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The pastor, the politician and the pension funds

Nearly R500-million of workers’ pension funds has been stolen and invested in risky initiatives, including that of controversial evangelist Shepherd Bushiri’s investment company. 

The Mail & Guardian has for the past six months been reporting and following developments in the case of Joseph Busha, a smooth-talking politician who runs JM Busha Asset Management, JM Investment Group and JM Busha Life out of his offices in Dunkeld, Johannesburg.

Busha ran for president in Zimbabwe two years ago, and frequently comments and gives investment advice on various broadcast and print media outlets.

Slick: Joseph Busha invested pension funds in Pastor Shepherd Bushiri’s company, some of which was allegedly was used to build his Rustenburg hotel and spa. (Alex Scott Lambley & ECG news)

The M&G’s reporting, which led to the suspension of JM Busha Asset Management’s financial service provider licence in February, has found that R480-million of R3.8-billion Busha was entrusted with by five pension funds ended up in at least three risky investments. This was done in breach of his mandate and hidden from the pension funds.

Yet the Financial Sector Conduct Authority (FSCA) has handed Busha his licence back with the hope that he will return what he owes to the funds. 

The money is for the pensions of more than 2 million people in the electrical, metals and engineering sectors and for municipal workers.

When asked for a comment, Busha simply said: “We have our licence. Please check with the FSCA.” 

Investing in Bushiri

Busha ploughed R200-million of workers’ pension funds into Shepherd Bushiri Investments (SBI), which operates a chain of hotels in Africa and Europe. 

The millions invested in SBI allegedly contributed to the construction of its first hotel on South African soil, the Sparkling Waters Hotel and Spa near Rustenburg. The M&G has learned that the investment, and other unauthorised investments, has fallen into arrears. 

Sparkling Waters Hotel and Spa near Rustenburg.

The 56-room hotel is part of the SBI chain of hotels in Barcelona, Tarragona, and Terres de l’Ebre according to news reports. 

Bushiri, who has not responded to the M&G’s questions, is said to be the wealthiest pastor in Africa with an estimated net worth of $150-million. Bushiri and his wife Mary, who is a director at SBI, were arrested for fraud, money laundering in connection with R15-million, and infringement of the Immigration Act last year. They appeared in the high court in Pretoria last month for pre-trial, but the matter was postponed until October. 

Pastor Shepherd Bushiri.

The government in Botswana imposed a travel restriction on the Malawi-born leader of the Enlightened Christian Gathering Church because, according to news reports, he had demanded security from state security agencies and that borders be opened 24 hours a day for his convenience. The government then deregistered all branches of his church. The visa restriction was lifted last year. 

Busha invested another R150‑million in an eSwatini-based construction company, Inyatsi Construction. According to eSwatini media, King Mswati III owns shares in the company. A subsidiary of the company based in South Africa recently shut down its operations and retrenched staff. 

At least R60-million of the R400‑million cannot be recovered. It was lost when the Namibian SME Bank went into liquidation in 2018. An affidavit in the liquidation case filed by the bank’s legal adviser, Tania Pearson, shows that Busha invested the R60-million into SME while the bank was under scrutiny by authorities in Namibia. She also said that the bank traced R4.1-million of R247-million that was moved unlawfully to South Africa to Busha.  

Busha’s modus operandi

Busha took relatively small amounts from pension funds he was managing and used this money to invest in private equity transactions under the name of his businesses instead of under the fund. 

He then tells clients that the investments are in money markets instruments, which are similar to notice savings accounts.

Investing the funds without permission is a material breach of contract, and moving client money to his businesses for investment purposes without permission amounts to theft and contravenes the Pension Funds Act. 

Mphumzi Maqungo, a trustee of one of the funds — the Metal Industries Benefit Fund Administrators of the National Union of Metalworkers of South Africa (Numsa) — said he had pushed for the fund to terminate Busha’s contract. 

“As Numsa we are firm that any company that manages or invests money yabasebenzi (belonging to workers), if kuye kwafumaneka ukuba kunezityholo ezifana nezi (it’s found that there are allegations such as this), as an organisation we shall fight and make sure that imali yabasebenzi (workers’ money) is paid back and terminate that company,” he said. 

The Metal Industries Benefit Fund Administrators has recovered R420 262 of the R533 050 619.38 managed by Busha because of its swift action, which included a legal summons for Busha to return the money. 

Maqungo is one of several individuals who is unhappy with the FSCA’s handling of Busha. 

FSCA’s inaction

The regulator called a meeting with all affected pension funds last month and urged them to institute joint legal recovery proceedings against Busha. At the same time, it lifted the suspension of his licence. 

The FSCA also had him agree to an enforceable undertaking that commits him to return the money and beef up his compliance function.

Busha was also mandated to hire an internal compliance officer separate from investors, appoint an external compliance firm to assist him, and appoint a third independent individual who will focus on compliance. 

He is required to submit monthly reports on all material compliance issues, and specifically on investment mandate compliance. 

This has left people in the investment industry and the pension funds unhappy because “it’s asking the thief to be part of recovering what he stole in the first place”, as one put it.

Another said: “There’s been a material breach like this, and the regulator does nothing except giving them back their licence. He could be getting new clients to cover what he has stolen because getting out of equity deals is not easy.

“[Or] he could be robbing another client to repay what he owes these funds,” the source added and also questioned why the FSCA did not appoint a curator or administrator to recover the funds.

Among the risks in Busha’s asset management company identified by the FSCA is that its liabilities exceeded its assets, which is in contravention of the requirement for fit and proper financial service providers. 

Brandon Topham, the FSCA’s head of investigation and enforcement, said there was no time limit to when the funds should be returned, but the individual funds should be able to pursue recovery in their own right.

“Recovery commenced a while ago but no timeframes have been set as this would be unreasonable in the light of current circumstances in the courts in South Africa arising from many factors including the Covid-19 situation,” he said.

Topham declined to confirm how much money has been recovered, citing confidentiality. 

Initially he said the FSCA was confident the money would be returned because Busha had shown security for the investments. He later backtracked when asked what the security was for the R60-million invested in SME Bank Namibia, and said there wasn’t security for all of the illegal investments. 

“We are monitoring his [Busha’s] actions on a monthly basis and will be in contact with the pension funds to ensure that the best possible alternatives are pursued by the pension funds to recover the invested monies. Busha’s ongoing licence will be monitored, and monthly consideration is done to ensure that the public is not in danger,” Topham said.

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Sabelo Skiti

Sabelo Skiti is an investigative journalist.

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