Pension funds abuse clients’ contributions

Source: Pension funds abuse clients’ contributions – The Zimbabwe Independent July 22, 2016

Top executives at in-house pension funds for the local authorities, mining, motor, local authorities and catering industries have been abusing funds for the purchase of information technology (IT) systems meant to improve internal management, prejudicing thousands of pensioners in the process, Zimbabwe Independent has learnt.

Hazel Ndebele

Documents prepared by Comarton Consultants Pvt Ltd, a registered fund administrator with the Insurance and Pensions Commission of Zimbabwe, show that the Local Authorities Pension Fund (LAPF), which has been struggling to pay out pensions, appointed a South African vendor to provide the IT system without going to tender.

LAPF, according to its website, has 11 689 pensioners and 20 363 contributor members. It administers pension funds for municipalities, rural district councils and town councils.

“LAPF did not go to tender two-and-a-half years ago, but merely did casual enquiries to the local vendors and then went on to appoint a South African vendor who has failed to deliver and the fund is now threatening court action,” reads the document dated August 4 2015.

Comarton group managing director Richard Muirimi said in the document that LAPF is fleecing the country of the much-needed foreign currency that it does not have and yet boosting the South African trade balance.

“One of the more important problems is that of national security, all these SA systems are backed up in a cloud over the USA meaning that the country’s data and earnings in each of these industries is at real risk of being read,” reads the document.

“Whoever is appointed locally ensures we do not export the currency and that it circulates within. I am suggesting for the reason outlined that as far as possible local vendors be appointed to benefit the country, reduce cash outflow, reduce corruption, improve our security and improve local development capacity.”

According to the document, Heritage Insurance Company lost US$500 000 after paying for an Indian developed system which was never commissioned. The vendor was in the country for two months in a bid to implement the system and the insurance company catered for hotel bills during the stay which never materialised as the job was not done.

“The vendor requested to go back home (India) for some urgent matter and they cannot trace him but national resources have been taken out,” the document says.

One of the country’s worst performing funds according to Comarton, the Catering Industry Pension Fund, also did not go to tender for its IT system but appointed a South African based vendor, which has failed IT systems in the country.

The document states that the managers misuse funds for their self-enrichment.

“What we are seeing is that the catering industry management tends to be happy with these structures as they take money out and have their own individual accounts credited,” it says.

At the Mining Industry and Construction Industry Pension Funds, local vendors for IT systems are being systematically pushed aside to cater for foreign owned companies.