Friday, September 18, 2020

Here is a diagnosis of Bona Life by NBFIRA….

Fresh information shows that the acrimonious relationship between Bona Life Chief Executive Officer Regina Sikalesele-Vaka and Capital Management Botswana CEO (CMB) Rapula Okaile played a major role in the imminent collapse of the company.

The new information forms part of the findings that came from an on-site inspection conducted by the Non Banking Financial Institutions Regulatory Authority (NBFIRA) at the Bona Life Head office in the capital Gaborone.   

A team of seven investigators from NBFIRA’s insurance department embarked on an onsite inspection of Bona Life between 12th ÔÇô 18th April 2018.

The inspectorate team interviewed amongst others, the Chief Executive Officer, Chief Financial Officer, Principal Officer and the Operations Manager.

The team then compiled a detailed report which underscored structural problems at Bona Life as well as lapses in proper corporate governance.

The report which forms part of the documents before court also suggest that Botswana’s  corporate governance code has a fatal flaw, and the way it is applied may help to mask the errors and mismanagement that led to collapse of Bona Life. 

It also emerged during the inspection that Bona Life had no separation between its board and the sub-committees, which are composed of the two same people being Vaka and Okaile.

At the same, the company’s audit committee which should monitor the integrity of financial reports to the board and the financial reporting system of management is non-existent.

The NBFIRA inspectorate team found out that CMB was given 25 percent of Bona Life without itself having spent any of their company funds.

“They were to provide technical expertise to Bona Life”, reads part of the report.

CMB was at the time of change in shareholding in 2015 appointed asset manager of Bona Life and looks after 16 percent of the assets while the remaining 84 percent is managed internally by Bona Life.

The report therefore says that the fact that the Shareholder (CBM) is also a service provide (asset manager) place Bona Life in a difficult position because the shareholder cannot be held accountable for its actions and decisions.

“This is a serious conflict of interest,” the report says.

The regulator has since told the court that Bona Life “has stressed their inability to obtain the signature of the directors, Mr. Okaile to effect certain important decisions”.

At the same time, another abnormality identified was that of several positions held by Vaka who is a shareholder, board chairperson, and CEO.

“This is a lapse in proper corporate governance, which exacerbated by the lack of numbers in the board. All board minutes were signed by Board chairperson only and the board meetings are not held quarterly, instead three meeting were held, contrary to what was reported during the interview sessions”, reads the report.

The report continues to state that Bona Life has an asset liability mismatch as a result of failing to tailor make their investments to match the annuities. This is said to be one of the most serious issues Bona Life is faced with and one that they themselves are worried about. The regulator inspectorate team pointed out that if this mismatch is not solved Bona Life will have issues with paying annuitants in the future.

At the time of temporary closure, Bona Life was unable to effect a lot of decisions without the approval of their board member and majority shareholder Rapula Okaile of CMB. The statutory actuarial recommendation requires the company to source capital of P100 million. However there is currently no platform or forum to discuss this at board level in light of recent tussles.

The closure follows a recommendation made by the regulator team which stated that due to the impasse at board level and absence of board, Bona Life should be placed under curatorship in order to ascertain if there is hope for turnaround strategy or to transfer the business to a more solvent entity.

Meanwhile the NBFIRA inspection team also had a look at the management accounts of Bona Life as at end of January 2018 and the entity has made an unrealized or artificial loss of P76 754 149.97 caused by provision for annuity contract liabilities. The gross income of the company to that point stood at P521 104 320.70.

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