LEAKED SATURNIA REPORT REVEALS HIGH LEVEL CORRUPTION
Continued From Yesterday 7. Secretariat
As secretary to the board, Bencon has repeatedly failed to objectively and correctly minute Board resolution items especially those that relate to itself and or to it’s sister company African Life, as was illustrated earlier above. The continued struggle by Trustees to access Fund records and information including simple things like past board minutes and resolutions and arranging face to face meetings with members has greatly concerned the Trustees. Bencon have assumed the face to face interaction and communication with members must be done by them only as they are the one who invited the members to join and so they treat this as proprietary a business ‘right’ that does not extend to the Trustees. Becon receives all correspondence relating to the Trustees as the use the same address and details as the Fund. This means that in a scenario where any member of the public wishes to contact the Trustees and share information that may be adverse to Bencon, such information may likely never reach it’s intended recipient, the Trustees. The current arrangement not only means that Trustees are unable to make the best informed decisions, but it also makes it difficult to operationalize any Public Interest Disclosures / whistleblower systems which is important in our industry. The above serious deficiencies re’ the Administrator and Board Secretary activities led the Trustees to consider setting up an independent Secretariat Office to mitigate the shortcomings above and to ensure a separate institutional presence for the Fund. This office of two people would also allow Trustees to set up an independent secretarial team to record without bias the Board minutes as they would not have any vested interest other than pensioners interest unlike the current state where Benco are conflicted in matters that relate to them or their sister company AfLife. The office would also keep a library of all key Fund documents, resolutions etc and quite importantly also ensure to follow through on the execution of the Board resolutions, something that rarely happens under the current structure. The office would also provide critical support to the Chairperson and the sub-committees of the Board of Trustees including ensuring for example that Trustees Insurance is updated timely, something that currently the present Trustees are unsure of as the Bencon has failed to confirm whether the Trustees are in fact properly and correctly insured. This idea was vigorously resisted by Bencon who launched campaigns via letters to members and meetings with sponsoring company representatives calling this arrangement an ‘emerging fund’ issue and accusing the Trustees of creating an ‘expensive superstructure’ that was irrelevant and would just be costly to the Fund. The trustees took a decision to terminate Bencon’s Contract at the December 2016 Board of Trustees Meeting following a motion that was put to the vote. Bencon and their sister company however are triying to thwart this resolution and are thus keen to ensure the removal of the current Trustees via a rushed AGM in the hope that this resolution does not come to pass when a new set of Trustees will be appointed / elected.
8. Custodian
Trustees have been exploring custodial arrangements but are very concerned that the current pension legislation appears to prohibit the appointment of the custodians that are already operating in other parts of the Zambian financial sector. Current pensions legislation requires that a pension custodian must be at least 51% Zambia owned. This rules all the reputable firms like Stanbic and Stanchart who already offer this invaluable and most critical governance control to other business within the financial sector except oddly enough, the pensions sector, which as most people would say, should in fact be the first sector that custodians must be considered for. Trustees would therefore like to urge all stakeholders to urgently review this achilles heel as it only serves to diminish the robustness of the pension sector.
Why is the custodian important?
This control acts as a gatekeeper to prevent the unauthorized use or diversion of Fund assets to activities and operations that not authorized by Trustees. It is an invaluable tool against fraud, embezzlement and diversion of funds. Trustees have previously communicated of an unfortunate incident where the Fund Manager, African life Service Limited decided to use approximately K2m of pensioner’s money to settle a significant legal judgement made against the Fund Manager a few years ago. Suffice to say we insisted that they pay the money back and this was thankfully recovered. Unfortunately, Trustees have now also become aware that during the recent period when the Fund Manager had injuncted the Trustees by taking the Trustees to court, another amount of over K620,000 appears also to have been taken out of pensioners Funds to settle bills relating to legal action taken by an a former tenant (Nkwazi Chambers) against African Life and the limited company. Trustees are concerned that there might be repeat behavior here which could have been prevented if a custodian was in place. Trustees have also recently become aware of a ZRA demand notice for K2m against a private limited company controlled the Service Providers but with a similar name to the Fund (Saturnia Pension Trust Limited). The Fund is not a limited company but and again pensioners money appears to have been used to part settle this cost. We have also already related Trustees concerns about some properties that appear to have been transferred from the Fund into a private limited company. Such a transaction would have been easily detected and prevented if such custodial arrangements were in place. Trustees believe custodian arrangement is a vital governance component that would ensure that pensioner’s assets are safeguarded and not used for any purpose other than as approved by the Trustees. Trustees would like to reiterate their request for stakeholders including the PIA and the Ministry of Finance to review legislation in relation to custodians and thus provide Trustees and Pensioners by extension, the correct tools and governance structures to plug a gapping loophole that currently exists.
9. Investment Consultant
Trustees believe an independent Investment Consultant provides an invaluable service to the Fund by assisting Trustees to set and review the Fund Managers target returns and general performance.
The current situation obtaining where there is no investment Manager can be likened to a situation where of a student who set’s his own examination paper, set the pass or cut-off mark and then goes off to write the exam and then mark it. At the end of it, the student then comes back to justify how well s/he has performed relatively to the target the student himself had set. This is of course unacceptable in any situation. Trustees believe this is even more important with fund investments where pensioners funds are invested in often complex and ever chang-ing financial instruments and where Trustees despite their best efforts just do not have the time and expertise required to sufficiently set the correct targets and critical and objectively review the Fund Managers performance. The service thus provided by an Investment Consultant, who is independent of the Fund Manager cannot be overemphasized as this is done on a time to time to basis and unlike the Fund manager, is on a once off basis. The benefits of engaging such a consultant far outweigh the costs that should generally be once off and project based. .
Conclusion
Saturnia Pension Trust Fund is poised for significant future growth and will continue to render a significant contribution to the economic development of the nation as well as continue to lead the way as one of the best run Private Sector Pensions not just in the country, but in the world. However, to continue on this path, Trustees firmly believe the forgoing to be very important and critical governance issues that need to be addressed as a matter of urgency. Yours Faithfully, On Behalf of The Board of Trustees.