THE Social Security Commission ‘invested’ N$150 million into the now defunct Small and Medium Enterprises Bank, at a time when both the bank’s auditors and the Bank of Namibia had already sounded alarm bells that public funds were being looted.
New evidence shows that at least N$100 million of the N$150 million was ‘invested’ a month after the central bank’s then head of banking supervision Romeo Nel had opened a criminal case, with the Namibian police, indicating fraud, theft and money laundering was taking place at the SME Bank.
New information and timelines pieced together by The Issue point to the transactions between the SSC and the SME Bank being a bailout rather than an actual investment.
Milka Mungunda, who held senior roles at both the SSC and the SME Bank at the time of the large-scale fraud at the bank, would not answer questions about her involvement but insists she “never stole money” but has curiously never been held accountable by her employer for the failed investment.
Mungunda was the CEO of the SSC, a board member of the SME Bank, and also served on the SME Bank’s board investment committee at the same time.
PAINT ME AS CORRUPT
The Issue’s investigations and analysis of the sequence of events leading to the closure of SME Bank revealed it was unlikely that the SSC, especially Mungunda, would not have known that any investment into the SME Bank was not in the interest of the investor.
The sequence of events further show that when the SSC made its first investment of N$50 million, the bank was already in trouble and under the BoN microscope.
The investment was done between July and September 2016.
This period is significant because it was around July 2016 that the SME Bank’s auditors, BDO, started questioning the disappearance of N$75 million.
The bank claimed it had invested the money with South African-based Mamepe Capital, owned by Mauwane Kotane. Mamepe could not provide proof that it had indeed invested the N$75 million and where the money was invested.
Mamepe Capital even went to the extent of providing the bank with fake monthly investment statements to fend off the prying eyes of BDO and BoN.
By September 2016, after the SSC had already made its first N$50 million ‘investment’ with the SME Bank, BDO and BoN had held several meetings with the SME Bank board about the whereabouts of the money invested in Mamepe Capital, while the central bank had begun taking a more stern approach to investigating the bank.
More meetings between the SME Bank’s board, BDO and BoN were to follow during that period. These led to the central bank demanding daily liquidity and financial reports from the bank. By November 2016, then BoN director of banking supervision, Nel, opened a case with the Namibian police.
However, on 13 December 2016, the SSC made two investments totalling N$100 million in the already sinking SME Bank on the same day: A 12-month fixed deposit investment of N$70 million and a six month fixed deposit of N$30 million.
The Issue has learned it was also during this time, from about October 2016, that the SME Bank’s then chairman, and secretary to Cabinet, George Simataa, was frantically writing to ministries, parastatals and other government agencies requesting their assistance in investing money in the bank, which was drowning.
The Government Institutions Pension Fund (GIPF) was one of the recipients of such a letter. According to sources familiar with the situation, the GIPF board of trustees initially flirted with the idea of investing N$1 billion in the bank. The figure then dropped to N$500 million but that idea was eventually dropped altogether after due diligence reports indicated it was not a viable investment.
“The SME Bank issue has been handled by competent authorities in our legal system. Therefore, I offer no comments,” said Simataa when asked about writing letters to government institutions seeking their assistance to invest into the failed bank.
Media reports indicate that only N$30 million of the N$150 million invested was recovered.
In 2022, the Namibian Sun reported that the SSC received another N$25 000 of the remaining N$120 million during January 2022.
Against this background, questions are now being asked whether the SSC did its due diligence before making its investment and how it was possible that the SSC board of trustees did not know that BoN was investigating SME Bank at the time of the ‘investments’.
At the time, the SSC’s board of directors was led by current BoN governor Johannes !Gawaxab. They were never asked to answer for the failed and risky investment.
Other questions relating to what role SSC CEO Mungunda might have played in the investments, also remain unanswered.
Did she sign off on the said investments despite being conflicted?
Is it possible that Mungunda, a board member of the SME Bank and a member of its investments committee, which was under BoN and BDO’s scrutiny at the time, did not know that it would be reckless to invest public money in a sinking bank?
Mungunda and the SSC have refused to respond to detailed questions sent on Thursday. In a telephonic conversation the SSC CEO, however, complained about what she felt was a sustained media campaign, especially by this reporter, to tarnish her image.
She said she was asked the same questions every two or three years and had already answered all such questions.
“I have never stolen money. I have never done anything and you guys want to paint me as corrupt. So please, do what you want,” she said before ending the call.
HISTORY OF BOTCHED INVESTMENTS
Mungunda and her fellow SME Bank directors have been held to some form of accountability for their role in the SME Bank’s demise. They have been made to pay back their board fees. In Mungunda’s case, she paid back about N$400 000 in board fees as a settlement to avoid being further pursued by the liquidators or possibly being declared a delinquent director.
The SSC and its board or the government has however not held Mungunda accountable for her role in the loss of the N$120 million belonging to Namibian workers.
In contrast, her critics point to 19 years ago when former SSC chief Tuli Hiveluah was forced to vacate his post after the State welfare agency lost N$30 million in a botched investment deal. The investment deal, now known as the Avid scandal, saw Hiveluah and at least two senior executives at the SSC facing the chop. The SSC recovered N$10 million from the failed investment.
Between 2002 and 2020, three of the five executive officers presiding over the SSC have faced scandals related to mismanagement of welfare funds in its custody.
Dessa Onesmus was removed in 2002, while Tuli Hiveluah resigned shortly after he was suspended in 2005.
Interestingly, despite the loss of N$120 million and the High Court concluding that one of the board members of the failed bank played a role in the looting, the SSC CEO did not face any disciplinary action.
In fact, she was rewarded with an additional five years, while the SSC was accused of changing its internal policies to accommodate Mungunda and allow her to serve in that position past the age of 60.
