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Suspended South Africa Pension Fund Head Disputes PwC Report

April 17 (Bloomberg) -- John Oliphant, suspended as head of South Africa’s 1.2 trillion-rand ($114 billion) Government Employees Pension Fund over the award of an advertising contract, disputed the findings of an auditor’s report that he acted irregularly.

Oliphant, who was suspended as principal executive officer in October pending a disciplinary inquiry, contravened GEPF policy when he approved increasing the fee for the winning bidder, Mother Russia, to 2 million rand ($190,411) from 531,555 rand, according to a PricewaterhouseCoopers LLP report obtained by Bloomberg News. Oliphant confirmed he had seen the report.

“This is a matter of dispute at the hearing,” Oliphant said in an e-mailed response to questions yesterday, adding that he was on leave when Mother Russia was appointed in September 2012. “I only became aware of possible irregularities in their appointment in February 2013, at which point I stopped all the activities regarding Mother Russia and initiated an investigation.”

Arthur Moloto, outgoing chairman of the GEPF, Africa’s biggest pension fund, suspended Oliphant after receiving the PwC report last September. The disciplinary hearing is due to take place between April 23 and 25, said Oliphant, adding that he has “pleaded not guilty.”

Probably Misunderstanding

“It is probably a misunderstanding,” according to Oliphant, who said there was no conflict of interest between him and Mother Russia.

PwC spokeswoman Sanchia Temkin declined to comment when contacted on April 14, citing client confidentiality. Moloto didn’t respond to e-mailed questions and the GEPF’s switchboard said that all staff had left for the day.

Adri van Niekerk, head of the GEPF’s secretariat, was also suspended because of irregularities related to the tender. She has since pleaded guilty and been reinstated.

There were “multiple instances of failure to adhere to the supply chain management policy requirements,” according to the PwC report, which said costs relating to Mother Russia’s fees were due to rise to as much as 20 million rand. The GEPF should consider canceling and reissuing the tender and take corrective action against Oliphant and three other employees, it said.

Reputational Risk

Oliphant “deviated” from GEPF policy in signing off on payments totaling 563,875 rand to five other suppliers, PwC said, adding that it required further investigation.

The report is incomplete on this matter, said Oliphant.

“We’d encourage the GEPF leadership to resolve their internal issues as quickly as possible,” David Couldridge, an analyst at Element Investment Managers in Cape Town, said yesterday. “They put South Africa’s reputation for responsible investment at risk.”

South African Finance Minister Pravin Gordhan, who has oversight of the GEPF, convened the first sitting of a new board of trustees today, the Pretoria-based pension fund said in an e-mailed statement. Renosi Mokate was named as chairwoman, replacing Moloto, and Prabir Badal as deputy chairman.

To contact the reporter on this story: Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net Dylan Griffiths, Keith Campbell

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