THE Government Institutions Pension Fund has approved a N$350 million unlisted investment mandate to a company with strong ties to controversial Chinese businesswoman Qiaoxia ‘Stina’ Wu.
The Issue has reliably learnt that the said company had initially listed a few of Wu’s property development concerns as major projects it planned to invest in. This has sparked allegations that the entire purpose of the mandate was a politically motivated manoeuvre to rescue Wu’s business empire from crumbling.
The decision comes less than 12 months after Wu made media headlines for being pursued by financial institutions after failing to repay loans worth over N$100 million.
Adding to the controversy, The Issue has learnt, is the fact that the GIPF’s own internal processes had recommended rejecting the mandate application due to flagged irregularities.
The businesswoman, however, pleaded ignorance. “What you said is completely unknown to me; it’s just a rumour,” she said via text on Thursday.
RED FLAGS
During the first half of 2022, the GIPF called for investment mandate expression of interests. This was done as part of its legal obligation stipulating that pension funds invest 45% of their market value in the country.
One of the applicants was VG Capital with a unique concept that appears to be the first of its kind for the GIPF.
The company came up with a private debt financing concept and not the equity funding model traditionally practised by the GIPF.
In equity funding, the entity which receives the GIPF’s money invests as a shareholder in a project and makes its money via dividends or sells its shares after the business has grown at a profit. While in debt financing, the project receives money and has an almost instant repayment obligation, just like receiving a loan from a commercial bank. This also means that the investor (GIPF) will not have a seat on the board of the company in which the money will be channelled to, nor will it have a say in the running of such an entity.
But there was a problem. The GIPF’s own internal processes flagged VG Capital as risky and recommended the pension fund not to entertain the proposal.
The main reason was because VG Capital’s list of intended investment projects was predominantly property development projects in Wu’s property portfolio. Some of which are under her companies, like At Helmsman Group.
The Issue is informed that some of the projects are shopping mall developments in the Kavango East and West regions.
GIPF spokesperson Edwin Tjiramba has confirmed that fund managers are “prohibited from using GIPF funds to finance their own or related party projects”.
The GIPF’s internal investigations pointed out that VG Capital’s owners, Chinese businessman Min ‘Charlie’ Xie and banker Chuka Okafor, have close business ties to Wu. This relationship or proximity to Wu created a conflict and presented the possibility that VG Capital would not be independent in dealing with Wu.
Wu and Xie are known to have a close personal and business relationship. They are seen driving the same car around Windhoek, attending functions together and their business operations are intertwined. Earlier this year, The Issue reported that Wu was implicated in a seal genital smuggling case, which involved Xie’s Virgo Biotechnology company. This was because an employee of Wu’s At Helmsman Group was responsible for handling the alleged illegal shipment to China in December.
Business registration documents at the Business and Intellectual Property Authority (Bipa) also show this link.
The documents show that VG Capital was initially Kingsway Capital Partners, a company founded by Xie in March 2019. Xie was listed as the sole shareholder and beneficial owner.
The Issue understands that it was also Xie who managed to get the company accredited and licensed by the Namibia Financial Institutions Supervisory Authority (Namfisa).
Banker Okafor was appointed as director during August 2019. During February 2021, the company changed names to VG Capital.
Interestingly, the company documents show that both Okafor and Xie gave Kingsway Group email addresses. Kingsway Group Holding, not to be confused with Kingsway Capital Partners, is a property development company owned by Xie, Wu and Cheng-Yuan Lee.
This information also adds to the evidence that VG Capital has a too-close-for-comfort relationship with the controversial Chinese businesswoman.
Wu has close ties to the ruling Swapo party and some of its leaders, including influential senior government officials and the police top brass.
Xie distanced himself from VG Capital when asked for comment on Thursday. “Thats totally wrong. That’s not my company, so no comments [sic],” he said via text message.
Sources in the asset management industry also complained that VG Capital was not an indigenous Namibian-owned company because both Okafor and Xie are naturalised Namibians.
SPECIAL TREATMENT
Allegations of a tailor-made bailout for Wu have been made against the GIPF. It is alleged that once a mandate application does not meet the criteria for selection, the GIPF simply throws such an application out.
But not in VG Capital’s case.
The Issue has been informed that the company was given a chance to comply with GIPF requirements, despite an internal report recommending a rejection.
People in the fund management industry well versed with the case told The Issue that instead of rejecting the application, VG Capital was given an opportunity to change its shareholding structure to include indigenous Namibian shareholders. It was also given an opportunity to change its investment strategy to remove all the Wu-linked projects and investments.
It is for this reason that the application took three years to be approved.
Questions about this alleged special treatment are now being raised.
GIPF’s Tjiramba on Saturday said the funds’ actions were above board. He said there was no special treatment accorded to VG Capital and that all four entities who are shortlisted for this round of allocations were afforded time and opportunity to fix shortcomings identified during the due diligence process from 2022.
According to Tjiramba, VG Capital’s mandate was approved last month after it had to tailor its application to GIPF’s halfway requests, starting in 2022. Tjiramba added that Xie is not a shareholder of VG Capital but was at some point listed as an employee; he was not part of the VG Capital team at the time the entity submitted its application.
BAILOUT
The strange circumstances in which the GIPF went out of its way to grant VG Capital a N$350 million debt financing mandate have led to allegations that the mandate was aimed at saving the politically connected Chinese businesswoman’s business empire from collapse. Wu’s business entities preside over a billion-dollar property portfolio, with residential and commercial property developments across Namibia. But recent media reports that she was in serious financial trouble with major financiers making a run for her properties because she was unable to service her debts with them.
Between October and November last year, the Development Bank of Namibia (DBN) dragged Wu to court in a bid to auction off Wu’s properties, including her flagship Marigold Hotel in the heart of Windhoek, due to an unpaid N$68 million loan and arrears.
As a result, DBN was criticised by the local business community for favouring foreigners at the expense of Namibians. Wu is currently a naturalised Namibian, who got Namibian residency on the back of being dubbed a super investor. The business community argued DBN’s mandate, as a government-owned development financing agency, should focus on assisting indigenous Namibians, especially the previously disadvantaged, who would find it difficult to get business financing from the commercial banks.
During the same period, the country’s largest commercial bank, First National Bank (FNB) also took Wu and her two business partners businessman Xie, businesswoman Yiling Huang, as well as her companies, First Wall Industrial Park and AT Helmsman Group Holding to court over an unpaid loan of N$40 million.
LEGAL THREAT
After a brief telephonic conversation with VG Capital’s Okafor, The Issue received a letter from their lawyer Raywood Rukoro, basically instructing the publication not to publish anything about his client and stating that such a publication will be viewed as malicious, negligent and reckless journalism.
The Issue’s lawyer, Norman Tjombe, responded to the legal threats that his client will publish the article in line with ethical journalistic principles.
