15 Jul 2020

Gaborone High Court has been informed that prior to the Botswana Public Officers Pension Fund (BPOPF) board meeting of December 11, 2017, the management received a letter from one Bakang Seretse with allegations that BPOPF board chairperson, Carter Morupisi, had beneficial interest in Capital Management Botswana (CMB). 

When giving evidence in chief on July 14, former BPOPF chief executive officer, Ms Boitumelo Molefe, said BPOPF had appointed CMB as the fund administrator.

Ms Molefe said the board meeting was called to discuss the fact that CMB was non-compliant with conditions of the contract and also to deal with the issue that at one point CMB had attempted to terminate relations with BPOPF as a limited partner by claiming that it was not compliant with the draw down notice made in respect of two companies being Lobatse Clay Works and Yarona Insurance Holdings.

Ms Molefe said BPOPF had rejected the request for funds to be invested with the two potential investors on the basis that the general partner had previously requested funds that were never fully utilised for the intended purpose.

As such, she said at the December 2017 board meeting, CMB was informed of its breach of contract, that its services were terminated and that there was an ongoing process of taking legal action against them.

As it was custom, Ms Molefe said board members were asked to declare their interest in relation to the issues that were to be dealt with, but none was recorded.

“It was then brought to the attention of the chairperson (Mr Morupisi) that Mr Seretse had made allegations against him. He (Morupisi) said he did not have any beneficial relationship with CMB and after seeking advice from the management, the board secretary advised Morupisi that in the best interest of the company, it would be best for him to be recused from the meeting to protect the integrity of the discussion,” she said. 

Ms Molefe further stated that the board meeting resolved that the allegations from Mr Seretse be reported to the Directorate on Corruption and Economic Crime for further investigations.

“In January 2018, the board further informed the chairperson of the intentions to engage the DCEC in investigating the allegations, but he still maintained his stance that he did not have any beneficial relations with CMB,” she said.

She further stated that the contract engaging CMB as BPOPF funds administrator was signed by the directorship of both companies.

]Molefe also said BPOPF trustee members were supposed to declare gifts from business partners, following the declaration policy guidelines. She further stated that there was no record, that the first accused person (Carter Morupisi) ever declared a gift from a business partner.

“If one was to get a loan from a business partner, such a trustee member, was to declare interest before the board and a determination on how to deal with it,” she said. 

Ms Molefe said at the time when she joined BPOPF on July 01, 2015, the first accused person (Carter Morupisi) was the Chairperson of BPOPF. “The chairperson was eligible for re-election after five years. I worked with the first accused person until April 2018,” she said.

She said the first accused person was among the five employer representative trustees in the board and was subsequently elected as chairperson of the board in April 2013.

She said the BPOPF board decisions were made from a consensus by members. “Where a consensus could not be reached at a board sitting, the pending issue will be dealt with at the next sitting of the board. Subsequently, if it so happens that the subject matter cannot be resolved, an expert on the issue will be roped in to give guidance. Following non-agreement, an independent mediator will be appointed to give guidance. Finally, if no consensus was ever made at the previous stages, the regulatory body being Non-Banking Financial Regulatory (NBFIRA) will have the final say,” said Ms Molefe.

She said an individual member could not solely make a decision without the consensus of the board.

She also informed the court that evaluation of the board’s decisions was done annually, while board meetings were to be held quarterly, adding that the idea of engaging an investment partner was mulled at the time when Mr Rapula Okaile was a BPOPF member as one of the employer trustees and Morupisi took the Chairmanship from him.

She said at the time when Morupisi was the chairperson of BPOPF, Mr Okaile was now one of the directors at CMB.  

Relating the circumstances of awarding CMB the tender to manage the BPOPF investment fund, Ms Molefe said in 2014, several companies responded to board tender documents that were advertised relating to managing the investment fund.

“Discussions on the tender started on May 19, 2014 before the finance and investment committee. The tender had to undergo three stages being the initial stage where bids are evaluated, followed by the technical due diligence and finally, the legal due diligence stage,” she said.

Ms Molefe said the first two stages of the tendering process were done internally, while the final stage of legal due diligence was done by an independent law firm.

After following the outlined tendering process, she said available records indicated that three companies namely Choppies, CA Sales and Botho University made it past the two initial stages and were interviewed.

“The first two stages are done internally, and a report on what has been done will be presented to the board. The board will then give a conditional approval pending completion of the finals stage of legal due diligence, which must be done before awarding the bid,” said Molefe. She said the legal due diligence stage will give the board an assurance to enter into a contract with an entity as it will unearth all the likely contractual risks. 

As per her knowledge and the available records, Molefe told the court that the final stage of legal due diligence was never conducted prior to awarding CMB the job of administering the BPOPF investment fund.

“On November 11, 2014, following the board meeting of August 21-22, 2014, an agreement was signed consolidating private equity agreement with CMB. It was done on conditional approval by the board without the legal due diligence.

According to the deal, BPOPF was the limited partners and therefore could not participate in any investment decisions. In the event BPOPF will get engaged in decision making relating to a proposed potential investment, they will use the limited liability. Therefore, the agreement gave CMB, as the general partner, total control over what was being invested.

By not carrying out the legal due diligence stage, she said, the second recommendation of the board was not adhered to as it had ruled that the role of the asset manager of the asset equity and that of the general partner be separated to provide independent oversight over the general partner, she said.

Ms Molefe further revealed that the general partner was obligated to raise capital for the fund and in so doing formed an independent body that will hold the investment. The general partner has an obligation to identify credible and potential investors in order to run a profitable investment fund and provide quarterly and annual reports evaluating the investment to the limited partner (BPOPF) as the owner of the invested funds.

“The General Partner, CMB, through the Botswana Opportunities Partnership (BOP) contributed one per cent, while the limited partner BPOPF contributed 99 per cent of the P500 million that was agreed and committed to the fund for potential investment,” said Ms Molefe.

She said BPOPF had further requested the limited partner to make an additional commitment of P600 million but was declined by the board. 

Under cross examination by the defence attorney, Mr Busang Manewe, Ms Molefe maintained that her evidence was credible.

“I gave evidence based on facts from my personal knowledge as former employee of BPOPF and what I had collected from minutes of board meetings,” she said.

She also confirmed to the defence team that she was an employee of BPOPF when the CMB tender was dealt with.

“Other than relying on records, I do not have any personal knowledge on what transpired prior to my employment,” said Ms Molefe. She also confirmed that she did not have personal vendetta against the first accused person. 

Carter Morupisi, R7 Group (PTY) Limited and Pinny Morupisi appeared before Judge Mokwadi Gabanagae facing three counts of corruption and money laundering. The first accused person, Carter Morupisi is facing two counts of corruption and is also jointly charged with R7 Group (PTY) Limited and Pinny Morupisi on the count of money laundering.  ends