The Business Weekly & Review can confirm that two prominent attorneys representing councils have prepared a summons that is to be personally served on directors and shareholders of Bluthorn Fund Management this week. The crux of the matter is that the directors and shareholders of Bluthorn must pay up or face criminal charges.
In the summons, the attorneys question both the directors and the shareholders’ role in the mismanagement of Bluthorn. Their argument is that directors were present at board level when the creditors’ money was fleeced. Further, it is the shareholders of Bluthorn who benefitted from the alleged looting.
This is so because the shareholders of Bluthorn Fund Management were found to have been conducting “illegal banking activities” by loaning out money belonging to clients to an intricate web of their own companies and squandering it. The fatally insolvent Bluthorn is being liquidated after revelations that the shareholders siphoned off funds amounting to approximately P220 million belonging to investors.
According to the latest creditors’ report based on work done to-date by the Statutory Manager Chris Bray and the Provisional Liquidator, there is evidence that the directors of Blu Thorn committed offences.
“In terms of both of these acts those found guilty of offences may be liable to a fine or penalty,” says the report. “They also may be disqualified to act as a director and made personally liable for the debts of the company. The final liquidator will need to determine if such action should be taken.
“Given the state of the cash position at the date of closure of the business (13 February 2020) and the way in which the company was operated, the directors have behaved at the very least recklessly and have failed to keep proper books and records. Both are in contravention of the Companies Act.”
The attorneys are determined to attach properties and assets belonging to the directors and shareholders, failing which the directors and shareholders may face jail terms. Some of the directors and shareholders are Henk J van der Merwe, Joseph Botuna Mosimane , Andre Heunes , Eune Englebrecht , Marthinus Hendrik van der Merwe, Masego Castherns Mathambo, Michael Bernard Howard, Modisatsotlhe Manyake, Motlamedi M T G Matome, Tiyedze Shirley Kamodi , Modisaotsile Manyake , Cedrick Moriti Mothso, Monamodi Taj Kenosi, Alfred Ntenunyana Mokone, Joseph Othusitse Batsalelwang and Kelebogile Sibisibi.
The incumbent Chairman of Botswana Association of Local Authorities (BALA), Jeffrey Sibisibi, will also be served. He is believed to have been the brains behind the entire operation and the one who influenced local authorities to invest in Bluthorn.
HOW BLUTHORN DIRECTORS CASHED IN
In its operations, Bluthorn Fund Managers (BFM) was found to have used a network of five primarily related parties in the BFM ‘family’ of companies. They are BluThorn Fund Managers (Pty) Ltd, BluThorn Procurement (Pty) Ltd, B Thorn (Pty) Ltd, BluThorn Holdings (Pty) Ltd and Prime Employee Benefits (Pty) Ltd.
Bluthorn Fund Managers is owned 60 percent by Bluthorn Holdings (Pty) Ltd. Joseph Mosimane, Joseph Batsalelwang, Motlamedi Matome and Tiyedze Kamodi in the extent of 10 percent shares each.
Bluthorn Holdings (Pty) Ltd is in turn owned 70 percent by B Thorn (Pty) Ltd while the remaining 30 percent is held by Kelebogile Sibisibi, who is the daughter of former chairman of Kweneng District Council, Jeffery Sibisibi, the incumbent Chairman of Botswana Association of Local Authorities (BALA) to which all district councils in Botswana are federated. He seems to have leveraged this position to influence many local authorities to invest piles of money in Bluthorn.
Eugene Engelbrecht owns 40 percent shares in B Thorn (Pty) Ltd, Kelebogile Sibisibi another 40 percent while Henk J. van der Merwe owns the remaining 20 percent.
The fifth company, Prime Employee Benefits (Pty) Ltd, is owned 100 percent by B Thorn (Pty) Ltd. In essence, all these five companies are interrelated to Bluthorn and are owned by these seven individuals. Moreover, B Thorn (Pty) Ltd owns 100 percent shares in Bluthorn Procurement Solutions (Pty) Ltd. The millions of pula exchanged between these companies were effectively transactions between fellow shareholders.
The then Statutory Manager Peter Collins’ report to NBFIRA, it is abundantly clear that from a shareholding perspective, the same Eugene Engelbrecht, Kelebogile Sibisibi and Henk J. van der Merwe jointly own all the shares in the real holding company, B Thorn (Pty) Ltd, which owns majority shares in Bluthorn Fund Managers.
Collins states in the report: “These parties are so closely related that transactions between them are the equivalent of brothers and sisters sitting at a family lunch table and passing money between themselves.”
WHO STANDS TO LOSE MILLIONS AS BLUTHORN WINDS UP
According to evidence seen by The Business Weekly & Review, Bluthorn has failed to pay Ghanzi District Council a total of P40 million that matured on 3 April 2020. P10 million invested by the Southern District Council Bluthorn matured on 8 January 2020 but was not paid back to the investor. In addition, Malete Land Board and Hukuntsi Sub-District Council have not been paid their P4 million and P2 million respectively, which matured on 12 and 30 January 2020 respectively.
Mahalapye Sub-District Council and South East South Sub-District Council have not received their P10 million each that matured on 3 February 2020 and 12 February 2020 respectively. A further P5 million due to Tlokweng Sub-District Council matured on 15 March 2020 but has not been paid. Letlhakeng Sub-District Council has not received its P15 million from Bluthorn, which was due on 16 March 2020.
In total, P96 million in cash, which matured between January and March 2020, has not been paid by Bluthorn to its eight clients, all of them district councils, sub-district councils and a land board. In addition to this P96 million, there is a further P114.4 million held by Bluthorn that is yet to mature.
The then Statutory Manager has pointed out that if Bluthorn was unable to settle the P96 million in matured investments, the same challenge may recur with the much bigger sum that is yet to mature. In actual fact, the reality is that Bluthorn does not have any liquid cash, which means that it does not have the P114.4 million which it supposedly holds on behalf of other clients.
Among those that have not yet matured is that of Botswana Institute of Development and Policy Analysis (BIDPA), which invested P3 million in Bluthorn. Botswana Sectors of Educators Trade Union (BOSETU) invested P16 million, Chibuku SACCOS over P1 million while Tlokweng Land Board invested P10 million. CPM Architects invested P10 million with Bluthorn while Motswedi SACCOS invested over P5 million.
The rest of the investments are made by high net worth individuals and pensioners. In total, funds invested in Bluthorn that have not yet matured bulk up to P114.45 million.
Subject to verification, Collins noted in the Statutory Manager’s report that the total amount outstanding to depositors is in excess of P220 000 000 (excluding interest). “Given the extraordinarily generous interest rates paid or promised to depositors by Bluthorn, I would expect the real exposure to be in the region of P250 million,” Collins wrote in his report.