Monday, August 8, 2022

Central Bank terminates BIFM contract

The Bank of Botswana (BoB) has cancelled its assets management contract with the Botswana Insurance Fund Management (BIFM) following a series of reports carried exclusively in The Sunday Standard that some BIFM executive managers and directors bought P300 million worth of shares in the company under questionable circumstances.

BoB, which is the Botswana government’s principal advisor on economic issues, has joined the groundswell of opinion against MacLean Letshwiti, Keith Jefferies, Regina Vaka and Victor Senye’s purchase of a P300 million stake in BIFM, an asset management arm of BIHL.

Scores of shareholders are also up in arms against the purchase, which they say amounts to dirty corporate practice. This has touched on speculations that the Botswana Public Officers Pension Fund may also be pressured into terminating its asset management contract with BIFM.
BIHL, which is listed with the Botswana Stock Exchange, is the fifth largest company on the bourse 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 is the Non-Executive Director responsible for investments.
The other two: Vaka and Senye are co-Chief Executives, with Senye heading the Asset Management wing (BIFM) while Vaka is head of Botswana Life.
Bank of Botswana Staff Pension Fund Principal Officer, Ewetse Rakhudu, on May 8, 2008 wrote to BIFM that they had “followed reports regarding the sale of shareholding to some senior members, including executive employees and certain directors of BIFM.”

The letter, a copy of which is in the possession of Sunday Standard, further states that, “As you are aware, BIFM is currently the domestic asset manager of the (BoB) Pension Fund. In this regard, the Board of Trustees is concerned about the seriousness of the allegations relating to the governance and ethical issues, which could potentially affect the relationship. In this regard, we request that you urgently provide full disclosure to assist the pension fund to adopt an informed position on the matter.”

BIFM, however, sat on the BoB request and the result was another letter from Rakhudu dated May 26 and addressed to BIFM Chief Executive Officer, Victor Senye. In the letter, BoB gave BIFM a three day ultimatum, stating that, “We note with dismay that you have still not responded to our enquiry, and urge you do so by latest May 29, 2008, as the information is critical to decision making on a number of key issues.”
Senye, however, responded on May 30th giving the “background and rationale to the sale of a stake in BIFM.”
States Senye: “The Board of BIHL is charged with the responsibility to conduct the day to day business of BIHL and its subsidiaries which entail taking decisions regarding strategy, policy direction and market share of the group, in the best interest of the BIHL Group and the general body of shareholders.

“The landscape of the Asset Management business in Botswana has changed radically in the past three years, with competition from 3 to 8 players largely attracted by the BPOPF funds. It became essential to implement a retention strategy to secure the business, which strategy would take cognizance of some of the key government policy concerns.
“It was clear to the Board that active involvement of citizen executives of the Company to counteract the influence of citizens which held beneficial interests in competitors of BIFM was a necessary intervention. The Board constituted a citizen “Retention Committee” comprising Mclean Letshwiti, Chairman of the Board, Keith Jefferis, Economic advisor to the Board and Chairman of BIFM investment Committee, Regina Vaka, CEO of BLIL, and Victor Senye, CEO of BIFM.

“The mandate of the Retention Committee” was, amongst others, to protect the business interests of BIFM, grow the assets under management, lobby government and other stakeholders for a favourable environment.

“The success of the “Retention Committee” is shown in the excellent results of BIFM over the past three years. In order to safeguard continued performance by the “Retention Committee”, the Board resolved to recognize the contribution of the citizen members of the Retention Committee so as to retain their services as well as to provide further incentivisation to citizen employees.”
The Bank of Botswana, however, is not happy with the explanation and on Friday decided to cancel its agreement with BIFM.

In the letter, dated June 20, canceling the agreement, Rakhudu states that “having considered the totality of the circumstances, the Board of Trustees of the Bank of Botswana Staff Pension Fund have resolved that the asset management services contract entered into on September 20, 2005, with yourselves be terminated with immediate effect.”


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