The Lobatse High Court on Wednesday placed the Capital Management Botswana under final liquidation following a protracted legal battle with the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
Justice Mercy Garekwe placed CMB into final liquidation and confirmed John Little of Corporate Service firm as its liquidator. Little replaced former High Court Judge Peter Collins whose preliminary findings warned that “my suspicion is raised concerning criminal activity on a massive scale which eclipses isolated breaches of financial laws.”
In its running battle with the country’s biggest pension fund Botswana Public Officers Pension Fund (BPOPF), CMB had insisted that reasons advanced by NBFIRA that it should be placed under liquidation were unconvincing. This argument was shared by Gaborone High Court Justice Omphemetse Motumise. But a three-man Court of appeal bench comprising Judge president Ian Kirby, Justice Walia and Justice Brand ruled later ruled that, “the apparent disappearance or dissipation or disposal of P 400 million of BPOPF assets entrusted through BOP to the management of CMB bears full investigation, as it may indicate a financial crime has been committed. Certainly the claim that this dispute is purely contractual and is to be solved at some time in the future by arbitration cannot preclude or forestall a criminal investigation.”
Ruling that Motumise was in error to rule in favour of CMB, the three High Court of Appeal Justices also warned that “Many a crime has been committed beneath the cloak of corporate personality, or in the name of the exercise of contractual rights. Only a full investigation, with proper disclosure, will reveal whether that is or is not so in the present case.”
The Court of Appeal further stated that, “it is to be hoped that the statutory manager will carefully examine the BOP with a view to establishing whether he can or should exercise his powers of repudiation under section 47(6) of the Securities Act.”
The judges also stated that “It appears that this agreement has been used rightly or wrongly to convert cash resources not into tangible assets, but promissory notes, not always with any enforceable resort by the investor to the underlying assets purchased on the investor’s behalf. That too will need to be interrogated, lest any possible illegalities be repeated by a replacement general Partner. I express no views on these matters, and trust that they will be fully examined.”
Last year in December , CMB claimed to have sold 100% of BPOPF’s stake in the fund (representing 99% of the total partnership in the fund) for a paltry P50 million to an undisclosed party. These assets, only weeks previously, had been valued by CMB at P447 million Pula. In other words P 400 million, roughly 90% of the money invested by BPOPF has not been accounted for by CMB.
Motumise had also refused to confirm NBIFIRA’s appointment of Collins as CMB statutory manager.
Motumise, according to the judges “was in error, to grant an order reviewing and setting aside NBIFIRA’s decision to appoint a statutory manager and that portion of his decision must be set aside.”