11 January 2013

Namibia: GIPF Probes Property Deal

THE Government Institutions Pension Fund (GIPF) yesterday confirmed that it has commissioned a special investigation by auditors Deloitte & Touche into dealings conducted via the Frontier Property Trust and its administrator Safland, a South African-owned shopping mall developer.

"The GIPF has found it necessary to conduct investigations into certain aspects of the transactions conducted by the Frontier Property Trust Fund and its administrator/manager Safland Property Services as required and envisaged by their contractual and fiduciary relationship with the GIPF," a statement issued yesterday said.

Safland is currently the single largest beneficiary of the GIPF's N$6.5 billion portfolio in unlisted investments in

Namibia, having received a mandate to invest N$450 million in property on behalf of the GIPF, of which it has received N$239.8 million so far in disbursements.

The company also earns a management fee of N$937,500 per month for developing and managing shopping centres in Otjiwarongo and Ondangwa, as well as for developing a massive N$1.1 billion shopping centre in Kleine Kuppe, Windhoek.

The N$6.5 billion fund for unlisted investment was set up in response to the government's call for insurance companies and pension funds to invest between five and ten percent of their proceeds in the Namibian economy in terms of an amendment made in 2008 to Regulation 28 of the Pension Funds Act.

This amendment, passed by Finance Minister Saraa Kuugongelwa-Amadhila in 2008 under loud protests from the Namibian finance industry, also calls for a minimum of 35 percent of all insurance premiums and pension contributions to be invested in Namibia to stem the outflow of local capital abroad, especially South Africa.

The Frontier Property Trust (FPT) is one of 11 such special purpose vehicles (SPVs) set up as 'Bewind' trusts - trusts with limited liabilities as well as getting major tax advantages - by the GIPF and its various contracted fund managers to conduct investments in private equity, venture capital, debt and property development.

Safland, via its jointly owned Frontier Property Trust, is also to develop shopping malls in Katima Mulilo, Rundu and Gobabis, which, like its Otjiwarongo and Ondongwa complexes, are to include regional offices for the GIPF.

Safland CEO Kallie van der Merwe earlier this week denied any knowledge of any "special investigation" into Safland's business dealings, conceding only that there was "some dispute" between Safland and the GIPF at present.

The GIPF yesterday said the special investigation was to be completed by mid-February, following which the GIPF would decide on a course of action that could include further forensic investigations.

The GIPF's investment to Safland has been widely criticised largely because of the involvement in Safland of Ranga Haikali, who was also a beneficiary of the controversial Development Capital Portfolio that is believed to have lost some R660 million to investments in unlisted companies between 1999 and 2001.

Haikali was a shareholder and director of Namibia Plastic Food Packaging, which failed to pay back N$20 million, as well as Ongopolo Mining, which borrowed N$70 million from the GIPF.

DCP loans to 17 companies, as well as earlier loans made to the Windhoek Country Club and Casino and the Swakopmund Station Hotel , are the subject of an ongoing investigation by Nampol's Commercial Branch, with reports that some criminal charges may follow the businesspeople who got GIPF loans, some under questionable circumstances.

Van der Merwe declined to comment on this aspect earlier this week in e-mailed exchanges with The Namibian.

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