Rwanda Social Security Board (RSSB) has defended its investments, saying although it may not "yield immediate profits, in the long term, they do.”

Moses Kazoora, RSSB’s public relations and communications unit director, made the comments in an interview with The New Times, last week, days after the Auditor-General, Obadiah Biraro, released Financial Year 2013/14 report detailing system errors and gaps in monitoring the operations and financial performance of entities that RSSB partly or wholly owns.

The report also cited inappropriate basis of valuing equity investments, absence of valuation to establish fair value of investment properties, weaknesses in tracking and accounting for mortgage loans relating to houses located at Gacuriro 2020 Estate.

The report said RSSB may not be able to recoup the amounts invested, hence negatively impacting on medical and pension schemes.

It cited a balance of Rwf4.9 billion as fair value of equity investment in Akagera Game Lodge based on projected operating profits over a five-year period from June 2014 to 2019.

The operating profit amounts used, according to the AG, are merely imaginary figures as there is no documented basis for the projections. The reported fair value is highly inflated.

The report further cited the Rwanda Foreign Investment Holding Company (RFIH), which was created in 2008 by the then La Rwandaise Assurance Maladies (RAMA) and the Military Medical Insurance (MMI) with initial share capital of Rwf8.9 billion that was later increased to Rwf10.1 billion.

Up to 94.5 per cent shareholding was paid up by RSSB while the remaining 5.50 per cent was paid up by MMI.

However, the company has never generated any return to RSSB nor produced financial statements since its inception up to the time of audit in March 2015, after a period of over seven years.

The report pointed out that it is not clear what the company does and how management of RSSB monitors its operations.

This investment is reported at Rwf11.7 billion as of June 2014 in RSSB financial statements without any basis, according to the report.

On Gacuriro 2020 Estate, the report pointed at differences of Rwf50.3 billion between the value of assets as per the fixed assets register and that recorded in the books of account and reported in the financial statements.

Unreported mortgage repayment

The AG also faulted the agency for unallocated mortgage repayments reported under liabilities in the financial statements, unexplained differences amounting to Rwf7.6 billion between opening balances as of July 1, 2013, and the closing balances for the year ending June 30, 2013, for other payables.

The report also accused RSSB of unsupported creditors and unusual creditor balances amounting to about Rwf10 billion.

It highlights a loss of about Rwf10 billion RSSB failed to recover in loans and faults the agency on the rationality of selling price of Rwf26 billion offered and accepted by RSSB for three investment properties; Nyarugenge Pension Plaza, Kicukiro Pension Plaza and Former CSR headquarters in Kacyiru.

RSSB is also faulted for mismatching figures in its purchase of shares in Congebanque and issues relating to the affordability of housing units in planned Nyagatare Real Estate Project.

Kazoora admitted there were system errors but said no money was embezzled.

"Truth is no money was embezzled, we recognise there were system errors; for example between 1962 and 2008, CSR had seven million records of data on papers most of which involved errors, some pensioners were registered with wrong age or wrong details, correcting these errors is what may cause a mismatch,” he said.

Other issues include lack of the Board of Directors involvement in key investment decisions.

Up to 22 equity investments involving significant amounts totaling Rwf99 billion were acquired by RSSB with no assessment and approval by the Board, despite requirements in the investment Policy Statement for the Board of Directors to oversee the overall portfolio management process and making of investment decisions, reads the report.

Kazoora reassured workers, saying their savings were safe.

"In the past three years, our financial portfolio has grown from Rwf 200 billion to over Rwf400 billion. The public should not worry about anything,” said Kazoora.

However, worker’s union CESTRAR, said investments should be done in a manner that minimises losses.

Eric Manzi the executive secretary of CESTRAR, who also sits on RSSB Board representing interests of workers, said money should be invested in social projects like affordable houses that benefit pensioners.

"There are many investments made that have paid off well but there are also those that have failed but the situation is not very alarming. However, if investigations are conducted following the AG’s report, and it’s proven that there was individual responsibility in mismanagement of the funds, then whoever is involved should be prosecuted,” said Manzi.

editorial@newtimes.co.rw