It is technically legal for one person to earn millions to manage a pension fund, and there is no obligation to use that money to benefit the pensioners who invested in that fund – as long as a court sanctions such a deal. A Saturday Star report says this was the SCA’s conclusion when ruling on a case accusing attorney Anthony Mostert of charging exorbitant fees for one of the 10 pension funds under his curatorship.

The Sable pension fund, its later iteration, and nine other pension funds, including Cadac, were placed under the curatorship of Mostert between 2005 and 2011, with the agreement of the financial services board (FSB). However, as part of these agreements, Mostert and his law firm, AL Mostert, were able to negotiate up to 30% claims on surplus earnings in each of the funds – alongside remuneration for legal fees.

A parliamentary query from 2011 revealed that up until that point, Mostert and his firm had already been paid out at least R164m on the Sable fund alone.

The Gauteng High Court (Pretoria) ruled that Mostert was not entitled to such vast amounts, and that an agreement for 30% of the surplus was unlawful, prompting Mostert to elevate the case to the SCA.

While the SCA dismissed Mostert’s appeal in its entirety, the presiding panel of judges was only able to do so because of a technicality, says the Saturday Star report. In the SCA ruling, it was revealed that when Mostert initially signed on as curator of the Sable fund, he had agreed by court order to only charge his hourly legal fees – about R2 000 an hour – while acting as curator.

This adds up to a maximum of R320 000 a month.

Because of this, Judge Malcolm Wallis and three other concurring judges said that a new payment scheme would have to be decided on between him and the FSB. Such an agreement would have to be ‘reasonable’, but could possibly entail negotiations based on how much time he had contributed to the job of curator.

FSB head Dube Tshidi, in his own papers, argued that arrangements involving such amounts were not unusual, though admitted they faced ‘controversy and criticism.’ There was no precedent to declare such arrangements illegal.

According to the report, the ruling read: ‘I have no difficulty with the notion that in circumstances such as those that arose… there might be good reasons for a curator to be remunerated on a basis other than the norm, including a fee calculated as a percentage of the amount recovered on behalf of the fund… Nor would I regard it as per se unlawful.’

Full Saturday Star report (subscription needed)