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Johannesburg - A couple involved in a pension fund surplus-stripping scheme has been convicted of fraud and money-laundering in the Johannesburg Specialised Commercial Crime Court on Monday after entering a plea and sentence agreement with the state.
The scheme affected the Mitchell Cotts Pension Fund.
This is a victory in the long-running legal battle to recover close to R1bn following the surplus-stripping of nine retirement funds (including the Mitchell Cotts Pension Fund) in the 1990s through a scheme that has become known as the 'Ghavalas option'.
According to Business Report,financial services firm Alexander Forbes is one of the accused in the case, and 19 others who were arrested following a Financial Services Board investigation, appeared in the Johannesburg Specialised Crimes Court last week.
Peter Ghavalas, a former Nedcor and Finansbank executive who is alleged to be the kingpin behind the operation, is one of the accused. Business Report stated that as the owner of Soundprops, one of the accused companies, Ghavalas is alleged to have benefited by R42m.
As part of the complex scheme devised by Ghavalas the pension fund of former Afrox-owned Lifecare Hospital Group was used to launder the money, says Personal Finance.
Rowland Bailey (64) and his wife Shirley (63) both pleaded guilty; Rowland was convicted of fraud, contravening sections of the Financial Institutions Act and money-laundering, while Shirley was convicted of contravening sections of the Proceeds of Crime Act and the Prevention of Organised Crime Act.
Suspended sentence
On the fraud charge, Rowland was sentenced to ten years' imprisonment, wholly suspended for five years on condition that he fully complies with the settlement agreement he had entered into with the Mitchell Cotts Pension Fund liquidator and is not convicted of fraud or theft during the period of suspension.
For contravening the Financial Institutions Act, Rowland Bailey was fined R200 000 or three years' imprisonment, suspended for five years.
In lieu of the fine, he must pay the liquidator of the Mitchells Cotts Pension Fund R300 000 for the direct benefit of the existing pensioners.
On the money-laundering charge, he was fined R3m or six years' imprisonment, suspended for five years on condition that he is not convicted of the same offence during the suspension period and that he must pay the liquidator of the Mitchell Cotts Pension Fund R500 000 for the direct benefit of the existing registered pensioners.
Shirley Bailey has been fined R1m or must face five years' imprisonment on condition that she pays the liquidator of the Mitchell Cotts Pension Fund R200 000 for the benefit of the existing registered pensioners.
Ceding all worldly assets
In terms of the plea bargain agreement, they will give their full co-operation to the liquidator of the fund in providing evidence and facts relevant to the surplus stripping transactions and any other information which the liquidator might require.
They have agreed to transfer, cede and assign all their worldwide assets, together with the balances of all other bank accounts and investments to the liquidator.
The total amount paid over to pay the liquidator is R20 648 990. They have also waived their rights to any surplus in the Mitchell Cotts Pension Fund as well as any pension they were entitled to receive, other than that agreed to with the liquidator in terms of the Settlement Agreement.
Rowland Bailey has agreed to testify in any criminal proceedings against other persons and entities involved in the so-called surplus stripping schemes.
- Fin24