money in order to allow the curator to earn fees".
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