By Surihe Gaomas WINDHOEK Business ventures that suspiciously went bankrupt after receiving loans from the Government Institutions Pension Fund (GIPF) are being probed by a joint investigation involving the Ministry of Finance and NAMFISA officials. Tens of millions in funds belonging to members of GIPF have spectacularly gone up in smoke after several business ventures that in the first place were deemed financially viable collapsed under questionable circumstances and while suspects remain untouched. The probe undertaken by the Ministry of Finance and investigators from the Namibia Financial Institutions Supervisory Authority (NAMFISA) targets some of the 18 businesses mainly bankrolled under the Black Economic Empowerment (BEE) schemes. This resulted in GIPF losing N$637,6 million in these investments. Notable among these ventures was a slaughterhouse that went bankrupt after it received a capital injection of N$5 million from GIPF, while Omaheke Tannery lost N$20 million. Namibia Grape Company (NGC) and Omaheke Leather Processing at Witvlei blew N$30-million of GIPF money during the free-for-all gravy-train ride. Furthermore, New Era learnt that the main target of the investigations centres around the missing millions of the GIPF's Development Capital Portfolio (DCP). Although Namfisa's Corporate Communications Officer Eben Kalondo confirmed the investigation into GIPF, she could not divulge any further information since the investigations are still ongoing and she felt this could prejudice the probe. The DCP initiative, which was geared essentially to inject developmental capital into selected institutions to drive economic development, had turned out to be a huge loss for the company. The N$75,5-million investment under scrutiny was sealed with five local authorities. It turns out that under the DCP initiative the five loans amounting to N$75,5 million, divided up into five different investment companies, have also gone to waste. Previously under review it was reported that the loans of N$5 million were granted to Tsongang Investments Company (Pty) Limited; 10 million to Sepiolite Investment (Pty) Limited; N$12 million to Omna Investments (Pty) and N$20 million each to Omaheke Tannery and Multitime Investment (Pty) Limited. When the Board of Trustees of GIPF conducted a review in October last year the audit report found zero value recorded on these investments. At that time, GIPF's Acting Chairperson of the Board of Trustees, Hartmut Ruppel, said that the DCP which was established in 1997 was meant to bring about economic development by uplifting the business sector of the country through providing the much needed direct investment for companies to become self-sustainable and declare profits. Thus DCP projects were funded by GIPF with the intention to alleviate poverty and promote Black Economic Empowerment in Namibia. However, all this failed as most of the BEE companies failed. "Regrettably things went wrong and there has been a disappointment in returns," said Ruppel in a previous interview with New Era. It was as a result of these financial irregularities that the company board reviewed a moratorium on investments. The overriding failure in most of these BEE schemes was related to the structure of financing. "The debt ratio is skewed therefore creating a huge monthly interest burden to repay their debts during the initial part of the business cycle," explained GIPF's Investment Manager Madeleine /Goagoses in a previous interview with New Era. During the past three years the government institution also failed to make any returns from the failed loans that were given to Omaheke Tannery. Minister of Finance Saara Kuugongelwa-Amadhila on October 20 last year gave orders that an investigation must be launched into the financial situation of GIPF. "Several entrepreneurs were granted loans as start-up capital for their businesses by the Development Capital Portfolio. These were drawn from different sectors of the economy, including agriculture, mining, hospitality and tourism as a well as manufacturing. However, inadequate management capacity at projects level resulted in poor management," explained Kuugongelwa-Amadhila during last year October's National Assembly session. Thus the Ministry of Finance is working closely with NAMFISA to review the investments made by GIPF. Since then the regulator of non-banking financial institutions has been conducting on and off-site inspections into the affairs of the GIPF since last year. The inspection covers a full-scale investigation into all investments made. The GIPF's Chief Executive Officer Primus Hango could not be reached for comment at the time of going to press.
2006-08-25 00:00:00 12 years ago