Embattled asset management firm Capital Management Botswana (CMB) is under intense scrutiny from graft busters at the Directorate on Corruption and Economic Crime (DCEC), fresh information unearthed by The Patriot on Sunday shows. The company was reported to DCEC by Botswana Insurance Fund Management (Bifm)Chief Executive Officer Neo Bogatsu on January 30, 2018 following an attempt to withdraw P71 million from a Botswana Life Insurance Limited (BLIL) account managed by Bifm at First National Bank Botswana (FNBB). The letter, written on a letterhead bearing Bifm Botswana Limited logo, is addressed to one Tsholofelo Bareetsi at DCEC, but also has a Non-Bank Financial Institutions Regulatory Authority (NBFIRA) stamp confirming receipt on 01 February 2018. Bifm is an asset management company and currently has a portfolio management agreement with BLIL for management of Botswana Life annuity assets. The portfolio management agreement previously existed between BLIL and Capital Management Africa (CMA)- a 70% shareholder in CMB (the other 30% is owned by Rapula Okaile) –but was terminated in 2013 and all assets belonging to Botswana Life were transferred to Bifm Botswana for management and oversight. Bogatsu was alerted to the attempted fraud by Andre Roux, an Executive of Sanlam who also sits on Bifm board of directors, on January 22. Sanlam is a South Africa conglomerate, which includes Botswana Insurance Holdings Limited (BIHL) under its stable of diverse portfolio of investments. In turn, Bifm Botswana and BLIL are subsidiaries of BIHL. Roux revealed that he had received a tip off about a zero coupon deposit that was left under the CMB banking profile when all other deposits were transferred to the Botswana Life banking profile following the termination of the mandate in 2013. Roux was warned that one of the Directors at CMB, Tim Marsland, was planning or had already withdrawn funds from the FNBB account currently managed by Bifm.
The following day, January 23, Bifm as managers of the BLIL annuity book (which the zero deposits fall under) contacted FNBB to verify the zero coupon deposits. Surprisingly, the tip off turned out to be true when it was discovered that deposit number 71314474380 was not under either BLIL or Bifm banking profile. Nonetheless, none of the zero coupon deposits was found to have been withdrawn. However, Sanlam internal auditors discovered that one of the deposits (zero coupon deposit number 71382861238) statement from FNBB received on 17 February 2015 shows some inconsistencies and did not seem to correlate with what the bank had confirmed and what was in Bifm's books. Bifm immediately launched an investigation into the anomalies, and Bogatsu accompanied by the Senior Operations Officer Boikobo Mmualefe visited FNBB on Friday 26 January 2018 for a close look and resolution of the noted anomaly. The duo was satisfied with the explanation given by FNBB that the anomalies were caused by system issues they had back in 2013. During discussions with FNBB staff, Bifm executives were alerted and shown an instruction from CMB for an early redemption of zero coupon fixed deposit number 71382861238 into the asset managers' account number 621 000 233 58. The deposit was first brought to FNBB on 11th May 2012 at a purchase price of P50 million with a nominal rate of 8.55%, and a maturity date of 11th May 2022. The early redemption amount for the deposit is estimated at P71 million. "The signatories on the request for early redemption are the two directors of CMB being Rapula Okaile and Tim Marsland. The directors know that the money belongs to Botswana Life (their former client) who are now a Bifm client and that the management of the deposits are under our care. It is in the above basis that we are treating this attempt as a crime and hence reporting it to the DCEC. We seek your intervention and guidance on the matter,” reads part of the letter signed by Bogatsu, which was copied to Chief Executive Officer of Botswana Life.
Carr spills the beans
Meanwhile, in an exclusive interview with The Patriot on Sunday, Rhys Carr (a former shareholder and director at CMA) paints a gloomy picture about the company he previously co-owned and its directors, particularly Marsland. He says he resigned the directorship of CMB and walked away with nothing because Marsland was continually pushing deals that may even border on being unlawful. Carr says he left both CMB and CMA in December 2015 without any pay-out and was happy to walk away with nothing rather than be associated with the business any longer. He reveals more: "I was ambushed at a board meeting by Rapula, Siqo Mphoko (the son of former Vice President of Zimbabwe) and Marsland, who pushed through a variety of resolutions aimed at giving Marsland total control for life of the company. Marsland was involved in a variety of schemes that I did not agree with and he also had plans to do things that I believed to be illegal". Citing examples of Kawena and AGILE University as both start-up businesses formed by Marsland's friends, Carr accuses his erstwhile partner of seeking to take stakes through CMA in most companies that he wanted to invest clients funds in. "Taking personal stakes in invest companies is specifically prohibited by BOP mandate, unless directly approved by the BPOPF Advisory Committee. The fund is barred from investing in listed companies and start-ups so I do not know how they were able to get the Wilderness Safair’s, Kawena investment and the Agile University investment (both start-ups through) through the BPOPF," he said. Emphasising that he does not have a relationship with CMB or any of its shareholders, Carr describes the conduct of the asset management company and its directors as dishonest. "I would have nothing to do with them. I told the BPOPF that they would lose their money if they remained invested with Marsland but they did not heed my advice. I had a meeting with BJ Molefe in October of 2016 where I warned her that Marsland was not to be trusted and that they would lose whatever money they had invested in the Botswana Opportunities Partnership (BOP), the BPOPF private equity fund managed by CMB, instead of listening to what I had to say they gave BOP another P380m to manage," he reveals. Molefe, the principal officer of BPOPF, counters that claim saying she was not there in 2014 when CMB was awarded the contract. "I have subsequently been made aware of warnings, but it is not formal stuff in writing. I have also heard that the board had been warned at the time. I have no knowledge of any executives in the BPOPF management working with service providers to fleece the fund of money. I have a team of experts that I am working with, but I have no knowledge that anyone of them is implicated in any wrong doing regarding the appointment of asset managers," she said. The latter denial comes after The Patriot on Sunday specifically asked Molefe if the pensions behemoth she leads is aware of allegations that some within the board of trustees, its subcommittees or executive managers could be colluding with unscrupulous asset managers to fleece BPOPF of millions of pula in dubious transactions. For an extended period CMB was found to have successfully managed to get away with multi-million drawdowns that did not only far exceed set limits (ceilings) but also violated the terms of the BOP partnership. Carr had specifically named one Director in BPOPF executive management, a cabinet minister and some senior Government officials accusing them of having a suspicious relationship with CMB directors that included talk about secret bank accounts in Mauritius. BPOPF board chairman Carter Morupisi has also, in a previous interview in December 2017, denied any connections with CMB Directors. He even promised to avail his bank accounts to DCEC agents for perusal to clear any suspicion. "You also need to look at the composition of the BOP investment committee. As far as I know the investment committee comprises the board and a CEO of a local leading stockbrokerage firm, who facilitated the purchase of Wilderness Holdings shares at Botswana Stock Exchange for CMB. The stockbroker cashed big from the transaction," said Carr. According to Carr immediately after his departure from the company, Grant Thornton fired CMB, CMA and the BOP as an audit client because they were not prepared to bear the risk associated with the companies without him being there to watch over things. Carr was a director of CMB (previously Bifm Capital) from December 2004 until December 2015, when he resigned as a director and gave back his shares. Historically, his shareholding was 50 per cent. "I wanted nothing more to do with the company. From 1 January 2016 I have had nothing to do with the company either as a shareholder or director. I was paid nothing for my shares when I left and I was happy with this, as I just didn’t want to be associated with Marsland or the business any longer. Our split was very acrimonious as I was not happy with the way Marsland wanted to run the business and I did not approve of the transactions that he wanted to put through the fund". Asked to name the other Directors/ shareholders in CM and their shareholding, Carr says to the best of his knowledge they are Marsland, Siqo Mphoko (son of former Zimbabwe Vice President) and Okaile. "Marsland owns 100% of CMA which in turns owns 70% of CMB, the other 30% of CMB is theoretically held by Okaile, but on behalf of who he holds this I do not know. Marsland and Rapula also have a very close relationship with (a senior Management Executive) at BPOPF. All of the personal stakes that Marsland takes in investee/portfolio companies (like 25% of Bona Life, AGILE University, Kawena) when he invests with BPOPF money, are directly held by CMA," he revealed. Apart from being an asset manager at BPOPF what other business dealings is CMB involved in in Botswana, we asked Carr. He responded: "CMA also owns Flemings and CMA has taken a stake in some of the investments it has made. CMA effectively uses BPOPF money to invest in businesses through the BOP and then takes personal interests in the portfolio companies directly. This is highly unethical and unless properly disclosed illegal".
It has also emerged that at the same time that Bifm filed their complaints the Chief Executive Officer of Bona Life, Regina Sikalesele-Vaka also wrote numerous letters to NBFIRA and DCEC reporting CMB and its directors. Responding to the accusations; CMB has slapped Vaka with a letter of demand for P650 million accusing her of mismanaging and collapsing Bona Life with her "unlawful actions". In a letter dated 9 January 2018 to NBIFRA Vaka claimed that CMB manages P133 million of Bona Life’s assets, but CMB denies this insisting that no such contract exists. In addition Vaka told the regulator that CMB has consulted its attorneys to liquidate CMB. "This, to your knowledge, is false. Your misrepresentation was purely designed to create the impression that Bona Life’s investments would be at risk, something that is far removed from the truth," reads a letter from CMB lawyers. CMB also contends that Vaka misled the regulator by claiming, in a letter dated 11 January 2018, that they were served with a liquidation notice which to her knowledge is false. "The notice was served on CMBF1, an entity unrelated to CMB. Your misrepresentation was purely designed to sow panic about CMB so be able to unlawfully draw NBFIRA into your personal dispute," CMB wrote. CMB also dismiss as false, allegations contained in a letter dated 12 January 2018, where Vaka said CMB does not appear to have funds available to complete transactions. CMB counters the claim: "Firstly, Bona purchases an asset from CMBF1 secured by an underlying asset. It did not purchase the asset itself. Provided CMBF1 is not in default, Bona has no say over the management of the asset. Secondly, the funds were available. The fact is that the asset which is referred to, being Storage Solutions, had financially beneficial loans from FNBB. CMBF1 was able to invest the funds at a higher rate of interest than was being charged by FNBB, thus resulting in a profit for Storage Solutions. The improper interference by Bona resulted in a loss of income for Storage Solutions". In yet another letter dated 22 January 2018, Vaka claimed that CMB is Bona Life’s asset manager and that CMB has been served with a notice of liquidation. "Both these representations are false. These misrepresentations were made solely for the purpose, at your instigation, of having CMB placed under Statutory Management, to the prejudice of CMB," reads CMB response signed by Okaile, further; adding that Vaka's other letter of 24 January 2018 contains various representations which are also false.
Seeking to set the record straight CMB says Vaka's allegation that the statement from Bona Life requesting for documentation were made and not delivered is false. CMB said Bona Life does not have an automatic right to the information it claims to have requested. Secondly, Bona was vague and evasive as to what information it was trying to obtain, reads part of Okaile's letter maintaining that all relevant information was provided. The audit queries resulted from the lack of expertise within Bona. CMB addressed the concerns the auditors raised and provided them with the documents requested. The auditors pronounced themselves satisfied. After that pronouncement, Bona met with the auditors and altered the facts, thus resulting in the auditors qualifying the accounts. Bona did not request any further clarification from CMB to address whatever false information Bona provided to the auditors. On the face of it, it would appear that this was a deliberate strategy to try to damage the reputation of CMB. CMB further said CMBF1 holds no assets of the BPOPF, and at no point was Bona Life told assets would be transferred to it. "The contracts signed by Vaka, and the legal opinion obtained at the behest of Vaka from DLG, make this very clear. The history of Lot 226 is well documented and nothing was hidden about this asset," said Okaile, further explaining that no asset management functions are conducted through CMBF1 and no funds were removed from CMBF1, other than funds applied in the ordinary course of business. Okaile further reveals that Vaka was deeply involved in discussions to merge CMB with and then possibly to inject Fleming into Bona Life. Numerous attempts to reach Marsland for a response on the allegations against him were unsuccesful on his two South African and one Botswana mobile numbers. Either the cellphone was not answered or reportedly not available.