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| Notes to the group
financial statements |
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| for the year ended
31 March 2006 |
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50.1 |
Road Accident
Fund (RAF) matter |
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In
April 2005, the RAF brought an application
by way of notice of motion and affidavit
in the Witwatersrand High Court. In this
application the RAF seeks a declaratory
order that the agreement entered into between
the RAF and Alexander Forbes Compensation
Technologies (Pty) Limited (“AFCT”)
during 2002 in terms of which provisional
payments totalling R56,8 million were made
by the RAF to AFCT was ultra vires the Road
Accident Fund Act. The RAF further claims
that an order be granted in terms of which
AFCT be ordered to repay the amount still
in the hands of suppliers. This amount is
reduced on an ongoing basis as the RAF finalises
the claims in respect of which the provisional
payments were made. On 31 March 2006 the
amount outstanding was R30,2m. AFCT is not
in possession of any outstanding amounts
as these funds have been paid to suppliers
in terms of the agreement entered into with
the RAF. The advice given by Senior Counsel
is that the RAF is not likely to succeed
in its claim and the claim is being opposed.
Even if such claim were to be successful,
there is not expected to be any material
financial cost to the group because
any repayment to the RAF would be represented
by future claims recoveries and/or amounts
recoverable from the suppliers to which
provisional payments were made. The matter
has been enrolled for legal argument on
31 July 2006. |
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50.2 |
Lifecare matter |
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Alexander
Forbes acted as consultants, actuaries and
administrators to the Lifecare Pension Fund
(“the fund”). The basic scheme
behind each of the transactions was the
same. The fund was used in a scheme devised
by certain individuals to allegedly obtain
access to surpluses in certain transferor
funds, and to transfer the surpluses for
the ultimate benefit of persons other
than the members or pensioners of the funds
in question.
The Financial Services Board (“FSB”)
is currently investigating the Lifecare
Group Holdings Pension Fund (the “Lifecare
Fund”) under the provisions of the
Inspection of Financial Institutions Act
80 of 1998. In particular, the FSB is investigating
eight transactions to which the Lifecare
Fund was a party during the period 1992
to 1997.
Alexander Forbes was appointed as administrators,
consultants and actuaries to the Lifecare
Fund during the above periods, and has complied
in all respects with the FSB investigation.
At this stage it is not possible to assess
with any degree of certainty the probability
that claims will be brought against Alexander
Forbes, having particular regard to the
fact that there is no evidence available
which suggests that Alexander Forbes benefited
unduly from the transactions and that Alexander
Forbes is one of a number of potential parties
who may be included in any future litigation.
Nor is it possible at this stage to express
an opinion on whether such claims will be
successful, or quantify the potential liability
if such claims should prove to be successful.
Although this matter is covered by professional
indemnity insurance, Alexander Forbes’
insurers recently advised that they may
be entitled to repudiate any claims relating
to the matter. Having taken legal advice,
the directors were advised that it is unlikely
that a court of law will find in favour
of the insurers. Accordingly it is probable
that any claims made against Alexander Forbes
will be substantially indemnifiable
by insurers and it is unlikely that this
matter will have a material financial
effect on Alexander Forbes. |
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In addition, refer to
note 57.2
to these financial statements |
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