JOHANNESBURG - The Financial Sector Conduct Authority (FSCA) has dealt a blow to the South African Army Foundation.
The authority has officially withdrawn its financial services provider licence and has imposed substantial administrative penalties and debarment orders against the Foundation's two top officials.
The officials alleged embezzled funds totaling R50 million in monthly contributions intended for military personnel’s pension, funeral and insurance benefits.
The misappropriation of funds was reportedly picked up by the Foundation’s bank which spotted an outflow of large amounts to personal accounts, which in turn, led to the FSCA investigation after a referral by the National Prosecuting Authority.
Unathi Kamlana, FSCA Commissioner said while members’ premiums were not affected, authorised payments were made from structures linked to soldiers’ deductions.
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“Our investigation confirmed there were no instances where the premiums were not paid to the underwriters the Foundation is contracted to. The payment to personal bank accounts was mainly from the additional fees that were charged from the soldiers and deducted with the premiums,” said Kamlana.
During the investigation period, the FSCA found that about R40 million linked to the foundation’s two senior executives.
In a statement, the FSCA said between February 2016 and March 2022 the Foundation, through managing director Angel Ramphele and Maria Rosa Barros engaged in unlawful practices including commingling client funds, submitting misleading regulatory reports, failing to exercise proper care over funds and making significant unauthorised payments to themselves from the bank account of the SA National Defence Force (SANDF) Group Life Insurance Scheme (GLIS)
The FSCA has now imposed administrative penalties on both executives. It said has imposed a R24 million administrative penalty on Ramphele, with Barros similarly penalised to the tune of R20.7 million.
Both have also been debarred from rendering financial services for 30 years.