THE National Social Security Authority (Nssa) reportedly ignored advice from its own Management Investments Committee (MIC) to sink US$11 million of public funds into buying shares in a private unlisted company.
Internal sources revealed that the amount was spent to purchase 3 621 shares in Dubury (Pvt) Ltd, a company which reportedly owns the Joina City shopping mall located in Harare’s central business district.
“US$11 million was spent in acquiring the 3 621 shares out of 10 000 shares the company has. This works out to a whopping US$3 037,83 per share,” said a Nssa official who queried why his organisation would want to spend “so much to purchase private unlisted shares unless it was for the benefit of some crooked senior officials”.
A discussion paper by the office of the Comptroller and Auditor-General, Mildred Chiri presented to Nssa, criticises the social security authority for making “inappropriate investment decisions” and warned of the possibility of irregular activities going “undetected as a result of improper due diligence on the part of management and the board”.
“Management Investments Committee recommended against this investment advising that joint ventures have always created challenges for Nssa such as Ekusileni Medical Centre, South Medical Chitungwiza and many others,” reads the discussion paper.
“The MIC also stated that the terms and conditions of the shareholders’ agreement of Dubury Investments which had not yet been made available might not fit in with the authority’s requirements.”
Despite the MIC’s recommendations, the Nssa board authorised the acquisition of a 36,2% stake in Dubury, reads the report which concluded by recommending that Nssa management and board “should exercise due care in carrying out their duties with regards Nssa’s investments.”
A search at the company registry by the Zimbabwe Independent this week revealed Dubury was first registered on February 16, 1994 with various objectives including to “purchase or take in exchange or on lease, or to rent, occupy or otherwise acquire any lands or buildings in Zimbabwe”.
Shingai Mutasa, Chomunoda Sithole (both of Harare) and Jude Kofi Bucknor of Cal Merchant Bank in Accra, Ghana, are listed as directors.
In an emailed response to questions, Nssa general manager James Matiza said it is not correct to say Nssa disregarded its MIC’s recommendation and invested US$11 million in Dubury.
“BIC (the Board Investments Committee) reviews recommendations of MIC and can accept or turn down recommendations. In this case the Board Investments Committee saw value in the transaction and decided to proceed with it.
“Through acquisition of 36,21% of Dubury, Nssa acquired 20,75% of Joina City. The returns are, besides dividend, rentals. The building appreciates in value therefore adding value to the Nssa portfolio,” Matiza said.
He also said acquiring shares in a company that owns buildings is not unique to Nssa.
“Zimre (has) property Investments, First Mutual owns shares in Pearl Properties and African Sun owns shares in Dawn Properties. All these companies bought shares in order to have access to dividends (rentals) from the property companies.”
However, in the discussion paper Nssa management absolved itself of any wrong-doing in the matter stating that it had done a “well-documented analysis and recommended to MIC to turn down the proposal (to invest in Dubury)”.
“BIC, with powers invested in it, decided otherwise and passed a resolution for management to go ahead and purchase the shareholding on offer,” reads the management’s response.
Nssa has a well-documented history of poor investment decisions which have cost contributors millions of dollars spanning various sectors including deposits to non-performing indigenous banks, non-performing listed companies and non-profitable properties.
The authority risks losing US$50 million in Capital Bank alone while, reportedly, it could be another 29 years before it recoups its US$50 million investment in a hotel in Beitbridge.
Pensioners are getting meagre monthly payments of as little as US$40 from Nssa.