The government of Botswana and Anglo American are caught up in a P600 million lawsuit which will be heard at the Commercial Court of Ireland this week. More than 100 members of a pension scheme run for Element Six Ltd are suing their fund’s trustees for approximately Ôé¼50 million (about P600 milion). Element Six is part of an international group and its ultimate owners are the Government of Botswana, Belgian Company Umicore and Anglo American Plc.
The law suit has attracted political interest in Ireland, with The Socialist Party TD for Dublin West, Joe Higgins, calling on Element Six, to immediately honour the agreed payments into its Defined Benefit Pension Scheme, after it announced that it is winding up this plan.
In 2009 Element Six came to an agreement with the Irish Labour Relations Commission that in return for a reduction in the terms of redundancy offered to laid-off workers, the company would honour its outstanding obligations to the Defined Benefit Scheme up to 2020. The company had since written to employees, deferred and retired members to confirm its commitment to the plan.
Joe Higgins TD on the matter said “It is an outrage that De Beers/Element Six is reneging on its commitment to honour pension contracts. This is a firm that has been in Shannon since 1960 and has made very substantial profits in the process. The complete disregard shown to current and former employees is scandalous.
Members of the pension scheme are arguing that the company should have ensured a funding deficit was resolved by their employer before the scheme was closed down.
The members of a scheme run for Element Six Ltd, a producer of industrial diamonds based in Shannon, Co Clare, are arguing that the trustees had the power under the terms of the scheme to demand that the employer fund the deficit before closing the scheme. The arguments involved raise general issues about the obligations of the trustees of pension schemes.
The trustees of the scheme have an indemnity from Element Six, meaning it would become liable for any ruling made by the court against the trustees.
According to the latest filed accounts from Element Six, an agreement to wind up the pension scheme was reached with the trustees in December 2011. This agreement involved a final payment of Ôé¼34.2 million in full settlement of the company’s obligations.
The accounts also noted that some members of the scheme subsequently brought a claim against the trustees.
“Whilst the company is not party to the litigation, Element Six Ltd has provided an indemnity to the trustees, which may cover this claim and any award of damages or costs which may be made by the courts should this claim be successful. The trustees are vigorously defending the claim and Element Six believes that the trustees have a strong defence to the claim.”
Element Six made a pre-tax profit of $1.45 million last year, having made a profit of $27.9 million the previous year, according to its latest accounts. At the end of 2012 it had a net liability position of $9.19 million. The accounts show the scheme closed with a deficit of $70.8 million.