Creditors want meeting with Bluthorn directors
Councils lost P100m in “unit trust’ scheme Govt budget cuts kick in
Creditors of Bluthorn’s collapsed unit trust scheme have resolved to hold a face-toface meeting with the group’s directors in their search for answers on where investments of more than P200 million went to.
Mmegi is informed that creditors, who include a long line-up of councils and Land Boards, held a meeting last Friday where they resolved to tackle the Bluthorn directors. Meetings between creditors and the directors of collapsed companies are provided for under local laws. The meetings before the Master of the High Court, typically feature creditors’ lawyers as well as the liquidator and are part of a process to recover whatever funds can be traced.
The scheduled meeting comes as councils strategise about how to plug the gaps that will be caused by government’s plan to reduce its funding of local authorities. In her budget speech last month, Finance Minister, Peggy Serame said grants to councils would be gradually reduced “to incentivise them to generate their own revenues to fund their programmes”
The Finance Ministry also recently revealed that nine local authorities and Land Boards had invested more than P100 million in Bluthorn Fund Managers’ collapsed scheme, without prior approval.
Running between 2018 and 2019, the unit trust scheme was touted as promising lucrative returns for the councils and Land Boards, but ran into trouble when the dividends and capital were not paid despite reaching maturity. Investigations by the Non-Bank Financial Institutions Regulatory Authority (NBIFRA), a statutory manager, liquidators as well as a recent High Court ruling have found that Bluthorn Fund Managers was part of a family of related companies where funds were moved about “like brothers and sisters sitting at a family table and exchanging money between themselves”.
This week, Gaborone City Mayor, Father Maphongo told councillors the local authority would step up its debt collections, identify new sources of income and prioritise projects with high returns, in light of the
“ever-contracting resource base”. The city council reportedly invested P20 million in Bluthorn.
One of the council’s plans involves updating the valuation roll used to charge rates to property owners. According to Maphongo, the roll dates back to 2008 and only contains 35,000 plots, which amounts to a billing total of P90 million.
“This valuation has long been overtaken by events as more development has been done from 2008 to date hence is a potential to augment council revenue once updated,” he said.
“It is without a doubt that the intensification of the Rates collection will have a major positive impact on the financial position of the council.” From April 2022, the council will also introduce higher fees for staff houses, advertising signs, road reinstatement, and sanitation.
“The sub-committee on revenue collection will also continue to review the remaining tariffs and user fees while considering other sources of income,” Maphongo said.
In Kgatleng this week, district council chair, Daniel Molokwe told councillors the preliminary budget estimate for 2022-2023 financial year had already been cut by one percent and there was a “high likelihood” that the final figures would be further reduced. Kgatleng District Council does not appear in the list of local authorities that invested in Bluthorn.
“We shall have to re-prioritise and rescale our planned activities to fit without the tight budgetary provision,” Molokwe said.
“As espoused in the President’s Reset Agenda, we shall have to stop all the extravagant activities that otherwise are of no value addition in the value chain and, start and improve on only those that are very critical in executing our mandate.”
Besides tightening its controls, the district council is suspending the collection of matimela (stray livestock) as part of its efforts to restrain spending.