THE Social Security Commission has confirmed that a breach surrounding its N$700 million investment had occurred, leading to government’s social welfare organisation cutting ties with South Africa-based investment manager Retirement Investments and Savings for Everyone (RISE).
SSC boss, Milka Mungunda, on Thursday issued a media statement explaining that the termination came as a result of RISE failing to stick to the SSC’s prescribed investment protocols, policies and rules.
“The challenge with RISE arose when they invested in an asset class not prescribed or permitted by the SSC investment policy, standards and procedures, which was unlisted private credit instruments,” read Mungunda’s statement.
She further explains that RISE’s investment in unlisted private credit instruments resulted in a breach of compliance.
“The transgression by RISE (Pty) Ltd prompted the commission to act decisively to ensure the compliance breach was rectified and to prevent a recurrence,” read Mungunda’s statement.
This comes after The Issue, in May, reported that the SSC’s board of commissioners has ordered an investigation to ascertain the whereabouts of N$55 million (about US$3 million) invested with RISE. The Issue also reported that the SSC board started asking questions around March, when the management allegedly failed to provide satisfactory answers regarding the said investment.
The Issue further reported that the board demanded assurances that the said investment is in compliance with international investment principles and that it is also not in breach of SSC’s internal investment policies; That a second due diligence be conducted on RISE; the SSC management should provide the board with verified information detailing the location and status of the funds; A review of the agreement between SSC and RISE to identify any breaches and recommended actions if any breaches are identified; Management should ensure that all custody accounts for SSC investments are set up in the name of SSC and establish viewing access to the investment bank account to monitor performance.
Mungunda’s Thursday statement now confirms that not all was above board with the investment. Detailed questions about the process and criteria used to entrust welfare money with RISE have remained unanswered since May.
The Issue had also reported in June that RISE invested an undisclosed amount of money into another South African investment firm, Plane Tree Capital. This third-party investment, The Issue has learnt, was in breach of RISE’s contract with the SSC.
“I can assure you that no investment from SSC investments with RISE has been lost to date. We will issue a detailed press release/statement in due course to address your concerns,” was Mungunda’s response in May.
RISE, at the time, also responded to The Issue stating there was nothing untoward with how the entity has been managing the SSC’s money.
“We are fully compliant with SSC requirements,” was the response by RISE chief executive Deresh Lawangee. Lawangee emailed a response in June, after The Issue, inquired about RISE’s role in what appears to be questionable investment transactions by the SSC.
At the time, Lawangee said no funds were missing and the investment remains liquid and traceable and that RISE has kept the SSC board abreast with full transparency and all the requested documents.
He also added that RISE grew the funds allocated by 14.2%.
This is now in contradiction with Mungunda’s Thursday statement, saying the contrary.
The figure is in line with Mungunda’s Thursday statement, which read that in June 2023, the SSC allocated US$34 million to RISE and that this amount grew by US$5.6 million to just shy of US$40 million.
She did not explain when exactly the SSC terminated its relationship with RISE but pointed out in her statement that due diligence on two potential investment managers, specialising in offshore investments, was conducted. The SCC then appointed Symmetry (Pty) Ltd to replace RISE and manage the money.
Mungunda also confirms that the SSC got an exemption from following the public procurement laws when choosing investment managers to manage its N$6 billion portfolio. This was because the public procurement law is silent on modalities on how investment managers should be appointed. She said the exemption was granted on 9 December 2020 by the finance minister.
