Eswatini authorities strike down Riscura’s tender
• Public Service Pension Fund reinvite to bidders to compete for same tender found to be flawed
Cape Town investment firm Riscura’s contract to provide investment consultancy services to the Public Service Pension Fund (PSPF) of Eswatini has been set aside after the process followed by the fund was found to be flawed.
The independent investment adviser and financial analytics provider that offers investment decision support in developed and emerging markets counts SA’s Government Employees Pension Fund as one of its clients. The firm also has a presence in the US, UK, Hong Kong, Mauritius, Namibia, Nigeria, Zambia, Kenya, Botswana and Zimbabwe.
The company provides a range of services to the largest investor base in Africa in listed and unlisted investments, servicing institutional investors, asset managers, hedge funds and private equity clients.
Investment consultants such as Riscura assist pension funds with asset and liability studies, investment strategy formulation and implementation.
This requires them to determine asset allocations, fund manager research and due diligence among others, so they ultimately influence asset classes and even fund managers who would ultimately manage the pension funds assets.
The PSPF, which has assets under management of more than R22bn, in 2020 invited tenders to provide it with investment consultancy services, with a number of SA companies expressing interest.
These included Alexforbes, in partnership with Eswatini’s Employee Benefits Consultants (EEBC), and Novare, in partnership with that country’s Orange Partners, also called the Orange consortium.
When the initial tender was issued in 2020, Riscura did not take part, with the Orange consortium recommended by the PSPF investment committee.
However, before Orange could be awarded the tender, allegations of professional misconduct against it popped up, with the result that the awarding of the tender was put in abeyance pending an investigation into the allegations.
The allegations were made via an anonymous whistleblower to SA’s Financial Sector Conduct Authority.
Orange was cleared of the allegations. However, the PSPF decided to cancel the award of the tender due to the extended time taken to finalise the probe.
In November 2021, the PSPF issued a new invitation for tenders. The applicants in this process were again assessed on the technical and financial aspects of the tender.
The technical aspects amounted to 70% of the overall scoring while the financial aspect made up the balance.
In terms of the total weighted scores, EEBC, partnering with Alexforbes, came out tops with a total score of 85.5%, followed by Orange with 70.9%. In third place was Riscura with a total weighted score of 63.9%.
Despite its overall ranking, however, Riscura won on the technical assessment with a score of 82.7%, with the investment committee recommending its appointment.
UNFAIR
This recommendation was adopted by the board of the PSPF, which resolved to appoint Riscura as an investment consultant adviser for its foreign and domestic portfolios for a term of three years.
EEBC took the decision on review, one of the grounds being that allowing Riscura to enter the process while all parties have already disclosed their pricing gave it an unfair advantage.
The independent review committee, under the auspices of the Eswatini Public Procurement Regulatory Agency (ESSPRA), found that the PSPF’s decision to reinvite those that competed for the same tender in 2020 to bid for it in 2021, was wanting.
The review body said this was because the initial tender had not been suspended but was cancelled.
“We now revert to the invitation to retender that was issued by PSPF to the tenderers in November 2021, which also included the Riscura. The assertion on behalf of the PSPF that the Riscura did not have a licence or certificate from the Financial Services Regulatory Authority hence it did not make it to the top three, is telling. The effect of this is that Riscura failed in the preliminary examination of the tenderers owing to this outstanding licence or certificate,” the ruling reads.
“Since the evaluation of the initial tender was done this presupposes that the deadline for the submission of the tender documents by the tenderers had long passed and therefore Riscura fell short of meeting the tender requirements. Therefore, it was a flaw in the tender process for PSPF to have invited Riscura to retender in 2021 when the same entity did not meet the threshold requirements in 2020.”
The panel ordered the PSPF to start the procurement process afresh with “clear evaluation criteria and guidelines for the responsive tenderers”.
It apportioned no wrongdoing on Riscura’s part.
A source with intimate knowledge of the tender process said Orange was intentionally sabotaged after it won the initial contract.
“The reason advanced for Riscura not making the top three bidders in the initial assessment round was that at the time they did not possess a licence from the Financial Services Regulatory Authority in Eswatini which was a prerequisite to tender. Effectively the disqualification of the initial bid owing to the anonymous whistleblowing complaint allowed Riscura time to secure [the required] licence,” the source said.
Riscura said it respects the decision of the review committee.
“As Riscura has not been formally appointed, we were correctly not involved in the Eswatini Public Procurement Regulatory Agency review and cannot, therefore, comment.
“We respect the process of the ESSPRA and note the outcome,” Bernadette Marais, spokesperson for Riscura, said.