Saturday, May 30, 2020

Millions disappear from P100m BDF Welfare Trust Fund

BY THOBO MOTLHOKA

Millions have slipped through the fingers of ex and serving soldiers’ welfare fund and “the who done it” question lingers.

Investigations are ongoing to establish the whereabouts of millions of Pula that disappeared from the Botswana Defense Force (BDF) Welfare Trust Fund.

Internal audits conducted by the BDF Inspector General’s Office have established that the Trust lost at least Nine Million Pula due to misappropriation, embezzlement and fraud before 2013 when the BDF started carrying out audits.

The Minister of Defense Shaw Kgathi told Parliament last week that a total of Four Million Pula has since been recovered as criminal investigations by the Botswana Police Service continue.

He said eight people have been interdicted and files forwarded to the Director of Public Prosecutions (DPP) for possible prosecution. A 2013 qualified audit exposed the irregularities.

“Upon discovery that there had been embezzlement and fraud we then took the matter up and reported to the police and the case is still ongoing,” the Minister said when addressing questions from Selebi-Phikwe West Member of Parliament Dithapelo Keorapetse.

The Trust Fund, Kgathi said, has been audited four times since 2013 to 2016 with the Board of Trustees having received 2016 audited financials. He said the 2013 audit was the first audit to be carried out resulting in a lot of audit work covering all the previous years which had not been audited.

“This created a backlog of two years hence the delay in preparing the audits for 2017/2018 financial statements. Furthermore, the auditor issued a qualified opinion citing maintenance of adequate internal controls to maintain acceptable records of opening balances relating to 2013 financials and prior years, and as a result, the auditor was not able to obtain sufficient and appropriate audit evidence to verify members’ contributions and retained earning which formed part of the account balances as at 31st December 2016.”

The BDF Welfare Trust Fund was established in 1991. The rules of the Fund are deduced from the Trust Deed and further explain the governance structure of the Fund. The objectives of the Fund at inception were towards the general welfare of members, to inculcate a culture of saving and facilitate issuance of emergency personal loans. In addition, it was used as security for bank loans.

As part of its rules, members were entitled to their savings plus 10 per cent at the time of their separation. In 2007, it was registered as a Notarial Deed of Trust giving it legal personality and independence from the BDF. The transition from the BDF Welfare Fund to the BDF Welfare Trust Fund in 2007, hinged on improving transparency and allowing members direct control in the Fund. The growth of the Fund necessitated the transition.

Contributions into the Fund by solders are optional. There is no legal instrument authorizing compulsory contribution. Individuals who have opted to join, give the Fund the authority to deduct monthly welfare savings. The Trust Fund has been registered as a friendly society by Non-Bank Financial Institutions Regulatory Authority (NBFIRA).

According to the NBFIRA Act Section 2 a friendly society is defined as “an association of persons established with no share capital for the purpose of aiding members of the association or their dependents.” In terms of Section 345 of the BDF Act of 2018, the Commander is empowered to establish and maintain a Welfare Trust Fund by appointing an accountable officer or board to be accountable for such funds.

Kgathi said as at the April 5, 2019 the Trust holds an account with First National Bank (FNB), in the amount of Thirty-Seven Million, Four Hundred and Eighty, Two Hundred and Thirteen Pula and Ninety-Two Thebe (P37 480 213. 92) and another account with Stanbic Bank holding Eighty-Seven Million, Sixty-Eight Thousand, Eight Hundred and Nineteen Pula and Seventy-Seven Thebe (P87 068 819.77).

The Trust Fund, Kgathi said, holds Annual General Meetings to update its membership about the Trust Fund performance and solicit approval of major decisions by members about the Trust Fund performance and the affairs of the Fund. He said Members are also furnished with annual benefits statements so that they are well aware of the contribution.

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