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’.
The first session of the final creditors’ liquidation meeting of Capital Management Botswana (CMB) adjourned last Thursday to April with the High Court Master, Chipo Gaobatwe ruling that CMB directors are in contempt of court. When wrapping up, attorney for the Liquidator, Peter Collins told the Court Master that he is still left with some people who must give testimony amongst them Chief Executive of Bona Life, Regina Vaka, but will appear on April 25 when the meeting resumes.
Collins said another person that must testify is Moitsheki Lekalake who came to the court briefly and disappeared, but did not give the liquidator his particulars. He then requested the Master to write a letter referring him to the Attorney General because to refuse to come when subpoenaed is a criminal offence.
Collins said that CMB directors Rapula Okaile and Tim Marshland as well as their attorney, Gabriel Kanjabanga have contravened Section 430 of the Company’s Act. Kanjabanga was subpoenaed in his own right to explain his involvement because the liquidator discovered that he was involved in his official capacity in some transactions. The above section states that any person summoned by the Master or other officer in terms of subsection (3) or (4) who fails without valid excuse (a) to attend any meeting to which he has been summoned; or (b) to produce any book or document or extract from any book or document in his possession, custody or control, shall be guilty of contempt of court and liable to a fine not exceeding P1,000 or to imprisonment for a term not exceeding 12 months or to both.
Collins requested the Master to refer them to the Attorney General saying something must be done lest the integrity of the court, the office of the high court master and the meeting, is compromised. Collins told the court master that he has proof that Marshland has been served with summons to appear, he said Marshland contravened Section 512 and 513 of the Companies Act. He said he has an affidavit deposed by one Van Wyk from South Africa who delivered the summons to Marshland and explained that Marshland said he was not prepared to sign. Collins quoted the section which states that in every winding up of a company unable to pay its debts, all the directors of the company, including, if the Master so directs, in writing, any person who has been a director within a period of six months preceding the date on which the winding up commenced, shall attend the first and second meetings of creditors and every adjourned first and second such meetings.
The directors shall also attend any subsequent meeting of creditors if required to do so by written notice from the liquidator. The Master or other officers in the public service who is to preside or presides at any meeting of creditors may summon any person, who is known or, on reasonable grounds, believed to be in possession of any property which belongs or belonged to the company or to be indebted to the company or any person who in the opinion of the Master or such other officer may be able to give any material information concerning the company or its affairs, whether before or after the commencement of the winding up, to appear at such meeting or adjourned meeting for the purpose of being interrogated under section 431.
He requested the Court Master to write a letter referring the concerned parties to the Attorney General where they will be made to face criminal charges. In her ruling High court Master Gaobatwe ruled that Okaile and CMB directors are in contempt, but she finds it difficult to refer Okaile to the Attorney General as he delivered a sick note to the court and is not sure if he has recovered. She said she will write a letter for both Lekalake and Marshland to be sent to AG Chambers.Attorney for NBFIRA, Sipho Ziga requested the court Master to furnish them with the official court record in summary form of the first meeting as he has to present it before the high court.
To that the court Master Gaobatwe agreed and promised that the summary requested from her office will be available on February 28th. She ruled that new creditors though allowed will not be able to submit during the second meeting billed for April 25- 26, but will do so at a later date to be communicated.
The Non-bank Financial Institutions Regulatory Authority (NBFIRA) has lifted the temporary closure on Bona Life. Regina Sikalesele-Vaka, the founder and Chief Executive Officer (CEO) told media that a lot of what has been troubling the company in 2018 has been resolved.“We have gone through a year of turmoil and that has failed to stop us,” said Sikalesele-Vaka, adding that the company has attended to the bulk of issues that lead to the company being dysfunctional.
Last July, the non-bank financial institutions regulator temporarily shutdown Bona Life due to shareholder fights. The development lead to Bona Life accounts being closed and banned from advertising and selling new insurance products to the public, threatening the life of the company.
With aspiration to become a leading financial institution, Bona Life’s misery started in October 2017 when Capital Management Botswana (CMB) and Botswana Public Officers Pension Fund (BPOPF) fought over shares. The two own 40 percent shares in Bona Life through an investment vehicle named Botswana Opportunity Partnership (BOP), this lead to a trail of developments such as relationship breakdown between CEO and CMB.
In addition, Bona Life board could not quorate following the dispute. The current status is that CMB has been expelled from BOP, resolving the ownership dispute and CMB will no longer be a shareholder in Bona Life after its liquidation. Meanwhile, Bona Life has embarked on a restructuring of its portifolio which is expected to be concluded by March and Sikalesele-Vaka remains optimistic and intends to list the company on the local bourse.“Listing has always been a primary thing for us to achieve,” said Sikalesele-Vaka.Bona Life is the first local citizen owned insurance company and according to Sikalesele-Vaka the company was this year facing a sophisticated coup attempt by CMB.
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.