Thursday, September 24, 2020

Pensioners, BPOPF clash

Local pensioners have taken the Botswana Public Officers Pension Fund (BPOPF) to task following reports suggesting impropriety in the way their money is being invested.

Tension started building up last October, at the Serowe annual general meeting, when pensioners queried some investment decisions made by BPOPF. The situation was not helped by findings of an investigation by Jacques Malan which revealed that pensioners may have lost close to P200 million because of the fund’s negligence.

Sunday Standard can reveal that the pensioners’ National Executive Committee has written BPOPF demanding answers. The embattled BPOPF, however, has not been able to provide answers, much to the chagrin of pensioners.

A member of the pensioners National Executive Committee, Imelda Mathe, this week confirmed to The Sunday Standard that BPOPF has not been able to provide a satisfactory explanation, “except for the press release that was published in newspapers, which we do not accept.”
The first casualty in the controversy over the administration of pensioners’ money is BPOPF Trustee and Gaborone business tycoon, Parks Gaobakwe, who has been forced out.

Gaobakwe stepped down as BPOPF trustee following recommendations carried in the Jacques Malan report and subsequent pressure from pensioners.

Gaobakwe, who goes by the sobriquet “ Uncle Parks”, is implicated in a conflict of interest and unfair practice in a failed bid to sell Mascom shares that are believed to have cost tax payers close to P200 million.

“While the Mascom deal was under discussion, a consortium of citizens wished to purchase the shares. The evidence given by African Alliance strongly suggests that the leader of the consortium was Mr. Gaobakwe, who is a trustee of the BPOPF. Mr. Gaobakwe denied this at a trustee meeting but apparently admitted this at a later stage,” reported Jacques Malan Consultancies and Actuaries, who were commissioned to investigate the goings on at BPOPF.

Jacques Malan Consultants and Actuaries reported that they had not been able to prove this beyond doubt but called on the registrar to establish the truth. They recommended that if it is true, then the lack of good governance and the conflict of interest are severe and, in fact, Mr. Gaobakwe lied to the trust. If true, Mr. Gaobakwe should cease to be a trustee of the Fund.

Gaobakwe’s name also comes up in the decision to fire African Alliance from administering BPOPF funds. According to the report that has been passed to The Sunday Standard, the decision to fire African Alliance shows BPOPF in a very poor light for the following reasons:
“Why remove one of the best performing asset managers? There is a potential loss of future investment performance by the fund.” The report further asks, “Was the African Alliance appointment terminated for any personal or vindictive reasons? It would appear that Mr. Gaobakwe played a leading role in these discussions. It also emerged in the report the BPOPF refused to disclose crucial information on the termination of African Alliance.

“By seemingly concealing this information it leaves an impression that something is not right and is being hidden.”

The consultants were “asked to quantify the investment losses as a result of the actions taken by the trustees. This is not possible other than to refer to the loss previously mentioned of between P100 and P180 million on the Mascom debacle. The other matters are lost investment opportunities (such as when AA was prevented from trading) and these can not be determined with any degree of certainty.”

For now, it is not clear if pensioners will sue BPOPF trustees to recover their money. Jacques Malan Consultants, however, stated that “if the trustees cannot show that they applied their minds and acted in the best interests of the Fund, then it could be conceived to be negligence and any member or even the employer (government) could sue the trustees and they could be held personally responsible for the loss. Negligence by even one of the trustees would mean that all the trustees could be held responsible.”

At the time of going to press, The Sunday Standard had not established if the government would also join the law suit against BPOPF. What, however, has emerged is that the relationship between government and BPOPF has broken down and consultants are even talking of the possibility of the government pulling out of the fund.

It also emerged that the BPOPF had changed some of the rules without the approval of the employer (government) whereas the rules state that all amendments that affect the financial position of the fund need to be approved by the employer. Since this was a major oversight and probably indicates a total lack of respect for the role of the employer, the position of the Chairman at the time such amendments were made should be reconsidered by the Trustees and the Employer.”

“The trustees have effectively disempowered the employer by unilaterally amending the rules and ignoring requests for information. The unhappiness was evident in a meeting between the employer and the Trustees late in 2006. The employer has a number of decision making functions in terms of the original rules and this must be respected by the trustees. Clearly, the employer may even decide to stop contributing to the fund, so the goodwill between the employer and the trustees is of paramount importance so as to run an efficient fund in the interest of all the members and pensioners.

The relationship between BPOPF and pensioners is expected to get worse before it gets better, with the ongoing Botswana Insurance Fund Management (BIFM) providing more fodder for pensioners’ disquiet. BIFM administers more than P1 billion in pensioners’ money and is also a subsidiary of Botswana Insurance Holding Limited in which BPOPF has a significant stake.

Mathe told the Sunday Standard that they were studying the BIFM debacle to inform themselves before deciding what course of action to take. The blue chip stock-listed on the Botswana Stock Exchange, has been forced to restructure its board and recruit a new set of independent non executive directors following a disputed acquisition of shares in BIFM by a consortium owned by directors and executive management team.
BIHL has had to implement an embarrassing reversal and clean up of its corporate governance following a P30 million purchase of shares by no executive directors in BIFM (an asset management subsidiary.)
Sanlam, which is the majority shareholder of the pyramid structure that owns BIHL, facilitated the deal, helped secure the financier in Barclays and sold the shares without notifying the other minority shareholders, among them Botswana Public Officers Pension Fund (BPOPF).

Analysts and staff at BIFM were this week worried that the now close relationship between Sanlam and the non executive directors does not only go against the King governance code but also brings the new danger that BIFM will now be run for the benefit of the directors and Sanlam as a benefactor rather than for the benefit of minority shareholders like BPOPF.

See BIHL’s response on Page 4

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