Durban - ABSA bank (Absa) has been accused of overcharging and abusing a Trust fund belonging to a Durban quadriplegic and brain-damaged young woman who received millions of rand from the Department of Health as medical negligence compensation.
The allegations against Absa came from financial advisers at Liberty Life, who investigated the financial affairs of physically and mentally challenged Nolundando Mdletshe.
The 23-year-old Mdletshe, has no chance of surviving without assistance, as she sustained cerebral palsy at birth owing to medical staff negligence at Prince Mshiyeni Hospital.
A Trust fund on her behalf was opened, and an amount of R9 million was deposited into an Absa account. However, according to Mdletshe’s parents, Absa mysteriously subsequently became a trustee and administrator of the Trust.
Mdletshe’s mother, Ntombenhle Mdletshe, and father, Reggie Dludla, suspected something untoward, as they have been left in total darkness about the way the Trust has since been managed.
Since 2018, the couple have been battling to remove Absa as the administrator and trustee of their daughter’s Trust fund.
When the bank was contacted about the allegation, Gillian du Toit, an executive assistant to strategic communications and stakeholder relations managing executive, Khulani Qoma, requested more time for the bank “to do a deep dive investigation into the matter”.
Bongani Mageba, Absa Managing Executive: Non-Banking Financial Services, Relationship Banking, Absa Retail and Business Bank, said Absa Trust specialises in the administration of Trusts formed subsequent to a litigation process, and has many years’ experience in administering such Trusts.
“Against this background, we can confirm that Absa Trust was appointed as Trustee of the Mdletshe NC Trust in terms of a court order, which ordered the formation of the Trust and the appointment of the Trustees. At the time, the trust beneficiary’s mother agreed to the appointment of Absa Trust as Trustee and signed the Trust Deed accordingly.
“Absa Trust has administered the trust with due care while adhering to all regulations and the highest standards of governance. The fees charged are in line with comparable fees in the industry.
“We currently have no knowledge of any application to remove Absa Trust as a Trustee. We received a complaint from the Master of the High Court, lodged by an attorney acting on behalf of the family in October 2020.
“Absa Trust duly responded to the matter in November 2020 but received no further response. Further correspondence from a new attorney was received in August 2021. All aspects were addressed to the family’s new representative in October 2021 and no further queries were raised through the attorney.
“It is important to note that any investigation into the administration of a Trust should be conducted by an independent party with the necessary authority and standing with no commercial interest in the outcome of the investigation.
“The investigation that was conducted by an external financial adviser did not take market conditions into account; did not analyse the underlying funds; and did not make any market comparison with regard to industry fees. As such, it cannot be regarded as independent and unbiased.”
Prior to being awarded compensation, they were represented by Eastern Cape-based Milile Mpambaniso, who in 2016, was declared delinquent and struck off the roll of attorneys by the Grahamstown High Court. Mpambaniso had in 2014, been convicted of 28 counts of fraud, including overcharging his clients.
Following Mpambaniso’s departure, Mdletshe’s parents moved from one lawyer to another until they ended up with Philip Dlamini, who challenged Absa’s handling of the fund. Dlamini died in 2020 after approaching Liberty Life to check how Absa was dealing with the fund.
Independent Media had seen emails in which Liberty Life’s financial consultant, Asogan Naicker, who had been assigned to Mdletshe’s matter, had criticised Absa’s conduct saying its costs of running the fund “are absolutely horrific”.
Naicker had found that Absa was charging the Trust, a trustee fee of R9 873 per month. Absa also charged the Trust R5 200 for investment management fees or, for providing financial advice. There was also a portfolio management fee of R7 800 per month.
“So that total monthly costs of R22 873 [is] leaving the client’s investment every month (just in fees). Put that in percentage terms, that’s 3.43% per annum.
“If you consider that Absa’s portfolio returns have been around 6% per annum, that leaves net growth of 2.57% per annum for the client.
“Since the net growth on the investment is only around R17 000 per month (2.57% per annum), they are clearly eating into the capital value of the investment,” reads Naicker’s email to Dlamini.
Naiker recommended that Absa be removed from the Trust, as it was expected that the capital would fall each year until it was eventually depleted.
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