R100m of workers' money missing from Popcru firm

An auditing firm has established that monies meant to benefit members of the Police and Prisons Civil Rights Union have been siphoned off to another company.
An auditing firm has established that monies meant to benefit members of the Police and Prisons Civil Rights Union have been siphoned off to another company.
Image: Phill Magakoe

A staggering R100m meant to benefit members of the police and other public safety workers has disappeared from Popcru Group of Companies (PGC), the investment arm of the Police and Prisons Civil Rights Union (Popcru), forcing its auditors to pull out.

Sowetan has established that the money, which was supposed to be paid to Popcru, was moved to a company that was allegedly not authorised to receive the funds.

A letter written by auditors, SNG Grant Thornton, which Sowetan has seen, revealed that a company called PGC Management Services (PGCMS) received referral fees that were supposed to be paid back to Popcru when new members take up investment products from companies owned by the union.

"Upon inspection of the bank statement of Workers Life Direct, it was identified that referral fees, amounting to approximately R100m, were paid over to PGCMS as opposed to Popcru or PGC. We cannot make a determination as to whether the above mentioned fees were paid across from PGCMS to Popcru and PGC, as PGCMS is unaudited," states the letter sent by auditors to Workers Life Direct, one of the companies owned by the union.

Workers Life Direct is a broker selling insurance products underwritten by Workers Life Assuarance and Workers Life Insurance, all under the PGC.

According to the auditors' letter, Mpho Dipela, a then director of PGC, was also a director of PGCMS.

"As a result of the pervasive nature of the impact of these findings, our audit risk has increased to a level which we cannot mitigate for us to continue being external auditors of PGC," SNG Grant Thornton said in its departure letter.

Dipela was a CFO of PGC when the transaction took place but resigned last year.

SNG Grant Thornton spokesperson Sihle Cengimbo said its relationship with PGC ended in October.

"We are not in a position to answer all your other questions as we are bound by confidentiality agreements and prohibited by our regulatory code to discuss client matters with third parties," Cengimbo said. Dipela had not responded to requests for comment by the time of going to print.

City Press reported a week ago of the suspension of PGC CEO Reuben Mdletshe for misconduct. Mdletshe, however, told Sowetan that his suspension was because he raised the issues that had been flagged by the auditors.

"Those allegations are an effort to deflect attention from the real issues at PGC. Workers' funds are being stolen. Money which is supposed to improve the lives of workers ends in other people's pockets," Mdletshe said.

Mdletshe has since been fired as CEO.

On Thursday, things turned worse for Mdletshe when the Hawks announced they have secured a warrant of arrest for him and another official, Robert Sherriff.

Hawks spokesperson Brig Hangwani Mulaudzi said the two were wanted in connection with an alleged plot to kidnap and murder senior leaders and members in the union.

"The investigation commenced in September this year and so far it has revealed there was apparent misappropriation of funds that was carried out through Popcru Investment Group of Companies ... since 2016," said Mulaudzi.

In its official statement released in reply to Sowetan questions, PGC said Mdletshe was suspended for maladministration, abuse of company resources, fraud, nepotism, misrepresentation of his qualifications and alleged affairs with his employees.

"The accusation about financial mismanagement which Mdletshe has been alleging to the media is not only baseless, inaccurate and blatant defamation, but what Mdletshe lacked to communicate was that he was the sole signatory that authorised the agreements that he is questioning and that he was also a director and CEO of PGC Group and a director a PGC Management Services until recently," PGC said.