The perfidious relationship among the sponsors of the now defunct Pula Steel in Selibe Phikwe was for once put on full display by one of the key figures in the choreographed project, Deepak Verma at the Hilton Hotel in Gaborone this week. Willowy in his unpacking of the drama that led to the folding of a promising project, Verma shared how they as promoters bundled and buried Pula Steel to the detriment of Selibe Phikwe and Botswana.
In the process it was over P150 million of tax payers’ money down the drain and what remains is battle of egos – soon to be beamed at the courts. At this point, Pula Steel equipment is up for auction; and the Vermas are planning on launching a spirited court bid to force the liquidator to allow them to buy the white elephant that is supposed to be Pula Steel. Deepak Verma is accusing Nigel Dickson Warren of refusing to accept their offer to buy Pula Steel.
Emphatic in downplaying his education credentials and fervent in his mocking of CEDA Chief Executive Officer (CEO) Thabo Thamane as a questionable graduate of London School of Economics, Deepak Verma portrays himself as a shrewd businessman who managed to siphon P14 million from a BCL/Pula Steel deal and bought himself profitable apartments in South Africa and a project similar to Pula Steel in Zimbabwe. He says he is making R2.5 million a month on his apartments because everything he touches turns gold.
Pula Steel went into judicial management on Feb 24th 2017, according to Deepak Verma, they made an offer to Nigel Warren Dixon to buy the shares on 23rd June 2017, this offer was revised when Nigel did not accept their initial offer and tried to broker within shareholders by way of advising them that he was waiting for all shareholders value to match the allocated shares. Verma posits that according to their shareholders’ agreement whoever had offered the liquidator the maximum must be offered the project, “but he opted to broker the deal so that every ones value is the same.”
In plain language the Vermas wanted to buy Pula Steel for P361 000. This is a company that was assembled in 2010, 80% owned by the Verma family and 20% belonging to Wealth Creation, an arm owned by the former BEDIA CEO, Brian Mosenene and Mpho Balopi, who was an ordinary citizen by then. Mosenene had known the Vermas by virtue of his BEDIA escapades in India and he introduced them to Mpho Balopi. “Mosenene had told us that he is interested in becoming a businessman and he motivated our interest in partnering with him,” explained Deepak Verma.
Pula Steel was to become an 80 tonne per day capacity plant that consumes 2400 tonnes raw material every month. According to Deepak Verma, at this point things got serious and they had to up the ante hence deciding that they needed P44 million for the project to take off. This is where CEDA, Botswana Development Corporation (BDC), Vermas and Wealth Generation came into one pot for mixing. P13 million was to come from promoters as debt and CEDA was to inject P7 million as equity and have a 35% interest in the business. Lesego Selotate was CEDA’s deputy CEO at the time the deal was being stitched and was the focal person.
Interestingly, BDC was non-committal at the stage and decided to put an executive to do some due diligence and the said executive never filed comments on the project and BDC did not put the P10 million they had pledged. Wealth Generation was expected to pop out P4.5 million into the reconfigured project.
Amid the capital call there was a nagging obstacle, the promters were failing to get land for the project despite the machinery having arrived. Five interlocking plots were identified and they were to be consolidated and allocated to Pula Steel, but in Deepak Verma’s words, “our file got stuck at some office at the Square Mart building and this delayed the project and a lot was changing in the market.”
But after protracted negotiations, Government finally offered Pula Steel land next to the five consolidated plots, “the project had already lost 12 months at this stage”, and “mind you during this period the company had a CEO in Brian Mosenene of Wealth Creation who was already getting a salary; there was also a Florence Mokalake who was working as an HR person and she was being paid but with no production,” said Deepak Verma. At this point CEDA was beginning to take control of things, the Vermas feeling sidelined despite their claimed knowledge of the business and its operations.
Deepak Verma was instructive in pointing out that “any delay in timelines are the first steps to derailment of any promising project.” He claims that the Vermas are the only directors who did not take salaries from Pula Steel for a period of six months. He said he was running a textile business on the side. This was the bleeding period for Pula Steel, money was moving out with nothing coming in.
HOW BCL GOT INVOLVED WITH PULA STEEL
“We reached out to BCL because the induction furnace of Pula Steel needs water for cooling. We wanted the water they were pumping out and throwing into the dam. We only wanted the water and not the steel scrap. It must noted that at the time BCP was prospecting for iron ore in Shoshong, Mahalapye, and Barolong farms.” According to Deepak Verma, after pitching their proposal for water with BCL, the mine’s hierarchy conceived an idea that maybe they should have a stake in Pula Steel to increase the value of their company.
The Vermas who now had a 52% stake in Pula Steel at this point interested CEDA, a 35% shareholding partner, with BCL’s proposal. BCL demanded 55% share in the company of Pula Steel. The mining giant at the time notified the promoters of Pula Steel that it was controlling 6% of GDP in the country hence they are bring influence more so that their executives serve in various boards such those of Botswana Power Corporation (BPC). The partners were to sell some of their shares to bring in BCL and CEDA made it clear that they will not go below 26%.
After negotiations, Mitchin and Kelly helped the partners close the deal with BCL, giving away 50.5% of the company to the mining giant in Selibe Phikwe in 2014. Mitchin and Kelly are still involved in Pula Steel’s liquidation process today. The Verma Family received P14 million from the deal; Wealth Generation got about P3.5 million and the other P3.5 million was paid to CEDA, “We were told not to talk to the media about the deal,” divulged the irritated Deepak Verma.
After BCL came in, the capacity of the project was increased and there was need to build a power substation of 5.5 MW and the cost of transfer of power to the substation was initially estimated at P5.5 million and the money was to be paid at a rate of P60 000 per month for five years but after some period the deal changed, BPC now demanded P21 million for the substation with an upfront payment.
Deepak Verma said this was another setback for the project, an escalation in costs that was unforeseen. BCL demanded the increase in capacity and they were in control, he said. In 2014 BCL brought in a new CEO for Pula Steel. This was the time when CEDA refused to participate in these decisions hence did not partake in capital call and their share was diluted to 6%.
At this point in the address Deepak Verma took a detour and started lashing at Thabo Thamane, the CEO of CEDA. “CEDA has invested P13 million and is now a creditor, he is at the mercy of the liquidator. He did not mortgage for the loan – he could have mortgaged the property or land. I have decided that I am putting together an induction furnace and this time I am not taking a partner. I am not relocating, I have been here 20 years and I am staying,” he said.
At the time of near collapse of Pula Steel, the Vermas had 26%, Wealth Generation 4%, CEDA 6% and the rest was held by BCL. The company could not control its costs. There were labour disputes, several allegations of racism and unfair treatment of employees among other things. The company was certainly going under. In addition there were poor decisions made on behalf of the company, such as spending more on consultants instead of the company doing the jobs direct. The final nail on the coffin was the collapse of BCL which meant Pula Steel became obvious collateral albeit its own frailties.
POLITICIANS HAD A SAY
All along Selebi Phikwe, Keorapetse had reported Pula Steel to the Directorate of Corruption and Economic Crime (DCEC) with a number of cases to be investigated. The MP has always questioned the wisdom for coming up with Pula Steel when the biggest steel manufacturing companies in the world were crying foul about the market. â€¨â€¨
The then assistant Minister of Presidential Affairs and Public Administration, Phillip Dikgang Makgalemele had informed parliament that 18 cases were classified for investigation, nine were closed due to lack of evidence while eight were still under investigation. Details of the said corruption reports were not shared. Pula Steel was borne of a diversification strategy by BCL code named Polaris II which sought to diversify the operations of BCL from just mining and smelting.â€¨â€¨Pula Steel which was a subsidiary of BCL Limited which has now been placed under final liquidation following its closure last year October is currently under judicial management.
The steel manufacturing company was placed under judicial management by the High Court to suspend all orders by creditors to attach the company’s property for auction.â€¨â€¨At the time Pula Steel’s Judicial Manager, Vijay Kalyanaraman of Grand Thornton who was appointed by the High Court said at that time that Pula Steel is not yet insolvent despite liabilities but it would need cash injection by shareholders for production to continue. The Judicial Manager has applied for Pula Steel to be replaced under liquidation as shareholders have failed to inject the necessary cash to allow for recommencement of production.
Pula Steel was the first integrated steel plant in Botswana using scrap metal to produce steel billets, an intermediary steel product. Built at a cost of P130 million in 2015. The company, majority owned by BCL Mine and with shareholding from CEDA and founders, the Verma family, was placed in liquidation last October, owing creditors an estimated P100 million.
The Vermas are vociferous on their Pula Steel takeover bid. Deepak Verma says he can create 1000 jobs if offered the company. He is of the view that Batswana should desist from always blaming foreign investors when projects do not go according to plan. He says it is very important to critically look at the facts and all parties involved. “Certainly you cannot blame the Vermas for Pula Steel collapse, we know the business but were overshadowed.”
President Dr Mokgweetsi Masisi has been touring the entire world since occupying Presidential office in 2018. Few months down the line, he flew to Florida in the United States of America where he landed at the Disney World.
This is the world’s largest entertainment complex opened in 1971, with four theme parks (consisting of Magic Kingdom, Epcot, Disney’s Hollywood Studios, and Disney’s Animal Kingdom).
Upon his return in the country from the fairytale land, Masisi said Botswana struck a partnership with Disney World. The partnership primarily focused on turning the country’s capital, Gaborone, into an international tourism and leisure destination.
“We have struck a partnership with Disney World as a company. They focus on making people happy and bringing tourists. I want tourists in this country. Visa restrictions are out. They will be issued on arrival. I have tasked Minister Makgato’s Ministry to categorize taxis so that there can be value in the taxi industry.
I am very committed to making Gaborone an international venue center and this will bring revenue to our country,” Masisi said at the time. Masisi, has now appointed Makgato as Botswana’s High Commissioner – designate to the Commonwealth of Australia.
However, two years later, there is no sign of Gaborone being turned into a tourism hub. In fact, the partnership Masisi struck with Disney World never emerged. It is now becoming more of a pipeline dream, and politicians are keen to know what really transpired.
In a dramatic turn of events, Masisi’s flanking Minister, Minister for Presidential Affairs, Governance and Public Administration, Kabo Morwaeng, slammed Vice President Slumber Tsogwane with questions on this said ghost partnership, demanding answers on Masisi’s long dead promise.
Vice President Tsogwane told Parliament on Thursday that Masisi was looking for investors to come and do business in Botswana, either in partnership with government or the private sector.
“The President and his delegation engaged in meetings with the management of Disney World to identify opportunities for the company to collaborate with in Botswana. There were a number of opportunities Mr. Speaker for collaboration that were identified to be followed up with by bilateral negotiations with various institutions.
The key area that was identified for collaboration was the implementation of an enhanced customer care training and development akin to that of Disney World.
The Botswana Public Service College was assigned to collaborate with Disney World, to roll out a training programme which will achieve excellent customer service for the public sector in Botswana, Tsogwane said via virtual Parliament.
He further said representatives of Disney World visited Botswana on a fact finding mission in May 2019.
“While in Botswana, the team toured selected sites such as Gaborone bus rank, Tlokweng Boarder post, and Department of Roads, Training and Safety offices amongst others. Following this, Disney World produced a scoping report which detailed training and engagement timelines for consideration by government,” said Tsogwane.
In fulfilment of their procurement requirement, Tsogwane said Disney Institute was requested to submit a proposal based on their scoping report indicating associated cost implications. He said, Disney declined to submit citing that it does not deal directly with government.
“After being advised by their Disney World Board, they therefore advised Botswana government to deal with another company in the United States of America, which according to them does the Disney World way. This never proceeded because our interest was on Disney World and not any other company that point in time.”
As a result, Tsogwane told Parliament that no deal or contract was signed with Disney World. “The issue of easing of restrictions which is part of the question, between any two countries is a matter that is negotiated through diplomatic channels and whenever agreements are reached, proper communication is made. With regard to Visa restrictions between Botswana and the US, Tsogwane says they will continue discussions on how to ease restrictions,” he said on Thursday.
Morwaeng wanted Tsogwane to update Parliament on: Government’s deal with Disney World, the terms of the deal propounded by the President in March 2019; Whether the deal was signed, when it was signed and clear specifics of the deal and its benefits to Botswana tourism; when visa restrictions between the two countries (Botswana and the United States of America) will be eased and visas issued on arrival as per the Disney World deal pronouncement; and If the deal struck with Disney World was not just mere electioneering talk that will never see the light of the day.
Despite the government of Botswana’s ambition to have one of its own to lead Southern Africa Development Community (SADC) since its establishment in 1980, the Presidency says there is no budget specifically dedicated to the campaign.
The Government has released the name of Permanent Secretary to the President, Elias Mpedi Magosi, as the candidate for the SADC Executive Secretary position. Magosi is expected to face off with Democratic Republic of Congo (DRC) candidate, Faustin Mukela. The position will become vacant in August this year.
However, despite the optimism the Botswana Government has not yet set aside a budget to assist Magosi to win against the seemingly DRC giant. “We all know that the COVID-19 pandemic has negatively affected the country’s ability to effectively fund any new project. This campaign is not an exception. As such, we do not have any budget for the campaign. However, we have so far managed to take advantage of His Excellency the President’s working visits to the neighbouring countries to also carry out the campaigns,” Press Secretary to the President, Batlhalefi Leagajang, explained.
Botswana has housed SADC since the establishment of the then SADCC in 1980, but has never occupied top most leadership positions at the SADC Secretariat. “We therefore, strongly believe that we should also have an opportunity to contribute to the management of our regional body as it continues to drive the important issues of regional integration industrialization and socio-economic development.
This will also profile Botswana as a strong advocate of regional integration,” he responded to this publication’s questionnaire as to why the Government wants to occupy the plum post. SADC is a Member State driven organization. As such, Leagajang said, needs a well-grounded Executive Secretary with a blend of management and leadership acumen; a transformational leader with political awareness and integrity; private and public sector experience; a deep culture of corporate governance; as well as strategic agility and result-oriented consummate diplomat.
“These are the unique attributes of our candidate,” he said. So far President Mokgweetsi Masisi has visited nine out of 16 SADC member states on a working visit and also taking an opportunity to present to them his candidate.
“The countries have appreciated this effort and we remain hopeful. However, it is important to note that this is a democratic and competitive process which must be respected,” he responded when asked about the reception and assurances from various countries to cast a vote for Magosi.
In 2018, when Pelonomi Venson-Moitoi challenged for the Africa Union (AU) Chairperson, the government appointed former President Festus Mogae to be the campaign leader. Does the Government have anyone apart from Masisi to help with the campaign?
“The campaigns for the candidate are strictly led by the Government of Botswana. Since this is a candidate for Botswana, not just the Government, it will be appreciated if all Batswana, including the media, could also shoulder the responsibility to campaign for the candidate in their own spheres of influence,” Leagajang responded.
While there are sceptics on Magosi winning against the DRC man, the Government is confident and believes that with the unique traits that he possess, Magosi stands a chance. He is said to be a strong advocate of justice and fairness as he has played this role in his current role as PSP and in his previous roles as PS and in the private sector. He has helped individuals and companies to find justice and fairness in most of their dealings with Government.
Magosi is also said to be a proponent of corporate governance and which he has relentlessly pursued in most of his career including in Government and other sectors. A strong believer in following laid down procedures and laws. “He carries a variety of skills as an HR expert with experience in different sectors, a strategist and an Organization development specialist.
His experience and exposure spans government, parastatal, private sector and at regional level as well, thus making him a suitable candidate for the regional role. He has worked with governments, businesses, development partners and politicians and is comfortable navigating through all of them,” Leagajang concluded.
The Minister of Land Management, Water and Sanitation Services, Kefentse Mzwinila looked a politician set to shoot the moon as he laid bare his billions of pula development agenda recently in Parliament.
His Ministry’s combined Recurrent and Development Budget Proposals for the 2021/ 2022 Financial Year is pegged at Four Billion, Three Hundred and Sixty – Five Million, two Hundred and Nineteen Thousand, Five Hundred and Sixty Pula (P4, 365, 219, 560). This is a budget 38.3% more than the allocation for the 2020/2021 Financial Year.
Mzwinila preluded his request to parliament with a demonstration that his Ministry has no champagne taste on a beer budget – indicating that his ministry’s expenditure at the end of February 2021P2.111 Billion or 96% of development budget; and P910 million or 90% of the recurrent budget.
Notwithstanding the budget dust, the Minister justified this year’s increase in the Ministry’s total budget. He attributed the escalation to the commencement of major projects under the water sector. These include the implementation of the North South Carrier (NSC) 22.2 covering various sub projects. Mzwinila noted that these are all public value projects which are aimed at improving the lives of Batswana.
Mzwinila’s Ministry has projected that the sum of Nine Hundred and Sixty –Three Million, Nine Hundred and Forty – Seven Thousand, Five Hundred and Sixty Pula (P963, 947, 560) be permitted for the Recurrent Budget and stand part of the 2021 / 2022 Appropriation Bill ( No. 1 of 2021).
“55% of the Recurrent Budget is geared towards the Revenue Support Grant for 12 Land Boards and their subordinate authorities while the sum of P5 Million is allocated to the Real Estate Advisory Council (REAC). The remaining 44% is proposed for the Ministry Departments.”
The sum of Three Billion, Four Hundred and One Million, Two hundred and Seventy –Two Thousand Pula (P3, 401, 272, 000), for the Development Budget was approved and stand part of the same schedule of the appropriation (2021/2022).
When breaking down the Development Budget, Minister Mzwinila noted that Water Supply and Sanitation projects will account for P1.098 Billion to finance the Maun Water and Sanitation project, Molepolole Sanitation projects and the Shakawe Water Treatment Plant Rehabilitation.
With all the implementation bottlenecks troubling several projects in the country, Mzwinila had to satisfy the question of whether his Ministry demonstrated a dire need for the budget with reference to its execution of the budget for the financial year 2020/2021 and its delivery of strategic initiatives and projects?
Mzwinila’s pitch found favour with parliament and his ministry will get an aggregate budget of P3.198 Billion for the 2020/ 2021 Financial Year. Within this allocation, P2.188 Billion is for the Development Budget and P1.010 Billion will cover the Recurrent Budget.
The Minister revealed his strategic interventions for land management, water and sanitation services. Highlighting that efforts by Government to provide serviced residential land to citizens on the waiting list are being hampered by limited resources. He shared that his ministry needs P94 Billion to cover such costs which will directly link to water, sewage, roads, electricity, telecommunications and storm water drainage leading to the allocation of 4 587 plots on un-serviced land.
The minister projected that 22 952 un-serviced residential plots are planned to be allocated in the next financial year. However, there is a trend where allocated land remains fallow and undeveloped which raises misgivings that the requests could have been made on speculative plans.
Mzwinila noted that in the spirit of forging stronger International connections, the Ministry will in June 2021 sign a Memorandum of Understanding on Land matters between Namibia and Botswana with the aim of opening doors to the creation of Dry Ports in the country, facilitate international trade through Walvis Bay Sea Port.
Botswana is already challenged by scarcity of naturally occurring water resources due to the aridity of the country creating persistent water shortages. The type of infrastructure required to improve national water security is a true reflection of intensive investment needed in the water sector The Minister stressed.
“An emerging issue such as the COVID -19 pandemic poses serious challenges as the control of the virus requires reliable water supply. In an effort to mitigate the challenge, the Ministry has undertaken extensive bowsing throughout the country which included the provision of additional capacity for supplementary bowsing to areas with pervasive water shortages, plus an additional forty one (41) un-gazetted settlements.
Operational costs due to bowsing were at an average of P6 Million per month before the COVID-19 pandemic and increased to an unsustainable amount of the order of P13 Million per month, since the beginning of the State of Emergency in April 2020,” the minister shared.
Through the support of a World Bank Loan, the Ministry is implementing several initiatives under the Botswana Emergency Water Security and Efficiency (BEWSE) project. Through BEWSE the Raw Water Pricing and Abstraction Strategy will assess the pricing of water in a manner that enables the provision of water to support new economic development, the strategy is planned to be completed in June 2021.
The Ministry has commenced the development of a long term National Water Security Strategy to improve resilience to climate change impacts. The strategy development entails prioritization of the proposed future mega water transfers such as the Chobe – Zambezi water transfer, the Atlantic Ocean water transfer to Botswana through Namibia and Lesotho – Botswana water transfer.
Following the signing of the tripartite Memorandum of Agreement (MoA) between Botswana, Lesotho and South Africa in November 2017 for the Lesotho –Botswana Water Transfer project, a 24 months contract for a combined prefeasibility and feasibility study for the development of a bankable Lesotho – Botswana Water Transfer project feasibility study was signed and is to be completed in 2022.
One of the Ministry’s famous major water supply projects such as the North South Carrier (NSC) 2.2 has experienced hiccups; having tenders for contract 1 (Masama to Mmamashia Pipeline) and Contract 2 (Mahalapye to Masama Pipeline) cancelled due to budgetary constraints.