Windhoek
The Social Security Commission (SSC) management was yesterday unable to explain how it came to award a multi-million-dollar investment consulting tender to Multi-Wealth Management, a company initially discarded during the shortlisting process for failing to provide the required documents.
Questions are also being raised over how Multi-Wealth Management is allowed to charge an annual investment consulting fee based on SSC assets’ market value, in addition to the basic annual consulting fee. Other asset management companies that tendered only charged for a single consultancy fee.
The additional investment consulting fee is set to earn Multi-Wealth Management nearly N$14,9 million each year for the next three years.
Multi-Wealth Management was selected for the tender to set up and bring into operation the SSC’s envisaged National Pension Fund.
Multi-Wealth Management is also tasked to advise the SSC on where and how to invest funds in the National Pension Fund, and monitor these investments.
However, the contract agreement documents between SSC and Multi-Wealth Management, which New Era has seen, appear to give powers to the consulting company to administer all SSC funds, including currently operational funds such as maternity, sick and death benefit, and development funds.
More intriguing is the fact that, according to a New Era investigation, the managing director of Multi-Wealth Management, Bryan Hoveka, and the business development executive Manfred Zamuee, are all former employees of Old Mutual Namibia, where SSC board chairperson Johannes Gawaxab served as CEO until 2014.
Gawaxab was CEO of Old Mutual for Africa Operations, based in Windhoek. Gawaxab is currently the co-founder and chief executive officer of Eos Capital, a wholly-owned Namibian newly incorporated private equity fund manager that is managing the Allegrow Fund in Namibia.
Further, according to the contract documents, Multi-Wealth Management identifies itself as a licensed long-term insurance broker, and not as a licensed asset management company. Nevertheless, the contract tasks Multi-Wealth Management to “provide investment advice concerning the investment and management of SSC assets, advice on investment decisions, risk management and the investment monitoring process.”
SSC chief executive officer Milka Mungunda promised to respond, when she gets answers, to New Era’s questions on whether this Old Mutual connection between Gawaxab and the owners of Multi-Wealth Management had any influence on the decision to award the tender to the company.
She also said she will answer on what informed their decision to award the tender to Multi-Wealth Management, despite it tabling a more expensive bid.
After contacting Multi-Wealth Management yesterday, New Era was informed that Hoveka would revert to answer questions, but this did not happen at the time of going to print. Gawaxab could not be reached on his mobile.
According to the consultancy agreement documents between SSC and Multi-Wealth Management, the consulting company would be paid a consultancy fee of N$500 000 per year for the next three years and the contract may be renewed after that period.
However, in addition to the basic consultancy fee, Multi-Wealth Management is also to be paid “a further Implemented Investment Consulting Fee at an annual rate of 0.55 percent of the market value of [SSC] assets”.
SSC’s assets are currently valued at around N$2,7 billion. According to New Era’s rough calculations the ‘Implemented Investment Consulting Fee’ would earn Multi-Wealth Management annual earnings of about N$14,89 million. The contract stipulates that the fees be paid out monthly, which translate to a monthly payment of N$1,24 million.
The contract also says that Multi-Wealth Management would have full discretion in managing the SSC funds and shall not need to obtain instructions from the SSC before entering into any transaction on the SSC’s behalf.
Another alarming issue in the contract is the fact that Multi-Wealth Management is given the powers to register investments in the name of the SSC or so-called approved nominee company nominated by the SSC.
Insiders at the parastatal say that the procurement procedure at the company is riddled with discrepancies after Gawaxab fired the previous SSC tender and project committee in February this year.
This specific tender was advertised a month after the dismantling of that committee and became effective on June 2. This means that the vetting process, which usually is done by the committee, was not followed, according to officials at the SSC.
Mungunda yesterday assured New Era that the SSC board was hard at work in constituting another committee.