Authorities put Busha deals on ice

The Financial Services Conduct Authority (FSCA) has suspended the operating licence of JM Busha Investments, the controversial asset manager that lost R60-million from the Municipal Workers Retirement Fund (MWRF) belonging to more than 26000 municipal workers.

The provisional suspension, which is pending further investigations into the firm’s conduct, was effected last week, the regulator said on Tuesday.

Although the regulator would not confirm this, the Mail & Guardian understands that the suspension came after a number of conduct issues, including the risk created by the 2018 R60-million investment, without prior permission from the fund, in the Namibian SME bank that was later placed into liquidation.

FSCA spokesperson Tembisa Marele would only say it will allow the regulator to look into a few conduct issues they have picked up.

In regard to the R60-million investment, she said: “We can confirm that we are investigating JM Busha Asset Management (Pty) Ltd, following allegations that the asset manager breached investment mandates given to it. The authority intends to also look at the conduct of the fund’s trustees to establish if they compromised their fiduciary duties in any way.”


JM Busha is also embroiled in a messy court action by the Eswatini Financial Sector Regulatory Authority (FSRA), which accused the company of attempting to unlawfully transfer millions belonging to investors there to South Africa.

The FSRA successfully petitioned the courts to freeze a 16-million emalangeni (local currency) investment and dividend.

Last month, the M&G published an article that JM Busha — the oldest black asset management firm in the country — had invested about R200-million belonging to the workers’ fund in relatively unknown companies in Southern Africa without prior written permission.

This included the R60-million that was invested in SME Bank Namibia — through VBS-linked businessmen — just before the bank was placed into liquidation.

At the time the article was published, the firm’s chief executive Joseph Makamba Busha insisted the money was not lost, despite the bank being liquidated, and undertook to update the fund by the end of January. To date, this has not happened and it’s not clear what actions the fund has taken.

He said: “The process is still on-going as you know liquidation takes time. I met with the related parties including the liquidators last week.”

The disgruntled board of trustees accused the fund — in particular principal officer Themba Mfeka — of protecting the firm because Mfeka only informed a sub-committee of the board about the lost R60-million and not the entire board, and to date has taken no action against Busha. 

On Tuesday Mfeka said in response to questions posed by the M&G: “I also wish to assure you that JM Busha is soon to appear before the investment committee again, with all board members involved to account for this.

“All other issues you have raised in this latest email will also be placed before them to clarify. Should any information given by them to the fund be misleading, the board will certainly demand answers.”

Other investments included R40-million in Vuka Construction in Eswatini, R11-million in Hortex Limited in Zambia, R7-million in Africa Media Holdings in Lesotho, and another R42.2-million in Shepherd Bushiri Investments (SBI).

SBI, which belongs to church leader Shepherd Bushiri and which was fined for operating without a licence in 2018, also found itself duped out of millions of its money when it invested into a company owned by another senior pastor of the church.

Last February the Sowetan newspaper reported that Nicholas Mgiba’s Merger Chen Solutions promised congregants of Bushiri’s Enlightened Christian Gathering church a 57-fold increase in six months on a R1-million investment, and the SBI itself was caught in this scheme. 

The MWRF has 26000 members from municipalities across the country and controls about R12-billion in assets.

Besides paying out on retirement, the fund also provides death and disability and funeral cover, bursaries and home loans to its members. Busha, the M&G established recently, has also been a broker and administrator on the fund’s funeral cover since 2016, through his other company JM Busha Life.

Two MWRF insiders claimed Busha was inserted into a deal that was initially agreed between the fund and underwriters, Safrican.

“These guys did not initiate the Safrican business, and in fact the current arrangement (of R40000 death benefit, R20000 paid-up benefit, plus R40000 accidental death benefit in return for a R98 premium) is to accommodate them [Busha],” said one, who asked to be anonymous. “It’s simply too expensive because these guys must get their 17% (commission).”

Mfeka defended Busha Life’s appointment saying there is no detriment to the fund because the premiums are competitive. “JM Busha pitched for the business and the board accepted at a price that was R15.50 less than the then intermediary.

“The next cheapest quote was R3 more than JM Busha,” he said.

“My understanding is that the (SBI) investment was a money market instrument and all interest income has been received. There is no link between the investment and the church congregants’ activities.

“Fund members have not been prejudiced as there are returns the fund obtains relative to the market. The initial investment was R700-million which JM Busha has grown to about R1.5-billion for the benefit of the members,” he said.

This week Busha, who is also a politician in Zimbabwe and contested the last general elections as presidential candidate under the banner of the FreeZim Congress, lamented what he described as a campaign against his company.

He said the case Eswatini arose from fabricated information. “This will be proved in due course. Our lawyers are working on it,” he said.

“We invested in a company owned by Shepherd Bushiri Investments as a holding company. The funds get above market returns and we have double the investment as guarantees. We considered the company and matters relating to the church surfaced after the investment.”

On the funeral cover policy, Busha said: “We presented to the Fund with the underwriting done by Safrican. We get an administrative fee which any other intermediary would get.   

“There is no disadvantage. We provide a service and charge management fees per mandate. We believe our fees are among the cheapest.”

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Sabelo Skiti

Sabelo Skiti is an investigative journalist.

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