South Africa: The pastor, the politician and the pension funds
25 Aug 2020

Nearly R500-million of workers’ pension funds has been stolen and invested in risky initiatives, including that of controversial evangelist Shepherd Bushiri’s investment company.

The Mail & Guardian has for the past six months been reporting and following developments in the case of Joseph Busha, a smooth-talking politician who runs JM Busha Asset Management, JM Investment Group and JM Busha Life out of his offices in Dunkeld, Johannesburg.

Busha ran for president in Zimbabwe two years ago, and frequently comments and gives investment advice on various broadcast and print media outlets.

The M&G’s reporting, which led to the suspension of JM Busha Asset Management’s financial service provider licence in February, has found that R480-million of R3.8-billion Busha was entrusted with by five pension funds ended up in at least three risky investments. This was done in breach of his mandate and hidden from the pension funds.

Yet the Financial Sector Conduct Authority (FSCA) has handed Busha his licence back with the hope that he will return what he owes to the funds.

The money is for the pensions of more than 2 million people in the electrical, metals and engineering sectors and for municipal workers.

When asked for a comment, Busha simply said: “We have our licence. Please check with the FSCA.”

Investing in Bushiri

Busha ploughed R200-million of workers’ pension funds into Shepherd Bushiri Investments (SBI), which operates a chain of hotels in Africa and Europe.

The millions invested in SBI allegedly contributed to the construction of its first hotel on South African soil, the Sparkling Waters Hotel and Spa near Rustenburg. The M&G has learned that the investment, and other unauthorised investments, has fallen into arrears.

The 56-room hotel is part of the SBI chain of hotels in Barcelona, Tarragona, and Terres de l’Ebre according to news reports.

Bushiri, who has not responded to the M&G’s questions, is said to be the wealthiest pastor in Africa with an estimated net worth of $150-million. Bushiri and his wife Mary, who is a director at SBI, were arrested for fraud, money laundering in connection with R15-million, and infringement of the Immigration Act last year. They appeared in the high court in Pretoria last month for pre-trial, but the matter was postponed until October.

The government in Botswana imposed a travel restriction on the Malawi-born leader of the Enlightened Christian Gathering Church because, according to news reports, he had demanded security from state security agencies and that borders be opened 24 hours a day for his convenience. The government then deregistered all branches of his church. The visa restriction was lifted last year.

Busha invested another R150‑million in an eSwatini-based construction company, Inyatsi Construction. According to eSwatini media, King Mswati III owns shares in the company. A subsidiary of the company based in South Africa recently shut down its operations and retrenched staff.

At least R60-million of the R400‑million cannot be recovered. It was lost when the Namibian SME Bank went into liquidation in 2018. An affidavit in the liquidation case filed by the bank’s legal adviser, Tania Pearson, shows that Busha invested the R60-million into SME while the bank was under scrutiny by authorities in Namibia. She also said that the bank traced R4.1-million of R247-million that was moved unlawfully to South Africa to Busha.

Busha’s modus operandi

Busha took relatively small amounts from pension funds he was managing and used this money to invest in private equity transactions under the name of his businesses instead of under the fund.

He then tells clients that the investments are in money markets instruments, which are similar to notice savings accounts.

Investing the funds without permission is a material breach of contract, and moving client money to his businesses for investment purposes without permission amounts to theft and contravenes the Pension Funds Act.

Mphumzi Maqungo, a trustee of one of the funds — the Metal Industries Benefit Fund Administrators of the National Union of Metalworkers of South Africa (Numsa) — said he had pushed for the fund to terminate Busha’s contract.

“As Numsa we are firm that any company that manages or invests money yabasebenzi (belonging to workers), if kuye kwafumaneka ukuba kunezityholo ezifana nezi (it’s found that there are allegations such as this), as an organisation we shall fight and make sure that imali yabasebenzi (workers’ money) is paid back and terminate that company,” he said.

The Metal Industries Benefit Fund Administrators has recovered R420 262 of the R533 050 619.38 managed by Busha because of its swift action, which included a legal summons for Busha to return the money.

Maqungo is one of several individuals who is unhappy with the FSCA’s handling of Busha.

By Sabelo Skiti, Mail & Guardian, 22 August 2020

Read more at Mail & Guardian

RiskScreen: Eliminating Financial Crime with Smart Technology

You can claim CPD minutes for this content, by signing up to our CPD Wallet