Asset management firms come under Ipec spotlight

Ipec director of pensions and life Cuthbert Munjoma

SOME asset management businesses are allegedly overvaluing projects and stealing from insurance companies and pension funds, the Insurance and Pensions Commission (Ipec) has revealed.

Cuthbert Munjoma, director of Ipec pensions and life, stated in an interview on the side-lines of the 49th annual conference of the Zimbabwe Association of Pension Funds in Victoria Falls last week that the practice was prevalent.

He indicated that there were excessively numerous projects pursuing investible revenue streams and small contributors within the context of prescribed assets projects.

According to information released by the regulator, the insurance and pension sectors accounted for more than US$1,1 billion of the total prescribed assets granted, which currently totals US$5,1 billion.

"It is not the investor but the asset manager who is in charge. The feedback that we are getting through whistleblowing…(is) as the regulator, please watch out,” he said.

“They would overvalue the projects and they get kickbacks from the developers and the construction companies. So it is more of an integrity issue.”

Munjoma stated that as the regulator they lacked concrete evidence and did not consider the area regulated.

He, however, pointed out that they have independent developers, including engineers and professionals, who are responsible for building the infrastructure, but are not under the umbrella of asset management.

"So the feedback that we are getting now is, you would say, this project is valued at this much. You take out funds legitimately from a pumping plant and invest it there. But the parties involved now would do some kickbacks,” Munjoma said.

“That's where they siphon the legitimate funds.  So I was saying, you guys need to develop the capacity to monitor projects because we are asking, why everyone is doing a project. They are doing a project because that's where certain things are happening.

“So, that's the feedback that we are getting formally and we had to bring it to the fore. It's not a desire to develop with the economy because collectively you can develop, collectively you can have a return on investment."

The Ipec director said the fact that the projects were overvalued meant more resources were being forked out by pension funds.

This, Munjoma said,  was draining pension funds.

"Our desire is to let them pool all resources like what they did in Bulawayo for the students accommodation.  Massive projects, they get together, they pool resources, they invest, and they are done.

“You go to the next project.

“But what we are picking now, every asset manager wants to run on a project. And we are very curious to say, why is everyone interested in doing projects,” he said.

Munjoma called for the industry to invest in bankable prescribed assets to ensure compliance and to develop project monitoring capacity.

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