Brink family wields power in BBS crisis
Mbongeni Mguni | Friday April 9, 2021 18:26
BBS shareholders are set to meet on April 30 where five new nominees will face off against five current directors at the Annual General Meeting (AGM) in an election for the board. Shareholders, including the Brinks, will have to choose between the current directors and the five new nominees. The incumbent directors whose terms expire on April 26, have put themselves up for re-election but at an April 1 meeting, also resolved to extend their terms by 90 more days after April 30, “so that due process may be concluded”.
Whichever board wins the election on April 30 will lead the BBS and consequently, its shareholders, into becoming the country’s first indigenous commercial bank. The building society is scheduled to reapply for a banking licence and begin commercial banking activities between October and December this year.
The drama at the building society kicked off this week, after board chair, Pelani Siwawa-Ndai wrote letters dismissing veteran MD, Pius Molefe and company secretary, Sipho Showa. Management at BBS said the dismissals were because Molefe had challenged the extension of board tenure as unlawful.
Molefe and Showa have since engaged legal counsel who have written to the board stating that the dismissals are void as the meeting held to decide on them was unlawful.
The two executives have continued reporting for work, amidst media reports of rising tensions as directors have allegedly been kept at bay in order not to lock out the pair.
Meanwhile, according to CIPA records, Derek, Rita and Lerie Brink hold 17.3% equity in BBS Limited and as a voting bloc, are even more powerful than institutional shareholders such as the Botswana Privatisation Holdings (14.9%) and the Botswana Police Savings and Loans Guarantee Scheme (9.2 percent).
“Unless the legal papers that have thus far been filed result in a Court case and ruling, the April 30 AGM will go ahead with the various shareholders taking up positions,” an insider close to the latest developments told Mmegi yesterday. “It is likely the board, given its resolutions, would want a ruling ahead of that to stop the AGM from being an elective one.”
The new nominees set to challenge the five current directors include Duraiswamy Kalyanaraman, Lebole Mokoto, Bernard Mzizi, Colm Patterson and Victor Ramalepa. Kalyanaraman is a local chartered accountant, while Mokoto is Debswana head of human resources. Mzizi is country head of corporate banking at BancABC Botswana, while Patterson was Letshego’s chief financial officer until 2019. Ramalepa is a prominent local attorney and managing partner of Ramalepa Attorneys.
Insiders said the five new nominees have directly similar and competing skill sets with the five directors whose terms end on April 26, setting up a tight battle at the AGM. The five directors whose terms are ending and who have put themselves up for re-election include James Kanyuka, Richard Molosiwa, Kgalalelo Monthe, Michael Tlhagwane and board chair, Siwawa-Ndai.
Besides the five spots up for grabs, the BBS board has three other directors being Molefe, capital markets veteran, Geoffrey Bakwena and former Finance Ministry director, Elaina Gonsalves. Speculation around the BBS crisis has led to some analysts suggesting the Brink family, as powerful shareholders in the building society, are behind some of the nominees ready to battle on April 30. Kalyanaraman, who is said to have links to the affluent family, is said to be due to challenge Ndai for chairmanship.
Other insiders following the latest developments however said four of the nominees were proposed by “various shareholders” while one of the nominees had expressed interest to be considered for possible appointment. “It is important to note that you don’t need to be a shareholder to be considered for appointment to the board,” the insider said.
Ahead of the vote, management has fired salvos at the five directors allegedly seeking to extend their terms. On Monday, the building society’s management, in an unsigned statement, took aim at the directors. “The five retiring directors being Ms. Siwawa-Ndai, Mr Kamyuka who has been on the board for more than 10 years, Mr Tlhagwane who, in any event, is barred by Bank of Botswana regulations from serving on the board of the envisaged commercial bank because he works for a parastatal entity MVA Fund, Mr Molosiwa and Mr Monthe, appear to have expected nominations from other parties not to be accepted so that they can be re-elected without opposition.
“As explained by management at the said meeting, neither management nor the board have the authority to decline nominations submitted by shareholders or other interested parties in line with the Companies Act and the BBS Limited Constitution.”
Observers following the developments at BBS have questioned how the board allowed the AGM notice to be published, indicating the new nominees challenging the current, when it (the board) could have used its numerical strength to overrule management. Molefe is the only executive member of the eight-member BBS board, with the balance being non-executive. “The board could have simply resolved this by voting down the elective AGM using their numbers against the MD,” an analyst said.
“Why let the AGM agenda with new nominees go out, then hold another meeting resolving to extend terms, then get into this situation with the MD?
“It appears there are other issues at play here which the public is not seeing. It is also very bad for the corporate governance picture in Botswana.”
The Botswana Stock Exchange suspended BBS from trading on Monday and said the decision would stand until satisfactory clarification on the goings-on at the building society is provided. Still on the matter,, Mmegi is authoritatively informed that Bank of Botswana (BoB) seniors met with BBS management on Thursday to probe the crisis at the building society. The central bank is not directly a regulator of the BBS, but rather has an “agreement” with the Ministry of Finance and Economic Development under which it monitors the building society. “The meeting was to appreciate the developments and possibly see what actions can be done,” separate sources told Mmegi yesterday late afternoon.
The BBS oversight institutions include the Finance Ministry, the BSE as a listed entity and the BoB to a degree. Mmegi is informed that as a last resort, the Finance Ministry could engage the central bank to assert control over BBS for an interim period, should other solutions such as the legal recourse sought by management fail. By press time yesterday, the board was reportedly yet to respond to the legal letters filed by Molefe and Showa.