Bunye Betfu Co-op’s E19m missing

MANZINI – Bunye Betfu Buhle Betfu Savings and Credit Co-operative a scheme for civil servants, is in tatters.

The scheme, one of the oldest in the country, faces financial and administrative problems. An audit report revealed that E19.6 million could not be properly accounted for.

As a result, the current Board has been removed pending an intensive investigation.

Audits by Kobla Quashie Chartered Accountants and PricewaterhouseCoopers uncovered financial irregularities and maladministration during the tenure of the removed Board.

The findings were relayed to members at a short-notice annual general meeting (AGM) convened by the Financial Services Regulatory Authority (FSRA) and the commissioner for Co-operatives in the Ministry of Commerce, Trade and Industry.

The meeting was held at Zakhele Free Evangelical Assemblies Auditorium, next to OK Food, and drew more than 5 000 members yesterday. Many began arriving at 7am, the time set for registration, which was expected to take two hours before the meeting started at 9am.

However, by 9am, the queues had not cleared, and organisers directed that registration continue while proceedings got under way.

The first to address the gathering was Acting Commissioner for Co-operatives Bongani Maziya, with auditors from Kobla Quashie present. He apologised for the short notice, which he said fell short of standard procedure.

“We apologise for the short notice,” Maziya told the meeting.

He acknowledged the frustration members displayed last week after information about the co-operative’s affairs surfaced, adding the meeting was called jointly by the commissioner and the regulator in terms of the Co-operatives Act and the FSRA Act.

Maziya began by pointing out that the co-operative was not new to controversy. Previously, he said, its governing body remained in office beyond its term, even after being asked to prepare for elections. As a result, Maziya revealed that no elections were held until those in office were forced out by the commissioner.

The acting commissioner gave a preview of the maladministration that has rocked Buhle Betfu Bunye Betfu, saying that the Board provides oversight and sets strategy and does not interfere in daily operations in a well-run organisation.

Members of Buhle Betfu Bunye Betfu Savings and Credit Cooperatives during yesterday’s Annual General Meeting (AGM) held at short notice at the Free Evangelical Church Auditorium at Zakhele.

Yet, at Bunye, he said, that line had already been crossed. He explained that a Board also had a duty to protect the co-operative’s assets and ensure that a manager was in place. He listed five other Board duties that he felt were important to mention to members. He revealed that all five key duties had not been fulfilled.

Elaborating, he explained how the removed Board compromised the membership’s trust through operational inefficiencies that left the regulator with no choice but to act.

The problems included meetings that failed to form a quorum, hindering the running of the co-operative. Maziya said gaps in government laws and regulations had also forced the commissioner to intervene. He said, however, that it was not the first co-operative to find itself in this predicament.

He, therefore, urged members not to panic, saying curatorship should not be confused with liquidation, which often ends in a co-operative’s closure. “This is not liquidation and your co-operative is in good hands,” he said.

He applauded the FSRA and the commissioner for intervening and apologised for the time taken to act, saying procedures had to be followed. Two reports, one by PricewaterhouseCoopers and another by a second firm, pointed to serious malpractice within the organisation and prompted the intervention, he said.

The aim, he said, was to protect members’ money, improve the internal control system flagged by both auditors, restore lawful and sound operations and preserve members’ assets.

Maziya asked members to support the commissioner so that the roadmap could work. The process is scheduled to run for three months, during which the co-operative will remain under curatorship, with regular reports provided to members until elections for a proper governing body are held.

He said wrongdoing in a co-operative affected not only members but also the families who depended on their savings and investments for their livelihoods. He condemned what he described as the taking of members’ interests by those entrusted with leading the co-operative, noting that Bunye Betfu was a business belonging to many emaSwati.

Mbongiseni Nkambule of the FSRA then explained to members what the three-month curatorship means. He said it applies when a licensed institution, such as a bank or an insurer, shows inconsistencies and maladministration, and the regulator has to step in.

Nkambule explained that the co-operative’s curatorship was temporary and had three purposes, including restoring normal operations and protecting members’ property and assets.

“We are not here to close the co-operative or to take it over forever,” he said.

He said the co-operative and members’ money still belong to members. Responding to concerns raised on social media about the regulator’s role, he said the FSRA is authorised by its Act to intervene.

Members lining for registration before the commencement of the AGM.

Nkambule said the regulator noted that the co-operative had ignored directives from the commissioner for co-operatives, including instructions to produce financial reports and hold elections.

When these were overlooked, he said, it fell to the regulator to act.

Based on Section 71 of the Act, he said, the person taking charge would work with two consultants. They are Wellington Motsa, who served as a regulator and supervisor at the Central Bank of Eswatini, and Mlandvo Sikhondze, a financial expert with extensive experience at Standard Bank. The regulator hoped the two would help rescue the co-operative, he said.

The FSRA intervened, Nkhambule said, because of disorder at Bunye Betfu, the failure to hold meetings that formed a quorum and a tendency to disregard the regulator.
He said difficulties had also arisen after the regulator proposed cutting Board members’ benefits, resulting in a court case.

At Bunye Betfu, he said, officials also found that profits were being spent without savings being set aside, contrary to the founding principles of co-operatives.

Appealing to the members, he asked them not to disrupt the curator’s work, saying everything being done was in their interest.

He further assured members that their savings at Bunye Betfu would continue uninterrupted and advised those with queries to approach the co-operative’s offices, not the FSRA. In that way, he said, they would have followed the laid-down procedure.

He insisted that the regulator would remain in charge for only three months to stabilise the co-operative, restore controls and prepare for the election of a new Board.

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