Justice Chris Gabanagae of Gaborone High Court in a recent judgment ruled in favour of Kopanang Thekiso, CMB’s liquidator, in a case in which prominent businessman, Moitsheki Lekalake, was challenging the recovery of funds he allegedly received from CMB.
CMB, now under liquidation, was contracted by the BPOPF in 2014 to manage an initial P500 million investment mandate in private equity. The asset manager and the pension fund fell out in late 2017 following allegations of misappropriation, at which point CMB had reportedly been given P477 million to manage.
The asset manager sent BPOPF P50 million back and said the amount was final fulfilment and settlement of its (CMB’s) obligations to the BPOPF under the terms of a “partnership agreement”.
Following that, the liquidator, acting on behalf of numerous creditors and the BPOPF, went on a quest to recover millions of Pula from different individuals including Lekalake. Thekiso on February 1, 2021 issued a notice to the businessman in terms of the Companies Act in which he sought to return an amount of P3,521,000.
In response to the notice, Lekalake, who was accused of benefitting from the asset manager without any tangible evidence of the services he was to provide, made an application in which he sought the court not to set aside transactions which are the subject of the notice. The payments were made through CMB Fund1 (CMBF 1), a fund controlled at the time by CMB, between February 2016 and June 2018.
Setting aside the transactions would make Lekalake and his companies liable for the funds received and oblige him to repay.
Gabanagae judgment
In the judgment, Justice Gabanagae dismissed Lekalake’s application with costs and ordered him to refund the liquidator the sum of P3, 521,000 together with interest thereon at 10% per annum until payment.
“I find that the applicant (Lekalake) has failed to demonstrate why the transaction should not be set aside. “The transaction is accordingly set aside in terms of the notice. I agree with Thekiso’s submission that Lekalake has not disclosed any lawful defence to the notice as he has failed to plead in his application that at time he benefitted from the transaction, the assets of CMBF1 and/or the liquidated companies exceeded its liabilities,” the judge said.
During the breakdown of Lekalake’s application, the judge explained that in determining whether or not to set aside the transactions, Section 25 of the Insolvency Act was applicable.
Justice Gabanagae pointed out that the CMB liquidator submitted that there was clearly a disposition of property, meaning there was various sums of money totalling P3.52 million paid for the benefit of Lekalake from CMBF1's transactional bank account.
“These amounts are property. This is common cause and is not controversial. The property was disposed of by CMBF1, from its transactional account. CMBF1 is the insolvent as one of the liquidated companies. CMBF1 did not receive any value for the payments,” the judge noted.
According to the judgment, Lekalake testified that the work that he did in consideration for the payments was for Capital Management Africa, a separate distinct company and he stated that he benefited from the funds.
Further the businessman testified having withdrawn the funds from an account held by an entity known as Varsity League.
Dispute background
As per court documents, on August 16, 2018, CMB was placed under provisional liquidation, which order was made final on September 19, 2018 by order of the High Court of Botswana. On November 23, 2018, CMBF 1 was placed under provisional liquidation, which order was made final on February 19, 2019.
On July 10, 2020, the liquidations of CMB and CMBF1 were consolidated in terms of section 488 (1) (b) of the Companies Act. 6.
During the period of February 12, 2019 to July 10, 2020, an enquiry was held into the affairs of the liquidated companies and several witnesses were subpoenaed over multiple sessions of the enquiry before the Master of the High Court between February 12, 2019 and July 10, 2020. The witnesses gave testimony in respect of the affairs of the liquidated companies.
According to court papers, the enquiry revealed that a significant amount of pensioners funds from the BPOPF, around P200 million, was misappropriated and diverted through the liquidated companies that were controlled by directors, Tim Marsland and Rapula Okaile, to various beneficiaries in Botswana and South Africa.
Reportedly Lekalake was one of the witnesses who testified at the enquiry and he had been summoned because it had been discovered that he had received payments totalling P3.52 million.
Lekalake’s case
In court, the businessman argued that the claim made by the CMB liquidator was vague and embarrassing to the extent that, the liquidator failed to state where such transactions were made. Lekalake also argued that the liquidator had not provided any banking details and that the liquidator had not attached any proof of the alleged payments.
CMB liquidator’s case
The liquidator, Thekiso, argued that despite the funds in question being paid to an account in the name of Varsity League, the company was a mere conduit, and Lekalake was the true beneficiary behind the transactions. According to court documents, Lekalake was both a shareholder and director of Varsity League and was in control of its bank account and the controlling mind of Varsity League. Lekalake reportedly admitted to withdrawing funds from the Varsity League accounts for various transactions at the instance of Marsland who was depositing the amounts from the CMBF1 account.
“For instance, he (Lekalake) testified that he received P690,000,000 from the companies on instruction from Marsland for purposes of obtaining forex in exchanging the funds into an equivalent of the US dollar. “He received P108,000 from the companies at the instance of Marsland, for purposes of cashing this to give Sadique Kebonang to fund political activities,” reads the judgement.
According to the judgement, Lekalake testified that he also received P40,000 as a refund for expenses he incurred taking a delegation to Cape Town for the Jazz Festival.
The liquidator also argued that it was clear from the evidence transcript that Lekalake was a beneficiary of the funds in the Varsity League accounts, which he withdrew for various purposes such as obtaining forex and taking guests to the Cape Town Jazz Festival.
