Conflict of interest at BPOPF

SHARE   |   Thursday, 23 August 2018   |   By Ditiro Motlhabane
Johnson and Marenga Johnson and Marenga

Board members fail to declare interest

Board chairman, Solomon Mantswe, conflicted?

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Marenga conflicted in Confianza decision

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Motsamai never declared interest in Kgori Capital deals

Controversy refuses to leave multi-billion pula Botswana Public Officers Pension Fund (BPOPF) with the latest allegations pointing to rampant conflict of interest, particularly among the board of trustees.

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Although BPOPF Principal Officer Boitumelo Johnson has confidently stated that trustees always declare interest before board meetings to discuss investment proposals, she could not corroborate such with specific proof when requested to do so at a recent press briefing. Taking refuge behind confidentiality provisions, Johnson refused to be drawn into a discussion on specific instances when such interest was declared and the trustees who did. She would only say “indeed BPOPF trustees are expected to declare interest and they have done so in the past”. The Board Charter declares at Section 2.8 that “all trustees shall complete (a) trustee declaration of interest form. Furthermore, declaration of interest shall be done on annual basis”. 

Contrary to Johnson's assertion, The Patriot on Sunday has it on good authority that there are many instances where trustees never declared interest even when discussing transactions between BPOPF and companies they have business relationships with elsewhere. Even when such declaration was made the trustees did not recuse themselves to avoid conflict of interest. One such incident, which Johnson was specifically asked about, was the participation of BPOPF trustee Topius Marenga in a special board meeting at the end of July 2018 that rejected the appointment of Confianza Capital as one of the local start-up asset managers who were awarded assets worth P500 million each. Marenga is a member of the Finance and Investment sub-committee of the board who recommended the disqualification of Confianza based on the findings of a legal due diligence conducted by Dr Baatlhodi Molatlhegi and Bokamoso Masilo of Molatlhegi & Associates incorporated by Monthe, Marumo & Co. The legal due diligence was motivated by challenges experienced in the controversial Botswana Opportunities Partnership (BOP) private equity fund entered into between BPOPF and Capital Management Botswana (CMB). 

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It has since emerged that Confianza was disqualified by the BPOPF board because one of its directors had past dealings with Babereki Investments – a company owned by Botswana Public Employees Union (BOPEU) where Marenga is the Secretary General. All members of BOPEU are civil servants who by extension are members of BPOPF. Both Marenga and the implicated Confianza Director  -Don Gaetsaloe- have in the past confirmed to The Patriot on Sunday that the latter provided investment consultancy services to Babereki during the acquisition of multi-million shareholding in Flying Mission Services, and two lodges  -Kadizora camp in the Okavango Delta offering 10 luxury tents, hot air ballooning, safari game drives, mokoro excursions and bush walks; and Saguni Safari Lodge situated in Moremi East in the Okavango Delta. Although BOPEU investment arm -Babereki-claim to have made huge losses exceeding P30 million from the investments, a claim which BPOPF board used to reject Confianza, Gaetsaloe holds a different view altogether.

In his recollection there was nothing wrong with the transactions and the strategic plan he developed and delivered to Babereki as instructed, but rather the biggest problem was that Babereki executive management lacked the business acumen to run a multi-million investment company. This is compounded by rampant interference from the parent union (BOPEU) national executive committee who cannot draw a line between the operations of a business and running a trade union. “The president compromised business transactions and lost out on great opportunities by always claiming that the general membership of the union have to make decisions about how and where Babereki should invest. That is not how you run a business,” he told The Patriot on Sunday about four months ago.

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Sources say ahead of the July special meeting Marenga was eager to have the Confianza bid presented to the board because he wanted Gaetsaloe's company disqualified.

In yet another curious relationship, the ongoing legal tussle between BOPEU and numerous service providers has uncovered what could amount to conflict of interest. Before he fell out with other BOPEU leaders, former Babereki Investments Executive Chairman Andrew Motsamai was a member of BPOPF board of trustees and Chairman of the Investment sub-committee. Motsamai was a close ally of the then Managing Director of Kgori Capital, Bakang Seretse, who has since been deposed after he was implicated in the P250 million National Petroleum Fund scandal. At the time, Kgori (previously Afena) Capital was one of the asset managers allocated lucrative multi billion pula portfolios at BPOPF. Although Kgori Capital invested some of the funds they managed in Babereki which was led by Motsamai, he never declared such interest before the BPOPF board or recused himself from meetings discussing the asset manager. Babereki has also had dealings with Capital Management Botswana.

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Board Chairman

The position of Chairman of the Fund, being a major financial institution requires a fundamental understanding and strong knowledge of finance and financial risk relevant to the institution. In addition to the controversy surrounding the recent election of senior police officer Solomon Mantswe as chairman, the new development has also raised eyebrows in some quarters with suggestions that his ascendence violates the BPOPF Board Charter.

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Section 3 of the Charter provides that the chairman should be independent and free of conflict of interest on appointment. Independence is defined as someone who is not a representative of a stakeholder who has the ability to control or significantly influence management; (and) does not have a direct or indirect interest in the Fund. Observers argue that being a policeman Mantswe is public officer and by extension a member of BPOPF and therefore has a direct interest in the Fund. Alternatively, they add, as an employer trustee he lacks independence because he is a representative of a key stakeholder in the board –government of Botswana.

A similar observation was made by forensic experts from South Africa –Nexus Forensics- engaged by Non-Bank Financial Institutions Regulatory Authority (NBFIRA) in 2014 to investigate compliance issues, the structure and risks at BPOPF. Nexus Forensics concluded and advised NBFIRA that the then board chairman Carter Morupisi, who was the Director of Public Service Management (DPSM), was conflicted since he was a member of the employer and had direct interest in BPOPF as a civil servant. Morupisi, who is the current Permanent Secretary to the President, flatly refused to step down until his term expired in May 2018 when he was replaced, albeit briefly, by Tobokani Rari of Botswana Sectors of Educators Union (BOSETU). Rari was deposed a month later and replaced with Mantswe in a controversial board election that saw BOPEU representative Marenga vote with government trustees.

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Insiders have expressed shock at the eagerness from government’s side to continue to control BPOPF because the Fund belongs to pensioners and active civil servants (deferred pensioners) while government only plays a supporting role. Government makes monthly contributions in respect of each member (pensioners and eligible civil servants) at the rate of one twelfth of fifteen percent of the member’s Fund salary. On the other hand, an eligible civil servant contributes at the rate of one twelfth of five percent of his Fund salary to the Fund throughout his service. A Fund salary means a member’s annual salary, together with other such emoluments and the cash value of such other benefits as the employer may direct provided that for the purposes of the Fund, Fund salary shall be determined on the first day of each month of membership of the Fund.

Meanwhile BPOPF is in the process of finalising the appointment of a Specialist Trustee, Ruta Moses, who was recently given a green light by the regulator (NBFIRA) following a vetting process that lasted several months. 



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