Stanbic Bank, Hollard Insurance Botswana and The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) are mired in a law suit that threatens to explode into a corporate scandal involving fraud, gunpoint insurance, falsified documents, perjury and worse.
At the center of the lawsuit filed with the High Court of Botswana is the suspected collusion between Stanbic Bank and Hollard Insurance company to rip off a client and the regulator’s refusal to take action.
Court documents passed to the Sunday Standard suggest a web of fraudulent activities and perjury committed by Stanbic Bank and Hollard Insurance. That Hollard Insurance cooked the company records and allegedly passed them to Stanbic Bank to help the bank cover its alleged fraud against a client.
Court records further revealed that Hollard has admitted to NBFIRA that the documents which it gave to Stanbic Bank to use in court were fraudulent.
Although NBFIRA ruled that Hollard had a case to answer, the regulator refused to investigate the insurance company for possible fraud, arguing that issues of suspected fraud are criminal matters which should be reported to the Botswana Police.
NBFIRA has thus been cited as the first respondent in a civil suit in which Hollard Insurance is accused of possible fraud.
NBFIRA Chief Executive Officer Oduetse Motshidisi is cited as the second respondent and Hollard Insurance is cited as the third respondent.
The Applicant, Meepo Mosupiemang is calling into question NBFIRA’s integrity and competence in investigating allegations of maladministration allegedly committed by the financial institutions it regulates.
Mosupiemang’s lawyer, Rockfall Lekgowe of Rockfall Lekgowe Law Group has asked the court to rule that “ there is reasonable suspicion that” Hollard Insurance committed fraud and that the case be referred to the police for “ for further investigation with a view of prosecution should the police so decide”; alternatively the court should find that Hollard Insurance’s documents are fraudulent; alternatively the court should order that an independent expert be appointed amongst those proposed by Mosupiemang within 14 days of the granting of the order.
Should the court rule in Mosupiemang’s favor, this would open a can of worms implicating Stanbic Bank and Hollard in colluding to rip off a client and may expose Stanbic Bank to possible perjury for uttering false documents in court.
The civil suit against NBFIRA and Hollard is an offshoot of another lawsuit in which Stanbic Bank allegedly used the fraudulent insurance documents from Hollard in its defence against Mosupiemang.
BACKGROUND
In his affidavit, giving a background to the lawsuit, Mosupiemang explained that he entered into a vehicle loan agreement with Stanbic Bank on or around 8th Aug 2011. The terms were such that he would pay an installment of P10 521. 73 for the first 12 months and subsequent installments of P7804.69 for the remainder of the loan contract.
The vehicle would remain the property of the bank until the loan is fully repaid. He was to keep the motor vehicle insured at its market value. In the event the insurance policy became of no force and effect the bank would be entitled to insure the motor vehicle, pay the premium on his behalf and would only be entitled to debit his account after making a demand.
At the commencement of the deal, Mosupiemang authorized the bank to pay Hollard P30 763.98.
After the lapse of the 1st policy, on or around the 30th Aug 2012, the bank allegedly force debited his account with P26150.00 without authorization under the pretext of insurance.
He cites in his court records that the force debit
did not come to his attention until after sometime. At the point he queried and asked the bank to reverse the transaction. From the 26150 the bank paid back P21 576.93 and the difference of P4573.07 remained unaccounted for.
He then arranged his own insurance cover and, on 30th Nov 2012, gave a cover note to Stanbic.
On 18th April 2013, the bank again allegedly force debited his account with a further P30, 488.59 under the pretext of insurance without notifying him and contrary to the agreement.
According to court records, Mosupiemang only became aware of the hefty unauthorized deduction when Stanbic repossessed his motor vehicle on 15th Nov 2013. He lodged a complaint with the bank.
Despite the query, Stanbic bank went ahead and sold his vehicle allegedly without a court order.
He states that around 9th June 2014, he visited the bank to complain of the irregular process and asked for the policy documents of the premiums that the bank had taken without his authorization.
“It was a huge shock”, he said, to discover that the bank didn’t have the policy documents for the premiums they initiated.
He then visited Hollard offices to enquire about the premiums and the insurance company denied the existence of covers. The insurance company also denied ever receiving payment except for the initial premium of P30 763.98 which is the cover he authorized.
He said he Hollard issued him with a policy of 2011/2012 as the one and only ever undertaken with them by the bank on his behalf.
The result was that he lodged a formal complaint about the alleged anomaly to Stanbic Bank and asked them through a series of letters to avail the policy documents. The bank failed to avail the documents but still maintained that the covers for P26 150 and P30 488.59 were taken with Hollard.
SUSPECTED COLLUSION
Around 2017 Mosupiemang took the bank to court for restoration of the motor vehicle or installment paid towards the vehicle. During the proceedings, Mosupiemang denied the existence of an insurance cover taken on 8th August 2012 “and put the bank to the strict proof thereof. The bank produced the schedule of insurance whose page 2 was missing. The bank failed to produce the missing page even in the face of a court order and an application for contempt. In lieu of producing the requested page 2, the bank responded by issuing a letter from authored by a Hollard employee, one Pelekekae dated 11th December 2017 confirming the existence of the insurance cover. Mosupiemang lost the law suit and has lodged an appeal which is currently pending.
In the second law suit against NBFIRA and Hollard, Mosupiemang is claiming collusion between Hollard and Stanbic Bank.
According to Mosupiemang’s affidavit in the second lawsuit, “the letter by Pelekekae (used in the first law suit) contained confidential financial and personal information which could only have been acquired from the bank. In particular,” Mosupiemang claimed to know that he had arranged his own insurance cover which led to the cancellation of the Hollard policy; the insurance cover which he had secured privately was later cancelled by his broker and on 18th April 2013, the bank charged him insurance cover for the period 18th April 2013 to 17th April 2014. He states that, “the foregoing are allegations pertaining to things the said Pelekekae could not have known solely by being an employee of Hollard Insurance Company. “it is indicative of collusion between the bank and the 3rd respondent (Hollard) or Pelekekae in the least.
“Consequently, on the basis of the foregoing, the most probable inference that can be drawn is that the schedule of insurance was a fraudulent document.”
Mosupiemang claims his affidavit that the letter from Hollard “was a document prepared to perpetuate a fraud against me. This is so for the following reasons: from the factual background, it is apparent that the circumstances under which the letter was written and issued are such that it would be used in court in support of Stanbic Bank’s defence against me; This is more so in light of the letter which accompanied it from Moribame Mathews (Stanbic lawyers) dated 11th December 2017…. Paragraph 4 thereof refers to the letter from Hollard and reads: “Kindly note that in respect of the proof of cover for insurance taken by the bank on the 18thApril 2013, client is not in possession of a specific policy cover…. We therefore enclose herewith a copy of a letter from Hollard (previously Regent Insurance) in respect of this. This letter covers both insurance cover for 2012 and 2013.”
In his affidavit, Mosupiemang states that, “ the letter from Hollard alone, or as read together with that from Moribame Mathews were intended to, and did convey the following false and misleading information, either expressly or by necessary implication: that the bank had taken an insurance policy on my behalf for the period 8th August 2013 to 7th August 2013 and from 18th April 2013; that the bank had paid insurance premiums to Hollard for the insurance cover for the above periods and had therefore debited the amount to my account.
PLOT THICKENS
“Hollard has conceded that the letter was indeed written by an employee of theirs and further that the letter contained factually incorrect statements”, states Mosupiemang is his affidavit.
Hollard has issued two letters, the other written by the attorneys – Armstrongs Attorneys – in which they rebut an earlier letter written by Pelekekae and used in court by Stanbic Bank in their defence against Mosupiemang. In the two letters, Hollard “unequivocally stated that there had been no other insurance policy for the amount of P30 488.59 undertaken by them. The letters are dated 22nd November 2018 and 31st January 2019.
Mosupiemang states that “by writing such a letter (Pelekekae’s letter) Hollard acted fraudulently to mislead the intended recipient of the letter who, in this case, was myself and the court seized with the matter…… In light of the foregoing, in particular, the dubious documents provided as proof of policy of insurance which policy Hollard has confirmed in various letters that it did not exist, and the inconsistent and implausible explanations given, together with the circumstances surrounding the policy of insurance, there is a real likelihood that the two impugned documents were made with an intention to defraud me. Their authenticity is lacking.”
NBIFIRA REFUSES TO ACT
While NBIFIRA has ruled that Hollard had a case to answer, the regulator refused to launch an investigation of possible fraud by the insurance company.
In his affidavit, Mosupiemang states that in terms of the law, if an investigator from NBFIRA has reasonable grounds to believe that an offence under a financial service law may have been committed and suspects on reasonable grounds that a person has in its possession or under its control anything that may afford evidence relevant to the matter, the investigator shall commence investigations and where the inspection of a non-banking institution reveals a cause for concern, the matter shall be referred to the police with the evidence collected.
“The statement of complaint submitted to NBFIRA alone, or together with the response from Hollard established clear grounds for suspicion that an offence under a financial services law may have been committed and there were reasonable grounds that Hollard Insurance had in its possession or under its control anything that may afford evidence relevant to the matter,” he said.
He added that, “To the extent that the NBIFIRA declined to a preliminary investigation against Hollard Insurance on the issue of the suspected fraudulent documents, citing the reason that issues of suspected fraud are criminal matters which should be reported to the Botswana Police, it abdicated its duty, acted unlawfully and contrary to the law.”
Court records further reveal that Hollard insurance is refusing to avail Mosupiemang’s alleged policy documents to him, claiming that they are confidential records.
Mosupiemang claims in his affidavit that in terms of the law, a policy holder or his legal representative is entitled to access documents or correspondence held by the insurance broker or insurance agent of insurance transactions undertaken on behalf of the policy holder.
“Therefore, the second respondent’s decision is tainted with illegality to the extent that he declined to give me or my legal representative access to documents or correspondence held by the insurance broker or insurance agent pertaining to insurance transactions undertaken on my behalf,” said Mosupiemang.
He said as part of his initial complaint to NBFIRA against Hollard Insurance, he complained that there had been maladministration by Hollard Insurance. He said the NBFIRA chief executive officer delivered his decision and made no finding on the issue of the alleged maladministration by Hollard Insurance.
He said this was irrational in that there is an admission by Hollard Insurance that their employee issued out a false statement and said statement contained confidential information which could only have been acquired from the bank.
