The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is going after P164 million in property and other assets it alleges are illegally housed in a Capital Management Botswana (CMB) associate.
CMB is in liquidation following a long drawn out legal battle with NBFIRA and the Botswana Public Officers Pension Fund over more than P500 million in pensioner funds alleged to have been mismanaged.
The former asset manager’s affiliate, CMB Fund 1 has been sued for liquidation by Bona Life which is claiming P133 million in funds invested as part of the relationship with CMB.
In a report last August, CMB statutory manager, Peter Collins reported that CMB Fund 1’s ownership had been transferred from CMB to Capital Management Africa (CMA) in December 2016 to “keep it out of the reach of the insurance regulator”. CMB’s former major shareholder, Tim Marsland appears to wholly own CMA.
According to documents seen by Mmegi, NBFIRA alleges CMB Fund 1 is holding about P75 million in corporate bonds, about P76 million in unlisted equity and P13.5 million in property.
“The funds in question held by CMB Fund 1 were invested by Bona Life from its annuity book,” wrote NBFIRA’s capital markets director, Juliana White on June 3.
“We note that CMB Fund 1 was a separate legal entity from CMB, an entity licensed by NBFIRA until July 20, 2018 when it returned NBFIRA’s licence.
“NBFIRA opines that the operations CMB Fund 1 is of a non-bank financial institution particularly an asset manager, hence a contravention of the Securities Act.”
White cited Section 3 of the Securities which states that no person shall establish nor carry on a securities business unless licensed as a non-bank financial institution by NBFIRA. Violation of the Section carries a fine of up to P2,500 for each day on which the offence occurs or continues to occur or up to five years in prison or both.
NBFIRA further ordered CMB Fund 1 to pay supervisory levies and penalty interests on the Bona Life assets. The regulator gave the CMB affiliate 14-days to respond and show cause why action should not be taken on the licence issue.
Lawyers representing CMB Fund 1 challenged the NBFIRA’s assertions, saying previously the regulator had fought for CMB’s liquidation by arguing that the assets did not exist.
“This now clearly false statement was one of the pillars used to justify NBFIRA placing CMB under statutory management and later its liquidation by NBFIRA and placing CMB Fund 1 under liquidation,” the attorneys wrote.
“To receive confirmation from the very regulator that sparked same that these assets do in fact exist, contrary to the now obviously sworn affidavits, is deeply concerning and we await your substantial explanation of same.”
The attorneys denied that CMB Fund 1 was in asset management, but rather Bona Life had acquired assets from CMB Fund 1.
“An exchange of value occurred between CMB Fund 1 and Bona Life. Bona Life acquired an asset in exchange for Pula.
“Bona Life did not give CMB Fund 1 nor CMB funds to manage,” the attorneys stated.