Tuesday 19 September 2017

SSC invested N$150m with SME Bank

SSC invested N$150m with SME Bank
(The Namibian 03/14/17)
Milka Mungunda, SSC chief executive

The Social Security Commission invested N$150 million with the SME Bank last year and The Namibian understands that they want part of it back.
The Bank of Namibia took control of the SME Bank two weeks ago after alleged suspicious investments in South Africa, involving N$200 million, were uncovered.

Some of the ousted SME Bank executives, who have hired lawyer Sisa Namandje to demand that the Bank of Namibia reinstate them, said there was a run on the bank, and that they were losing money.

SSC chief executive Milka Mungunda confirmed yesterday that N$150 million had been invested in the SME Bank, but declined to comment on claims that the SSC has already recalled N$80 million of its investment in the bank.

Mungunda was one of the SME Bank board members who was fired two weeks ago by the Bank of Namibia after the discovery of the “unsound” N$200 million investment by the bank's management.

According to her, the SSC board approved the investment, and due diligence was done before the transaction proceeded. The money, she further said, was part of N$3 billion under the SSC's management.

“We all are waiting to hear the outcome of the Bank (of Namibia) investigation into the SME Bank, and will remain calm in the meantime. Our investment is a (short) term investment,” she added.

Before Mungunda's admission, The Namibian had been informed that the SSC invested only N$70 million.

The investment manager at the SSC, Lorentha Harases, also last week confirmed the existence of a 12-month N$70 million investment with the SME Bank.

“The Social Security Commission holds, like many other corporate investors, investments with the SME Bank. The short-term investment you referred to has a nominal value of N$70 million with a 12-month duration,” she explained.

Harases said they invested with the SME Bank after they reached their investment limits with other institutions, and because of the SME Bank's competitive rates.

On whether Mungunda did not have a conflict of interest when the SSC invested, Harases said her boss declared her links to the SME Bank.

“Mungunda disclosed her directorship of the SME Bank, and recused herself from the process of investing with the SME Bank,” she stated.

According to Harases, 75% of the parastatal's total assets were managed by four external managers, whilst 25% was managed internally and used to pay claims and benefits. She insisted that their financial decisions were sound and paying off.

She claimed that the SSC has terminated investments of around N$330 million with asset managers, which has resulted in a 1%, or N$3,3 million per year, saving on fees for the commission.

Finance minister Calle Schlettwein last week said he was aware of the N$70 million investment because treasury was informed of it. Labour minister Erkki Nghimtina said the SSC had requested several authorisations. He, however, could not recall the specific SME Bank transaction.

The SSC has a history of involvement in dubious investment transactions, with the long-running Avid investment saga being the standout.

That Avid scandal revolves around the disappearance of N$30 million of SSC money invested with the novice asset management firm. The Avid scandal, involving politically connected individuals, has been dragging through the courts for more than a decade now. The SSC's money has never been traced, and the court case is far from resolved.

by Shinovene Immanuel

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