A retirement fund that is owed almost R38 million in contributions has been given the go-ahead to obtain the participating employer’s banking information, in an attempt to locate the money.
The High Court order, which was granted this month, is the latest round in the litigation between the Municipal Workers Retirement Fund (MWRF) and the Mafube Local Municipality in the Free State.
The parties have been in and out of court for the past 13 years over the arrear contributions.
Mafube’s finances have been in disarray for years, and the Free State provincial government placed it under administration in June 2022.
The MWRF told the High Court in Bloemfontein it was beyond dispute that the municipality deducted the contributions from its employees’ salaries but failed to pay them over to the fund. No explanation has been provided about what happened to the deductions.
It was also a fact that the municipality receives revenue from the central government annually (its equitable share). This was R128 million in 2023/24 and R138m in 2024/25. Despite this revenue, the contributions have not been paid.
The fund contended that the municipality has moved the money from one bank account to another to prevent it from being attached.
The fund sought an order to furnish a full accounting of every withdrawal, payment, or transfer from the municipality’s Absa and First National Bank (FNB) accounts from 10 October 2023. It also sought an order to obtain copies of the bank statements of the relevant accounts and copies of bank statements for the accounts where the equitable shares are held, as well as the dates on which the municipality expects to receive this revenue.
Judgment was granted against the municipality in September last year for almost R38m. (R37 795 476.32 to be precise). The municipality offered payment of 25% of the judgment debt. The fund declined the offer and proceeded with its writ of execution by attaching the municipality’s bank accounts. The municipality brought an urgent application to have the writ of execution stayed, which was unsuccessful.
The sheriff received R97 000 from Absa and paid the amount to the fund’s attorneys.
Mafube submitted that the fund attached its right, title, and interest in its claim against the bank. The bank now stood in the “shoes of the municipality” and must pay over to the fund any money that was in the account and any money deposited thereafter.
The municipality also contended that the fund should have joined the banks in the matter because they are relevant parties.
Litigation since 2011
The High Court noted the years of litigation over the arrear contributions.
The MWRF brought its first application against the municipality in 2011. A judgment granted in 2015 resulted in Mafube making a partial payment after many years.
In July 2019, the fund brought another application against the municipality, seeking judgment for R25 411 872.20 and an order against Absa to disclose to what account the municipality transferred R39 939 000. Absa confirmed the money was transferred into an FNB account. The transfer took place surreptitiously while litigation was pending between the municipality and the fund.
The municipality did not pay the arrear contributions. Instead, it brought an application for leave to appeal against the court’s judgment, which was dismissed in December 2021.
In May last year, the municipality brought another application to have warrants of execution stayed. Not only was the application unsuccessful, but the High Court ordered the court registrar to bring the judgment to the attention of the National Director of Public Prosecutions for the possible institution of criminal proceedings against the municipality for breaching the Pension Funds Act.
Frivolous defences
In her decision handed down this month, Acting Judge Thiloshni Ramdeyal remarked on the municipality’s practice of engaging in “frivolous defences”.
“The municipality would rather challenge each and every application brought to assist the pension fund members rather than pay its employees’ money to the fund. There is a mysterious delay rather than a solution to an ongoing undisputed problem, namely the non-payment of the arrear pension monies of the fund’s members to the fund by the municipality,” she said.
Ramdeyal AJ said Mafube has presented various remedies and strategies to obtain the outstanding money, “but conveniently avoids addressing the elephant in the room: what happened to the pension fund contributions that had been deducted by the municipality?”
She said the municipality could not continue to delay proceedings and delay the rights of the applicant’s members from being enforced.
“It is now time to act and compel the municipality to disclose all the necessary documentation that the fund requires to enforce the court order and writ of execution on the relevant bank account that holds money to eradicate this long-outstanding problem and give proper effect to this court order,” Ramdeyal AJ said.
Just further proof of how corrupt the governing bodies are. I really hope they are brought to book
NB – important to note, this is NOT the George now Mossel Bay (DA lead) municipalities singled out by the EFF and the Press. Mafuba is one of many ANC cotrolled municipalities (ANC 10, eFF 3, DA 2, FF 2)
So who is to blame? Many bargaining council Funds, often controlled by UNION Trustees and officials- haven’t reconciled their membership and contributions for years. Yet their Administrators and Trustees keep on receiving extraordinary high fees, hundreds of millions in cases.
Is the Municipal Workers Retirement Fund (MWRF) negligent?
Is the FSCA doing its job, or incapable (unwilling?) to call out bad funds and trustees?