Thursday, September 24, 2020

Ministry of Finance must find answers to problems consuming Pensions Industry!

Fundamentalism seems to be in control somewhere in the belly of the Botswana Public Officers Pension Fund.

First they started by ridiculing the Permanent Secretary to the President when he sincerely, as a stakeholder and employer, sought to intervene to appoint an enquiry into allegations of ethical impropriety at the Fund.

Then they went on to refuse to cooperate with the consultants appointed under the regulations they had called for.
That was after they had cast aspersions and rubbished a series of newspaper articles that hinted at the extent of ethical rot at the multi billion Pula Fund.

It is clear from the findings of the consultants, legally appointed by the Registrar of Pension and Provident Fund, that the Botswana Public Officers Pensions Fund has failed to live by the terms of their own strategic plan.
In terms of the BPOPF strategic plan, the key values include integrity, honesty, transparency and, teamwork, accountability, customer focus and Botho.

It is clear, however, from the behaviour of the Trustees, not only from their mishandling of the consultants but also their general conduct that the Trustees have turned the Fund not only into a fiefdom, but also a cash cow from which they take turns to draw their milk.

As it so clearly comes out in the Report drafted by the consultants (Jacques Malan Consultants and Actuaries), the Trustees of the Fund have not been courteous to the employer as a stakeholder to allow government to verify facts surrounding the growth (or lack thereof) of the Fund as expected and as stated in the Fund’s strategic Plan. With the Trustees having become more like rogue elephants and a law unto themselves, the employers wallow in the dark, when it comes to fair expectations of growth, effective management and good corporate governance.

While we respect the sanctity of the independence of the Trustees of BPOPF, we think a way has to be found to get rid of the current crop, many of whom, other than their ability to position themselves and their interests to scrounge the money off the Fund, are literally in the dark when it comes to modern financial management and corporate governance.

Untutored in the art of good corporate governance, many of the Trustees are in the dark as to what is expected of them in the course of their fiduciary duties.
As the Consultants so succinctly put it, “the Trustees need to be fully aware of the risks involved in being a Trustee and that they are personally liable if the Fund loses money due to their negligence, dishonesty or fraud. Furthermore if one Trustee is so guilty, then all the Trustees are personally responsible.”

This cardinal role of corporate governance is far from being internalized by the Trustees of the BPOPF, a Fund, which, by the last count, stood at somewhere in the region of P35 billion.

It is in our opinion palpably callous to have put into the custody of the caliber of today’s Trustees such high amounts of money that have a potential to ruin the entire nation if not properly managed.
It is clear from the Report by the Consultants that the Trustees are still to formalize their code of conduct. In the meantime, the rules are abstract, vague, loosely interpreted and never strictly adhered to.

This is a cause for concern given not just the size of the money in question, but also the potential ruin to the economy a mismanagement of such funds could visit to the entire country.
It’s more like giving a super jet to an untrained pilot to fly.

We can’t agree more with the consultants when they say, “Botswana needs to prepare its own document regarding good governance in the retirement industry.”
It’s even more scary to learn that the people of BPOPF Trustees’ caliber are actually running a multi billion Pula Fund without the benefit of such a document.

We also buy into yet another recommendation by the consultants that “the size of the Board of Trustees is too large. It would be far better if the numbers were reduced from the current 20 plus alternates to a more streamlined number of say 10 or 12 with specialized skills.”

While the consultants rightly warn of the political implications of reducing the Board of Trustees, we want to give impetus to cutting it down but point out that a huge size makes the whole control structures clumsy. The huge size also allows for too many conflicting and sometimes predatory interests to creep in, hoping they will not be immediately detected owing to a huge and largely unskilled board.

All these are difficult issues which the Registrar will have to face squarely.
We hope he will have the courage and enjoy political goodwill from the government; all factors that will be necessary to restore public faith and trust into the Botswana Public Officers Pension Fund.

RELATED STORIES

Read this week's paper

Masisi creates his own “deep state”?

The government enclave is discussing a new law that will expand the president’s overreach and make it easier for the Directorate of...