Transnet faces R80bn suit

Former Transnet employees have the green light to launch a class action to try to recoup R79.96-billion in pension funds and interest they accuse the parastatal of losing through mismanagement.

The Pretoria High Court yesterday gave two Transnet pensioners the go-ahead to launch the lawsuit on behalf of thousands of former Transnet employees.

The case is the first of its kind since the Constitutional Court issued guidelines last year on class actions, which are a recent development in South African law.

The pensioners who approached the court, Johan Pretorius and Johan Kruger, claim that Transnet stripped two of its pension funds - the Transnet Second Defined Benefit Fund and the Transport Pension Fund - of their assets and mismanaged them to such an extent that they could not meet their obligations to members.

As a result, the about 65000 members have had their benefits reduced, with 45% of them earning less than the state's pension grant of R1350 a month.

The pensioners want an order forcing the state and Transnet to abide by their previous undertakings that pensioners would receive the benefits they were entitled to at the time of retirement.

The matter dates back to 1990 when the South African Transport Services became Transnet. The government gave firm undertakings that employees' service benefits would not change.

On April 1 1990, the South African Transport Services' obligation to the Transport Pension Fund, the successor to a number of pension funds in existence at the time, was worth R17.8-billion based on calculations by actuaries. However, by 1994, Transnet could no longer guarantee the fund's viability.

The alleged mismanagement of the Transport Pension Fund continued in 2000 when Transnet received R252-million of the total surplus of R632-million when members of the Transport Pension Fund were transferred to the Transnet Second Defined Benefit Fund.

In their court application, Pretorius and Kruger claim that Transnet dealt with the pension funds on the basis that it was entitled to the funds' assets.

In his judgment yesterday, Judge Ephraim Makgoba ordered the two pension funds to give Pretorius and Kruger details of their members within 30 days.

Makgoba confirmed that the two pensioners will publish adverts in newspapers to call on members of the two funds to indicate if they wish to opt out of the class action. If they fail to do so within 60 days of publication, they will automatically be included in the lawsuit.

In terms of yesterday's judgment, they must launch the class action within 60 days of this report-back to court.

Transnet spokesman Mboniso Sigonyela said the parastatal had "noted the decision".