FNB Acacia

Politics stall BPOPF boss appointment

SHARE   |   Sunday, 21 June 2015   |   By Staff Writer
TOO EXPENSIVE; BPOPF has failed to hire Kgosidiile TOO EXPENSIVE; BPOPF has failed to hire Kgosidiile

• NBFIRA audit questions Morupisi's chairmanship
• BPOPF asset base reaches P50.9 billion

The appointment of a new Chief Executive Officer at Botswana Public Officers Pension Fund (BPOPF) has been thrown into uncertainty with allegations of political interference at the centre of the issue, which is deteriorating into a crisis.
Sources close to developments at BPOPF told The Patriot on Sunday that a three man delegation appointed by the Board of Directors to head hunt current Motor Vehicle Accident Fund (MVA) boss Cross Kgosidiile for the position have failed. The delegation was made up of board chairman and Permanent Secretary to the President (PSP) Carter Morupisi together with board members Andrew Motsamai and Brigadier Charles Nkele. The trio are said to have reported back that Kgosidiile is unaffordable due an exorbitant asking price despite that the board had given them an open cheque to get him at all costs because the fund has the financial resources to meet his demands. Allegations are that the three man task force has now ditched pursuing Kgosidiile in favour of his runner up in the shortlist, one Boitumelo Molefhe- the Chief Finance Officer at Bokamoso Private Hospital.
But there is a political angle to the recruitment impasse at BPOPF-the biggest pension fund in Africa in terms of per capita income at P50.9 billion assets-under-management. Fresh information indicates that the trio may have backtracked on the MVA boss due to uncertainty over his political allegiance, as the current administration fears that he is too close to the opposition Botswana Congress Party (BCP). BCP spokesperson Taolo Lucas denied that Kgosidiile is their member. "Me and Cross cannot be separated by cosmetic differences. He is not our member. He is not close to the BCP but to me personally as a fellow tribesman. Our relationship goes way back, we grew up together in the same village-Bobonong and went to the same schools," he said. 


Both Morupisi and Motsamai have been linked to the ruling Botswana Democratic Party (BDP), while Nkele's affiliation remains unknown. The fear, sources said, is that appointing an outsider to such a strategic position at BPOPF could scuttle government's plan to continue to have a strangle hold on the multi billion pula fund. Government has over the years been accused of trying to take over control of the pension fund to the exclusion of the trade union party. Some board members openly confirm being aware of government's attempts, hence the rigorous campaign to ensure that Morupisi took over the chairmanship in 2013.  When the term for the then board chairman Rapula Okaile came to an end board members Allen Keitseng, Kgosi Modise (BOTASSA), Yarobi Motswaiso, BOPRITA'secretary general Malete supported the employer party to vote in Morupisi, defeating Shandukani Hlabano at the meeting to elect chairman in early 2013. Permanent Secretaries Morupisi, Ikwatlhaeng Bagopi, Kolaatamo Malefho, Shenaz El-Halabi,  then replaced other trustees as government set in motion plans to take over control of BPOPF. 
Having brought in high ranking government officials in the board, now it was time to remove the then CEO Ephraim Letebele who was said to be too independent, refusing to implement board decisions that did not make business sense. Old trustees lobbied other trustees who were still new in the board, and influenced them that Letebele was disrespectful of the board and refused to take instructions from it. They wanted him fired. Soon thereafter there was a fallout between the group that lobbied for the removal of Letebele. Letebele's major undoing was refusal to endorse board decisions which did not make business sense. During Letebele's tenure there was a fight over who was to represent BPOPF on the board of Mascom Wireless, where BPOPF owns shares.Those currently representing BPOPF in the Mascom board are Moakofhi, Kwenasebele Modukanele  and  Morupisi-who chairs the board. Letebele's reluctance to facilitate forwarding of the then nominated representatives to the Mascom board also contributed to his dismissal. Morupisi could not be reached as he did not take calls to his cellphone.
When Letebele took BPOPF to court challenging his dismissal and seeking reinstatement the board resolved to settle out of court in fear of the unanimity clause, which threatened to expose divisions in the decision of the board of trustees to the public. An out of court settlement was brokered, with Letebele walking away with millions of pula in a gentleman's agreement. The then Marketing Manager Lesedi Moakofhi has been acting since 2012 following the departure of Letebele. After Letebele's departure the new acting CEO launched a witchhunt on other managers who were sympathetic to Letebele over the implementation of some decisions. Two managers were invited for disciplinary hearings but interdicted the process before court. The issue was never resuscitated.
The vacuum in the CEO position and the manner in which Letebele was fired has created tension and a fall out between management as other managers felt they were equally qualified to act in the position as Moakofhi. This led to the resignation of Finance Manager Claire Mathe, and Audit Manager-Pearl Molomo due to internal bickering.
BPOPF board's HR committee is said to have also expressed concern that Moakofhi has been allowed to act for a long time, two years. Moakofhi's contract expired in July 2014, which could have led to her losing the acting CEO position. The HR Committee refused to extend Moakhofhi's contract but she succesfully appealed to the Board who reversed the decision.
Since formation BPOPF has always been intertwined with politics. Even the awarding of contracts is said to be done based on the relationship with the political administration.  The first tranches of pensions that were outsourced to fund managers was to African Alliance with Louis Nchindo as the main shareholder and what was then Ngamiland asset management now known as Flemmings owned by 21st century, a company whose shareholding included Moses Lekaukau, Julian Nganunu,Mokama, Festus Mogae, Charles Tibone etc. They performed woefully but got paid handsomely because the contracts were not linked to performance but they were paid based on a certain percentage of funds under management. Some asset management companies who lost the bid for the multi billion contracts awarded in February complain that they were overlooked in favour of some new entrants, who lack experience and track record like Afena Capital and Capital Management.
BPOPF has since grown but the politics still remain. An example is given of the fight over Mascom shareholding. "I suspect they are regressing and going back to what they were 10 years ago, an equity fund to invest in local businesses managed by connected local businessmen," said a source referring to a decision by BPOPF to enter local private equity market. BPOPF acting Chief Executive Officer Lesedi Moakofhi recently announced that they are about to enter the private equity market and set up an infrastructure fund, as new investment projects estimated at around P1.6 billion.
Some critics have dismissed the foray into the private equity market by BPOPF as part of their new investment strategy as a  gamble with public officers pension funds. They argue that the equity market in Botswana is oversubscribed, hence the reason why asset managers are against the revision of the investment formula to 50 per cent offshore and 50 per cent in Botswana. In the current scenario of 70 per cent offshore and 30 per cent in Botswana most asset managers are said to be struggling to find areas of investment in Botswana.
Critics also point to the make up of the board of trustees made up of 18 substantive members; nine from trade unions representing public servants and nine from government together with their 18 alternates and one public officers pension association representative. Some board members, a majority of whom lack the financial acumen to comprehend investment issues confirm that indeed they sometimes endorse proposals and recommendations they barely have a clue about, let alone understand the technical language used in the documents. "To expect them to have some sort of fiduciary duty in managing the pension money is a little bit foolhardy. Even some in the board admit that its size is too big for business decisions despite that there are sub committees to manage different portfolios," said a source.
Meanwhile a recent audit  carried out by the regulator-Non Bank Financial Institutions Regulatory Authority (NBFIRA) on BPOPF has raised a number of concerns regarding their operations. Among others NBFIRA found that some asset managers had exceeded their limits for investment by as much as over 38%. The regulator also expressed concern that Morupisi chairs the board of trustees even though he is a public servant contrary to the rules and regulations of the fund, which state that an independent individual should be appointed to chair the board. This raises questions of conflict of interest.
 BPOPF was registered in 2001. Since inception BPOPF has grown from an asset base of P1.9 billion to P50.9 billion as at end of March 2015. The establishment of the Fund came as a result of government decision to change the Public Officer’s Pension arrangement from a Defined Benefit Pension Scheme to a Defined Contribution Pension Scheme. The Fund has experienced phenomenal growth since inception owing to the overwhelming positive response from the entire public service as public servants exercised their option to join the fund. As is required by the Pensions and Provident Funds Act, the BPOPF has in place management structures. A Board of Trustees is the supreme body that manages the Fund and is comprised of nine (9) Employer Trustees, nine (9) Employees Trustees, one (1) Pensioner Trustee and one (1) Independent Trustee appointed by the Board of Trustees. In total there are 21 Trustees including the Principal Officer. The Board of Trustees has five main sub committees.

NEXT WEEK: Inside NBFIRA audit report, Rampant conflict of interest at BPOPF, How Capital Management Botswana got the BPOPF contract, Millions missing at BPOPF.

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