10 Apr 2019

Botswana Defence Force (BDF) Welfare Trust Fund membership is optional and there is no legal instrument authorising compulsory contribution.

Minister of Defence, Justice and Security, Mr Shaw Kgathi says individuals who had opted to join, give the Fund the authority to deduct monthly welfare savings.

The Trust Fund, he said, had been registered as a friendly society by Non-Bank Financial Institutions Regulation Authority (NBFIRA) and in terms of section 345 of the BDF Act of 2018. 

The Commander was empowered to establish and maintain the Welfare Trust Fund by appointing accounting officer or board to be accountable for such funds.

Mr Kgathi disclosed that ‘as at April 5, the Trust held an account with First National Bank Botswana in the amount of P37 480 213.92 and another account with Stanbic holding P87 068 819.77’.

“The trust fund manager is AON Botswana and there are three asset managers who have been mandated with the investment of funds generated by activities of the Fund, namely Kgori Capital, Stanlib Investment Management Services and Investec Asset Management Botswana,” he said.

In addition, the minister highlighted that the asset managers had invested the Trust Fund money into various portfolios, namely Equity, Money Markets and Bonds.

The House was informed that the Trust Fund had been audited four times between 2013 to 2016 and the Board of Trustees had received signed 2016 audited financials. 

He explained that the 2013 audit was the first audit to be carried out and it entailed a lot of audit work covering all the previous.

This, he said, created a backlog of two years, hence the delay in preparing the audits for 2017 and 2018 financial statements.

Minister Kgathi further said through internal processes conducted by the BDF Inspector General’s office it emerged that prior to 2013, the Trust lost P9 748 170.84 due to misappropriation, embezzlement and fraud.

“The Trust has however since managed to recover P4 105 436.85,” he said adding that investigations by Botswana Police Service were ongoing, thus far eight people had been interdicted and the files had been forwarded to the Director of Public Prosecutions for possible prosecution.

Further, he stated that the Trust Fund held annual general meetings to update membership about the Fund performance and solicit approval of major decisions by members about the Fund performance and its affairs.

“Members are also furnished with annual benefit statements,” he said.

Parliament also heard that the Fund was established in 1991, and objectives at inception were towards the general welfare of members and to inculcate a culture of saving as well as to facilitate issuance of emergency personal loans. In addition it was used as security for bank loans.

Mr Kgathi explained that in 2007, it was registered as a Notarial Deed of Trust giving it legal personality and independence from the BDF, adding that the transition from the BDF Welfare Fund to the BDF Welfare Trust Fund in 2007 hinged on improving transparency and according members direct control in the Fund. 

The interest rate for borrowing is 10 per cent, he added.

The minister was responding to a question by MP for Selebi Phikwe, Mr Dithapelo Keorapetse, who wanted him to explain the BDF Welfare Scheme Contributory Fund.

Mr Kgathi was to state when and why the fund was set up, whether contributions by soldiers into the fund was compulsory and why, interest rate for borrowing and any legal instrument authorising compulsory contribution and regulation of the Fund and the role of NBFIRA in regard to the Fund.

MP Keorapetse had wanted to know how much was in the account and at which bank, the names of the companies or fund managers managing the Fund and how the money had been invested, how many times the Fund had been audited, the time it was last audited and the outcome of the audit including criminal investigation and how the BDF accounted to soldiers who own the Fund. ENDS