GIPF blunders with Endjala’s loan

By: JO-MARÉ DUDDY

THE Government Institutions Pension Fund (GIPF) lost more than N$3 million in penalty fees alone because an “unauthorised person” signed an addendum to its loan agreement with Namibia Pig Farm (NPF).

The loss is one of several slip-ups which marked the GIPF’s handling of the N$26,4 million NPF project in its Development Capital Portfolio (DCP), an investigation initiated by the Namibia Financial Institutions Supervisory Authority (Namfisa) has shown.

NPF didn’t pay back a cent on the millions it received since 2001. The GIPF eventually had to settle for N$9,8 million, or 37 per cent, of the money it invested in NPF, when the company was sold to Number Two Piggeries (Pty) Ltd last year.

A report independent auditors Sizwe Ntsaluba compiled after investigating the DCP on behalf of Namfisa, shows that GIPF trustees approved NPF’s first loan of N$18 million in August 2001. The board minutes stated that “according to SIM [Sanlam Investment Managers] this business has average financial risk”.

This is not what SIM said in its proposal, the Namfisa report said. SIM said that the risk is “above average”.

“This contradiction needs to be resolved,” the report said, adding that the auditors could find no evidence that the GIPF conducted due diligence before approving the project.

In a report compiled by the GIPF in March this year, the fund said John Endjala, well-known businessman and former president of the Namibia Chamber of Commerce and Industry (NCCI), drove the project. Endjala held a 30 per cent shareholding in NPF.

“In the case of the NPF, Mr John Endjala was instrumental in the discussion process, and was therefore, a key promoter of the project,” the GIPF said in its report.

The Namfisa investigators could only get copies of the financial statements for 2003 and 2005, both of which indicated that NPF was technically bankrupt. 

In 2003, the company’s liabilities outstripped its total assets by N$3,3 million. In 2005, NPF’s liabilities exceeded its assets by N$1,3 million, and it made a loss after taxation, of N$2,5 million.

In the 2005 report, the auditors said that “an addendum to the GIPF loan was signed by an unauthorised person, consequently the directors [of NPF] believe the company is not bound by the addendum”. The addendum allowed the loan grace period to be cut from 36 months to 18 months.

“Had the addendum been valid, a penalty of N$3 223 680 would have applied,” the auditors said, adding that NPF would then have owed the GIPF nearly N$30 million.

According to the loan agreement, NPF shareholders each had to sign a personal guarantee to cover the GIPF loan. The Namfisa investigators were not provided with such guarantees.

“It is recommended that the GIPF establish whether such guarantees exist in order to affect recovery of the capital and interest,” the Namfisa report stated.

The report also called for a full forensic investigation “into the utilisation of the loan amounts, and reasons for trading under technical insolvent situation, is recommended”.

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