Monday, August 15, 2022

Is NBFIRA compromised ÔÇô an open letter to the CEO?

It is said that, the most fatal thing for any public scandal is not so much the actual misdemeanour but any subsequent attempts to cover it up. I read sometime on a South African publication that there is an old Afrikaans saying that if you throw a stone into the bush and you hear a rustling sound, you know you have disturbed something. So I was intrigued by the swift response from the Botswana Public Officers Pension Fund (BPOPF) and BIFM and Fleming alike to the Sunday Standard article a few weeks ago in which it shared with Batswana that Pensioners are being fleeced. That shows BPOPF does not only know this to be true but is also worried about it. If it were not so, a smart public relations staff would have ignored the issue and let it slip quietly into the background. But the petulance of the reply, accusing the Sunday Standard of subpar professionalism of revealing what I deem is national interest, was the giveaway. Respectable CEO and leader of orderly non-banking financial institutions I hereby attach the so-called Novare report that mysteriously seems not to exist and kindly allow me to labour on it. To save you reading time, may I also summarise the findings. And these are as follows: ÔÇó That there are shortcomings in the local pension Fund’s current investment strategies and manager structure ÔÇó That the BPOPF has had high investment costs to the detriment of the pension members ÔÇó That there is limited control by the trustees over the majority of asset managers ÔÇó That there has been limited success in the development of an independent local investment industry ÔÇó And not surprising, there has been sub-par contribution by the BPOPF to the socio economic development of Botswana Furthermore it has been noted that: ÔÇó Most local managers outsource the offshore component of their investments. This outsourced management structure creates problems ÔÇó It removes accountability at portfolio level ÔÇó Domestic assets managed separately to offshore, thus leading to disjointed portfolios ÔÇó Total portfolio sensitivity to risks unknown ÔÇó Offshore manager selection skills are not evident in domestic firms ÔÇó The use of Fund of Funds increases fees Respectable CEO, are these findings new to you? Will I be correct that your colleague Mr Brown highlighted the same concerns at the 2012 Botswana Retirement Funds conference, especially around fees? Has not Jacque Malan, the World Bank and Bank of Botswana raised the same concerns before? What moved BPOPF to negotiate their fees downwards with investment managers? Why are they adopting a new investment strategy? Is it not as a result of the presentation, discussion and adoption of this mysterious hard hitting report that led to a hasty new investment strategy that we have since seen BPOPF adopt. I therefore find the press release by BPOPF not only to be misleading but disingenuous to claim ignorance of the issues raised by the Sunday Standard article. I have come to the conclusion that there are certain truths that BPOPF are desperate to keep hidden and allow me to once again elaborate on them. In an environment whereby returns have been hard to come by except for maybe last year and where pension fund credits have not grown, BPOPF has instead been paying over P400 million each year in fees to investment managers. This is obscene considering the size and structure of the pension Fund. In addition most of this money does not go through Botswana’s tax system to create further revenues for government. Over the years the Fund has been accused of not having any social impact on the country. Fund managers have recklessly pursued their own business objectives of taking every possible penny offshore in pursuit of their narrow economic interests. It is no wonder therefore that we do not have enough jobs created in our economy, that we are lacking in infrastructure and our economy continues to be dependent on government. I regret to say that the future of Botswana’s pensioners looks bleak. It is perhaps good news that the BPOPF total assets have grown to over P40 billion. These good news were shared with the public recently by the Acting BPOPF Chief Executive Officer, Lesedi Moakofhi at the launch of the Fund’s new investment strategy in January. She also had said that membership of the fund had grown and that there had introduced new products such as the pre-retirement switch. Regrettably, the good numbers did not erase the stigma that BPOPF has not served this country and its pension members well. Actually Moakofhi’s presentation on BTV at the launch of the investment strategy sounded more like a business pitch of their service providers ÔÇô the presentation was peppered with recollections of glories of the past, a claim to work for even better things for the good of the pension members and how so clean their investment managers are. How does she know with one hundred percent certainty that their investment managers are squeaky clean? Does she sit on their Boards? It is no longer news that Botswana’s pension funds serve the interests of certain South African investment firms. These firms have spent thousands of Pulas trying to influence how BPOPF invest their assets. Like the 1885 Berlin Conference on Africa held at Chancellor Otto von Bismarck’s official residence, when major European powers carved up Africa to their heart’s content and lavishly divided spoils among themselves. Similar to Berlin, with a sumptuous buffet, Cape Town has become the influence on how the affairs of Botswana greatest savings are divided up. Botswana with its womb pregnant with free exchange controls, allows inhibited South African firms (South Africa has restrictive exchange controls) the ability to develop international capabilities by taking Botswana money offshore. Never wondered why SA firms are fascinated by Botswana pension assets when they can be pursuing a R1 trillion plus industry in their own turf? It is for this advantageous, god-sent free exchange controls that Botswana offers. So these firms have over the years enmeshed in unprecedented unethical behaviour in cohorts with Trustees, with some trustees taking undue advantage of the pensions to better themselves. The biggest problem is that some of the Trustees and managers at the Fund are using their positions to enrich themselves. Management and Trustees of the Fund are well known to receive undeclared gifts from investment managers. Trustees enjoy being dined and wined at expensive restaurants of the world. Cape Town and London “site visits” are their preferred occupation than to attend Board meetings. Year-end parties, with champagne and all sorts of sophisticated concoctions at the GICC are also preferred. I submit my thesis that there exists a syndicated, institutionalised corruption, fraud and daylight embezzlement in the management of pension funds in this country. How is this done? Let me share one example. There exists what you call rebates especially in international investments. These are normally passed on to a client, and in the case of BPOPF two investment managers were found to be keeping these to themselves. Let me be generous and share another example of fraud. Cases are known of investment managers who use client money to pursue their own economic interests or use client money as a guinea pig for unacceptable risky investments. One manager with an affiliation to a Property Group has over the years transformed himself and the property partner to multi-millionaires in dollar terms at clients’ expense. Lest I forget, there is also BPOPF and its Mascom investment. That is another story for another day, where big, influential people are going about behind the scenes to eventually snatch the Mascom investment from BPOPF’s for their own nests. Mascom dividends are sweet and get better any nest any day. At close to P500m every year, some individuals want these for themselves and have all sorts of BPOPF internal people working to land them on their laps for nothing. When the Sunday Standard article came out, I was together with former Trustees assured that Batswana had been revealed the mother of all frauds. But more surprises came after. The uproar that followed the fraud discovery has been temporarily doused with discreet silence from BPOPF and your institution (NBFRIA), I regret Respectable CEO. While pensioners whose money has been misappropriated over the years with obscene fees paid to investment managers waited patiently to be told what is being done to restore their savings, and for stiff punishments to be meted out on those who made away with their retirement savings, the BPOPF instead slid everything under the carpet to let it die a natural death. BPOPF was quick to allude to the fact that the allegations were part of ongoing attempts to witch-hunt certain members of the executive of the Fund, and that the timing was wrong given that it is timed around a new investment strategy being launched. Really now? Who cares on timing of exposing a fraud? To BPOPF, when is best to reveal fraud that is happening in the Fund? Respectable CEO, the silence from NBFRIA is equally deafening. Let us be not be under any illusion. The findings of Novare are scathing and need to be acknowledged with seriousness. This cannot be business as usual. We can’t bank on the old strategy that Batswana have a short memory and that things will disappear quietly. Civil society organisations and stakeholders are worried that the problem with corruption in Botswana is that no serious convictions have been given to perpetrators, making any new case “a business as usual”. NBFIRA is too young to start adopting this kind of attitude seen with most organs of government. NBFIRA armed with an ACT of parliament needs to militate against such behaviour, and remove these narrow economic tendencies we see being pursued in Botswana’s pension funds to the detriment of Batswana, and its economy. Thus the questions arise as to why it is too easy to corner pension funds in Botswana to serve narrow selfish economic interests? When will there be adequate deterrent to pension thieves in Botswana? The answer may as well be that NBFIRA seems not too interested in pursuing such naked injustices to the country’s pensioners. BPOPF and its Board have become too big for them to start even telling government to take a hike whenever there are concerns raised with its governance. The Fund exists as if it’s a republic within a republic, and that Botswana laws do not matter. I remember that when your institution was advocating for new investment guidelines that favour bringing more money home as to having it offshore, you were met with the same arrogant, brush response by BPOPF and its service providers. The facts in the Novare report in whatever form or shape speak for themselves, but BPOPF is not taking any immediate action to remedy the situation. It’s all business as usual. There were firm arguments to pursue legal action against certain investment firms, but the BPOPF has opted to do nothing against the managers who have been accused of fraudulent behaviour. The secretariat of BPOPF is too concerned about the businesses of investment managers at the expense of the members of the fund. We hear that certain international partners to these investment managers alerted BPOPF of fraudulent behaviour in the form of rebates not being passed to the client (BPOPF) by some of the firms. What did BPOPF do? BPOPF only asked for refunds and took no further punitive action. As a matter of fact, I report to you factually, BPOPF is actually quietly negotiating new contracts with the same old managers and even bettering some by increasing their allocation offshore albeit with minor reforms especially around reduced fees. And when confronted with their hidden secret, what do they do? They play to the gallery with ineffectual, unprofessional, hasty public statements. Then there is the walking disaster that is in charge at BPOPF, and here I am talking about the Acting CEO. How could someone who lacks the basic technical prerequisites of managing even a “motshelo” budget occupy such a powerful position? Powerful people have however always ignored concerns of suitability of Moakofhi because they like how she can easily be made to work for certain agendas. Trustees are equally pathetic. They are always in a daze. Confused and ready to be manipulated. Some can’t even count for Christ sake, and yet they are expected to make big investment decisions. Where I am from, such a situation is called “a circus”. And that’s what it is I am sorry to say. It is my conviction that unless urgent steps are taken to reform the entire pension system, and have technically competent and morally upright citizens at the core of our nation’s savings then we could be heading for a national disaster. NBFIRA needs to enforce minimum education standards for one to be a trustee and demand strong, frequent trustee training. Anytime from now we can wake up and be told that all our pensioners’ money has been wiped out. This is not far-fetched in the Botswana of today. All sorts of noises were made to warn officials about Botswana Development Corporation, Botswana Meat Corruption, Morupule and so forth but nothing was done until the actual disaster happened. Do we want the same with the nation’s savings? We need to remove the helplessness currently foisted by BPOPF and its trustees, otherwise the big thieves will continually have a field day. The Unions of this country, especially those represented at BPOPF also have a big role to play. The truth is that they have offline demonstrated their displeasure in the manner in which the seemingly helplessness of Botswana in curbing corruption and this disenchantment with the system could very soon account for a full out civil disobedience. And it won’t be surprising given that workers haven’t had salary increases in a long time, and now corporate thieves with their sausage fingers have found their way into workers savings. In closing Respectable CEO, I wish to condemn in the strongest words attempts by BPOPF and their blood thirsty partners in attempting to hide the truths on what has been happening to people’s pensions. This is the worst immoral behaviour I can think of. The BMC’s and BDC’s of this world have collapsed under our watch, and now in cohorts with unrepentant corporate sharks, we want to suck every little penny out of our parents lifelong savings for selfish, self-serving interests. It makes my stomach turn to even think that nobody in this country has ever stood up to this injustice to our old citizens. I cannot just imagine it that the destinies of our fathers and mothers who served this country with their blood are being toyed with. Often we hear of former Permanent Secretaries, Directors of Government, Ministers, teachers, nurses, soldiers being condemned to a life of poverty after retirement. This is because of this reckless behaviour of BPOPF to loot these poor people’s pensions with hidden, excessive fees. Respectable CEO, if we fail to fight for changetoday, God forbid, we may be treated the same way tomorrow when we also retire. This injustice has to stop now if our country must move forward. In Setswana culture and in fact in the whole African tradition, younger ones have much respect for elders. Unfortunately the reverse is the case to the extent that the money meant for elders is now being stolen by the youthful professionals of today. With the BPOPF scam not be attended to, will it be out of question to say that new ones will be uncovered, when will there be an end to the impunity of few who dip their fingers into the till and eat the seed of workers and retirees present and the future? I started with an Afrikaans saying, I will end with a Setswana one used in the mfexane eraÔÇô “tsogang Batswana matebele ba sia ka dikgomo”. BPOPF with its partners have had a field day with your savings. Don’t buy into their use of venomous language in defending themselves. It is ploy to hide the truths from all of us. This is all to intimidate and hide their genocide towards our country and its pensioners. Thanks Sunday Standard for having disturbed something ÔÇô a cover up by an institution that is meant to safeguard our greatest assets. At the end of the day Respectable CEO, it is in your hands together with your Board to take urgent steps to investigate and remedy the situation once for all and secure the future of Batswana. Us as citizens can only best alert you of the rot. If no action is taken, and we go on with our accustomed culture of doing nothing, and one day Batswana land by your doorstep demanding their disappeared savings, you can’t say you have not been warned. But I will be quick to remind you that you it is your responsibility as head of the non-bank institutions to mobilise the power of capital markets for good public purpose.

*Name withheld for fear of being victimised by fellow Trustees.

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