New Era

WINDHOEK – There was blatant disregard for basic corporate procedures and provisions of the Company Act during the issuance of loans worth N$659 million by the Government Institutions Pension Fund (GIPF) to some 21 companies, an official investigation into the saga has revealed.

In extraordinary instances loans were granted weeks before applications were submitted to GIPF; only the GIPF Chief Executive Officer and the Chairperson of the Board of Trustees signed off some loans; while several of the fund’s trustees served as remunerated directors on companies that received loans from the GIPF.

An investigation by Sizwe Ntsaluba VSP, a South African firm of accountants and auditors, conducted on behalf of the Namibia Financial Institutions Supervisory Autho-rity (Namfisa), reveals there is, by far, more than meets the eye in the GIPF saga.

The secretly kept fin-dings of the investigation indicate how some companies were awarded loans without having formally applied for them, while others got millions of dollars from the GIPF without signed approval by the fund’s board of trustees.

Omaheke Tannery and Leather Processing received a N$20 million loan with the sole blessings of the GIPF chairman and CEO. Likewise, only the CEO and chairman of the board of trustees signed for the release of N$12 million loan to Omina Investment.

This was also the case with Sepiolite Production, which got a N$10 million loan.

Omina Investment was owned by, among others, High Court Judge Nate Ndauendapo.

Further, GIPF did not ensure that security was provided, as stipulated in the loan contracts, neither did it bother to monitor its loans through the simple means of requesting qualified annual financial statements. Most of the loans were granted at the time’s prime rate minus 2 percent.

In spite of advancing such favourable rates, GIPF did not bother to enforce some of its crucial fiduciary obligations, as stipulated for loan agreements. Some borrowers only registered mortgage and notarial bonds over immovable and movable properties more than a year after accessing the loans.

“This implies that the GIPF’s investment was unsecured for the mentioned period,” says the report in the case of Namibia Plastics and Liquid Food that received a N$16,75 million loan. The company went on to receive an additional loan of N$3,25 million, even though it was already in breach of the first loan contract by having failed to provide sufficient security within the given time frame and subsequent failure to repay the loan.

Similarly, the !Uri !Khubis abattoir received N$5 million from the GIPF, while no ‘tangible’ proof of security was provided to the fund. The company was liquidated without paying back the GIPF loan. Ostrich Production Namibia (OPN) is in the same category. It received successive loans of N$9 million in 2001, N$6 million in 2002 and a further N$1.5 million in 2003.

The report recommen-ded forensic investigations into the financial and ope-rational records of some companies and that some directors be charged for contravening various sections of the Companies Act and possible embezzlement. This is true in the case of Namibia Chicken Investments (Pty) Ltd and Namibia Plastics and Li-quid Foods (Pty) Ltd.

Directors of these companies advanced loans to themselves in contravention of Section 226 of the Companies Act, with some absconding by leaving the country “due to possible mismanagement and fraudulent conduct”. Investigators recommended “forensic investigation[s] be conducted into the financial and operational records of [Namibia Chicken Investments and Namibia Plastics and Liquid Food].” In the case of Namibia Chicken Investments, the report says the forensic investigation should be “with specific focus on the loans paid to directors and shareholders which are in contravention of section 226 of the Companies Act”.

Investigators could not make cases of conflict of interest, but they noted that several GIPF trustees were also listed as board members of some of the companies that received loans. There is, however, “no documentation in which [the persons] declared [their] conflict of interest” during GIPF board of trustee meetings. The recommendation was that “this matter be investigated and, where necessary, a further forensic investigation be done”. These are in the case of Steve Katjiuanjo and Peter Nevonga who were both Namibia Grape Company board members while sitting on the GIPF Board of Trustees. Katjiuanjo was the Chairman of the Board of Trustees. GIPF advanced an additional, but unauthorised, N$9 million more than the N$56 million agreed to in the loan contract to NGC, pushing up the total loan to N$65 million.

The money was paid without GIPF Board of Trustee consent and expressly against the advice of GIPF asset managers at the time. The asset managers fired off a letter to the GIPF chairman that “[we are] extremely embarrassed by the fact that N$65 million was paid out to NGC without GIPF authorisation”. Katjiuanjo was entitled to remuneration as board member of Namibia Grape Company (NGC).

“It is our opinion that he should not have been entitled to any remuneration, nor should he have served as chairman of the Board of Trustees in any future GIPF discussions regarding this investment,” noted the report.

Contacted for comment, Katjiuanjo said he sat on the board of NGC to represent the interests of GIPF, and it was according to that company’s resolutions that he received remuneration. “What is it in their [those who compiled] report that constitutes conflict of interest?” asked Katjiuanjo.

He further said he never signed off the granting of loans without following GIPF procedures and policies at the time. “I have never signed anything of that nature,” he said.

Efforts to get a comment from Nevonga proved futile at the time of going to press last night.

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