The High Court of Eswatini has granted an order empowering the Financial Services Regulatory Authority (FSRA) to appoint an interim administrator for the Fairlife Beneficiary Fund. This decision comes amid allegations of a significant deficit and governance failures within the fund. The court order, granted by Judge John Magagula, also directs Fairlife Benefit Services Swaziland (Pty) Ltd, the administrator of the fund, to fully cooperate with the interim administrator.
The FSRA had brought the application to court under Section 38(2) of the Retirement Funds Act No. 5 of 2005. The regulator sought an order to appoint an interim administrator due to serious financial weaknesses, governance failures, and questionable transactions that placed the interests of beneficiaries at risk. According to the FSRA's Chief Executive Officer, Ncamiso Ntshalintshali, regulatory inspections revealed that the fund's financial position had deteriorated significantly.
The fund's financial position showed a significant decline, with its funding ratio dropping from 80% in 2024 to 73.5% as of March 31, 2026. This ratio indicates that for every E1 owed to beneficiaries, the fund had only 73.5 cents available. The fund had approximately E33.43 million in gross invested assets during the first quarter of 2026, but after accounting for an impairment of E7 million, its effective assets were reduced to approximately E26.43 million.
Against liabilities of E35,957,901.33, the fund had a deficit of approximately E9.53 million. The FSRA alleged that the fund's financial difficulties were compounded by questionable transactions involving its administrator, Fairlife Benefit Services Swaziland (Pty) Ltd. The regulator's investigation established that the administrator had been receiving excessive fees, including management fees amounting to 60% of monthly investment returns.
An analysis of bank statements covering October 2024 to April 2026 revealed that E3,159,143.58 had been extracted from the beneficiary fund as fees over 18 months. Of this amount, E1,819,081.44 was allegedly taken as management fees without contractual authority, while E1,340,062.14 was paid as administration fees. The regulator calculated that the total excess extraction above the contractual limit amounted to E2,571,893.58.
The FSRA also raised concerns about conflicts of interest between the fund and its administrator. Two major shareholders of Fairlife Benefit Services Swaziland were also sponsor trustees of the beneficiary fund, which compromised the independence of the trustees responsible for protecting beneficiaries' interests. The regulator argued that these relationships and the administrator's significant influence over the fund's operations, including its banking arrangements, posed a risk to the fund's management.
The FSRA expressed concerns about the fund's investments, stating that 61.73% of its total assets were tied up in three illiquid promissory notes issued by a single company, African Alliance Eswatini Capital. The fund's financial survival was allegedly dependent on the repayment of approximately E10.3 million from one of the promissory notes, which matured in September 2026. The regulator warned that potential withdrawals by four retirement funds could trigger a run on the beneficiary fund and potentially lead to its liquidation.
Key points
- The Eswatini High Court has empowered the FSRA to appoint an interim administrator for the Fairlife Beneficiary Fund due to allegations of a E9.53 million deficit and governance failures.
- The fund's financial position deteriorated significantly, with a funding ratio of 73.5% as of March 31, 2026.
- The administrator, Fairlife Benefit Services Swaziland (Pty) Ltd, allegedly received excessive fees, including management fees amounting to 60% of monthly investment returns.
