Martin Kadzere and Bright Madera
THE axe is hanging over Mining Industry Pension Fund chairman Mr James Maposa after an investigation found he was “unfit” to run the affairs of the US$122 million fund, Herald Business can

reveal.

An investigation conducted by the Insurance and Pension Commission between March and May this year was meant to assess the fund’s corporate governance structures.

It  also looked into compliance of rules and regulations that govern the fund and adequacy on internal control systems.

IPEC is the regulator of pension funds and the insurance industry.
The IPEC on-site report on the investigation found that the MIPF board oversight was weak.
It recommended  that “the chairman (Mr Maposa) should be “immediately fired because the commission believes him not fit and proper to preside over the affairs of the fund”.

An eight-member board led by Mr Maposa is responsible for administering the fund’s operations.
Mr Maposa, who is also chairman of Standard Chartered Zimbabwe, was given 14 days from May 21 to respond.

He could not as he was out of the country. He said he returned on May 30 and there had not been enough time for the board to consider the report.
The board was scheduled to meet on Wednesday. 
“You will no doubt appreciate that as a board chairman, I do not act in my personal capacity,” he said in a letter to IPEC on Wednesday.

“Therefore, it would only be proper for me to present to IPEC the collective position of the board. Surely, you do realise that the issues raised in your report are not so simple as to be discussed or resolved between the board chairman, the principal and your office.
“With due respect, even convicted criminals have legal rights. Under the circumstances, I would like to believe that, I, as board chairman, and the MIPF board of trustees still have legal rights.

“In this instance, I am requesting for time to consult my board and a written response will be provided within the next 14 days.”
The IPEC report alleges that the board of MIPF was failing to convene board meetings on time.
This resulted in the fund operating without approved budgets and audit plan.

The fund was also not making investments in the absence of the board members’ approval, the report said.
As at May 17, 2010, the fund had about US$7 million, R26  701, A$16 213 and GBP 413 that could have been invested. The funds were mostly accumulated from monthly contributions from members and rentals.

The report also alleges that Mr Maposa had “overbearing” influence in the operation of the board, which may have compromised its independence.
He is alleged to have sorely sanctioned a forensic audit conducted by Ernst & Young in November 2011 on a US$500 000 sale and leaseback investment that was placed with BancABC asset management company on May 5 last year.

It was noted that there was no documentary evidence to indicate that the majority of the members, as required by the regulations, sanctioned the forensic audit.
The report also noted that as Ernst & Young were the fund’s external auditors, they could have been “less qualified” to be awarded the contract to conduct the forensic audit.

“The sanctioning of the forensic audit solely by the chairman amounts to the same individual reviewing the decisions made by the board through the investment committee which points to him wielding excessive influence,” the report said.
“This compromises the independence of the board.”

In addition, it was found that the SMC (Private) Ltd, an organisation that Mr Maposa represents, had never remitted contributions to the fund since the adoption of multi-currency regime.

This was in violation of rule 6 (1) of the fund which stipulates that the board representing employees shall consist of people who shall be employees of a contributing employer. Failure by SMC to remit contributions could have made it difficult for the fund to put in place measures such as litigation to force other mining houses to pay since this was going to amount to the MIPF “policing its boss”.

On remuneration of the board members, the report alleges that, in addition to the sitting fees, members are entitled to monthly fuel allowances and quarterly fees. The board members are entitled to monthly fuel allowances, ranging between 80 litres to 100 litres.
Their quarterly allowances range from US$544 to US$780, while the sitting allowances are in the range of US$210 and US$330.

“Such compensation structures are in violation of rule 6 (6) of the fund which stipulates that the trustees shall not receive any remuneration for their services. But they may be funded the reasonable out-of-pocket expenses incurred in the exercise of their duties on behalf of the fund,” said the IPEC report.

The commission also noted that the fund portfolio mix was not in line with the fund’s strategic asset allocation policy.
As at April 30, 2012, the MIPF investment portfolio was at US$121,3 million. Its investments in listed companies stood at US$26 million; US$2,7 million in unlisted entities; US$1 million in prescribed assets; US$84,4 million in fixed assets and US$7,1 million on the money market.

The breakdown on the investments shows that the fund’s investment of 0,86 percent in prescribed assets was not compliant with the minimum regulatory requirement of 10 percent for pension funds.

The fund’s allocation in fixed properties was 69,5 percent of the total portfolio, way above the maximum 40 percent stipulated in the investment policy statements.
“Failure to adhere to the strategic and tactical asset allocation guideline spelt out in the investment policy statement may imply that investment decisions being made are not in line with the fund’s risk return profiles which may jeopardise the fund membership interest,” said the IPEC report.