Finance minister launches probe into state pension administrator as GEPF urges Godongwana to tighten oversight.
By Vernon Wessels
South Africa’s largest pension administrator has been thrown into crisis after finance minister Enoch Godongwana suspended the CEO of the Government Pensions Administration Agency (GPAA) Kedibone Madiehe over claims of misconduct in high-value procurement deals.
Godongwana announced this week that a forensic investigation is underway to scrutinise contracts involving the lease for the GPAA head office in Pretoria, as well as bus leases, a consulting deal, and the purchase of a biometric system.
This came after reports by News24, citing an internal audit, revealing that the GPAA had committed nearly R1bn in a 10-year lease for a non-existent office in Pretoria. The Agency then suspended the whistleblower — a senior financial manager — after he raised red flags about a R21m payment.
Godongwana has now seconded Job Stadi Mngomezulu, a seasoned National Treasury official with experience in pension fund governance, to step-in as acting CEO.
“Under Mr Mngomezulu’s leadership, GPAA will continue to deliver on its mandate while we work to resolve these matters expeditiously,” Godongwana said. He assured pensioners that payments will continue without disruption.
Though it has remained largely below the radar, the GPAA administers benefits for the R3-trillion Government Employees Pension Fund (GEPF), which provides benefits for 1.2-million active members and more than 450,000 pensioners.
But in a letter to Godongwana, GEPF chairman Frans Baleni urged him to place the GPAA directly under the fund’s control. He argued that weak governance and poor procurement oversight exposes the GEPF’s funds to abuse, undermining its fiduciary duty to protect members’ money.
Baleni’s intervention suggests a growing frustration that Treasury’s oversight has failed to prevent abuses at the administrator.
Zirk Gous, of the Association for the Monitoring & Advocacy of Government Pensions (AMAGP), said the GPAA’s operational budget is 93% funded by the GEPF. Yet the GEPF had to ask Treasury to resolve the matter, without being able to act against the administrator itself.
GPAA spokesperson Mack Lewele referred Today’s Trustee’s to the finance ministry for comment. But in Business Report two weeks ago, he defended the agency against the claims of poor governing, saying the GPAA’s procurement processes were “fair, transparent and competitive”.
Claude Naicker, a negotiator for the Public Servants Association which represents 240,000 civil servants, told Today’s Trustee that the treatment of the whistle-blower for exposing the R21m payment illustrates the risks faced by those who expose wrongdoing.
“He did the right thing yet has to suffer prejudice himself. Very few people are prepared to take a stand like he did,” he said.
Naicker said that while pensions are defined benefits guaranteed by law, corruption undermines public confidence and erodes the surpluses generated from investments.
History of scandal
The crisis at the GPAA is not an isolated case. South Africa has a troubling history of pension fund administrators being implicated in misconduct that has cost members dearly.
Earlier this year, the Motor Industry Fund Administrators – which oversees retirement savings for thousands of autoworkers – laid criminal charges against staff accused of colluding with members to commit fraud. And last year, executives of N-e-FG, a Vanderbijlpark-based administrator, were banned for 30-years after R470 million in retirement savings vanished under their watch.
Going further back, the collapse of the Bophelo Beneficiary Fund in 2017 – which saw more than R500m misappropriated from Amplats employees’ benefits – exposed how weak governance and conflicted management can devastate vulnerable dependants.
The GPAA itself has also been here before: the Labour Court in 2022 upheld the dismissal of two officials who had processed a fraudulent pension payout into an unauthorised bank account.
These episodes underline the fiduciary hazards facing trustees. Administrators, often operating with limited oversight, can become the weakest link in safeguarding members’ retirement security.
The lesson is clear: without robust controls, independent audits, and strong whistle-blower protections, even the largest funds are vulnerable to abuse.
