Africa-Press – Eswatini. Seven pension funds have joined Likhwane Beneficiary Fund court battle against the Financial Services Regulatory Authority (FSRA), where it is challenging its liquidation.
The pension funds, which are from State-owned enterprises, argued that they had invested E20 996 949.04 with Likhwane Beneficiary Fund.
They have also questioned the capacity and eligibility of the liquidator proposed by FSRA. The liquidator’s identity is not stated in the intervening parties’ opposing affidavit.
This is contained in the funds’ application to intervene in the court battle, where the FSRA wants Likhwane to be liquidated on allegations of unethical business practices.
Likhwane is against the liquidation and is being supported by the seven pension funds.
The pensions funds include Eswatini Civil Aviation Authority Provident Fund, Eswatini Electricity Company Pension Fund, Eswatini Bank Pension Fund, Eswatini Revenue Service Pension Fund, Eswatini National Provident Fund Staff Pension Fund, Umfuso Umbrella Fund (City Council of Mbabane), and Eswatini Sugar Association Staff Pension Fund.
According to Hamilton Curtis, the Principal Officer of Eswatini Civil Aviation Authority Provident Fund, the orders that were sought by FSRA in the main application had a direct effect and was prejudicial over the funds placed with Likhwane by the pension funds listed above.
Curtis made submissions on behalf of the pension funds.
He said the pension funds, which he referred to as the intervening parties, would not be guaranteed recovery of their funds, as well as the proceeds thereon, should the liquidation go ahead.
Safeguard
He argued that FSRA would suffer no prejudice in the High Court, if the funds were joined as respondents in the case between FSRA and Likhwane. This, according to Curtis, was to safeguard the funds invested by the pension funds with Likhwane.
He said the pension funds engaged with counsels from both parties about their interests to join in the case and they did not object. Officials of the other pension funds involved in this case have confirmed that they were part of the proceedings. They also confirmed that Curtis made the submissions on their behalf.
The officials include Patrick Mathunjwa (Principal Officer: Eswatini Electricity Company Pension Fund), Eunice Malaza (Principal Officer: EswatiniBank Pension Fund), Bongisipho Dlamini (Principal Officer: Eswatini Revenue Service Pension Fund), Sindisiwe C. Mango (Principal Officer: Eswatini National Provident Fund Staff Pension Fund), Sibusiso Hlanze (Chairperson: Eswatini Sugar Association Staff Pension Fund), and Nothando Dlamini (Principal Officer: Umfuso Umbrella Fund (City Council of Mbabane)).
In their opposing affidavit, Curtis stated that clearly, there was actual prejudice to be suffered by Likhwane and the pension funds, as well as the dependants of the members of the said funds.
As stated by Likhwane in its opposing papers, Curtis said the proceeds of the investment they made with Lingedla would soon pay out and in the event that the rule on the liquidation was confirmed, the said proceeds would be received by the appointed liquidators, while, as matters stood, the dependants of the members of Likhwane, who were mainly orphans, were already in desperate need of the funds for tuition fees, maintenance and other needs.
In this regard, Curtis said the confirmation of the rule would become prejudicial to the orphaned dependants of the members of Likhwane.
Curtis further told the court that they had gone through the application of FSRA; Likhwane’s opposing papers, FSRA’s replying affidavit, as well as FSRA’s application for the appointment of the co-liquidator.
Averments
Having gone through these court documents, Curtis contended that they opposed all of the submissions made by FSRA and wished to state that the pension funds, except for Umfuso Umbrella Fund (City Council of Mbabane) and Eswatini Sugar Association Staff Pension Fund, would proceed and place further averments to assist the court to arrive at a just and equitable conclusion of this matter.
Curtis argued that FSRA’s application fell short as the authority failed to make out a case for Likhwane’s liquidation. He said FSRA failed to establish that it fell within the confines of Section 73 (2) of the Financial Services Regulatory Act of 2010.
He said FSRA failed to establish that Likhwane was being liquidated for any of the reasons stated in Section 73 (2) (a), (b) (i), (ii) and (iii).
Curtis contended that the reasons forwarded by FSRA were clearly stated in the authority’s founding affidavit, and none of them were specified under the Act.
The principal officer continued to state that FSRA proceeded to court on an ex-parte basis and has, in the process, failed to make and/or disclose material information. He further submitted that it appeared from the opposing affidavit of Likhwane that FSRA made averments, which were denied as untrue and thus should render this application to be dismissed.
Also the Master of the High Court, according to Curtis, had not been cited in FSRA’s application and that was a fundamental flaw in the application and argued that there was no basis for the FSRA application, and the intervening parties stood to suffer irreparable harm should the liquidation proceed.
Curtis also argued that FSRA failed to pull itself using its own bootstraps.
He said FSRA was not in a position to point an accusing finger to Likhwane, given that in view of some of the funds, FSRA abdicated its responsibility to the extent that one arrived at the inevitable conclusion that FSRA was either complicit and/or extremely negligent in carrying out its statutory obligations and/or responsibilities, as per the FSRA Act of 2010.
Pension funds question liquidator’s capacity
The pension funds have questioned the capacity and eligibility of the liquidator that is proposed by FSRA.
The name of the liquidator is not stated in the intervening parties’ opposing affidavit.
Hamilton Curtis, the Principal Officer of Eswatini Civil Aviation Authority Provident Fund, said Likhwane raised some concerns about the proposed liquidator.
Curtis said it appeared that the averments made by Likhwane about the liquidator were not denied by FSRA.
The response thereto, according to Curtis, had been met with a further application for the appointment of a co-liquidator. In view of FSRA’s reply that or lack thereof, it appeared and it should positively, on behalf of Likhwane, by the court and accordingly, that the application stood to be dismissed.
He argued that while FSRA had a right to move such an application, the failure to include the Master of the High Court in its application was fatal to the application for liquidation to the extent that the liquidator assumed the role of a curator. The principal officer said there was no specific exclusion for the citation of the Master’s office in the FSRA Act.
However, according to Curtis, it followed that the common law requirement of the Master’s office being involved in the liquidation proceedings had not been done away with.
FSRA failed to protect stakeholders
The FSRA failed to protect its stakeholders by approaching the High Court to allow it to liquidate Likhwane, argued pension funds that have joined the court between the two entities.
Hamilton Curtis, who is the Principal Officer of Eswatini Civil Aviation Authority Provident Fund, argued that when FSRA was established in terms of the FSRA Act of 2010, one of its core responsibilities was to protect stakeholders in the financial services industry, particularly the unbaked financial services industry.
He said the principal objects of FSRA were to foster regulation and prudential supervision of financial services providers.
As it fostered the regulation and supervision, FSRA was to make sure that the financial services providers met the highest standard of conduct of business and the stakeholders were protected.
Curtis contended that in the present case, FSRA failed to protect the stakeholders, including the funds that were being involved in this case. He also submitted that in terms of the FSRA Act, on which FSRA relied on, the authority had mandatory functions, which included licencing, regulating, monitoring, and supervising the business activities of the financial services providers.
Another function was to carry out investigations and take measures to suppress illegal, dishonourable and improper practices, market abuse and financial fraud in relation to any activity in the financial services sector.
Curtis also said another function of the authority was to take measures for the better protection of stakeholders of the financial services. Regarding the functions of the authority, Curtis said it defied logic on how such large amounts of money would have been transferred out of the country, without FSRA taking notice and acting appropriately, as it did in other instances. He said FSRA had a responsibility to investigate and advice on the benefits and risks associated with different kinds of investments.
Curtis pleaded with the court not to ignore or disregard any averments raised by Likhwane regarding FSRA.
The matter is expected to be heard before High Court Judge Bongi Magagula on Thursday. The funds are represented by Sidumo Mdladla from SV Mdladla Attorneys, while Likhwane and FSRA are represented by Mlungisi Khumalo from Khumalo Attorneys and Lindokuhle Siphesihle Methula from Henwood and Company.
For More News And Analysis About Eswatini Follow Africa-Press
