Arguably the largest scandal to rock the financial services sector in recent times, an amount of P900 000 was credited into the account of Sentsho Tsealyakgosi, Stanbic Bank’s Head of Global Markets. The transaction raised suspicious within the Bank’s security division and the bank officials pursued the matter. The paper trail of the depositor directed investigators to the former Managing Director (MD) at Fleming Asset Management, Peter Van-Riet-Lowe. The money was a token of appreciation for the excellent work Tselayakgosi was doing, Van-Riet-Lowe responded upon being asked.
Fleming managed an excess of P4 billion in mandates, on behalf of the largest pension funds in the country
Further, Van-Riet-Lowe told investigators it was 1 percent of the total work they had done over the last 10 years. The bank, in line with its corporate governance and Statutory requirements held the position that if the Tselayakgosi had provided “good service” and was to be rewarded for it, the payment should have been directed to the bank; whose decision it was to pay its employees bonuses for the good performance. Five months into the investigations, Van-Riet-Lowe was suspended from work and later resigned.
Tselayakgosi was also suspended, pending investigations. The Business Weekly and Review established this after suspicions pointed out that Tselayakgosi and Van-Riet-Lowe could have possibly exploited their employers’ resources for illegal Foreign Exchange (FOREX) dealings.
Tselayakgosi had been the bank’s Head of Global Markets a powerful position that gave him access to FOREX dealings as well as the bank’s top clientele.
Investigations revealed that he partnered with Van-Riet-Lowe to conduct illegal forex transactions. Allegations were that both could have used the Botswana Public Officers Pension Funds (BPOPF) for these fraudulent dealings. Fleming managed an excess of P4 billion in mandates, on behalf of the largest pension funds in the country. The fund, led by vibrant Chief Executive Officer Boitumelo Molefhe, terminated the contract. Stanbic Bank, headed by CEO Leina Gabaraane, appointed Lesego Osman to Tselayakgosi’s post a fortnight ago.
Stockbrokers Botswana collapse
In a tragedy heaped upon tragedy, the Botswana Stock Exchange (BSE) imposed sanctions over the Stockbrokers Botswana after unearthing a cocktail of scandalous financial practices at the country’s oldest brokering firm. Stockbrokers was laden with internal power struggles ranging from non-compliance of laws to nepotism.
A joint investigation by BSE and Non-Bank Financial Institutions Regulatory Authority (NBFIRA), the regulator, found Stockbrokers to have been in contravention of the BSE’s rules, operating without a finance manager, despite handling large client transactions. In a previous interaction with this publication, Charles Tibone, with a majority stake in the firm, covered the embarrassment by suggesting that his firm had instead approached BSE on its own accord to plead for a suspension of its shares since they had some urgent matters that needed the attention of a finance manager.
Reports indicated that those who were engaged to handle the accounts of the stockbroking firm lacked professional qualifications, which also questioned the integrity of the appointments. The roles of a finance manager were performed by Nozizwe Rebaone, who was engaged as an accountant despite a lack of accreditation by regulators.
It is said that Charles Tibone, allowed his son, Titose Tibone, the Managing Director to be the caretaker, handling Stockbrokers Botswana. At one point, Tibone junior wanted to appoint an unqualified finance manager of his choice without following the vetting process. NBFIRA has a statutory obligation to vet a candidate for such a position and approve them before they can be fully appointed.
NBFIRA repeatedly warned Stockbrokers to appoint a qualified finance manager to no avail. It emerged further that the candidate who was preferred by Tibone junior, failed to meet the statutory requirements.
Amidst the difficulties over the Financial Officer, Stockbrokers difficulties were compounded by confusion over the roles of the company’s Chief Executive Officer (CEO) Oosi Lemo and the MD Tibone junior. Stockbrokers employed Lemo as the CEO, however it appeared because of the unclear roles between both her and the MD, Lemo found it difficult to function. NBFIRA decried the confusion as to who was in charge and who reports to whom.
In response, Tibone wrote to NBFIRA notifying them they had resorted to eliminate Lemo’s position. Interestingly, regulators ruled Lemo unfit and improper to run the company.
NBFIRA said the company did not have an independent board given that 4 members were from Tibone’s family while only one was independent. Grant Thornton, an auditing body engage to serve Stockbrokers was thrown into the mix after NBFIRA questioned their independence. The regulator argued that Stockbrokers had used the same auditor since the inception of the firm in 1989 which translates to an audit relationship spanning 27 years. NBFIRA officials were worried that length of the relationship was sufficient to induce doubt over the auditor’s independence and consequently its ability to remain objective. NBFIRA cited international best practices for auditors that stipulate regular change to avoid potential conflict.
When contacted for comment by this publication, Gran Thorton contradicted NBFIRA’s findings. The Business Weekly and Review asked the auditor if they were aware SBB had a dysfunctional finance which led to delay on reconciling clients’ accounts. The auditor was oblivious to the reports denying that either it or its client had acted in contravention of international best practices.
The High Court granted NBFIRA permission to appoint Jeffery Bookbinder, partner at Bookbinder Business Law as statutory manager in order to regularise Stockbrokers corporate governance issues.
Early this month, Bookbinder advised the BSE’s CEO Thapelo Tsheole he had managed to reconcile all accounts noting that a qualified finance manager who has been vetted by NBFIRA had been appointed. The BSE reinstated Stockbrokers Botswana Limited to trade on behalf of investors effective 18th November, 2016.
SE’s CEO Thapelo Tsheole he had managed to reconcile all accounts noting that a qualified finance manager who has been vetted by NBFIRA had been appointed
Cresta’s P2 million scandal
Meanwhile, another blow-up was on the horizon. BSE’s leading hospitality outfit, Cresta Marakanelo suspended its Chief Finance Officer (CFO) Valentine Mganga and his former boss, the Managing Director (MD) Tawanda Makaya after the two were linked to an embezzlement scheme costing the organisation almost P2 million, according to Cresta estimates. Market insiders alleged that Mganga, who was the ultimate financial controller at the company, worth P240 million in market capitalisation, had been filing fictitious invoices for non-existent works and supplies as against the company. The scheme, it is believed enabled him to pay the fake employees and suppliers to his personal benefit.
Cresta launched an investigation after the company realised the CFO appeared to be living a lavish lifestyle beyond his means. Mganga was found guilty and consequently fired while Makaya resigned.
Cresta has concluded its investigation and the matter has now been handed to police who have their own investigations. Cresta is owned by the Zimbabwean company TA Holdings with a 40 percent stake and BDC with a 26 percent stake. The Company announced last week that the matter has now been handed over to the law-enforcement authorities for them to conclude their own investigations and thereafter take appropriate action. “The Company has commenced a process to recover the misappropriated funds,” advised the Board Chair to the Botswana Stock Exchange (BSE) adding that Cresta is adequately indemnified and the Directors expect no financial loss to the company as a result of the misappropriation.
