Standard Bank Namibia is alleged to have awarded business valued at over N$7 million to businesses associated with one of its directors and a known friend of its Chief Executive Officer, Vetumbuavi Mungunda.
Despite the denial by the bank, Standard Bank picked IJG Stockbrokers as its preferred sponsoring broker for its listing and paid N$6.5 million for its services despite the bank’s chairperson, Herbert Maier being an executive in one of the IJG Group’s units.
Although the bank did request other Namibia Stock exchange (NSX) registered brokers to submit proposals for the listing, insiders allege that IJG was always going to emerge as the preferred partnering broker because of Maier’s position in the bank.
“The appointment of suppliers to the bank is managed by the Tender Board through a public process. Invitations were extended to brokers in Namibia, and after which an evaluation was performed based on the experience of the broking firms in managing listings of this nature and complexity.
“Mr Herbert Maier is not a member of the Tender Board that made the decision and his interest in IJG was declared to the Board. As disclosed on page 54 of the Prospectus Document, fees payable to IJG are N$6.5 million,” Standard bank Namibia Spokesperson, Magreth Mengo said in her response to questions sent by the Windhoek Observer.
Maier’s relationship with Standard Bank does not end there, however. The bank is alleged to have come to his rescue by bailing out his Desert Stone Fund managed by IJG Capital which he is Managing Director, after one of its investee companies, Mobipay, suffered huge losses after some its contracts were terminated.
Mobipay operated vending machines around the country offering electricity, water and airtime purchasing services.
Standard Bank acquired the businesses in April this year for N$53,2 million, giving the business an evaluation of over N$100 million despite the loss of key accounts.
Questions are being raised over the evaluation of the business, which saw Standard bank paying N$39 million as ‘goodwill’ for the business, about 73 percent of the purchase price.
In another case which has raised concerns about how business was awarded to those close to bank’s leadership, Dr Weder, Kauta & Hoveka Inc was picked as the preferred legal advisor of its recent NSX listing and was paid N$400,000 for its services despite its Chief Executive Officer, Vetumbuavi Mungunda being a known close associate to the law firm’s senior partner, Patrick Kauta.
Although the bank did not deny the close relationship between the bank’s CEO and Patrick Kauta when quizzed if that did not pose a likely conflict of interest, considering his law firm had emerged as the preferred legal advisor of its listing, Mengo said “The Chief Executive may be a personal friend of Mr Kauta, but he has no involvement in the appointment of suppliers to the Bank as he is not a member of the Tender Board.
“A transparent process was followed by the Legal Department of the bank which included all 14 firms then on the legal panel of the bank. Following a review of the proposals received, looking at factors such as experience of the firm and individual partners in the areas of corporate law and listings, the firm Dr Weder, Kauta and Hoveka Inc. was appointed.”
She was quick to point out that Kauta had not provided any legal services for the listing, but as a senior partner of the firm, Kauta will benefit directly from the billing of services rendered to Standard Bank.
“For the record, the partner that assisted Standard Bank with the listing is Ms Magano Erkana and not Mr Kauta. The fees paid are publicly disclosed on page 54 of the Prospectus document as N$400,000 together with other professional fees for the listing,” Mengo said.
SBN Holdings Limited was listed on the NSX on November 15, after raising N$722 million from its initial public offering as questions are raised about how the funds raised will be deployed.
“A total amount of N$722 million was raised from the listing and the capital raised will be utilised to make earnings enhancing acquisitions, facilitate diversification and expansions,” Mengo said.
After the listing, Standard Bank Group South Africa still remains the controlling shareholder of the Namibian-based bank, with an effective 74.9 percent stake.
“Standard Bank Group now owns 74.9 percent of Standard Bank Namibia following the listing. Standard Bank employees, together with the Standard Bank Community Trust, own just less than 10 percent and the remaining 15.1 percent is owned by Namibians who purchased shares as part of the listing process in November 2019. The direct shareholding of the Chief Executive in Standard Bank Namibia was disclosed on page 36 of the Prospectus document and it is 248,624 shares or 0.05 percent of the total shareholding or only 0.50 percent of the shares allocated for the employee share scheme,” she said.