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Scheme future depends on fraud investigation – Philips

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  • Scheme future depends on fraud investigation – Philips

NETHERLANDS - Officials at electronics giant Philips say any financial support by the sponsoring company, to fill the shortfall caused by the property fraud at its pension fund, will depend on the outcome of the current investigation into the damage and liabilities.

"Although chairman Gerard Kleisterlee's words were ill-chosen, he didn't mean to say that the participants in the pension fund should not expect anything," stressed Philips' spokesman Eric Drent stressed.

His comments were made in response to those made earlier this week by Kleisterlee, suggesting the company would not contribute further funds to make up for the shortfall caused by the large-scale fraud at the pension fund's real estate subsidiary PREIM.

"What the chairman meant is that, pending the investigation, it is too early for conclusions about who will pay which amount of damages," Drent added.

Concerns had already been voiced by union De Unie, which accused Kleisterlee of being premature with his statement.

"Since the investigation is still going on, the remarks send out absolutely the wrong signal," De Unie governor Wim Brouwer responded. "We need to know first whether, and to what extend, the pension fund's participants will be affected."

Drent pointed out: "Philips is a victim of fraud and we want to claim back what has been taken from us unlawfully. Therefore, the investigation will take as long as we need to determine the full damage."

Besides a criminal investigation by the Public Prosecutor, the law firm De Brauw & Blackstone is looking into all transactions conducted by PREIM, its governance and the supervision of the property branch.

Two of the suspects, the director of PREIM and his predecessor, have recently been released, after two months of custody.

Although the Philips' spokesman declined to provide an estimate of the damage, it is widely understood the shortfall amounts to tens of millions of euros.

Philips' company pension fund has almost €15bn of assets under management, of which €1.3bn had been invested in direct property. In 2006, property returned 10.5%, which is 1.6% short of the benchmark.

The scheme's coverage ratio was 136% and it has 130,000 participants.

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