In an interview with The Business Weekly & Review this week, Rapula Okaile, former Managing Director (MD) of the liquidated private equity firm Capital Management Botswana (CMB), said he is preparing to sue Boitumelo Molefe, former Botswana Public Officers Pension Fund (BPOPF) Principal Officer, in her personal capacity.
Okaile said his decision is informed by the fact that it was Molefe who started all the fights against CMB. “I believe that even when these fights started, it was clear that she had something against CMB or its directors. To her it was personal, and she went all out to destroy our business and personal lives. So we are coming heavily after her in her personal capacity,” Okaile explained. He added that before Molefe took the fight to CMB, the company at one point had a P880 million in assets under management (AUM) from the BPOPF. Further he said the company was approaching the P1billion mark because it was also luring in other private clients for private equity investments. “Our future was bright because we were signing in more clients. Allegations levelled against us by Molefe destroyed CMB’s reputation in the market and chased clients away,” he explained.
Further to that, Okaile notes that his other personal businesses were destroyed in the process, while he suffered humiliation and emotional stress together with his family due to being arrested and detained in police cells. As it turns out, Okaile said before Molefe, then as BPOPF Principal Officer, decided to drag CMB to court, she sought legal advice from two legal firms which boldly told her that CMB actions were all instituted within the confines of a legal document signed by CMB itself and the Fund.
In 2014, BPOPF signed a contract with CMB for management of a P800 million private equity fund, the Botswana Opportunities Partnership (BOP). The contract gave CMB absolute powers and control of the BOP. On the basis of the powers which CMB derived from the legal document, its directors Tim Marsland and Rapula Okaile were two weeks ago discharged and acquitted of all financial crimes they were previously accused of.
Interestingly though, a judgement by High Court Judge Boipuso Tshweneyagae, delivered on 30 August 2021, discharged Okaile and Marsland of the money laundering and obtaining by false pretense charges, and even acquitted them. Key of the reasons for their acquittal was that as per an en commandite agreement signed by the BPOPF and CMB, no money laundering was done and the funds were not obtained by CMB under false pretenses. In short, a contract that was signed by the BPOPF and CMB has rescued the CMB directors and choked BPOPF.
Under the contract, CMB was first awarded P500 million to be managed under the fund in which CMB was the General Partner while the BPOPF was a Limited Partner. That P500 million kitty awarded to CMB was the first tranche of BPOPF’s trend-setting P800 million private equity funds solely targeted for investments in Botswana. BPOPF at the time regarded CMB as experts in the asset management business.
Further, BPOPF in December 2016 awarded CMB a further P380 million under the same private equity fund. It brought the total assets in the BOP to P880 million. At that time, Boitumelo Molefe was the CEO, having been appointed substantively around July 2015.
BPOPF then said it chose to extend CMB allocation because of the speed at which they were finding new lucrative private equity investments. Some of the companies they had invested in include the first-ever 100 percent life insurance firm, Bona Life Insurance Limited, leading eco-tourism outfit Wilderness Safaris and certain companies in Mozambique.
However, a year down the line, relations soured between the two. Accusations and counter-accusations were thrown at each other. CMB and BPOPF became enemies so much that their disputes were dragged to the courts of law. At that time, CMB had only drawn down P480 million. The law being an evidence and document supported creature, the courts looked at what the two had initially agreed. BPOPF accused CMB of breaching the BOP agreement by investing in listed equities despite the fund being a private equity. CMB was also accused of failing to submit audited financials and of improper valuation of some of its investments.
When CMB put in a P77 million drawdown notice to BPOPF towards the end of 2017, BPOPF, because of its grievances against CMB, chose to ignore the request by CMB, until CMB exercised powers bestowed upon it by the BOP agreement and declared BPOPF a Defaulting Limited Partner. CMB then disposed of assets in the BOP and paid BPOPF P50 million, which it claims was a ‘settlement fee’
However, the matter dragged on, but fast forward to 30 August 2021 to find Justice Tshweneyagae ruling in favour of CMB. At the heart of the charges faced by Okaile and Marsland, said Justice Tshweneyagae, is an en commandite agreement. Okaile and Marsland disputed in court that they had obtained money from the BPOPF under false pretenses or engaged in money laundering. They argued that the charges arose out of a misunderstanding by the DPP and the Attorney General (AG) of the Private Equity Investments entered into by their company, CMB and the BPOPF.
Justice Tshweneyagae agreed with Marsland and Okaile. In his judgment, he said of all the documentation provided in the CMB case, of the utmost importance is the en commandite partnership agreement entered into between the BPOPF and CMB in November 2014 because it has all the features of an en commandite agreement. Justice Tshweneyagae noted that Clause 3 of the agreement provided that the purpose of the agreement is to establish an en commandite partnership between the partners for purposes of conducting business activities as per Clause 4 of the partnership. Clause 4 provides that the business of the BOP to accept the capital commitments, to acquire, hold and dispose of investments in accordance with the investment policy and to engage in such other activities in relation to BOP as the General Partner deems necessary, advisable and/or incidental all the above matters. Further, Justice Tshweneyagae noted that in terms of Clause 9 of the BOP agreement, the management of the BOP was to be vested exclusively in CMB, the General Partner. As General Partner, CMB was to perform all acts and enter into contracts and other undertakings that in its sole discretion it deemed necessary.
In the event of a dispute arising from implementation of the agreement, Clause 77 provided for such to be referred to arbitration, according to Justice Tshweneyagae. “There is no evidence that the parties ever invoked an arbitration clause before criminal proceedings were instituted against them,” he said. The judge was persuaded by Okaile and Marsland’s submissions that they never received any proceeds of crime or misrepresented/and or induced the BPOPF to inject money into the BOP. As a result, Justice Tshweneyagae agreed with the CMB directors that the money from BPOPF cannot be regarded as dirty money.
“There is no single evidence pointing to money laundering activities between the General Partner and the Limited Partner either directly or through their directors. In terms of the en commandite agreement, Applicants (Okaile and Marsland) had exclusive management of the funds invested in the partnership,” the judge ruled in alignment with Clause 15.1 of the partnership agreement which prohibits the Limited Partner from partaking in management or control of the BOP, transacting or having any power to sign for or otherwise bind the BOP.
In recognition of the exclusive investment mandate, Justice Tshweneyagae concluded that the agreement provided for unlimited liability of the CMB directors. Moreover, the CMB directors were accused of making some investments in their names personally, using the BPOPF funds. That the investments could be in their names in this type of agreement is not something outside of the agreement, according to Justice Tshweneyagae. “They were to look out for investments and opportunities for the BOP,” he noted. “Clause 16.1 of the agreement provided for that.”
In the context of the agreement, the judge added, to charge Okaile and Marsland with money laundering was irrational. “It is clear that the agreement provided for recourse between the parties in the event of a dispute,” he said. “The recourse provided was one of arbitration. It is unfortunate that a purely contractual matter was elevated to a criminal matter.” Justice Tshweneyagae noted that contrary to what the AG and DPP said, there is evidence that investments were made into companies like Wilderness Safaris, Bona Life and Cell City (to mention a few), with share certificates and company registration documents.
Consequently, Justice Tshweneyagae ruled that DPP’s decision to charge Okaile and Marsland with money laundering and obtaining by false pretenses reviewed and set aside. He acquitted and discharged Okaile and Marsland of all charges. Further, warrants of arrest issued against Marsland dated 12/06/19, 11/07/19 and 12/07/19 and any other such warrants were cancelled and set aside by Justice Tshweneyagae.
Okaile believes that Molefe knew that they had such an en commandite contract from the beginning and that she chose to ignore it and pursued her personal battles. The Business Weekly & Review contacted Molefe in a quest to know how she feels the CMB directors’ recent victory in court and how she responds to their decision to sue her in her personal capacity.
Molefe said she has nothing to say because the CMB case the BPOPF’s responsibility. But Okaile is aware that by suing Molefe, BPOPF will be caught in the crossfire. “It is unfortunate that BPOPF will be included,” he said.
In an interview, the BPOPF CEO Moemedi Malinda said the BPOPF is not a party to the CMB case and has limited knowledge regarding it.
“We reiterate that the BPOPF is not party to the proceedings that resulted in the recent High Court judgment … The recent decision has no bearing on any civil action/s that BPOPF may be inclined to take. These are ongoing matters that are or may still become the subject of court proceedings and as such we are legally constrained to comment on same,” he responded.