NSSA in credibility crisis

Source: NSSA in credibility crisis | The Financial Gazette June 22, 2017

THE National Social Security Authority (NSSA) board has lurched into a credibility crisis after it emerged they turned down a higher offer for CFI Holdings shares which they later sold for significantly less, The Financial Gazette can exclusively report.
The development will raise questions about the integrity of the Robin Vela-led board, which sacked five top managers in 2015 for poor investment decisions and alleged delinquency after its appointment the same year.

James Matiza had been dismissed as NSSA’s general manager alongside four other executives — investment director, Shadreck Vera, finance director Patrick Mapani, corporate services director, Tendai Mafunda and ICT director Bright Chidyagwai.
Vera died this year after a short illness.

Vela has promised to get rid of the rot at NSSA, insisting that he would strive to create a new perception of the statutory pension fund, which had been ruined by poor investment decisions that had cost pensioners huge sums of money.

Vela had also indicated that the new NSSA board, which manages a portfolio of investments worth nearly $700 million on behalf of pensioners, would be thorough, judicious, diligent and cautious in its investment strategy to curtail unnecessary losses to the fund.

But this paper was informed this week that Vela had rejected an offer by British tycoon, Nicholas van Hoogstraten, for NSSA-held shares in CFI, saying NSSA was in fact a buyer and not a seller.
Van Hoogstraten, through his Messina Investments, had offered 36 cents per share for NSSA’s 12,9 percent stake in CFI Holdings.
However, Vela later disposed of the same shares to Zimre Holdings’ vehicle, Stalap Investments, for 10,55 cents per share, a price three times less than what Messina had offered, resulting in a huge prejudice to NSSA.

At 36 cents per share, NSSA would have pocketed almost $5 million from the 13 643 807 shares purchased by Stalap for about $1,4 million.

It means the deal could have prejudiced pensioners of about $3,5 million. Vela declined to comment.
By selling its shares to Stalap, NSSA gave the Rudland brothers, Simon and Hamish, who are major shareholders in Zimre, indirect control of CFI.

Stalap snapped NSSA’s 12,9 percent shareholding in CFI in March, before buying an additional a 7,2 percent stake in the Zimbabwe Stock Exchange-listed concern previously held by EFE Nominees.
Stalap’s stake now stands above 41 percent and the vehicle is reported to be keen on making a mandatory offer to buy out minorities.

Van Hoogstraten, whose interest in CFI is held through various investment vehicles, including Messina, became the second largest shareholder with about 35 percent stake at the time.
He holds interests in several listed firms, including leisure outfit Rainbow Tourism Group and coal producer, Hwange Colliery Company.

NSSA’s deal with Stalap could have been an attempt by the pension fund to block the vocal van Hoogstraten, who has alleged mismanagement at CFI and is challenging a deal that handed over CFI’s 81 percent stake in a prime estate south west of Harare, Langford Estates to Fidelity Life Assurance Company, a unit of Zimre.

Vela has said NSSA would defend any challenge by van Hoogstraten against the transaction.
The Financial Gazette this week saw communication between Vela and Maximilian Hamilton, a director of Messina, indicating that Messina had offered to buy NSSA’s shares at a higher price.
On May 16, 2016, Hamilton notified Vela that Messina had been negotiating with former NSSA general manager, Hashmond Matemera, for the CFI stake.

Matemera was appointed acting NSSA general manager after the dismissal of Matiza, but was sacked a few months later.

“We refer to our previous correspondence of 5th April and 7th April with Mr Matemera in respect of this matter and note from the recent press reports that Mr Matemera has been removed as your general manager. We still wish to progress the purchase of the NSSA stake in CFI and confirm that we wish to pay US thirty six cents per share for your entire holding,” he said.

Vela turned down the offer in his letter dated May 27, 2016.
“I confirm receipt of your email and attachments. NSSA is a buyer of CFI shares, not a seller. I trust this should deal with the questions you raise,” he said, tersely.

Van Hoogstraten has, however, been able to shore up his interest in CFI through a purchase of a seven percent stake held by the Mining Industry Pension Fund, taking his interest to over 42 percent.
The transaction angered Vela, who told state media recently that he would be approaching the Zimbabwe Anti-Corruption Commission (ZACC) to investigate the purchase.
Vela claimed government had been prejudiced through the transaction.

“I will be writing to the ZACC requesting that they investigate how MIPF sold its seven percent (share) holding in CFI to van Hoogstraten…at 13 cents per share. The shares have recently attracted significant interest from credible quarters at some 23 cents a share. The whole trade reeks of corruption and again government loses. When will this pathetic theft be stopped?” Vela was quoted as saying.
The British tycoon reacted angrily to Vela’s rant.

“We did not ‘snap up’ a seven percent stake in CFI last week (two weeks ago). Messina purchased this holding off market about 18 months ago, around the time that CFI shares were suspended from trading,” said van Hoogstraten, adding the shares were fully paid for.

He accused Vela of “showing himself to be…a very poor choice to be the chairperson of NSSA.”
“I am not aware that government has any stake in CFI. If Stalap Investments is set to make a mandatory offer to minorities in the near future at way over 13 cents per share, why did NSSA recently sell their 12 percent stake in CFI to Stalap at 11 cents when Messina had made a standing offer to them of 36 cents per share? The question should surround that transaction especially as the previous frauds and corruption at CFI occurred during the years that NSSA was effectively responsible for mis-running CFI into the ground!” van Hoogstraten charged.