Chantelle Benjamin
25 November 2008
Johannesburg — THE Johannesburg High Court yesterday granted Investec's application for the transfer of its insurance business to Capital Alliance (CAL), despite it being opposed by members of the union pension funds of the now-defunct Fedsure.
They had argued the deal involved handing over R13,8bn, thus rendering Investec Employee Benefits (IEB) bankrupt.
Policyholders had accused Investec of "asset-stripping", and wanted to ensure the assets were immune from attachment if Investec lost a R4bn legal case brought by IEB policyholders for mismanagement, which is to be heard next year.
The court ruled that the conclusion of the transfer agreement had no effect on the financial position of IEB. The contested R13,8bn had been an asset of CAL since it was paid over to CAL in terms of the reinsurance agreements and, as such, was immune from the claims from IEB's creditors. The court dismissed the application by policyholders to halt the transfer.
It accepted Investec's argument that the physical transfer took place when IEB paid the reinsurance premiums to CAL during 2001, 2002 and 2005, and that the reassurance asset was not capable of being attached to satisfy IEB's ordinary creditors' claims because its true value was nil.
IEB CEO Ciaran Whelan said the company believed that the judgment was fair.
" The decision by the funds to oppose what is essentially an administrative action has proved to be misguided and costly for them. It has been extremely time-consuming for all concerned. Sadly, the real losers here are the very pensioners and workers whose interests the funds claim to be protecting."
" We trust the transfer of this insurance business can proceed without further delay."
The court also ruled that the pension fund s' counterapplication for an asset preservation order, which has had the effect of tying up IEB's surplus asset, valued at under R3,5bn, be dismissed with costs.
Judge Meyer Joffe refused to consider any evidence on the merits of the pension fund s' claims against IEB, or IEB's defence. He said IEB was patently correct in not dealing with any of the issues or documents relating to the merits of the pension fund s' claims.
Investec has been in a costly seven-year fight, funded by the company on one side and the policyholders on the other, over a failure to pay bonuses for two years, which led to losses in value in the fund and subsequent losses for members and pensioners.
Fedsure, which was in financial trouble, did not declare bonuses for 2000 and 2001, the year Investec acquired the business.
The case against Investec will go ahead as planned next year. Investec said yesterday it was of the view that the claims had no merit whatsoever.
South African Equity Workers Association director-general Deon van Deventer said yesterday that while it was a " fair" judgment, he did not believe that the judge had taken everything into consideration.
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