Fund in damaging legal brawl

Fund in damaging legal brawl

MASERU-A squabble over the appointment of a service provider has left the Public Officers Defined Contribution Pension Fund (PODCPF) in the throes of a damaging legal battle.

Tensions have been simmering over the past ten months, with the PODCPF’s board divided over the appointment of an administrator for the M7 billion fund whose nearly 40 000 members are government employees.
Matters came to a head on March 26 when the board appointed NBC Lesotho, a company that has held the contract since the Fund’s inception. Five of the nine-member board voted for NBC Lesotho while four backed Akani Retirement Fund Administrators.

The vote, which should have ideally resolved the matter, has triggered a legal fight that might drag on for months.
A day after the vote the Public Officers Defined Contribution Pension Association filed an urgent High Court application to block NBC Lesotho’s appointment.

Now Thabo Thulo, PODCPF’s principal officer, has cautioned that the legal battle could have a serious impact on the Fund’s operations.
Thulo makes the stern warning in his answering affidavit to the application filed by the association in March.

The association argues that NBC Lesotho’s appointment was illegal and illogical because its sister company, NBC Holdings, is embroiled in ‘malpractices’ in South Africa.
Of concern to the association is the NBC Holdings’ on-going legal wrangle with Chemical Industries National Provident Fund (CINPF).

Although the case in South Africa is yet to be finanlised the association insists that it makes NBC Lesotho unfit to manage the PODCPF. The association further points to forensic and due diligence reports that it says paint NBC Holdings in bad light.

Advocate Molefi Ntlhoki, the association’s lawyer, alleges that the board appointed NBC Lesotho “notwithstanding serious risks and concerns identified by the forensic audit reports and due diligence report”.
The association wants the court to block the board from signing a contract with NBC Lesotho pending the finalization of the case. It also seeks an order for the board’s decision to be “reversed, corrected and set aside as irrational and therefore unlawful and without an effect and force in law”.

Molise Chabana, the secretary general of the association, makes the same arguments in his affidavit.
Chabana says the 27 members of the association who have filed the case have a legal right to seek relief because of their interest in the PODCPF.
But Thulo, in his affidavit, tells the court that NBC Lesotho won the contract fair and square.

He argues that the application should be dismissed because only two of the 27 association members named as applicants are members of the pension fund.

The rest, Thulo says, left the pension fund and opted to take annuities with Metropolitan Lesotho.
“They have no interest whatsoever in the application and they are not entitled to any relief,” Thulo says.

“On this basis, the application in respect of those persons stands to be dismissed.”
Thulo says the board followed all procurement procedures before awarding the contract.

Giving a chronology of what transpired during the tender, Thulo says NBC Lesotho and Akani were shortlisted out of four companies after they had scored above the 70 percent threshold.
On the technical proposal NBC Lesotho scored 86.83 percent while Akani had 76.83 percent.

On the financial proposal NBC Lesotho charged M39.75 on each member per month while Akani quoted M35.
Thulo says on 24 November last year the evaluation committee recommended the appointment of NBC Lesotho but referred the pricing issue to the board.
The committee said its recommendation was based on the fact that NBC Lesotho was technically superior and was already familiar with the Fund’s operations.

Documents seen by thepost show that at the November 28 meeting some board members proposed a due diligence on both NBC Lesotho and Akani.
Minutes of that meeting reveal that there was a debate about that proposal, with some board members questioning the motive of having a due diligence when the bids had been evaluated and the preferred bidder had been recommended.

Some board members asked why there should be a due diligence when the issue to be decided was not the technical capacity of the companies but their pricing.

Others queried how the due diligence would affect the outcome of the evaluation and pointed out that such an exercise would amount to a re-evaluation of the bids.
The board however instructed the committee to define the parametres of the due diligence.

In December the committee established the parametres which it later presented to the board in January this year. The committee also appointed a firm to conduct the due diligence.

But Thulo says by that time the board already had all the information from the bidders, including NBC Holding’s issue with the CINPF in South Africa.
The due diligence was conducted over three days in mid-February and the committee discussed the report a few days later but was divided on who to appoint. Three backed NBC Lesotho and two supported Akani.

By that time it was clear that the board too was divided over the issue.
Those factions became clear when the committee asked the board to make the final decision at its extraordinary meeting on February 28.
A day before the meeting the chairperson of the board received a letter from Futho Hoohlo, a trustee, pleading with her to cancel the meeting because he had asked the Minister of Finance to intervene.

Board members Matheakuena Lekhoaba, Monaheng Matlatsi and Mofota Shomari also signed Hoohlo’s letter.
The four then boycotted the February 28 meeting which consequently failed to make a quorum.

Minutes of that meeting show that those who attended were annoyed that Hoohlo had approached the minister before the board received the evaluation committee’s recommendation after the due diligence.
Thulo, who is an ex-officio member of the board and does not vote, tells the court that members felt that the four had moved “prematurely to seek intervention and deprived the board statutory right to deal with the matters within its powers and responsibility”.

Hoohlo and company also boycotted another special meeting called to discuss their concerns.
When they eventually attended a board meeting on March 26, the evaluation committee presented its report but revealed that it was now divided on which company to appoint. Three favoured NBC Lesotho while two wanted Akani.

Thulo says each side presented its reasons for its preference.
NBC Lesotho then won the contract with five votes from the nine board members. Akani received four.

A day later the pensioners association filed the application to block NBC Lesotho’s appointment, arguing that the decision was unlawful.
Thulo also claims that even as the evaluation committee was working on its final report Akani did not have a trader’s licence. He says the company was still in consultation with the Ministry of Trade over the licence.
“NBC was already operational while Akani was not,” he says.

“Akani was still awaiting stakeholders’ consultation with the Central Bank of Lesotho. They were therefore not ready to perform the service.
Thulo also questions why board members who took part in the tender now disown the “democratic process”. Those board members, he adds, know that the process was fair and transparent.

“The board followed a democratic process. It requested the Evaluation Committee to look into the certain aspects of NBC Lesotho.”
He says Mahlatsi, the pensioner association’s representative on the board, “knows how the process was unfolding and there was no untoward conduct”.

Staff Reporter

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