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A Vehement Verma Vents

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. 



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.

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.

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.”

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Bangwato regent speaks ‘respect for Dikgosi’

23rd May 2022
Bangwato

Presidential Commission of Inquiry into the Review of the Constitution held a meeting in Serowe this week. The meeting was to accord Bangwato, just like other tribes, a platform to give their opinions, contributions and what they think is the horse power and limitations of the current Constitution of Botswana.

Bangwato Regent, Kgosi Serogola Seretse said, he is of the understanding that the Commission has not come for anything apart from getting their opinions on how things could be made better. His contribution was that he solely knows of only two social positions in the world; Dikgosi and Pastors. He said other positions are just benedictions. He further urged that, Batswana should respect God’s ordained protocols such as Dikgosi and Pastors.

Seretse pointed out the importance of acknowledging and appreciating Dikgosi as nation builders. He cautioned and warned that, the Commission should ensure that their dealing with Dikgosi is harmonious. He called for an amendment to be made on the ‘National Order of Precedence’ noting that Dikgosi are put at number 11, but should at least be taken a little higher to number 7.

One resident, Tshepo Moloi while giving his contribution said there must be provisions of Social Justice that ensure equal distribution of resources to all citizens. He said this provision should entail an obligation that all citizen have equal opportunities to different Government Initiatives. Moloi substantiated that, all ‘Presidential Commissions’ be engraved on the Constitution

Alfred Thogolwane who is as well a resident of the biggest village in the Central District, pointed out the need for preservation of the country and resources thereof, saying “it must dawn onto all that, the calabash that fetches water for the family cannot fixed once its broken.”  Another resident, Keikantsemang Sebedi advocated for Polygamous marriage, saying that men should marry as many wives as they please. She said there is no need for any socioeconomic assessment done on men who wish to marry more than one wife.

She advised that, the country should benchmark from the Zezuru culture that does it, with no complexities. On the other hand, Sebedi said that, there must be considerations done on the Old Age Pension. She said people who earned P4000 should not receive the old Age Pension upon their fullness of age.  Forshia Koloi called for amendments on Section 77 and all the provisions that speaks to the subject of Bogosi and the powers infested in them. He said they should be made more detailed and avoid ambiguity in clauses.

Mr Tlhaodi said there must be Land Audits done in the country. Citing an example of the Tati Land as one that should be thoroughly audited. He further advised that, Election Day be put on the Calendar. He said, if it happens that the day be a Saturday, there should be some special dispensation for the 7th Day Adventist Church members to take part in voting without compromising on their day of worship. Tlhaodi added that there must be People’s Complaint Commission in the country.

Speakers emphasized the need for the country to review the exercise of ‘Political Party Funding’. They articulated that lack of funding political parties’ results in political parties resorting to finding funds for themselves. They reiterated that sometimes going to the extent of getting funds through illegal means. Bangwato agreed in one accord that they want the President be tried whilst in office if suspected of any criminal offences. This was revealed in their contributions. They pointed out that, the law should not to wait until the end of their tenure.

For his part, the Deputy Chairperson of the Commission Johnson Motshwarakgole expressed gratitude to the residents of Serowe. He applauded women for their kindness saying it is only them, who always take responsibility for doing things amicably in the society.

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Parliament unveils major shake-up plans & reforms

23rd May 2022
Parliament

Parliament has revealed that it plans to rollout a Community Score Card (CSC) exercise as part of sweeping reforms to its role and mandate among others.

The planed shakeup, along with the rollout of CSC will see creation of new Parliamentary Portfolio Committees on Health, HIV&AIDS, Education and Skills Development, Trade and Economic Development, Agriculture, Lands and Housing and Local Governance and Social Welfare.
Parliament informed government ministries and departments that the CSC is a participatory, community based monitoring and evaluation tool that enables citizens to assess the quality of public services and interact with services providers to express their concerns.

According to Parliament, the CSC will assist to inform community members about available services and their entitlements and to solicit their opinions about the accessibility and quality of certain services related to the portfolio committees mentioned.  It said the main objective is for Parliament through identified oversight committees is to conduct a participatory monitoring and evaluating process that puts ownership and responsibility for delivery of services in the hands of both the Government and the service recipients.

“Through scorecards developed around identified sectors and services, communities and implementing departments remain in touch with progress made through the programme delivery cycle and are able to respond timely to bottlenecks,” the National Assembly said.  Some of the measurements and expected outcomes for the rolling out of the CSC include among others, improved monitoring and economic evaluation, to determine the impact of spending, so as to be able to direct resources from where they having the least benefit to those projects and programmes where they will have a larger positive impact.

The National Assembly explained further that this could result in a willingness to close down ineffective programmes and institutions and not to implement projects that do not deliver adequate returns, improved productivity in the public services, especially given the substantial pay increases.

The National Assembly believes that the rolling out of CSC is also expected to result in efficiency savings: many public services and programmes could be delivered more effectively at lower costs, by improving management and accountability, and making use of e-services. “This would yield financial savings that could be used for development programmes or reducing the deficit,” the National Assembly said.

The exercise is also expected to result in “Careful scrutiny of subsidy schemes and termination of those that do not address market failure or assist truly needy Batswana.”  The National Assembly revealed that proposed Parliamentary Portfolio Committee on Health and Wellness has been established in accordance with the Standing of National Assembly of Botswana.  It explained that the mandate of the Committee is mainly to exercise Parliamentary oversight and scrutiny over Government Ministries, Departments and Agencies with portfolio responsibilities in respect of Health and HIV/AIDS.

“There is need to identify reasons for inefficiency and poor outcomes and ensure that health system reform improve productivity and value for money. Key areas of focus for scorecard, availability of drugs, staffing ratios, accessibility of health services, speciality care and services and sexual reproductively health,” the National Assembly said.

Another proposed Committee is on Local Governance and Social Welfare. The mandate of the Committee is mainly to exercise Parliamentary Oversight and Scrutiny over Government Ministries. Departments and Agencies with Portfolio responsibilities in respect of Local Governance and Social Welfare.

“Strategies under NDP 11 to improve outcomes of social uplifment include; diversification of rural economies, development and support of small businesses, provision of social safety nets, eradication of absolute poverty, provision of quality and equitable education and harmonisation of social protection programmes,” said the National Assembly.  It said social nets need to be improved so as to target these most in need (at present some social safety nets benefit many people who are not the most needy, but also miss out some of those who are needy).

“Some social development policies more broadly should also aim to reduce household vulnerability to shocks such as those arising from fluctuations in agriculture, climate change, incomes and employment and improve their ability to handle shocks, thereby building household resilience,” the National Assembly said.

Another Committee established is on Agriculture, Lands and Housing. The mandate of the Committee is mainly to exercise Parliamentary oversight and scrutiny over Government Institutions, Departments and Agencies with portfolio responsibilities in respect of Agriculture, Lands and Housing.

The National Assembly said the average growth rate of the agricultural sector since the beginning of National Development Plan 11 (NDP11) (i.e. during the 2017/2018 and 2018/19 financial years) was 2.5 percent, making it the slowest growing sector of the economy, in line with its historical performance.

“Over the same period, its share of GDP has been stagnant at around 2 percent. The sector also contributes job opportunities for about 80 000 adults. Food security has become paramount since the onset of the corona virus pandemic,” the National Assembly said.  The National Assembly said the Government realises the need to increase food production for products in which Botswana has a cooperative advantage such as beef, grains and other horticulture products.

The Committee on Finance, Trade and Economic Development has also been established. One of the mandates of Committee would be to exercise Parliamentary oversight and scrutiny over government ministries, departments and agencies with portfolio responsibilities in respect of Finance, Development, Trade and Industry.

“The sector is at the core of industrialisation aspirations and strategies for economic development in Botswana. Manufacturing in particular can be the driver of economic growth through technological improvements and innovation,” the National Assembly said. Hence, it said, the development of the sector could also foster export diversification and export led-growth in Botswana while benefitting from the African Continental Free Trade Area (AFCFTA).

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Salbany, Bareetsi threaten to sue DIS

23rd May 2022
Salbany Bareetsi

Two senior members of Directorate on Corruption and Economic Crime (DCEC) have threatened legal action against Directorate of Intelligence and Security (DIS), it has transpired. The threat is contained in an answering affidavit of Director General of DCEC, Tymon Katlholo in which he is seeking an interdiction from High Court to stop the DIS from accessing investigation files at his office.

After the DIS detained DCEC officials Joao Salbany and Tsholofelo Bareetsi on December 16, 2021, they filed an official complaint against DIS and some officials. They complained about abuse of office by DIS and five officers. Salbany and Bareetsi also complained about unlawful detention by DIS and unlawful dissemination of classified information contrary to Section 44 of Corruption and Economic Crime Act. “The DIS interviews were premised on information divulged during the course of official DCEC work product, that is the Monday media brief meeting,” they wrote.

They further requested leave to institute a civil suit against the DIS and its officers, and invariably the State for inhuman and degrading treatment they suffered and unlawful detention. They also pondered a declaratory seeking a sanction against the DIS and Botswana Police Service (BPS) and clarification of the role of BPS officers seconded to DIS.

“The envisaged suit against BPS and DIS officers and the DIS will inevitably centre on investigations done by the DCEC and the scope of the protection availed to DCEC officers for conduct done in the course and scope of DCEC official duties.” The duo said it was self-evident from the conduct of the DIS officers that there was nothing urgent about the information required by the DIS, justifying their detention at its Sebele facility from 08:30 hours on December 16, 2021 until 02:00 hours on December 17, 2021.

They reasoned that the information required by the DIS could have been obtained by a simple request to DCEC Director General. “What the DIS did was to seek to intimidate officers of the DCEC whom they knew were carrying out investigations against some of the DIS officers who were part of their investigation team. This turn of events has a chilling effect not only on the functioning of the DCEC but also on the official conduct of officers of the DCEC as to how they conduct their official duties.”

They concluded by stating that in the event the request is granted, they would further request to be advised as to the provision of legal representation as the unalwful detention and the degrading and inhuman treatment by the DIS was in relation to matters conducted by and on behalf of the DCEC.

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