Kweneng Council in P15m investment loss fears
Mpho Mokwape | Friday October 9, 2020 16:34
The amount is reportedly petitioned before the High Court for an order to be placed under provisional liquidation.
The council through the Letlhakeng Sub- District Council is reported to have invested the money on Dec 17, 2019 with the sole purpose of cashing out on an investment return, estimated around P300,000 at a quoted interest rate of 8.25%.
According to documents seen by this publication from Kweneng Council, the investment company has not been able to honour the payment, both the principal amount and interest that was due to the council after the investment following difficulty experienced by the company and closure by the Non Bank Financial Institutions Regulatory Authority (NBFIRA).
The council explained that the equity company was invited together with other seven licensed banking and non-banking financial institutions on December 13, 2019 to quote for a fixed investment through the arrangement.
“On the December 16, 2019, Letlhakeng Sub Council Investment Panel convened to consider the investment proposal from the companies. Upon appraisal of the quotations submitted by the five institutions, Blu Thorn Fund Managers emerged as the preferred investment company at its quoted interest of 8.25% for an investment amount of P15m,” read the papers.
The investment made by the Letlhakeng Sub Council was reportedly for a period of three months, which was supposed to have matured on March 10, 2020 and the P15m was made up of P10m from capital account while P5m was the recurrent account.
However, according the papers, the company failed to honor the agreement at the time the investment matured subsequent to which the sub council has been engaging the fund managers since March 2020.
“The two parties met on March 10, 2020 and it was at this meeting where Blu Thorn representatives informed the sub council about their temporary closure by the regulator, NBFIRA,” said the council.
The council also pointed out that at the same meeting, the company also informed the sub council that it was challenging its closure by NBFIRA in Court and that it was expecting a judgment.
However, the council said on April 2, 2020 the sub council received a correspondence informing it about the appointment of Judge Peter Collins as the statutory manager of the fund manager company following which the sub council then decided to present the issue to him and through a letter he assured the sub council he was aware of the investment made while indicating that he was still investigating the matter and would report to NBFIRA as the regulator.
The council noted that as of date with the news of liquidation it is engaging its legal team to explore the possibility of recovering the funds through a Court process. Furthermore, the council has taken steps to make sure that all investment undertakings made at the sub district are reported monthly to the Headquarters Investment and Council Management as well as that the Finance Committee and the council enters into financial agreements with financial institutions as and when investment decisions are made.
Meanwhile, the council in its letter made note that it was not the time the sub council invested with the fund company as it had previously done so in 2018 without any problems therefore it has faith in such instruments.
“The company has always offered interest ranging from 6.5% and 8.25%. In total the sub council has made at least 10 investment transactions with the company ranging between P10 million and P20 million and just before this outstanding investment the sun council invested P20 million at an interest rate of 8.25% for 91 days on August 1, 2019 and the investment earned the council P400, 319.63 at maturity,” read the documents.