Namfisa's General Manager for Investments Boni Paulino said the SSC never reported any information on its investment with Avid to Namfisa, nor laid a complaint against Avid with Namfisa.

Paulino told the inquiry that if the two parties had entered into a contract, the SSC's money would never have "lost its identity" and become Avid's.

Instead, it would have "retained its ownership" anywhere it was invested.

Paulino arrived to testify in place of Namfisa CEO Frans van Rensburg, who last week refused to appear unless he was subpoenaed.

Yesterday, Namfisa's legal representative Peter Koep said Van Rensburg "thought the approach strange" that the Registrar of Financial Institutions told him that he should testify.

"It was never his intention to refuse and it is very important that Namfisa does so," said Koep on behalf of Van Rensburg, who was still not in court yesterday.

Namfisa submitted an affidavit to court explaining how the institution operates.

In his testimony, Paulino maintained his organisation could not be blamed for the situation the SSC finds itself in, as the investment of public money emanating from parastatals and other State-owned enterprises were not subject to authorisation from Namfisa.

Paulino said that it had no control over who individuals or companies decided to place their investments with.

The best that Namfisa could offer, he said, was for institutions or individuals to approach the authority beforehand so that the investment companies' credentials could be checked out.

"I don't care if private institutions make bad decisions: that's their fault.

But if it's public funds, the person receiving that money must be approved," said Heathcote.

Paulino said that Namfisa only regulated investments in listed securities according to the Stock Exchanges Act and this excluded investments in the money markets.

Namfisa was also not in a position to regulate the relationship between the client and investor, saying it could not prescribe to people where to place their money.

He added that Namfisa had no control over money leaving the country and that this was under the sole watch of commercial banks and the Bank of Namibia.

The BoN can monitor all cross-border foreign exchange transactions and is in the process of refining systems to track money transferred within the Common Monetary Area (CMA).

Paulino said Namfisa could only suggest that investment companies and their clients sign a mandate authorising the amounts to be invested in either the Stock Exchange or money markets.

"If you sit with a fraudster who signs the mandate, it doesn't really assist us," said Heathcote, appearing unimpressed that this was the only recourse a client would have over missing money.

He pressed Paulino for an opinion as to whether Namfisa's efficiency would be improved if it was a totally independent body instead of falling under the Ministry of Finance.

Paulino said draft provisions for inclusion in Namfisa's legislation to cover loopholes were in the pipeline and had already been handed to the Finance Minister for scrutiny.

Dirk Conradie, legal counsel for former Avid director Otniel Podewiltz, was unhappy with the way Namfisa kept watch over Namangol Investments.

Conradie noted that a quarterly report from the company initially documented the transfer from Avid of N$29,5 million as being under its control, but in a later report did not declare the amount again.

Paulino maintained that many investment companies misunderstood the reporting documents and often companies didn't know that they were still considered the managers of the funds even if these had been transferred elsewhere.

Besides, he said, balance sheets should reflect the money as belonging to the client and not the investment company.

Namfisa, he added, had no rights to access the bank accounts of companies.

In response to questioning from SSC legal counsel Andrew Corbett, Paulino said clients' money should remain reflected on the books of an investment company until it was returned to them.

For Namangol's Nico Josea, his lawyer Jaco van Rooyen maintained that Josea had previously approached a Namfisa official to question how the reporting had to be done and was reportedly told that he did not have to repeatedly indicate the N$29,5 million he received from Avid after it left Namangol's account.

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