Thursday, September 24, 2020

Government should take active interest at BPOPF

This week, the Chief Executive Officer of the Botswana Public Pension Fund, Ephraim Letebele, announced that the Fund’s Trustees had appointed six asset managers.

It is now common knowledge that for sometime now the Fund has been surrounded by a lot of disquiet over allegations of corruption, impropriety, conflict of interest and general lack of grasp of understanding of the fiduciary obligations among the Trustees.

It is natural that those asset managers that have not made it to the six appointed ones will not be pleased.

But we want to point out that much as there will be accusations of sour grapes, some of the stories coming out of the multi billion Pula Fund’s operations cannot be dismissed out of hand.

We have, in the past, written on this space that the allegations of ethical impropriety at BPOPF should not be allowed to die a natural death.

We note with assurance that the Registrar of Pensions, Mr. Wilfred Mandlebe, is also not taking the allegations for nonsense.

He has appointed an enquiry.

But what worries us also is the now open tug of war among the key players, with the Bank of Botswana having joined the fray with clearly vested interests.

We would have wished the Central Bank would only provide technical advice to the government, especially the Ministry of Finance, without going as far as to recommend that they be the ones given the mandate to manage the pension’s funds.

As we all know, the Bank of Botswana’s track record in managing Botswana’s reserves has itself not been without blemishes.

The Bank have their hands full, they should first sort their house before asking for more responsibilities.

But that is not the concern for this editorial comment.

Our concern is that government should not approach the activities of the BPOPF at arms length.

As we have said before, the importance of the Fund to the economy of Botswana cannot be over emphasized.

Estimates show that combined investment management and administration fees paid by BPOPF during the last year (20006) alone is somewhere in the region of P150 million.

Clearly, this means the amount paid since the first mandates were issued seven years ago stand at around P1 billion.

This is a large sum which can achieve miracles for Botswana’s attempts.
It is for these reasons that Batswana, not just those who are members of the Fund, have a right to be concerned whenever allegations of corruption and trustee ineptitude and impropriety are reported.

Clearly, the allegations of problematic fiduciary issues as raised against the Fund’s can not be taken at face value.
Notwithstanding announcements of the award of tenders, we hope that the investigations will continue.

We want to say yet again that one area that needs serious examination is the extent to which trustees are well versed with their fiduciary duties.

Given the rudimentary nature of some of the mistakes they are reported to have made, there are serious suspicions if the Fund has the right caliber of people to oversee the close to P30 billion they are entrusted with.

In the past, one of the starkest and most elementary mistakes made by the trustees has been their failure to issue each investment manager with a properly articulated investment policy statement.
We hope that has not been repeated with the new tender.

We also hope that the Fund Trustees have clearly spelt out criteria investments to be employed by their choice of investment managers.

Allegations persist that some of the ministers and senior public figures are sleeping shareholders in some of the preferred managers.

This brings back the issue of declaration.

A lot of public money is involved here and trust is the key underlying expectation.

That clearly raises eyebrows.

Clearly, there is a lot of circumstantial evidence that there is more than meets the eye at the BPOPF.
Again, we can only welcome the decision by the Registrar of Pensions to institute an enquiry, with the hope that not only will the enquiry shed more light into the operations of the Fund, but also improve what are, in some cases, clearly rotten examples of corporate governance.

A lot is clearly at stake.

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