MacLean Letshwiti looks into the distance and frowns: “When I took over as chairman, BIFM was a loss making operation. No one knew anything about BIHL (Botswana Insurance Holding Limited.) I personally made it what it is today. And this is how they thank me.”
The tall and nattily turned out businessman is actually talking about his passion for turning loss making businesses around – but he is under no illusions about the long trudge through the storm his latest business deal has unleashed.
Letshwiti is a wheeler-dealer with a formidable track record. He made a pile of money by helping companies rake in profits, taking handsome cuts as incentives. For a moment, the BIHL board Chairman is on song, bubbling over with success stories of the many companies he has turned around, with patches of disappointment over the lack of gratitude he is receiving. In a favourite bit, he gloats about how, as an enterprising young salary man at Avis, he dazzled his bosses so much that they decided to make him shareholder.
At this stage, I have lost count of the “Is” in Letshwiti’s monologue, but the stories provide a clue into how Letshwiti sees himself: a switched on entrepreneur with unparalled business savvy.
The business whiz kid and three other BIHL directors, however, recently unleashed a storm when it emerged that they sold themselves a 10 percent shareholding in BIFM.
When power, money and status combine to produce a business controversy, it can seem as if a whole way of life and behaviour is on trial. It has been that way last week and this as the deal sparked a fierce debate and questions on corporate governance and fiduciary propriety.
Letshwiti, Keith Jefferies, Regina Vaka and Victor Senye formed a consortium and bought a stake in BIFM, an asset management arm of BIHL. The holding company is the fifth largest company on the Botswana Stock Exchange, following on the heels of the four commercial banks that are the blue chips on the market.
Letshwiti is the Chairman of BIHL; Dr Jefferies, a former executive at Bank of Botswana and Senior Economics Lecturer at the University of Botswana, is the non executive director responsible for investments. The other two, Vaka and Senye are co-Chief Executives, with Senye heading the asset Management. Vaka is the top woman at Botswana Life ÔÇô another subsidiary of BIHL.
BIHL staff and other shareholders are up in arms complaining that the deal has an unsavory stench about it. The gripe of minority shareholders is that all known forms of corporate etiquette has been sacrificed on the alter of a friendship between executive and non-executive directors.
Although the quartet followed the legal rule book to the letter, they still find themselves on the wrong side of the ethical debate. And for now Letshwiti accepts that he should have known better to take along the confidence of minority shareholders.
“I accept that I should have insisted on taking the deal to other shareholders, but the problem is that I was never involved,” is all he musters.
We are huddled around a small table at Caravella Portuguese Restaurant. Letshwiti is holding court. At this stage he has made a convincing case that the deal stuck to the letter of the law but has not been able to blot out the impression that it was surprisingly indiscreet.
When the subject turns to how they got caught out in this storm, the smartest man in the room suddenly turns into the most clueless. By his own account, he did not see the corporate governance bear traps, and if he had, he would have done things differently. He goes on and on about how, on fears of being conflicted, he was removed from the structuring of the deal and never got the opportunity to think out the consequences.
And the consequences have been profound. It is all very likely that by the time the dust settles a few tears and possibly blood would have been shed.
Other shareholders are worried about the conflict of interest, and that the quartet may start running the company for their benefit and not for the benefit of other shareholders. This has touched off a restructuring of the board to bring in independent directors.
“Our biggest fear is that these directors are going to start using special dividends and bonuses to pay for their loan at Barclays.”
Barclays, which has been at the centre of the storm over another saga at Lobtrans which saw the bank lose close to P70 million, turns out to have been the financier of the share purchase by the BIFM quartet.
Although Letshwiti feigns ignorance, scores of BIHL insiders and shareholders, however, suggest the business – savvy wheeler-dealer knew what he was doing and that the country is being deliberately spun a theory that the deal never took its eyes off the legal rule book as a distraction and a tactic to win public sympathy.
So far, however, the situation is not helped by the quartet’s conflicting stories of the behind the scene deals that led to the 10% buy out. Senye last week took the Sunday Standard by hand into the protracted negotiations, first with African Life, who refused to sell claiming that the timing was not good as they were already in the process of selling to Sanlam. No sooner had Sanlam occupied their seats on the BIHL boardroom as majority shareholder than the quartet started pushing for a cut of the business.
“I do not know what the disquiet is all about because that is part of citizen empowerment that we have been fight for over the years,” said Senye at the time.
This line of reasoning, however, crumbled in the face of public scrutiny. First, it has now emerged that the amount of shares sold to BIHL directors was not 10% but 17, 5% and that other beneficiaries were non citizen directors who are based in South Africa.
The deal is understood to have run into opposition right from the drawing board.
Investigations have revealed that among the deal’s biggest opponents were former BIFM Executive Committee member, Mothusi Lekalake, and Board Secretary, Spankie Boitumelo.
The two resigned under mysterious circumstances. This has spawned a legion of conspiracy theorists.
It is said that whenever discussions inside the boardroom veered towards the deal, Boitumelo was always asked out so that she did not become part of the negotiations.
The legality of the deal notwithstanding, many simply join the dots and a sinister outline emerges; opponents of the deal were systematically purged to clear the way for the 10% shareholding windfall.
An even darker side is the theory that the deal was deliberately pegged at 17% because if it went to 20%, it would have triggered the Botswana Stock Exchange (BSE) requirement that other shareholders be informed by which case resistance and calls for transparency would have become insurmountable.
Other shareholders, however, argue that, BSE rules aside, good corporate governance dictates that if Sanlam wanted to dispose of a portion of their shareholding, they should have followed the procedure of going to the open market so that every interested person could buy a stake.
Corporate observers point out that BIFM is a subsidiary of a listed company which is available on the bourse and fiddling with it has ramifications for everyone else involved.
“Through this self dealing transaction, fiduciary officers of BIHL have usurped corporate assets. Shareholders, apart from Sanlam, were not aware that any piece of BIFM was up for sale. No cautionary or shareholder letter or circular was sent out to alert other shareholders that part of the assets they own were being curved out to a special group of the company’s officers”, said a shareholder who spoke to the Sunday Standard on condition of anonymity.
“The price paid by Sanlam and this group of officers for the piece of BIFM, whether fair value or not, is not the biggest issue. The real issue is why would a profitable and well reserved BIHL secretly sell part of its core assets to a select group when anyone can get exposure to those assets through holding BIHL shares? What should have happened is that all shareholders should have been alerted that pieces of assets they own were up for sale, whether majority shareholder consent is needed or not. This then should have been announced in the papers to attract as many buyers as possible so that the assets are sold at the best possible price,” said the shareholder.
Letshwiti, this week, presented his own spin. Like Senye, he maintains that everything was done above board and that the people who benefited formed what they called the “Retention Committee”, which is led by the Chairman. From here on the two versions part ways, with Letshwiti brushing aside Senye’s version of how they have had to wheel and deal to get the shares. Letshwiti maintains that Sanlam, the majority shareholder, realized how indispensable he and the other members of the retention committee were and decided to retain them by selling them the shares. This version, has also failed to assuage angry shareholders who maintain that some of the directors had already been given recruitment shares and retention shares which they sold.
Letshwiti, however, would not be drawn into disclosing details of other non citizen beneficiaries of the deal who hold 7,5% in the 17,5% generously given away by Sanlam, as he puts it under the able advice of Absa Capital and Armstrong Attorneys.