By Patience Nyangove
NAMIBIA Financial Exchange (NFE) a company co-owned by Swapo secretary for information, Helmut Angula and liberation war icon, Andimba Toivo ya Toivo has dragged the CEO of Namfisa, Kenneth Matomola and the regulatory authority to court for rejecting to grant it a stock exchange licence, Confidente has learnt.
NFE through Angula accuses senior Namfisa officials who include Matomola and Bonifatius Paulino the entity’s assistant CEO for Support Functions of illegally pocketing thousands of dollars from the country’s sole stock exchange, the Namibia Stock Exchange (NSX) under the guise of being board members.
NFE in its court papers argues the alleged illegal payments made to Namfisa officials highly compromised them which led them to treat any other entity that would be a competitor to NSX unfairly.
NFE contends that had it been granted a stock exchange licence it would have been in a position to assist the country in attaining its Vision 2030 objectives by offering a platform where local entrepreneurs get easy access to capital in the process stimulate economic growth and development.
The CEO of Namfisa and the state owned enterprise are cited as first and second respondents respectively, in papers recently lodged at the High Court. The Minister of Finance, the Attorney General and the Prime Minister are third, fourth and fifth respondents although no relief is being sought from them.
In his founding affidavit, Angula states that NFE had decided to drag Matomola to court to compel him to properly and faithfully discharge his statutory functions in terms of the Stock Exchanges Control Act and the country’s Constitution.
Angula highlights that Matomola is also the current registrar of Stock Exchanges.
He further accuses Matomola and Namfisa of having an unhealthy relationship with NSX which led to Matomola allegedly pocketing N$38 800 between 2011 and 2013 from NSX while Paulino between 2006 and 2010 allegedly pocketed N$136 326.
“The current Deputy Registrar and Assistant CEO of the second respondent, Mr Bonifatius Paulino, a nominee of the first respondent in terms of section 46 of the Act, received from and was paid in cash unlawfully and or irregularly by the NSX in his personal capacity for inter alia retainers and meeting attendance fees for attending board meetings and major sub-committees of the board of NSX. With respect, it is important to note that both Mr Kenneth Matomola and Mr Bonifatius Paulino by virtue of the positions they hold at the second respondent were and are still part of its executive management and were key officials that were also involved during and in the review process of applicant’s application for a license to operate a stock exchange.
“At the outset I point out to the Honourable court that the current assistant CEO of the second respondent, Mr Bonifatius Paulino has had a long association with the NSX for at least a decade, having attended meetings of the board of directors and major sub-committees of the board of the NSX. The current Deputy Chairperson of the board of the second respondent Gerson Katjimune has also served on the board and subcommittees of the NSX for a long period of time.”
Angula also alleges that Matomola, and Paulino had served on the Remuneration Committee of the NSX while another Namfisa official Lily Brandt had served on the NSX’s Audit and Risk Committee.
Matomola and Brandt are also accused of having served on the NSX listings panel.
He added that while it was international practice that representatives of a regulatory agency that regulates stock exchanges, have representation at the stock exchange in order to carry out their regulatory and supervisory work to ensure compliance by the entity it regulates and supervises as in particular, stock exchanges are self-regulatory organisations.
“However, these representatives cannot be directors of the stock exchange and/or be paid by the stock exchange for carrying out their duty as a regulator. The ramifications for conflict and compromise are obvious to anyone knowledgeable in corporate governance…The impartiality and independence of both the first and second respondent have been compromised due to an appropriate relationship that festered over the years,” Angula argues.
Angula cites communication he had with the late Namfisa CEO, Phillip Shiimi where he (Shiimi) allegedly acknowledged the paying of Namfisa employees by NSX and had reportedly indicated that he would halt the payments as they would be later perceived as conflict of interest.
“Of importance to note, with respect are the following statements Mr Phillip Shiimi made: I was aware …that an employee of the authority has always represented the authority on the board and various committee of the Namibian Stock Exchange as an observer. The Registrar’s nominee was recompensed by the NSX for their time and effort in arranging the meetings of the NSX board and sub-committees and this has always been the practice. We do not consider such recompense to be inappropriate or material (added emphasis), i.e. that it will lead to a conflict of interest or affect the independence of the nominee, and it has never been an issue which we deemed necessary to reconsider, but in light of the concerns raised by you neither the authority nor the nominee will receive any further compensation with immediate effect and for the purpose of preventing any perceived conflict.
“I further wish to highlight… that the amounts paid to the nominees for their time and effort were negligible and immaterial, their time and effort are actually worth much more than they were recompensed. I reiterate that we did not for the same reason, consider the compensation to be inappropriate or that it would lead to any conflict of interests.”
Angula further argues that Section 46 of the Namfisa act makes no reference to payments having to be made to the Registrar of Stock Exchanges and/or his nominees by the NSX for attending meetings of the entity because the same act provides for the remuneration of these officials as contracted salaried employees of the regulator.
“Moreover to receive payment for attending meetings of an entity which the first and second respondents were supposed to regulate and supervise, would be anathema to the very rational for the establishment of the regulator…Furthermore, it would be an unconstitutional provision if the said section 46 of the act made provision for payments of this nature, that is, payment (for any purpose and in any form or manner to these officials in their personal capacities, for performing their de facto tasks as representatives of the regulatory authority, their employer who pays them for their services as employees.”
He added that Namfisa has been allegedly ‘captured’ by the NSX because of the inappropriate relationship between the two.
“…The inappropriate relationship between the NSX and the first respondents, which is a result of actions that were taken over decades, caused the regulator to become cognitively captured. Manifestations of such capture came to the fore during meetings that the applicant had with officials of the First and Second respondent. They remarked that they believed there should only be one stock exchange in Namibia and also that there is no room for a second exchange. Furthermore that the NSX is a government entity.”
Angula also accuse Matomola and Namfisa of failing to process their application fairly according to set rules and regulations as well as irregular and unlawful actions by Namfisa officials.
He claims that when they went to apply for a stock exchange license officials from Namfisa told them they had no knowledge of receiving and reviewing an application for the issue of a stock exchange license in Namibia or anywhere else.
“…The consideration of the applicant’s application for a stock exchange license has been unduly delayed as a result of obfuscation on the party of the second respondent. It has also been characterised by second respondent’s lack of appreciation of his statutory powers and obligations to properly consider that application. Instead of dealing with that application expeditiously, the second respondent has raised all manners of extraneous obstacles to delay that application. … There has not been any meaningful objection by members of the public to the applicant’s object of establishing and operating the second stock exchange in Namibia. The establishment of that stock exchange is in the public interest and will benefit local entrepreneurs in Namibia.
“…It appears an unprecedented practice was established whereby the annual application for the renewal of the NSX stock exchange license was a formality and it was issued automatically without having to go through the review process prescribed in terms of sections 7, 9 and 10 of SECA.”
Namfisa, Tuesday, through its spokesperson, Christopher Swartz said it was aware of the court case against it and its CEO.
“NAMFISA is aware of the case against it and its Chief Executive Officer, who, in accordance with section 2 of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985) is the Registrar of Stock Exchanges. In response to the application filed by Namibia Financial Exchange (Pty) Ltd in the High Court of Namibia, the Authority has filed a Notice to oppose same. The matter is currently under judicial consideration, and as such, the Authority cannot provide any further information at this point in time.”
Confidente. Lifting the Lid. Copyright © 2015