Minister of Finance Margaret Mwanakatwe says the Pensions and Insurance Authority will impose sanctions on Saturnia Regna Pensions Fund Trustees for allowing the illegal externalisation of K452.956 million.
However, Mwanakatwe says the members of the fund are not adversely affected because the fund is performing well.
On Wednesday, Kabwe member of parliament Tutwa Ngulube asked the Mwanakatwe to explain who the major shareholders of the largest private pensions fund were, how much money was in the fund as of December 31, 1996 and February 28, 2018.
Ngulube also wanted to know whether any money has been externalized and whether the pensioners had been adversely affected in any way by the externalization of funds.
In response, Mwanakatwe explained the shareholding structure of the Fund managers and administrators.
“The Saturnia Regna Trust Fund does not have shareholders, as it is a pension scheme. The Saturnia Regna Trust Fund is the largest private occupational scheme, with 30,830 members from 162 participating employers and with a net asset value of K1.83 billion, as at December 2017. However, the fund managers of Saturnia Regna Pension Trust Fund are African Life Financial Services Limited and the fund administrators are Benefits Consulting Services Limited. These are sister companies with the same shareholders,” Mwanakatwe said.
“And the shareholders are as follows; the shareholders for African Life Financial Services Limited and Benefits Consulting Services Limited are as follows; Botswana Insurance Fund Limited, nationality is Botswana 49%, Menel management services, Zambian with 51%. The shareholders of Menel management services limited are as follows; Munakupya Hantuba, Zambian with 39%, Valentine Chitalu, Zambian with 30.5%, Hakainde Hichilema, Zambian with 30.5%. the shareholders for Botswana Insurance Fund Limited is as follows; Botswana Insurance Holdings Limited 100%.”
She said Saturnia had illegally externalised resources without authority from her ministry, adding that the managers would be requested to recall the funds.
“As regards how much money was in the fund, in 1996, Saturnia Regna Pension Trust Fund had a different reporting calendar which was March and not December. Accordingly, the net assets as at 31st March 1996, where K5.08 million. As of 28th February, 2018 Madam Speaker, from the unaudited quarterly account, the fund assert value, as at December, 2017 stood at K1.83 billion. The audited financial account for December 2017 are expected at the end of March, 2018. Madam Speaker, the recent audited net assets as at 31st December, 2016, stood at K1.851 billion,” Mwanakatwe said.
“With regards to externalization of funds, I wish to report that the answer is yes. The fund has external investments outside Zambia, the externalization was done within 30% of net asserts provision as provided in the pension scheme regulations Act of 1996 and the pension scheme investment guidelines regulations guide statutory instrument number 141 of 2011. However, madam Speaker, there was no approval from the Ministry as required by law the regulator will impose appropriate sanctions on the trustees and the fund, as a result of non adherence to the provisions of the law. Further, the regulator will request the fund managers to recall the funds. Madam Speaker, the fund has external investments outside Zambia, amounting to K452.95 million, as at 28th, February, 2018 unaudited.”
She said although the law allowed for external investment of up to 30 per cent, it was required by law to get permission from the ministry.
“The statutory auditor PWC and the special independent Auditor KPMG who carried out the audit both confirmed the existence of offshore investments and these investments are reflected in the Saturnia Regna Pension Fund trust books of accounts. I wish to also report that members of the fund are not adversely affected because the fund is performing well. The external funds are part of the broader investment funds which allow for diversification and hence, least reduction. It should be noted that the law allows for external investment up to 30% of net assets, with permission from the Minister of Finance, and there was no permission in this case,” she said.
During follow up questions, Lukulu East UPND member of parliament Christopher Kalila asked if shareholders were within the required stipulations of external investment and Mwanakatwe responded; “The amount $46.6 million dollars which is K452.956 million is within the 30% investment guidelines. However, because no permission was sought, it is an illegal transaction.”
Katombola UPND member parliament Derick Livune wondered why people were presenting the matter as though there was an illegality and asked the minister to state whether the issues at Saturnia could be resolved.
In response, Mwanakatwe said she was shocked that the fund could make a transaction which could impose sanctions on trustees but agreed that the issues could be resolved.
“I believe Saturnia Regna has been in existence for quite a while, I think before 2006. It was an acquisition by few individuals and it has grown over the years to be what it is today. What has surprised me is that such an institution well run can actually do a transaction which is going to impose sanctions to the fund and or trustees for non adherence of the provisions of the law. And further, the regulator would request the fund managers to recall the funds. You can’t send out the funds without permission. But yes, this issue can be resolved, in fact we are in the process of resolving the matter. This is why we conducted an independent audit by KMPG to ensure that we can go to the shareholding at an annual general meeting which was held on the 24th of February to make sure that the report of the auditors is shared with all the participants to the pension. Which is what we have done for the purpose of ensuring that everyone is understanding what exactly went wrong and why,” she said.
Ngulube asked Mwanakatwe when the audit report by KPMG would be made public but she said it was up to PIA to decide.
“With regards to the none payment of pensioners, we have not found any pensioners not paid. Vis-a-vis the report itself, the report that was done by KPMG, I need to check with the pensions and insurance authorizes whether this is the report that can be shared with the public,” she said.
Ngulube rose with another follow up question, demanding to know why it appeared the fund had many faces.
“Honourable minister, the question we want to know is why is this Saturnia Regna disguised? I said, there is a body called Saturnia Regna Registered Trustees and there is also Saturnia Regna Pensions Trust Fund and there is also Saturnia Regna Limited…so there are about six faces for Saturnia, four of these bodies have no corporate legal personality, you can’t sue them, they are fictitious,” Ngulube said.
But Mwanakatwe explained that the fund had three aspects to it; managers, administrators and trustees.
“A pension fund has a fund manager who manages the funds, that’s one aspect, Africa Life. There is the second aspect, which is the administrator, the administrator Benefits Consulting Services and I shared with you the shareholding within Africa Life Financial Limited and Benefits Consulting Services. 49% Botswana insurance fund management and Menel management serves. Each fund has trustees and I have the trustees here who were in office until 28th February at the time of the AGM and this D. Kabunda, S. Chitoshi, E, Ng’andu, C. Mwanza, P. Lwiindi, A. Chalwe, A. Kapambwe, R. Namanje, C. Sokoni, D. Mukodumas,” she explained.
“This was as at 28th of February when new trustees were now appointed. And the new trustees are Ophelia Nyambe, Chikusi Mugaga Banda, Emmanuel Mbambiko, Judith Lungu, Michael Kalimina Shamutete. And the employers of the trustees are Review Namonje, Marco Komana, Collins Muunga Hamusonde, Pamela C. Piyo, Elvin Mwitwa. So what am saying is that a pension fund has three arms to it. There are trustees, there is fund management and there is the administrator.”
Kasama PF member of parliament Kelvin Sampa asked; “Minister, I want to find out, in a cause to fight corruption by government. What would you take the externalisation of these resources that was never sought permission through your ministry? What do you call this, does it amount to money laundering or what is it? That’s tax haven in fact.”
But Deputy Speaker of the National Assembly Catherine Namugala interrupted proceedings to resume Thursday, 22 March 2018.