Tuesday, April 7, 2020

The Regulator is asking questions at BPOPF, but answers are in a slow-motion

With the ongoing coronavirus crisis expected to have significant impact on the investment made by one of the biggest pension fund in the country – Botswana Public Officers Pension Fund (PBOPF) in both ON and Offshore markets, there seems to be more questions that the Fund needs to answer including those from the regulator – Non Banking Financial Institutions Regulatory Authority (NBFIRA). 

This week, fresh information surfaced that the regulator wants BPOPF to, amongst other things account for its delayed financials. But before the Fund could do that, its two key personnel – the board chairman – Solomon Mantswe and Principal Officer Boitumelo Johnson must show cause why they should not be forced to use the EXIT door for the last time. In short, NBIFIRA is asking the duo to prove that it’s still “Fit and Proper” to lead the country’s biggest pension Fund. 

Many regulators, more especially in banking and non-banking sectors across the globe applies the Fit and Proper test to office bearers in the respective sectors. 

In Botswana, Sunday Standard can reveal that NBFIRA – which regulates non-banking entities such BPOPF has officially asked the Fund leadership to show cause why they should not be declared not fit and proper for their respective offices. 

Through a letter, NBFIRA is reported to have instructed BPOPF to respond within 21 days of receiving its communique. Through the same letter, NBFIRA is also alleged to have raised concerns   about the way the affairs of the multibillion Pula pension fund are being conducted.

At the top of list of irregularities that NBFIRA is not happy about, Sunday Standard has learnt, is the failure to publish audited financials of the fund on time for the last two years. The duo – Johnson and Mantswe might also find themselves having to explain their decisions to terminate contracts of some of the service providers. NBFIRA is reported to be unhappy about the loss of pension’s money by BPOPF due to improper structures at an unnamed private equity manager contracted by BPOPF in the past.

While she declined to comment further on the matter, Molefe on Friday did not outrightly deny the latest development at the Fund. 

She declined to comment further on the matter except to say, “I am shocked that the issues you are raising, which are board issues, as well as the regulator’s communication is now in public space”. 

On the other hand, NBFIRA also could not be drawn into discussing the BPOPF failures including that of not releasing financial results in two years. 

The regulator cited its governing ACT which has provisions that makes it difficult for it to discuss matters relating to individual entities until it is a public information. 

“The authority has a variety of supervisory tools at its disposal to address issues of non-compliance by any entity including sanctions. Due to the confidentiality clause in the NBFIRA Act, the Authority is not at liberty to discuss the precise measures taken in relation to a regulated entity until it is public information,” reads the NBFIRA response to the queries raised by Sunday Standard. 

Speaking in general terms, NBFIRA Head of Communications – Boa Chombah said that the regulator believes that from a governance and operational perspective, the delayed release of audited statements may result in delayed communication to stakeholders on the financial performance of the entity. 

She added that from a regulatory perspective, the Authority uses a risk-based supervisory approach meaning that entities whose size in the sector is significant enough to destabilize the sector, are subjected to enhanced monitoring and supervision. 

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