Gaolathe got into a legal battle with the CMB liquidator when investigators tracing about P600 million that the Botswana Public Officers Pension Fund (BPOPF) and Bona Life allege was mishandled by an asset manager, filed legal cases against Alliance for Progressives president, Gaolathe, and others.
CMB, an asset manager firm now under liquidation shot into the national spotlight in 2018 when the BPOPF alleged its directors had manipulated a 2014 agreement to shift pension funds to unclear investments and companies.
Gaolathe, who is also the Member of Parliament for Gaborone Bonnington-South, first surfaced in the matter from documents subsequently unearthed by statutory managers engaged by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).
He lost the case at the High Court after challenging the notice of “Setting aside and Recovery of a Transaction”, issued againts him by CMB liquidator, Kopanang Thekiso.
On Wednesday this week,before the bench, he was granted leave to withdraw his appeal after a consent order with the liquidator.
The bench of Justices Baaitse Nkabinde, Johan Froneman and Edwin Cameron made the consent order the order of the court.
“The appellant is granted leave to withdraw the appeal,” read the order.
The background of the case is that, CMB liquidators issued a notice in January 2021 to demand an amount of P1.3 million, which was allegedly paid to him from CMB transactional bank account during the period of May 2017 to January 2018. Gaolathe subsequently opposed the notice.
According to court documents, this was after the CMB liquidator in the cause of its duty as the liquidator observed that as at 31 December 31, 2016, CMB's assets were exceeded by its liabilities.
Upon investigation it noticed that a total amount of P1 333,328.00 was paid by CMB to him, during the period running from May 25, 2017 to January 10, 2018.
“That payment, according to the liquidator, was not supported by any proof of any justifiable basis, or supporting documents. Upon interrogation, so the liquidator alleges, Gaolathe confirmed to him that he had indeed been paid by CMB, and further that he had done no work for it during the period in question,” reads the court papers.
In turn, Gaolathe reportedly filed an application prompted by the notice dated January 28, 2021, that was given by the liquidator.
The notice, among other things, indicated that the liquidator intended to set aside the amount of P1 333,328.00 and to recover same from Gaolathe.
He filed the application geared towards explaining why the aforesaid amount should not be set aside and recovered.
In his application, he argued that from the second half of 2017, through to March 2018, he rendered services to a company called Fleming Asset Management Botswana and had been engaged through a letter written by one Tim Marsland, on behalf of Capital Management Africa (CMA), the holding company that had acquired Fleming.
However, the vice president in his defence allegedly said he failed to locate the alleged letter and as to the payments from CMB, he averred that he was satisfied that CMA was the core vehicle, with which Marsland intended to pursue the building of an indigenous financial transnational of which Fleming would be a key driver, subsequently.
“The applicant adds that it was clear that Fleming would not be able to finance itself in the immediate future and, consequently, that CMA would capitalise or facilitate capitalisation of Fleming or Fleming's activities and expenses, including his fees. Applicant states that he justifiably expected CMA to bear his fees until the capitalisation was normalised,” read court papers.
According to Gaolathe he believed that CMB, as a subsidiary of CMA, would do so on behalf of CMA, as doing so is not unusual in corporate management of intra company transactions, and therefore, that payments to him from the subsidiary were legitimate and appropriate,
However, Gaolathe was said to have not adduced any evidence that shows that what happened accorded with an established practice in the corporate world.
According to the liquidator, Thekiso he confirmed that he had authored the notice and served same on Gaolathe, in terms of Section 435 (1) of the Companies Act.
He stated further, that during his investigations he established that Gaolatlhe was paid P166 666.00 per month, between May 2017 and January 2018, from CMB's transactional bank account number
“He says the applicant testified at the enquiry that the above mentioned amounts received from CMB was on the basis that he was engaged by Tim Marsland, the then director of CMB in his (Marsland's) capacity as the director of CMA, as a consultant tasked with managing and assisting to create a Pan-African financial services company out of the already existing Fleming Asset Management restructuring process.,” said Thekiso’s affidavit.
Thekiso also pointed out that Gaolathe had testified that he was engaged as an executive director of Fleming, responsible for strategic management of Fleming, at a remuneration for P2 000 000.00 per annum, meaning he was earning P166 666.00 per month while he (Gaolathe) added that he did not perform any work for CMB.
The VP had lost the case at the High Court on September 22, 2022 when the court found that the liquidator of CMB was entitled to issue the notice, as he did, to Gaolathe to recover the missing funds, as the VP did not disclose any lawful defence to the notice.
