Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Chief Executive Officer, Oaitse Ramasedi has stated that the troubled Bona Life has been placed under Statutory Management in terms of Section 47 of the Insurance Industry Act, 2016, effective January 20.
The act stipulates that an inspector may at any time check whether the institution is complying or has complied with the financial services laws and the conditions of its license. Ramasedi stated that Paul Masie has therefore been appointed the Statutory Manager for Bona Life. “By virtue of his appointment the Statutory Manager is in full control, management and authority of Bona Life forthwith, ” said Ramasedi.
Last week Bona Life Founder and Chief Executive Officer, Regina Vaka-Sikalesele resigned from the position. Bona Life stakeholders are therefore advised to refer all queries, complaints and/or claims pertaining to Bona Life to the Statutory Manager at the offices of Bona Life. Vaka-Sikalesele holds 25 percent equity, while the Botswana Public Officers Pension Fund indirectly holds 40 percent and staff 10 percent.BPOPF members account for 85 percent of Bona Life and are owed up to P700 million.
Bona Life’s misery started in October 2017 when Capital Management Botswana (CMB) and Botswana Public Officers Pension Fund (BPOPF) fought over its shares. The two own 40 percent shares in Bona Life through an investment vehicle named Botswana Opportunity Partnership (BOP). This led to a trail of developments such as relationship breakdown between the CEO and CMB.
In a statement late Wednesday, NBFIRA said Bona Life’s financial position as per the latest records available with NBFIRA based on value of assets at that time, indicate it’s ability to meet its financial obligations to its annuitants and policy holders. The Authority said insurers are required to hold the greater of the Minimum Capital Target (MCT) or Prescribed Capital Target (PCT).Bona Life presently meets the MCT, which is the lowest amount of capital in absolute currency terms that an insurer is required to hold for licensing and ongoing operation.
“On the other hand, with regard to the PCT the Authority has previously requested Bona Life to seek a capital injection in order to meet the PCT. The PCT is the amount of assets in excess of liabilities that an insurer must hold to cushion against negative business experience that could result in premiums and technical reserves not being sufficient to cover the losses suffered. PCT also serves as a regulatory warning system,” said NBFIRA.
‘To date Bona Life has not secured the required additional capital to meet the PCT. However, in spite of this, Bona Life’s position as mentioned above appears to enable it to meet its financial obligations to its annuitants and policyholders. This may however not be sustainable in due course should the asset values change and the risk exposure continue to grow without a corresponding capital injection’.
Botswana Public Officers Pension Fund BPOPF has failed in its court bid to stop Capital Management Botswana (CMB) from implementing its decision to eject BPOPF from the partnership Fund known as Botswana Opportunity Fund.
At the centre of controversy is whether the CMB who are a General Partner and Fund Managers of BPOPF’s P880 million have breached the Partnership Agreement (PA) as alleged by BPOPF which claims that since late 2017 it has been requesting information from CMB to which it is entitled under the PA, but nothing has come forth.
The information includes but not limited to audited financial statements of the Fund, in the form prescribed by the PA. BPOPF states that it later appeared that there is a series of breaches of the PA and the Advisory Management Services (AMS) agreements by CMB. Boitumelo Molefe, the Chief Executive Officer of BPOPF states in her affidavit that, “those breaches were material, serious and mostly ongoing, and are incapable of being remedied. Thus CMB failed to act in the best interest of the Fund and its investor, BPOPF.”
But CMB counter argues that they managed the Fund well and would like to continue managing the Fund. BPOPF brought the matter before Justice Godfrey Radijeng on an urgent basis on 27th Decenber 2017 where seasoned Attorneys were lined up. Attorney Gabriel Kanjabanga appeared for CMB, while BPOPF was represented by Advocate S.D Van Nierkerk of South Africa appearing with attorney TC Dumba of Minchin and Kelly
BPOPF argues that CMB has ejected it from the Fund of which it was a legitimate limited partner and this through the arbitrary and completely unjustified designation of the BPOPF as a defaulting limited partner. It has been sent off with only a fraction of what it invested in the Fund, with no accounting provided for an enormous discrepancy between its investment and the net proceeds paid out to it.
In his order issued on December 27, Justice Radijeng dismissed the application with costs for want of urgency. “The application is not urgent and there will be no need for CMB to address the court on points in limine,” he ruled.
Part of Justice Radijeng’s ex tempore ruling states that the two parties entered into a partnership agreement in November 2014 by which BPOPF invested in a private equity (B0P). BPOPF was the limited partner while CMB was appointed General partner. BPOPF submitted that during the period June 2015 to June 2016 there were five (5) drawdown notices issued by CMB by which BPOPF paid P447.50 million of the total P880m committed. BPOPF averred further that during the course of 2017 certain events and facts were uncovered regarding the manner in which CMB was operating the Fund which caused BPOPF grave concern. The BPOPF commissioned its own investigations into the actions of CMB regarding the Fund. The outcome of the investigations was that CMB had and continued to commit a series of material breaches to the PA and AMS placing the Fund and its assets in jeopardy.
On the determination whether the application meets the urgency test, CMB submitted that BPOPF is complaining of alleged breaches by CMB that it has known for a considerable time since the parties contracted.
“I agree with CMB that BPOPF has sat on their rights and failed to move with expedition when the chronology of the event set out and complained about as forming the background to the application were within BPOPF’s power to act on”, said the Judge.The parties’ relationship started in 2014 when BPOPF decided to invest for the first time in private equity investments, specifically unlisted private companies in the country and elsewhere in Southern Africa. In her affidavit filed before the court Molefhe states that with no prior experience in investments of this nature, BPOPF sought a professional private equity investment manager to assist it in making such investments.
This is the stage where CMB presented itself to BPOPF as a private equity investment manager that was in the process of establishing a new equity fund and the final deal between the two was sealed in November 2014 through a Partnership Agreement.
Under the Agreement, CMB was amongst others appointed as the Fund Manager responsible for managing the assets of BPOPF. Since the formation of the Fund, BPOPF remains a limited partner having committed P880 million to the partnership. BPOPF argues that it is the sole investor of the partnership and accordingly it is the beneficial owner of the vast majority of at least 99 percent of the assets of the Fund. Its interest and that of the 166, 879 members are inextricably bound up with the Fund
Molefe argued in her affidavit that CMB has continuously avoided and ignored all requests for clarity in its failure to respond to BPOPF’s letter of 18 December 2017. Further CMB is no longer acting in the best interest of the Fund, but rather in its own, self-serving interests, with significant harm and prejudice to the BPOPFand its members.
She protested that CMB although CMB has been removed as the general partner of the fund, it continues to act as if it is still the partner, and has purportedly taken radical and significantly prejudicial steps and actions in doing so.She said that whilst a payment of P50 million had been made to BPOPF by CMB on 24 November 2017 for the next proceeds of its interest following the alleged sale, the transfer was not accompanied with any letter notifying BPOPF of the payment.
She said it was only on 12 December 2017 when BPOPF did its accounting reconciliation that payment came to light. Molefe's affidavit says that the partnership with CMB was BPOPF’s first foray in investments of this nature. With no prior experience in this field of investments BPOPF, and not being fully aware of all the risk associated with such investment structure, relied on CMB and legitimately placed its trust in CMB that it would abide by the terms of the agreement and discharge its fiduciary duties towards the Fund and BPOPF.
Policy framework is still not implemented because the Attorney General Chambers is still proposing the amendment of the PPAD Act- PPP Coordinator, Orono Otweyo
The private sector has urged government to increase its pace on implementing the Public Private Partnership (PPP) model since the policy was adopted in 2009.
Commenting in a panel discussion during the Stanbic Bank Botswana PPP conference on Wednesday, Botswana Public Officers Pension Fund (BPOPF) representative said the Ministry of Finance and Economic Development (MFED) should improve their pace on its processes.
“The policy has been adopted in 2009 and it is still not implemented because we are still waiting for the amendment. We want to support the government and we have the money to invest but we end up taking our money offshore because we need correct legislation,” he said.
Bona Life chief executive officer, Regina Vaka said the private sector is ready and eager to invest in government infrastructure but they are just waiting for the action plan. “Government should improve its pace. By now we should be hearing about the action plan on this PPP project since it has been adopted in 2009”.
Ministry of Finance and Economic Development, PPP Coordinator, Orono Otweyo said the policy framework is still not implemented because the Attorney General Chambers is still proposing the amendment of the PPAD Act. “Currently the proposal is at the Attorney General Chambers so we don’t know when it is going to be approved,” he said.
Otweyo said the government’s responsibility is broader because it must protect the public assets so it takes time to implement some projects. He said PPP is a complex project so the government ensures that right procedures are put in place before implementation of public projects.
“We appreciate that private sector is ready to partner with us but the government responsibility is broader. We have to make sure that correct measures are in place before starting any project. This is to protect the public assets,” said Otweyo.
He explained that the role of the MFED is to support government in delivering the PPP but they need the private sector to come on board. “We are already moving as the government, it might not be faster as expected. We need to work together with the private sector as a team,” said Otweyo.
Standard Bank’s Energy and Infrastructure Affairs Executive Vice President, Aadii Cajee said the success of the PPP project requires political commitment. “It is important for the ministry to have political commitment to drive the PPP project. In Kenya it became successful because the President was pushing it,” he said.
He said the size of the market and the costs incurred under feasibility studies also determine the success of the project. Currently MFED is in consultation with other ministries to identify potential PPP projects. The ministry has indicated that most infrastructure projects contained in the 11th NDP are potential PPP projects.
A pilot project, being the Office Accommodation for the Ombudsman and Land Tribunal, were implemented before the adoption of PPP Policy. The P55 million project was constructed for 16 months and handed over in July 2008 under a 10-year concession, which ends in July 2018.
Botswana Public Officers Pension Fund (BPOPF) Chief Executive, Boitumelo Molefe this week disclosed that the multimillion Pula Hilton Garden Inn Hotel project will drive citizen economic empowerment.
Addressing the media on Tuesday, Molefe said the Hilton Hotel project will seek to contribute to economic empowerment by way of engaging locals at all the stages of the project. This includes management control and preferential procurement “With like-minded entities we believe that we can generate profitable projects for our members,” said Molefe.
The BPOPF boss said the project team has exciting events ahead such as the artwork competition, which has been opened to local artists as well as a future viewing of a mock-up room. “The local economy has shown growth and we believe that as the private sector we should lead in economic growth by coming up with innovative investments, especially in the infrastructure space,” said,” Molefe. The project was until this week under the care of Fleming Asset Management at a cost of P300million. However, Molefe said Fleming was expected to have handed the project to Messidor this week.
“We have been working with Fleming on transitioning the development of the Hilton to our Property Manager Messidor. This is a critical and large project and it was critical that the transition is as smooth as possible Messidor is now working with us and we hope to build a very good property portfolio with them,” said Molefe.
She explained that the project team currently in place will not change; the only change will be the transition from Fleming to Messidor as a result of our termination of the Fleming mandates. Under its new project manager the fund has invested P1.5 billion.Hilton Garden Inn Gaborone will feature 150 guest rooms offering signature bedding, a health club and outdoor swimming pool as well as food and beverage options including an all-day dining restaurant, bar and 24-hour Pavilion Pantry.
The hotel, which is constructed at the new Central Business District (CBD) in Gaborone at a cost of P300 million, is expected to be in operation early 2018. BPOPF has also boosted its property portfolio after it bought two Francistown properties from PrimeTime for P71 million last year.
On other investments alternatives Molefe said investing in alternative investments to listed equities, bonds, property and other listed investments is progressing well. “We are currently drawing up the regulations that will define the detailed processes. The local economy has recently shown positive movement as a result of stimulation of the economy by Government,” she said.