The Namibia Financial Institutions Supervisory Authority (Namfisa) is currently investigating the financial advisory firm that lost at least N$250 million of clients’ savings.
The Namibian reported last week that Wealth Management Solutions (WMS), owned by Hanjo Schlabitz, owes N$250 million to its clients, who are mostly pensioners and families.
A total of 87 people and two organisations have come forward as creditors, but the liquidator estimates the total losses are likely to reach N$350 million.
Schlabitz promised clients they would earn around 7% a year in the money market fund and up to 20% on their investment in foreign exchange, according to investors The Namibian has spoken to.
The foreign exchange investments have disappeared, and Schlabitz admitted to creditors that he used money market funds to pay back foreign exchange investors.
Namfisa told The Namibian yesterday it is investigating the WMS case, but could not answer questions about the company or its managing director.
“As these investigations have not yet been concluded, it would not be appropriate for Namfisa to comment on any supervisory or enforcement actions that may form part of the investigation,” spokesperson Victoria Raimond said.
The regulator confirmed that WMS and Schlabitz still have active registrations with Namfisa.
“WMS was registered in 2007 as a long-term insurance broker firm. Mr Schlabitz was subsequently registered in 2015 as a long-term insurance broker,” Raimond said.
Since the Financial Institutions and Markets Act 2021 (Fima) came into force this year, brokers like Schlabitz are categorised as financial intermediaries, who manage policies on behalf of their clients.
Financial intermediaries are required to keep up-to-date financial records, but are not required to have auditors.
“Namfisa remains committed to carrying out its regulatory and supervisory mandate in accordance with the applicable laws and will communicate further information where appropriate once the investigative process has been concluded,” Raimond said.
Independent Patriots for Change shadow finance minister Michael Mwashindange says it would be inappropriate to speculate on specific facts while the investigation is ongoing.
“However, if it is ultimately established that client funds were diverted between investment products to meet obligations arising elsewhere, that would raise legitimate questions about whether existing supervisory mechanisms were sufficient to identify warning signs,” Mwashindange says.
Namfisa should adopt a more risk-based supervisory approach that includes regular inspections of licenced advisers and strong reporting requirements on investment recommendations, he says.
Former Namfisa chief executive Rainer Ritter told The Namibian on Friday that Namfisa’s response to this case will likely be shaped by the Prowealth case, a massive investment fraud scheme 20 years ago.
In May this year, the Supreme Court ordered that Namfisa pay N$35 million to Prowealth investors, finding that Namfisa failed to carry out its duty of regulatory oversight.
“They lost the Prowealth case, so they won’t say they’re at fault. From a regulatory point of view, if something is wrong a regulator doesn’t want to be exposed. That is normal,” Ritter said.
However, he believes that Namfisa should have picked up any irregular activity with WMS, as the company would have submitted regular financial statements.
“Namfisa did not do their job,” he said.
Member of parliament Tobie Aupindi says he prefers not to speculate on the case before the investigation concludes.
“It will be important to determine whether the matter arose from regulatory gaps, inadequate supervision, failures in reporting, or deliberate misconduct,” Aupindi says.
“At first glance, I believe there is certainly scope to strengthen the regulatory framework governing financial advisers. While they may not directly hold clients’ funds, their advisory role places them in a position of significant trust,” he says of Schlabitz and his firm.
