The Army Foundation’s two most senior officials were summarily dismissed and handed a combined fine of R44 million this week, following the plundering of member contributions belonging to tens of thousands of troops.
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The plundering of tens of thousands of troops’ member contributions this past week led to the two most senior officials of the SA Army Foundation being summarily dismissed and fined R44 million.
Approximately R50 million of soldiers’ money was, among other things, embezzled to finance credit cards for the military’s top generals, City Press’ sister publication Rapport earlier revealed.
The Financial Sector Conduct Authority’s (FCSA) years-long investigation into financial irregularities at the Army Foundation has now resulted in Angel Ramphele, the general manager, and Rosa Barros, its senior bookkeeper, being fined R24 million and R20.7 million, respectively.
They are also barred from holding any positions in the financial services sector for the next 30 years.
The foundation’s board confirmed on Friday evening that Ramphele’s and Barros’ services had been terminated with immediate effect. The board says it has implemented stricter measures to prevent further losses.
READ: SA Army Foundation top brass debarred, fined R44m after ‘exhaustive’ probe
The foundation’s licence to administer soldiers’ life and funeral insurance was suspended earlier in the week by the FCSA.
Army Foundation chiefs sacked
Army Foundation chiefs sacked
According to Gerhard van Deventer, head of enforcement at the authority, the foundation is now prohibited from administering the military’s group life insurance scheme on behalf of the roughly 70 000 service members. The foundation may also not provide any further financial services to the military.
The FCSA found no instances where soldiers’ premiums were not paid over to the underwriting insurers, and therefore, no policies are in jeopardy.
The unauthorised payments were mostly financed by an additional monthly administration fee charged to members.
FCSA
Another service provider will now have to be appointed to collect and administer members’ policy contributions.
The FCSA’s thorough forensic investigation followed a referral from the National Prosecuting Authority’s Specialised Commercial Crime Unit.
The case is also being criminally investigated by the Hawks.
The publication has learnt on good authority that the Army Foundation issued credit cards to, among other people, General Solly Shoke, former head of the military; Lieutenant General Lawrence Mbatha, the current army chief; and Major General Eric Mnisi, head of the military’s legal services.
Exactly what the credit cards were used for is not known, except that at least one general also bought a vehicle with one. The chiefs of the defence force and the army serve ex officio on the foundation’s board.
According to the FCSA, between February 2016 and March 2022, Ramphele and Barros commingled soldiers’ member contributions between different bank accounts, contrary to the authority’s regulations.
The two submitted misleading financial reports and channelled “significant” amounts of money into their own bank accounts, the FCSA found.
According to Van Deventer, an independent forensic auditor had to be brought in to trace the money trail through a string of bank accounts and concealments.
Shortly after the publication exposed the financial irregularities, Ramphele assured members in a letter that the foundation’s operations would continue uninterrupted.
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In response to the FCSA’s findings, the SA National Defence Union (SANWU) sent a lawyer’s letter to Angie Motshekga, the minister of defence; General Rudzani Maphwanya, the chief of the military; and Lieutenant General Malungisa Sitshongaye, the chief of staff. The union demands that a meeting of the military’s top management be held within five days to address the crisis.
“We demand the suspension of the foundation’s contract and that a tender be issued for a new service provider. We cannot allow the foundation, under these circumstances, to continue in any way as the administrator of GLIS [the military’s group life insurance]. That would be improper and unlawful because the licence has been suspended,” said Advocate Pikkie Greeff of SANWU.
Ramphele and Barros acted as officers of the foundation, and, therefore, the foundation is at risk of possible liability and seizure of assets due to criminal conduct such as theft and fraud. This includes movable and immovable assets [such as buildings, houses and guest quarters].
Pikkie Greeff
By virtue of his appointment, Sitshongaye is the chair of the group life insurance scheme’s board and thus has a duty to look after members’ interests.
“As administrator of the GLIS, the foundation earned an astronomical annual fee to administer claims and also controls the claims reserve fund, where possible irregularities have been noted in the criminal investigation. The chair cannot shield his fellow generals because he is there in his capacity as chair and trustee.
It is absolutely scandalous that banditry and plundering of soldiers’ money, who sacrifice their lives for the country and its people, are exposed without immediate action being taken.
Pikkie Greeff
“If the SANDF/ministry fails to fulfil its duty in this regard, SANWU will take urgent legal action.”
The military has not yet responded to Greeff’s demand.
According to Van Deventer, the authority is aware of additional financial services that the foundation, as a nonprofit organisation, provides to soldiers. These include personal loans, student loans and housing. These services, however, fall outside the authority’s mandate for the investigation and any possible irregularities with these loans were not investigated.
The board will now have to deal with this mess.
The foundation has provided financial services to the military for more than 70 years. Allegations of waste of soldiers’ money, however, have especially increased over the past 10 years.
The foundation boasts on its website that it recently sponsored the army chief’s golf day. Among other things, exorbitantly priced T-shirts were sponsored for the 200-plus golfers. At a recently concluded commanders’ conference, the foundation was also the sponsor. All the sponsorships were financed with members’ contributions.
