P120m-misuse puts FirstCred under judicial management
Staff Writer | Monday August 29, 2022 06:00
Formerly known as Getbucks, FirstCred is the country’s largest microlender.
CEO Duduetsang Garekwe says the judicial management provides the most optimal avenue for FirstCred to repay all its creditors adding that it will also allow the company to resolve its debt position.
“A winding up of the company would have closed the doors for the company to fully investigate and bring to book those responsible whereas judicial management offers prospects to deal with investors through either conversion of their investments or other suitable arrangements that ensure that as much value is recouped,” she said.
Judicial management refers to situations where a company is unable to pay its debts due to mismanagement then the court appoints a judicial manager to temporarily run the troubled company’s affairs. “The forensic examinations show that P160 million was raised between 2017 and 2019 when the company was operating as Getbucks Botswana. It also revealed that P120 million of these funds were grossly and inappropriately misused as the investor funds spent only two days in the then Getbucks Botswana bank accounts before they were taken out of Botswana and spent,” Garekwe said. ALCB Fund and AS Mintos Market Place had applied for the liquidation of FirstCred in an attempt to recover their funds.
ALCB Fund and Mintos Funds had initially invested P120 million while Afristrat Investment Holdings Limited formerly Ecsponent Limited invested P50 million. The investment was done before the company rebranded.
The P120 million funds were primarily raised from AS Mintos MarketPlace and from a listed bond on the Botswana Stock Exchange, whose investors included ALCB Fund managed by Lions Head and Ecsponent Limited now Afristrat Investment Holdings Limited. Garekwe said the the previous management’s misdeeds resulted in the loss of P120 million which made it impossible for the company to repay investors who are victims of the mismanagement.
She said as new management took over the reins of the company in 2020, due to such high levels of misappropriation they have been transparent with owed investors about the issue noting that it will take time for the company to repay their funds. “We have reported the findings of the forensic report to the regulatory authorities for investigation and have retained counsel with a view on legal action against individuals,” she added.