The Central Bank of Lesotho (CBL) whose key key responsibilities include managing the country’s currency, regulating and supervising financial institutions, ensuring price stability, facilitating payment systems, and advising the government on economic and financial matters, is once again under the spotlight through its division of Other Financial Institutions Supervision.
An employee of CBL who spoke on condition of anonymity with Lesotho Tribune, divulged a series of failures by the regulator to adhere to its guidelines, aimed at regulating financial institutions, in the main those who provide services to pension funds and pension funds themselves.
Our source confirmed that indeed the bank had on number of occasions failed to implement its regulations and enforce regulations.
“When you [Lesotho Tribune] started writing about issues in the pension fund industry, majority of us knew that, on issues related to CBL as the regulator, you had your finger on the pulse,” our source said.
“Since 2019 we have had a dozen of complaints about non – compliance of majority of trustees and service providers in the pension fund industry. There was a consortium of investors which wrote to us complaining, when they wanted to purchase stake in one of the companies we regulate [name known to Lesotho Tribune but is withheld for now] but we refused that acquisition without any basis…”
“We have CHAL hospitals which wrote to the bank on a number of occasions requesting that the bank intervene in what they deemed to be improprieties by companies we regulate, unfortunately we failed,” added our source.
Our source continued to highlight that CBL doesn’t fully implement “Fitness and Propriety Questionnaire” which is a tool used to assess whether individuals holding key positions in financial institutions meet the required standards of competence, integrity, and honesty.
“Fit & Proper evaluates a candidate’s qualifications, experience, criminal history, financial standing, and ethical conduct to ensure they are fit to manage or influence financial institutions. But Mr. Zamani Letjane, through his company, Akani Financial Services was cleared as fit & proper, yet the regulator was made aware that him and his company in South Akani had been found guilty of bribing trustees,” our source remarked.
Our source concluded by emphasising that the fit & proper questionnaire aims to safeguard the financial system by ensuring that only qualified, trustworthy individuals hold key positions, also promote sound governance and management within financial institutions and finally to enhance public trust in the financial sector by maintaining high ethical and professional standards.
Lesotho Tribune sent questions to CBL, no response was received at the time of publication. This story will be updated when comments from CBL have been made.
History of the capture of Lesotho’s pension funds
In February 2024, Lesotho Tribune ran an investigative series of capture and corruption of Lesotho’s Pension funds by Mergence, Akani Financial Services and Cadiant.
One Public Officers Defined Contribution Pension Fund (PODCPF) trustee who had knowledge of how the central figure, being Cadiant, had planned to capture and control PODCPF, aided by Mr. Mahlatsi and one other member of the investment committee, painted a picture of overt fraud and corruption, by trustees and Akani, who at that time had potential become a service provider had it not been of fraud and corruption case of which it was found guilty.
“When the tender for administration of the small fund (SODCPF) was issued, it was already rumoured that Cadiant (through its cofounder, Mr. Semoli Mokhanoi) have prepared two companies, their preferred of course being Akani and Fairsure. Since they (Cadiant) were aware that Akani has already been found guilty in South Africa for bribing trustees of one pension fund, they anticipated that Akani may not ‘win’ the tender, hence a quick incorporation of Fairsure,” the source said.
Interestingly Fairsure’s registered address is… (yes! you guessed it right, but there’s no prize for getting it correct) 10 Molepe street, Hillsview, Maseru.
Public records shows that Akani has two shareholders;
Akani Retirement Fund Administrators (PTY) Ltd
Pride Of Basotho Ink
After failing to secure the administration tender of SODCPF, Akani through the influence of Cadiant and Mr. Mahlatsi have been appointed as NUL pension fund, where Cadiant is an employee benefits manager and Mr. Mahlatsi is a principal officer.
Mr. Mahlatsi has since confirmed at the public accounts committee (PAC) hearings that he had a conflict of interest with Akani, where he was instructed to steamroll NBC Lesotho appointment after fairly winning the tender, however when he failed, him and other employees of the PODCPF filed a court case, which sought to reverse the appointment of NBC Lesotho. The case is still pending in court.
How did Central Bank of Lesotho due – diligence miss this?
According to CityWire, in the 2022 ruling, penned by Judge Leicester Adams and two other judges, the full South Gauteng High Court bench in Johannesburg invalidated the decision of the Chemical Industries National Provident Fund (CINPF) and its trustees in November 2019 to terminate the provident fund’s service agreements with NBC.
Adams also invalidated the decision of the CINPF and its former principal officer, Bonginhlanhla Dangazele, and the fund’s chair of its board of trustees, Reginald Sema, to appoint Akani, Novare Actuaries and Consultants, and Moruba Consultants and Actuaries as its administrative, consulting, and actuarial service providers.
Those three service providers replaced NBC, the CINPF’s administrator since its inception in 1987.
In the 2022 ruling, Adams ordered that the CINPF remove Sema and Ayanda Sithole, who was CINPF’s deputy chair, from the CINPF board of trustees.
At the centre of the legal battle are Dangazele, Sema and Sithole, who, according to NBC and other parties, received bribes from Akani to influence the decision to appoint Akani as CINPF’s fund administrator.
Bribes
The full bench, in its 2022 ruling, said the South Gauteng High Court’s first ruling, which took place in July 2020, should have rejected the far-fetched and implausible explanations proffered by CINPF and Akani for the irregular payouts received by CINPF’s senior office bearers.
The full bench said that the true purpose of the payments was to bribe Dangazele, Sema and Sithole.
‘In my judgement, the termination of NBC’s services is tainted with fraud and corruption,’ Adams wrote.
The judge said Dangazele, Sema and Sithole’s bribery was sufficient to invalidate CINPF’s supposed reasons for switching service providers.
According to our CBL source, who confirmed that it had the above information yet it continued to license Akani Financial Services, when the information provided to the regulator highlighted that Part of the judgement read… .section 13B of the Pension Funds Act (PFA) provides that the administrator of a fund shall be approved by the registrar and has onerous duties both to the fund and to the regulator, relating to the interests of the members and the proper administration of the fund. In terms of section 13B(5)(a) an administrator must endeavour to avoid conflict between his interests and the duties owed to the fund, and any conflict of interest or potential conflict of interest must be disclosed by the administrator to the board setting out full particulars of how such conflict will be managed. And section (b) requires the administrator to administer the fund in a responsible manner.
