Mbumba shields !Gawaxab

TILENI MONGUDHI
July 3, 2024

PRESIDENT Nangolo Mbumba has backed Bank of Namibia governor Johannes !Gawaxab and will not contradict the central bank’s board decision to clear him.

This is despite criticism that the board acted outside its mandate in clearing the governor. 

Senior figures in the banking sector told The Issue that the central bank’s board of directors had no power to clear !Gawaxab.

According to them, only the president and the public service commission possess such power. 

The Bank of Namibia has opted to remain mum on the latest questions around the governor’s conduct. The bank did not respond to questions from The Issue sent four weeks ago. 

!Gawaxab’s integrity was questioned after being fined N$1 million by the Namibian Competition Commission for failing to seek its blessing before finalising the sale of shares in his financial services company, Eos Capital.

It also emerged that he declared to the Bank of Namibia (BoN) that he had sold his interests in Eos Capital and Old Mutual to unrelated parties, while actually he sold them to a close friend and business associate and his sister-in-law. 

This resulted in calls for !Gawaxab to resign. 

However, the bank’s board of directors cleared him. On 24 May, BoN issued a media statement saying the bank’s non-executive board members had sought an independent legal opinion and deliberated on the matter. 

The statement said the board found that the N$1 million fine !Gawaxab paid to the competition commission does not transgress the Bank of Namibia Act. It concluded “that there are, at present, no obvious legal implications for the bank concerning the governor’s conduct.”

The decision to clear him has been criticised. 

At least two senior bankers told The Issue that the board does not have the power to clear !Gawaxab and only the president and the public service commission. 

This, according to the bankers, is because of the central bank’s unique set-up: !Gawaxab, as governor, is the board chairman and plays a significant role in appointing non-executive directors. 

As governor, he is in a position to sway board decisions, especially on operational matters. 

PRESIDENTIAL PARDON

In response to questions from The Issue, presidential press secretary Alfredo Hengari last week said President Mbumba was briefed on the matter and was satisfied with the Bank of Namibia board’s decision to clear !Gawaxab. 

“In the absence of any substantiated evidence of any malfeasance or impropriety presented in terms of the relevant provisions of the Act, the Presidency deems this matter concluded,” Hengari’s emailed response said. 

He said President Mbumba saw nothing wrong with !Gawaxab’s seemingly contentious declaration of interest. “The Presidency was satisfied with the declaration of interest availed and was informed of the measures undertaken by the governor to comply with the relevant provisions of the Act to the board of the Bank of Namibia, especially given the wide-ranging nature of his business interests and the complex process of relinquishing these interests,” Hengari added.

However, critics have said that in terms of the BoN Act, the governor can only be cleared by the public service commission, in consultation with the finance minister. This would be after the appointment of a tribunal, chaired by a retired judge or an advocate, to investigate the conduct of the governor or deputy governor. The president would then sign off whatever findings and recommendations the tribunal makes.

The Public Service Commission did not respond to detailed questions on the issue sent four weeks ago. 

FIT AND PROPER

Despite Mbumba’s support, !Gawaxab’s detractors are of the opinion that he is not fit to hold that position, which requires “an impeccable track record.”

Critics believe he does not fully comply with strict governance standards, whether measured locally or internationally, and should resign. 

One critic noted that !Gawaxab was chairman of the Social Security Commission’s (SSC) board of trustees between 2015 and 2018. During that period, the SSC invested N$150 million, in three tranches, in the now-defunct SME Bank. 

!Gawaxab and his fellow board members were never held accountable.

The !Gawaxab-led SSC board saw nothing wrong with chief executive Milka Mungunda being in a clear conflict of interest situation when public funds were being paid to the SME Bank. 

Mungunda not only served as a board member of the SME Bank at the time but was also a member of the board’s investment committee.

One critic wondered whether !Gawaxab continuing as governor could possibly lead to Namibia being further greylisted or downgraded by rating agencies. 

Namibia was greylisted early this year by the Financial Action Task Force, an intergovernmental organisation founded to develop policies to combat money laundering, organised crime and terrorism financing.

Another concern related to the central bank’s non-executive directors clearing the governor is that he interviews aspirant board members. 

The interviewing panel then provides the names to the minister, who presents them to the president to sign off on.

Someone well versed in BoN’s operations told The Issue that, based on the Bank of Namibia Act, !Gawaxab should not qualify to be governor. The source, who did not wish to be named, listed provisions in the law that may disqualify a governor from being appointed. 

The Act requires that the governor must be fit and proper; he or she must not have held a shareholding or directorship in companies or entities supervised by BoN at least three months before his appointment; he or she must not have been disqualified under any law dealing with companies to hold the position of director of a company; he or she must not have failed to disclose prior to his or her appointment that he or she was convicted in terms of laws dealing with companies or insolvency; he or she must also not have been convicted of an offence involving dishonesty in Namibia or elsewhere.

Some Interesting Stories