MakanDay

Zambia Centre for Investigative Journalism

The truth lies here
The shocking case of justice denied to hundreds of BP pensioners

In the annals of the Zambian justice system, there can be few examples of just how broken is the court system

The shocking case of justice denied to hundreds of BP pensioners

By Makanday Zambia Centre for Investigative Journalism

In the annals of the Zambian justice system, there can be few examples of just how broken is the court system than the case of 240 retrenched British Petroleum Zambia employees.

For more than 20 years these workers have sought to recoup millions of dollars in pension funds misappropriated by their employer and funnelled into pension fund companies with ties to powerful figures in Zambian politics.

Even after the Supreme Court ruled in their favour in March 2014, the BP workers have yet to see an ngwee of settlement money. If the same is true of other pension funds, it raises the question of whether justice is truly served for working people in Zambia.

The BP Zambia Staff Pension Scheme was established in 1964 when the company was privately owned and operated under Shell and subsequently BP Zambia Limited. After the company was nationalised following the 1968 Economic Reforms, the pension scheme was transferred to and managed by Zambia State Insurance Corporation. After 1991, the scheme shifted again, to Saturnia Regna Pension Fund Trust, managed by Anglo-American under the late businessman and UPND leader, Anderson Mazoka.

Between 1993 and 1999, however, BP Zambia retrenched 240 employees and withdrew their benefits in defiance of the pension scheme rules. None of the employees were allowed to terminate their membership or defer their pensions, and instead were told to accept a refund of their own contributions or forfeit their retrenchment packages.

Funds were misappropriated into pension fund companies. According to documents obtained by the B&R, on 29 July 1999, Saturnia’s Financial Services Assistant at the time, Collina Halwampa, promised the “employer portion” would be “deferred until normal retirement age of 55 or earlier death.” However, less than a month later, on 20 August 1999, the employer portion was revoked in a letter signed by the Acting Manager of Financial Services, Victor Sodala. This violation of the Income Tax Act and abrogation of Rule 19 of the BP Zambia Final Salary Staff Pension Scheme prompted the aggrieved workers to seek redress in the courts.

Legal action commenced in the High Court in July 2002, though judgement in favour of the employees was only delivered in October 2010. In his ruling, Justice Gregory Phiri found that “each of the Plaintiffs were simply cashed off by BP (Z) Ltd; and this suited the Fund Managers, Saturnia Regna Pension Fund Trust who conveniently paid into Court what BP (Z) Ltd. instructed them to pay.

Under normal circumstances, it would have been expected that BP (Z) Ltd should have completed a withdrawal report on each of its retrenches and forwarded them to Pension Managers who, in turn, should have processed and acted on them in accordance with the Pension Rules in each particular circumstances of each case.”

In addition, Justice Phiri found that “the Plaintiff’s Pension Fund was interfered with by the defendant and that the transfer of the Fund was done negligently and without regard to the rights of the true owners themselves, i.e., the members who contributed to it…”

BP Zambia appealed this decision to the Supreme Court, but on 26 February 2014, Justices Mumba, Wanki, and Muyovwe upheld the High Court ruling and granted the employees their full pension benefits, with interest of 40% from date of departure to October 2010, and 25% from October 2010 to date of settlement.

At the time, Shamwana and Company lawyers representing BP (now Puma, which acquired BP Zambia in 2010) advised the company to settle the claim which amounted to $250 million as at March 2014. Following the Supreme Court ruling, BP/Puma management approached Saturnia Regna to request a refund of the pension money, according to documents filed in court. Saturnia refused and instead removed Shamwana and Company from the case in favour of Mulenga Mundashi Kasonde Legal Practitioners before heading into the assessment phase.

Saturnia have since argued in court against the assessment. The company sent their administrator, Benefits Consulting Services Ltd. (Bencon), to defy the ruling and undermine the claim that was proved before both the High and Supreme Courts, according to Expendito Chipalo, who was Publicity Services Manager for BP for 11 years until his retrenchment in 1993. Bencon was represented by its Chief Executive Officer and Director, Bryson Hamanzuka (who is listed in PACRA documents as Company Secretary of Saturnia Regna) and Business Development Manager, Collina Halwampa (who is also named as Saturnia’s Director of Business Development).

According to investigations which were confirmed by documents obtained from PACRA, the shareholders in Bencon are the same as African Life Financial Services and Saturnia Regna. Those shareholders include Hakainde Hichilema, Manakupya Hantuba, and Valentine Chitalu, along with Anglo American, represented by Botswana Insurance Managers Limited.

According to its own corporate communications, Saturnia Regna is Zambia’s largest privately managed pension scheme, although it has no website or corporate offices. Instead, Saturnia Regna is apparently managed by African Life Financial Services and administered by Bencon.

“In their arguments at assessment, Bencon presented a distorted picture of the scheme,” explains lead plaintiff Chipalo. “Their entire argument was untruthful and a complete repudiation of the findings of the Supreme Court, as well as a denial of the pension scheme rules.”

Those rules were never disputed at trial or on appeal to the Supreme Court, says Chipalo. “But on assessment Bencon have denied that the rules ever existed. The chief witness for Bencon, Collina Halwampa, even denied the contents of a letter signed by herself promising the employer portion.”

According to Chipalo, Halwampa claimed in court that none of the plaintiffs were entitled to receive any benefits because they had withdrawn from the scheme. When challenged to produce the withdrawal forms, she told the court that she had not brought them because the court had not asked her to do so.

“As plaintiffs this was a shocking lie,” says Chipalo. “None of us withdrew from the scheme and it was a finding of fact by the High Court that explicitly stated that none of the plaintiffs consented to withdraw from the scheme as envisaged by the scheme rules.”

Furthermore, says Chipalo, Bencon officials misrepresented the financial position of the fund. In a submission to the Supreme Court on 29 April 2015, Bencon claimed the total asset of the fund was only K720 million un-rebased. However, a document signed by BP Zambia’s Financial Controller at the time, Edison Hamakowa, indicated that Saturnia Regna Pension Trust Fund received the sum of K1.49 billion un-rebased as at 31 January 1995.

Through further contributions by the members and the sponsor of the fund, the BP staff pension scheme stood at K22.7 billion un-rebased as at September 1999, according to an annual benefit statement issued by Saturnia.

In response to queries from B&R, Collina Halwampa denied any involvement in the courts between Saturnia Regna and former employees of BP Zambia, claiming that the fund “is not a party to this case and has never in fact been a party to the case as the court records will reveal. In this regard, and as Saturnia Regna Pension Fund, we reserve our full legal rights in respect of any reports contrary to the facts.”

The plaintiffs are now questioning how the Deputy Registrar of the Supreme Court failed to make his ruling within the 90 days following the completion of hearing and submissions on assessment in June 2015. “We feel that we are being denied justice,” says Chipalo.

“We have petitioned the Chief Justice of Zambia to complain about the delays.” The plaintiffs have also written to the Judicial Complaints Committee:
“We are disappointed that neither the Chief Justice nor the Judicial Complaints Committee have responded to our pleas for justice,” says Chipalo. “Ninety-one of our colleagues have passed away since this matter went to court in 2002, and these people have been denied justice by our courts. Surely if our judiciary cannot protect the rights of law-abiding workers where shall we run to?”

When asked to comment on this case, Chief Justice Ireen Mambilima declined and instead directed B&R reporters to Registrar of the High Court, Mathew Zulu, who attributed the delay to the “complexity of the matter”. He said the then Deputy Registrar, Charles Kafunda, has since dedicated his time to ensure the matter is settled soon. “The past two weeks, he has been working solely on this matter. That is how complex (the matter is) and we had to give him the accountants, so that they can assist him with the computations,” explained Zulu.

He added: “You have to be fair also that from the time the Supreme Court made a decision, there were fresh hearings now in the office of the Deputy Registrar for theassessment. So, there were huge arguments and witnesses again as if it is another court. Unfortunately that is how the assessment goes because both sides have to give their position.”

Questions remain about the role of opposition leader Hakainde Hichilema. PACRA documents obtained by B&R indicate that Hichilema owns 620,000 shares in a company called Menel Management Services Ltd, which is a shareholder in African Life Financial Services Zambia Ltd, of which Hichilema is listed as a Director.

African Life Financial Services Zambia is the majority shareholder in Saturnia Regna, holding 240 million shares according to PACRA documents. The registered offices of Menel Management, African Life Financial, Saturnia Regna, and Benefits Consulting Services are all listed as Plot No. 74, Independence Ave, Lusaka, formerly known as the Anglo American building, while all but Bencon share the same PO Box number 51331.

“Hichilema should have been the one to take the judgement to both BP/Puma and Anglo-American,” says Chipalo. “He should have told them to give the poor Zambians what is rightfully due to them. That is the role we expect him to play on behalf of the common people of this country. But instead he sent his managers to come and repudiate our legitimate and proven claim.”
Hichilema was asked to clarify his position on the matter but did not respond by press deadline.

According to Chipalo, it appears that Saturnia Regna is using Bencon to block the settlement. “It should be Puma suing Saturnia to find out what has happened to the fund and get the money,” says Chipalo.

“Saturnia completely abused their function as fund managers, and BP/Puma weakened their position against Saturnia should there be any need for auditing or investigating of the fund.”

As the two year anniversary of the Supreme Court ruling approaches (and following almost 15 years of litigation), the plaintiffs and their families are struggling to understand the continued delay of justice.

“Why did the Deputy Registrar fail to deliver a ruling in a matter which was determined in the Supreme Court?” asks Chipalo.
“With all due respect to the independence of the judiciary, we believe that the president is empowered by the constitution to protect the rights and interests of ordinary Zambians. He has the power to ask the judiciary to deliver justice.”

Chipalo points out that, cases involving parastatals like Zamtel are dealt with expressly by the judiciary, but those involving the private sector, in particular multi-nationals, go on forever.

“These corporations can never resist the rulings of Supreme Courts in England and America. Why are they disrespecting our Supreme Court?” asks Chipalo. “There are enough grounds for the State to take interest in this matter. How many more pensioners have to die before justice is delivered in this case?”