Zambia’s largest private pension fund crumbling with fraud

Fraud allegations, mistrust, bickering among stakeholders and legal suits have taken center stage at Saturnia Regna Pension Fund, which is Zambia’s largest private pension scheme worth over $200 million (about K2 billion).

And Munakupya Hantuba and several other prominent businessmen, have been named in a controversial shareholding structure of Africa Life Financial Services, Menel Management Services and Benefits Consulting Services Ltd– companies which are behind the management of the private pension Fund.

Saturnia Regna Fund was established in 1992 as an optional pensions savings initiative targeting private institutions as well as individuals and has grown to accommodate about 144 affiliate companies; covering over 34,000 people.

Zambia Sugar PLC, Afrox Zambia, Mopani Copper Mines, Konkola Copper Mines, Total Zambia, Cloride Zambia Ltd and First National Bank Zambia are some of the biggest companies whose employees’ retirement savings are managed by the buoyant Saturnia Regna Pension Fund

In the past few years, however, the Board of Trustees that represents the pension fund beneficiary has been accusing the service providers of mismanaging finances and assets of Saturnia Regna Pension Fund, placing Muna Hantuba at the center of mischief.

The Board of Trustees who represent the interest of contributors to the Fund have been calling for meetings to iron out the mismanagement of the Fund, but African Life and Benefits Consulting who are ironically sister companies controlled by the same shareholders have made several attempts in court to prevent the Board of Trustees from convening such meetings, claiming they were illegally serving on the Board.

On two occasions, the Lusaka High Court has thrown out injunction application from African Life and Muna Hantuba who want the Board of Trustees replaced on grounds that it has overstayed while claiming that other affiliate companies were overrepresented.

The court’s ruling gave powers to Board of Trustees to press further for an Extra Ordinary General Meeting where Fund managers could be questioned for, among other things, transferring assets of the Fund into a private company and mixing the roles of Fund manager and administrator.

On May 12, 2017 Board of Trustees members called for a meeting with Fund managers which was scheduled to take place today May 24, 2017, but Fund administrators (Benefits Consulting Services Ltd) rejected the proposed meeting, and instead wrote back on Monday, informing them that they were no longer recognized by Saturnia as Board members.

Saturnia Regna Pension Fund administrators went further to state that a new list of Board Trustee members had been proposed and the candidates were ready for elections.

Fraud allegations against Saturnia managers

By whistleblower

Saturnia Regna Pension Trust Fund was established by the late Anderson Mazoka and was designed to be operated by a Fund manager and an independent Administrator.

After Mazoka died, a company called Menel Management Services was established to superintend over the management of the Fund through Africa Life Insurance and its administration through Benefits Consulting Services Ltd.
In its quest to introduce a corporate Trustee, Africa Life Insurance (Aflife) incorporated a company similar to Saturnia Fund called Saturnia Regna Pension Trust Limited. Without getting express approval from the regulator, the new company began to own assets of Saturnia Regna Pension Trust Fund – notable assets being the properties located at 74 Independence Avenue. The company was supposed to act as a nominee of Saturnia Regna Fund and hold the assets. However, no document exits which shows the limited company was acting as a nominee of the Fund.

From a money laundering perspective, the Pension funds have been used to purchase offshore endowment instruments in UK, the entity purchasing them was Saturnia Fund, but the entity paying the premiums on the investments is Saturnia Limited. The endowments have since matured and the UK companies are querying the relationship between the two entities in order to satisfy their own money laundering legislation. The Fund is losing interest and ultimately the members of the Pension funds are the sufferers.

Investment management process: The position of Chief Investment Officer (CIO) at Africa Life Insurance has been vacant for more than 3 years. The size of the Saturnia Regna Fund is more than K200 billion and surely that warrants the appointment of CIO, but the Chief Executive Officer has taken up the responsibility of managing the investment department when the deliverables for the two positions are vastly different.
From a risk management perspective, it also becomes difficult to give directives to the CEO’s office who is in charge of the investment department. The overlapping duties of the two offices have been coming out in the internal audit reports but corrective actions are not being taken.

Looking at all the issues from a very neutral perspective, members of the Board of Trustees and the stakeholders in charge of the Fund must meet and agree to separate the Fund management from the Administration function. The independent administration will keep a check on the fund managers and can report to the trustees independently. Africa Life Financial Services’ argument that they have floated a separate company for doing the Fund administration does not hold water since the board and shareholders of the new company are the same as those holding shares in Africa Life. Besides they operate from the same office space and share the same resources.

It is important that all properties and assets under Saturnia Limited are transferred back to Saturnia Fund and the former must be closed and deregistered.

There is need to appoint professional property managers (like Knight Frank, Pam Golding, Homenet, etc) to manage the Saturnia Regna Property portfolio. This is done by Barclays Bank pension scheme and it works very well.

Who is involved?

According to PACRA records, prominent Zambian businessmen are directors or hold shares in Saturnia Fund, Saturnia Limited, African Life Financial Services and Benefits Consultants Services, directly or through a company in which they hold shares directly.

Muna Hantuba welcomes President Edgar Lungu to Sinazongwe recently

African Life Financial Services

Shareholders: Menel Management Services Limited (Munakupya Hantuba, Hakainde Hichilema and Valentine Chitalu) and Botswana Insurance Fund Management

Directors: Munakupya Hantuba, Hakainde Hichilema, Andre Bester, Andre Roux, John Alan Hurford Janes and Andrew Guy Howard.

Menel Management Services Limited

Shareholders: Munakupya Hantuba, Hakainde Hichilema and Valentine Chitalu.

Benefits Consulting Services Limited

Shareholders: Menel Management Services Limited (Munakupya Hantuba, Hakainde Hichilema and Valentine Chitalu) and Botswana Insurance Fund Managers Limited.

Directors: Bryson Hamanzuka, Nyangu Kayamba, Neo Bogatsu and Anura Jaranath Karunartne.

Saturnia Regna Pension Trust Limited

Shareholders: African Life Financial Services Zambia Limited (Menel Management Services Limited – Munakupya Hantuba, Hakainde Hichilema and Valentine Chitalu-) and Bostwana Insurance Fund Management.

Directors: Munakupya Hantuba, Sanjeev Gupta, Sibanze Simuchoba, Doreen Kabunda, Martin McCathy, Sophie Mulemba and Maxwell Tembo.

Injunctions and court rulings

In October 2016, African Life Financial Services (Aflife) filed an injunction in the Lusaka High Court seeking to restrain the Board of Trustees from convening a meeting to change Aflife as Saturnia Regna Pensions Trust Fund manager and Benefits Consulting Services as administrator.

The complainant argued that there was unequal representation on the Board of Trustees and that there were some members who had overstayed on the board.

In response, the Board of Trustees, argued that they were rightfully serving and that it was illogical for a service provider to stop its employer from terminating its services.

Upon analyzing the evidence presented, judge Sharon Newa threw out the injunction on February 8.

However, Muna Hantuba, who is a shareholder of both Aflife and Benefits Consulting Services, sued the Board of Trustees on February 14 insisting that the constitution of the Board was flawed and also challenging the “over staying” trustee Doreen Kabunda, who represents Zambia Sugar PLC.

In response, the Board of Trustees told the court that Hantuba did not disclose his conflict of interest by not declaring that he was the majority shareholder in Benefits Consulting Services and insisted that the board was correctly constituted.

In her ruling on May 3, judge Irene Zeko Mbewe discharged the interim injunction she had granted saying its continuation would disadvantage other members of the Fund who were not party to the proceedings.

Judge Mbewe also noted that Muna should have disclosed to the court that he was the majority shareholder in Benefits Consulting Services, adding that failure to do so was fatal.

         

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