Criminal charges loom as cmb faces liquidation

Gazette Reporter

  • Statutory manager files for liquidation
  • CMB to be stripped of all assets
  • Directors could face criminal charges
  • DCEC probes ongoing
  • NBFIRA to revoke CMB licence

Peter Collins, Statutory Manager of the controversial private equity firm, Capital Management Botswana (CMB) has filed an application for the liquidation of CMB with the High Court, this publication can confidently reveal.
This latest development in the CMB-saga, follows the recent Court of Appeal decision which placed the embattled asset management firm under statutory management of former High Court Judge Collins.
It is believed that the next major step of liquidating CMB is geared towards tracking the pending traceability of transactions and the recovery of millions of Pula reportedly missing. After Collins was appointed Statutory Manager, he confirmed the removal of CMB as General Partner to the Botswana Opportunities Partnership (BOP), an P880 million private equity fund in which BPOPF is Limited partner. Viltry (Pty) Ltd has since replaced CMB.
Towards the end of last year, CMB made a drawdown request of P77 million which the BPOPF did not honour on grounds that CMB has been making unsound investment decisions. CMB took advantage of a contractual clause that empowers the General Partner to remove the limited partner, sell assets and make a once off settlement. CMB claimed to have done that and made only P50 million as final settlement, of which BPOPF opposed and in turn terminated CMB, hence the stalemate. Collins has since rubbished CMB’s actions and removed it from BOP.
The liquidation comes at a time when CMB is under investigation by the Directorate on Corruption and Economic Crime (DCEC). Motor vehicles and personal gadgets belonging to the CMB CEO have been confiscated by DCEC.
Following the liquidation, Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is also said to be in the process of revoking CMB’s license.
Further, Collins is expected to conduct a public hearing soon, where CMB directors, Tim Marsland (who resides in South Africa) and Rapula Okaile, also CMB CEO, are expected to reveal details of how they transacted the P447 million drawn down from the Botswana Opportunities Partnership (BOP). The BOP is a private equity fund in which BPOPF had committed to cough up to P880 million to be invested in local unlisted equities. CMB has since drawn down a whopping P447 million in total.
Recently, BPOPF CEO Boitumelo Molefe said only P200 million, from investments made by CMB from the BOP can be traced as possibly recovered. Those assets are the P150 million, which was used to acquire approximately 27.9 percent stake in Wilderness Safaris Holdings Limited, a pan African eco-tourism firm in March 2016. Further, Molefe said P50million can also be traced and recovered which was used to buy 50 percent shares in Cell City, a local cellphone retailer in June 2016.
Molefe’s announcement follows a judgement by Court of Appeal Judge President Ian Kirby, who sat in a panel with Justice Singh Walia and Justice Fritz Brand, in which it emerges that Tim Marsland, CMB director who stays in South Africa was revealed as still controlling P150 million worth of shares in Wilderness Holdings (one of BPOPF assets) when, on 31st January 2018 he wrote to Bona Life offering to capitalize the company with a purported loan of those shares. Sources say the value of the shares has however appreciated and could be around P170 million.
It emerges that there are funds which may not be recovered because the rest of those investments, amounting to P247 million are in companies that are either difficult to locate or structured in such a way that it would be impossible to gauge the value or the rights to those shares, according to industry sources. CMB used P57.5 million to buy a 40 percent stake in citizen owned life insurer Bona Life Insurance Limited, founded by Regina Sikalesele-Vaka. The company is currently, insolvent and has been closed down for lack of a proper and functional board of directors. The fate of the company is unknown. CMB is said to have disbursed P50 million purportedly for the establishment of a conceptual “high-end entrant” business College in Gaborone, African Graduate Institute of Leadership and Enterprise (AGILE). Two of the directors, according to the CoA judgement, were members of CMB’s own investment committee. Further, the judgement said that two years later, there was no sign of any business college despite the P50 million drawdown.
A further P150 million is said to also have been disbursed to a company called Kawena Holdings (pty ) Ltd which appears to be a Mozambican retail group, of which Marsland was a director. According to CoA judgement, no records were availed to show the nature of Kawena’s business or the fate of the money.
The judgement further reveals that Marsland has made an undocumented loan of P20million with no terms of repayment or interest rate set to a company called Goldwing (pty) Ltd trading as Cell City, in which BOP held shares, out of the funds of CMB, whose only client he claimed was BOP. It is unclear if the P20 million was from Marsland personally or was funds from the BPOPF money.
Despite the Cell City and Wilderness investments, CoA, and a preliminary report made by Collins after his first appointment (which was then successfully opposed by CMB), all other investments are unlikely to be recovered. According to sources, should Okaile and Marsland fail to reveal the money trail, Collins as statutory manager will make an independent investigation which should reveal how the money was spent. If possible, sources say that the BPOPF could be forced to even go to South Africa, to establish assets owned by Marsland, which could be repossessed to make up for unrecoverable BOP funds. Okaile here in Botswana could also suffer the same fate
Viltry which has replaced CMB as General partner to the BOP will now house Wilderness’ 27 percent stake (worth over P150 million) and the 50 percent Cell City shares bought for P50 million.
CMB had signed contracts to acquire a stake in Yarona Media Holdings (YMH), a company that houses Yarona FM radio station, Echo Newspaper and advertising agency, Horizon. It was not clear how much stake CMB wanted to buy in YMH. Further, CMB, still using the BOP, was in the process of acquiring an undisclosed stake in Lobatse Clay Works (LCW), a company owned by government investment arm, Botswana Development Corporation (BDC).
Apparently, P13 million was transferred from the CMB account to Yarona Media Holding while an extra P 5miilion was transferred to Lobatse Clay Works account. More funds were supposed to be transferred to complete the transaction, however by the time CMB placed a drawdown request with BPOPF, controversy had already caught up with it, and BPOPF could not honor the call.
Cmb is under final liquidation as per justice mercy garekwe high court order. The final liquidator is John Little of Corporate Services Firm. He takes over Peter Collins who was statutory manager