Wednesday, September 23, 2020

Industrial class workers’ multi-million Pula savings heist

Thousands of Batswana blue collar workers have been bilked out of Millions of Pula in personal savings invested with the Local, Central and Parastatal Workers Savings and Credit Co-operative Society Ltd (LCGPW SACCOS).

Sunday Standard investigations have turned up documents detailing a web of shady business arrangements that steered millions of Pula in workers’ savings to LCGPW SACCOS executives and board members.

With an initial membership of more than 5000 industrial class public service, parastatal, private and non-governmental organizations workers who are members of the National Amalgamated Workers Union, LCGPW SACCOS’ unique strength derived from its sizable membership, whose dues provide the group with its largest source of revenue.

Registered in 2006, LCGPW SACCOS mobilized members to save and create a pool of funds from which they would get loans at competitive and affordable rates.

But to an extent not previously known, a primary activity of LCGPW SACCOS’ executives and board members was their own enrichment. 

To piece together the story, The Sunday Standard drew upon internal documents, letters and investigation reports provided by sources.

A letter dated 4th December 2019 by the Minister of Investment, Trade and Industry Peggy Serame addressed to members paints a bleak picture of a fund brought to its knees by flagrant embezzlement of funds and undisguised mismanagement.

Further investigations by the Sunday Standard confirmed Serame’s missive of doom and gloom.

A report from an investigation conducted at the instance of the Director for Co-operative Developments at the Ministry of Investment, Trade and Industry sheds light into how members lost millions of Pula in personal savings which was diverted to line pockets of LCGPW SACCOS board members and executives.

According to the report by Mahube Consultancy, between 2017 and 2019, LCGPW SACCOS board members misappropriated more than P2.7 million from the fund while executives embezzled at least P2.1 million for the same period.

It has further emerged that the board cannot account for more than P2.6 million which went missing between 2013 and 2019. There is an additional P6.1 million in unaccounted for expenditure and questionable overtime paid to executives, for the same period. LCGPW SACCOS is also unable to account for a number of its assets among them, plots and vehicles.

The report further revealed that the fund’s former Chairperson and Vice Chairperson (names know to this publication) were suspended from the board in November 2017. The duo is alleged to have cashed P120 000 of members’ savings for personal use.

The Vice Chairperson is said to have instructed that the LCGPW SACCOS bank account be linked to his cell phone banking transactions without the authority of the board.

“To the surprise of the investigating team, the remaining board members continued to do what the former chairperson and his vice were doing.  

“Our investigations have established that LCGPW SACCOS entered into a car purchase scheme with Zawekha Motors a second hand car dealer in Mogoditshane.  The scheme was originally meant for staff members; however, board members used the same scheme to acquire vehicles for themselves. Most of the beneficiaries of the scheme did not service their loans and instead funds from the Co-operative were used to pay the second hand car dealer.

The report further details how LCGPW SACCOS failed to take advantage of its numerical advantage to build a credit fund for provision of loan to members and how its disbursement of loans was “ineffective, corrupt and unfair.”

It also emerged in the report that the Co-operative mismanaged its scheme with be-Mobile and other suppliers. Members used the scheme to acquire cellular phone handsets from be-Mobile.  LCGPW SACCOS failed to do regular reconciliations of the be-Mobile account and is now saddled with a P12 million bill from the cellular phone service provider. The society cannot dispute the claim due to lack of reconciliation and proper records,” the report says.

LCGPW SACCOS governance structures and internal controls have collapsed, resulting in huge misappropriation of funds, states the report.

“Our investigations revealed that the society had no lending policy, hence loan administration was done haphazardly without any laid-out process. Loans were approved without following due diligence, they were issued without filing of application forms, there was no process done and there was poor record keeping,” the report says.

Members loan balances cannot be established due to poor record keeping and member passbooks were not updated. “This has negatively impacted the liquidity and viability of the Co-operative”, states the report.

The Director presented the report at a meeting held in Kanye on 21 September 2019) where it was discussed by the general membership at length and all the options concerning the future of LCGPW SACCOS which included amongst others, the revival of the Co-operative, judicial management and liquidation were weighed.

In her letter, the Minister of Investment, Trade and Industry Peggy Serame says, “It was on the basis of the above members’ resolution as well as the outcome of the report that the Director for Co-operative Development resolved to place your Co-operative under liquidation.

Serame said she supported the decision taken by the “Director to liquidate your Co-operative with a view to saving it from liquidation by creditors.”

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The Telegraph September 23

Digital edition of The Telegraph, September 23, 2020.