The team of investigators from Jacques Malan Consultants and Actuarial Scientists appointed to investigate the goings on at the P30 billion Botswana Public Officers Pension Fund (BPOPF) did not exactly expect bear hugs and welcome mats from the Fund officials.
Nothing, however, prepared them for the shoddy reception they received: “At meetings, the BPOPF secretariat was extremely rude and disrespectful… The Fund has been very uncooperative in dealing with the investigating team and have delayed provision of information, refused to pass on other information and refused to allow investigators to meet with certain service providers,” recalls consultants from Jacques Malan.
BPOPF officials have always been weary of strangers asking questions ÔÇô especially when the strangers happen to be actuarial specialists.
In February last year, BPOPF blocked an investigation by Novare Actuaries and Consultants, commissioned by the Permanent Secretary to the President, Eric Molale, in the operations of the P30 billion Fund.
They have spent the last few months trying to frustrate another investigation by Jacques Malan Consultants & Actuaries, commissioned by the Registrar of Pension and Provident Funds. It did not take long for the consultants to establish why.
In the first paragraph of their 49-page hard hitting report, Jacques Malan Consultants state that “in terms of the strategic plan of the BPOPF, their values are integrity, honestly, transparency, teamwork, accountability, customer focus and Botho. The Trustees have not stuck to all these values.” And that is putting it mildly. The report then goes on to plumb the murky depths of Botswana’s high finance, detailing questionable deals, conflicts of interest, cronyism, harassment and inefficiency.
The team of actuaries turned up “various shareholdings which cause concern. The major problem is the relationship that exists between Time projects, Fleming Asset Managers (FAM) and Alexander Forbes Botswana (AFB). Time Projects owns 25 percent of FAM and 33 percent of AFB.” Both these organizations are service providers to the fund.
The report states that although this has been disclosed and recorded in committee meetings, the shareholding “raises concerns.”
“Furthermore, Mr. Sandy Kelly is a director of AFB and also sits on the investment committee of Fleming Asset Managers. This has led to the unhealthy situation where it was agreed to put up an office block, costing some P50 million, to house the BPOPF Secretariat and the award for the project management of the building was given to Time Projects. The investigators did not know what to make of the whole deal and leaves a question mark hanging over it.
The investigators also suggest harassment against African Alliance. “The relationship between African Alliance and the Trustees has had its problems. African Alliance was one of the original three asset managers appointed in 2001. The number was increased to four in 2004 and six in 2007.
In November 2004, African Alliance was suspended for three months whilst Delloitte investigated various allegations against them. When the report was completed, AA’s suspension was lifted, but they claim that they have never received the report nor have they been told of its contents.”
Investigators state that they have seen the Delloitte report and were able to establish that all allegations of bad conduct against AA were dismissed other than one. “That issue was that when investing in various portfolios, money was often in AA bank account overnight and interest was earned by AA. “This is very similar to the Alexander Forbes South Africa bulking issue.
“African Alliance admitted their error and stated that it was an oversight and not intentional. The total amount was not large, some P160 000, and was repaid.
“During the suspension period, African Alliance was prevented from trading so the portfolio lay dormant for three months. Obviously, the reasoning behind was to prevent African Alliance making reckless trades at the expense of BPOPF. However, various investment opportunities were lost, although not quantified, and did result in a loss to the Fund.”
“It would have been much more sensible to allow trading but to take precautions, e.g. appoint somebody to sit in African Alliance’s offices and make sure that any trades were done for the right reasons.”
During 2006, Alexander Forbes South Africa was appointed as asset consultants to the Fund. In March 2007 it was agreed to increase the number of asset managers to the Fund and tenders were invited. Initially, 12 asset managers requested tender documents but only nine submitted tenders. The list was subsequently reduced to a shortlist of seven and in the end AA was dropped and six asset managers were appointed.
The team of investigators says, “It is clear from the minutes of the Investment Committee meetings, that the decision to fire African Alliance had already been taken at the end of 2006 so allowing them to tender was obviously a waste of time.”
The investigators have requested a copy of the asset consultant’s report but the BPOPF has banned the asset consultants from providing the report and have refused to supply it themselves.
The investigators say “it would seem that African Alliance was the second best performer of the four asset managers that existed at the date the tender process began and were rated third best in the actual tender process.”
The investigating team says the whole process shows up the trustees in a poor light for the following reasons: Why remove one of the best asset managers? There is potential loss of future investment performance by the Fund. Was African Alliances appointment terminated for any personal or vindictive reasons?
NB: Next week The Sunday Standard will look at how the fund lost more than P200 million of the pensioners profits, the shady wheeling and dealing in the controversial BPOPF Mascom deal and the BPOPF villains and puppet masters.