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CMB wants Peter Collins report set aside

Capital Management Botswana (CMB) directors, Rapula Okaile and Tim Marsland want the Statutory Manager’s report on their company to be reviewed and set aside because it characterised by falsehoods, bad faith, unreasonableness.

Okaile and Marsland’s decision to approach the court to set aside Peter Collins’ report comes following a liquidation hearing this week at which their attorney suggests he was unfairly treated and mocked. He further narrates that the process was flawed and natural principles of justice were not observed.

Okaile and Marsland in their affidavit to court posit that Collins’ findings and conclusions are not supported by any facts indicative of any wrong doing on the part of CMB directors or the company. “They are also not supported by any business principles of how private equity functions or operates,” writes Okaile.

In addition Okaile stresses that by the time Peter Collins was appointed, Capital Management Botswana had no interest inn the Botswana Opportunities Partnership as it was disposed of in October 2017 and Capital Management Botswana was removed as Manager by the new owner prior to the appointment of Peter Collins. “In the context of the flawed understanding and misappreciation of principles of private equity, Peter Collins’ reports are unreasonable, irrational and have been prepared with ulterior motive and should therefore be reviewed and set aside.”

Okaile disputes the indebtedness of Capital Management Botswana and further states that claims that the company is insolvent are false and problematic. “He concludes that Capital Management Botswana is indebted to various persons and entities. He makes the findings without asking the company directors about the debts and inquiring from them whether such debts exist and if they do, why they have not been paid.”

Okaile further writes that besides debts which are denied or opposed on bona fide basis, Peter Collins recommends liquidation on the basis of a possible damages claim. “An unproven damages claim can never be a basis upon which a company can be liquidated.” According the CMB director based in Botswana, the fact that Peter Collins would want Capital; Management Botswana to be liquidated on account of possible damages claim is clear indication of bias, improper motive and desperate desire to want it liquidated at all costs. Okaile is of the view that the conduct of the Statutory Manager is unlawful and liable to be set aside and reviewed.

“The other basis upon which his reports particularly the one dated the 7thth of June 2018 should be set aside is that, he prepared it when he was not confirmed as Statutory Manager. “…he cannot have prepared the report before the court confirmed his appointment.”  Okaile is adamant that Peter Collins’ reports were prepared illegally and should be set aside.

In disputing claims that they have siphoned P500 million from pensioners Okaile is adamant that they have proven that assets do exist that cover the alleged figure. He also points that Kawena, which is disputed is a big company operating from Mozambique and BOP has a 50% share in it.

WHAT CMB DIRECTORS DISPUTE

According to the former judge Collins in his statutory report, a P20 million loan under investigation appears to have originated from a verbal request by Cell City’s management to CMB’s Tim Marsland “for a short term facility to fund working capital in order to finance a one-off deal for purchase and sale of mobile handsets.”

According to a leaked CMB Statutory Management Report prepared by former High Court Judge, Peter Collins, the audited financial statements of Cell City after BOP investment shows a Cash flow statement reflects negative operating cash flow of P49, 559,259, negative investing cash flow of P4, 164,870 financed by net cash raised of P49, 978,510 from a share issue and a related party loan, primarily from BOP.

Net cash flow for the year was a negative P3, 270,898 according to Cell City’s financials. The statutory manager Collins was appointed by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) to CMB.According to the CMB Statutory Management Report, the balance sheet reflects total assets of P109, 976,679; equity of P48, 887, 605; and liabilities of P61, 089,074. The Profit and Loss account reflects revenues of P202, 433,257 and a pre-tax profit of P20, 140,268.

The Statutory Management Report has also curiously found that during the financial year of 2017 shares were issued to raise the issued share capital to P30 million but there was nowhere where a reflection of an increase in the number of shares in issue. What raised the statutory manager’s eye brows was a P20 million loan which was facilitated obscurely and not documented in the company’s financial records.

“I have nothing to add to section 19 of my Interim Report save that I neglected to state that the loan of P20 million was advanced by CMBF1 whereas the Financial Statements of the company reflects it as a loan from BOP, viz the equity investor. BOP at no stage gave authority for the introduction of this debt. Payment of it was made from general funds in the CMBFl bank account. The debtor/creditor relationship would nevertheless appear, at least ostensibly, to be between the company and BOP (rather than CMB).

That is the way the company understood it. Moreover, I do not think that it can fall from the mouth of CMB that it was extending its own resources to an unsecured commercial loan to a company in which its principal (BOP) holds 50 percent equity,” said the statutory manager Collins in his report seen by this publication. The statutory manager further revealed that the loan is unsecured with no set term for repayment and no agreed rate of interest.

It is also stated that this fact is confirmed in the audited financials dated 30 September 2017. However, the borrower has undertaken to pay (and has paid) interest at an effective rate of 5 percent p.a. since October 2016. P346, 393.42 in interest has been paid up to 31 December2017 said the statutory manager.

The deal which saw BOP buying 50 percent stake in Cell City was the centre of a meeting held by the BOP Investment Committee held at the plushy Sunny Side Hotel in Johannesburg, South Africa. Those in attendance at the meeting were Rasoava Rijamampianina who was chairing the meeting, Martin Makgatlhe, Tim Marsland and Rapula Okaile. It is revealed in documents passed to this publication that the minutes of the meeting reflect that the investment was “presented, discussed and approved.”

However, according to the statutory manager, it is not clear whether a specific detailed investment case was presented. In the Statutory Management Report which followed the ongoing CMB liquidation, Collins says the relationship between CMB and BPOPF in respect of the BOP is in dispute and is pending litigation and arbitration.

CMB challenges Liquidation handler

Okaile and Marsland have since written a letter to the Registrar and Master of the High Court raising concerns and complaints at the manner in which the Ms Chipo Gaobatwe handled the inquiry. They state that she handled the inquiry in a very biased and unfair way. According to their affidavit, “She was impatient, temperamental and hostile to clients’ attorney, Mr Gabriel Kanjabanga.”  They state that she was blantandly biased towards Mr Peter Collins who is the liquidator’s legal advisor.

According to Okaile and Marsland, Kanjabanga was constantly interjected and interrupted when trying to make submissions. “Clients attoney was constantly threatened with contempt and thus was prevented from fully and effectively representing the clients to the best of his ability.”  They want the Master to intervene “in the most legally possible way”.

CMB Directors threaten Desai

Okaile and Marsland have also written a letter to Rizwani Desai of Desai Law Practice accsuing him of using information they consulted him on against them in court. They have informed him that they will be reporting him to the Law Society of Botswana because he breached his professional ethics.

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Civil Service volatility: Democracy vs Bureaucracy

19th April 2021
President Masisi

Here is how one Permanent Secretary encapsulates the clear tension between democracy and bureaucracy in Botswana: “President Mokgweetsi Masisi’s Government is behaving like a state surrounded with armed forces in order to capture it or force its surrender. The situation has turned so volatile, for tomorrow is not guaranteed for us top civil servants.

These are the painful results of a personalized civil service in our view as permanent secretaries”. Although his deduction of the situation may be summed as sour grapes because he is one of the ‘victims’ of the reshuffle, he is convinced this is a perfect description of the rationale behind frequent changes and transfers characterising the current civil service.

The result of it all, he said, is that “there is too much instability at managerial and strategic levels of the civil service leading to a noticeable directionless civil service.” He continued: “Changes and transfers are inevitable in the civil service, but to a permissible scale and frequency. Think of soccer team coach who changes and transfers his entire squad every month; you know the consequences?”

The Tsunami has hit hard at critical departments and Ministries leaving a strong wave of uncertainty, many demoralised and some jobless. In traditional approaches to public administration, democracy gives the goals; and bureaucracy delivers the technical efficiency required for implementation. But the recent moves in the civil service are indicative of conflicting imperatives – the notion of separation between politicians and administrators is becoming blurred by the day.

“Look at what happened to Prisons and BDF where second in command were overlooked for outsiders, and these are the people who had sacrificially served for donkey’s years hoping for a seat at the ladder’s end. The frequency of the changes, at times affecting the same Ministry or individual also demonstrates some level of ineptitude, clumsiness and lack of foresight from those in charge,” remarked the PS who added that their view is that the transfers are not related to anything but “settling scores, creating corruption opportunities and pushing out perceived dissident and former president, Ian Khama’s alleged loyalists and most of these transfers are said to be products of intelligence detection.”

Partly blaming Khama for the mess and his unwillingness to let go, the PS dismissed Masisi for falling to the trap and failing to outgrow the destructive tiff. “Khama is here to stay and the sooner Masisi comes to terms with the fact that he (Masisi) is the state President, the better. For a President to still be making these changes and transfers signals signs of a confused man who has not yet started rolling his roadmap, if at all it was ever there. I am saying this because any roadmap comes with key players and policies,” he concluded.

The Ministry of Health and Wellness seems to be the most hard-hit by the transfers, having experienced three Permanent Secretaries changes within a year and a half. Insiders say the changes have everything to do with the Ministry being the centre of COVID-19 tenders and economic opportunities. “The buck stops with the PS and no right-thinking PS can just allow glaring corruption under his watch as an accounting officer. Technocrats are generally law abiding, the pressure comes with politically appointed leaders racing against political terms to loot,” revealed a director in the Ministry preferring anonymity.

The latest transfer of Kabelo Ebineng she says was also motivated by his firm attitude against the President’s blue-eyed Task Team boys. “The Task Team wants to own the COVID-19 pandemic and government interventions and always cry foul when the Ministry reasserts itself as mandated by law,” said the director who added that Masisi who was always caught between the crossfire decided on sacrificing Ebineng to the joy of his team as they (Task Team) were in the habit of threatening to resign citing Ebineng as the problem.

Ebineng joins the Office of the President as a deputy Coordinator (government implementation and coordination office).The incoming PS is the soft-spoken Grace Muzila, known and described by her close associates as a conformist albeit knowledgeable.

One of the losers in the grand scheme is Thato Raphaka who many had seen as the next PSP because of his experience and calm demeanour following a declaration of interest in the Southern African Development Community (SADC) Secretary post by the current PSP, Elias Magosi.

But hardly ten months into his post, Raphaka has been transferred out to the National Strategy Office in what many see as a demotion of some sort. Other notable changes coming into OP are Pearl Ramokoka formerly with the Employment, Labour and Productivity Ministry coming in as a Permanent Secretary and Kgomotso Abi as director of Public Service Reforms.

One of the ousted senior officers in the Office of the President warned that there are no signs that the changes and transfers will stop anytime soon: “If you are observant you would have long noticed that the changes don’t only affect senior officers but government decisions as well. A decision is made today and the government backtracks on it within a week. Not only that, the President says this today, and his deputy denies it the following day in Parliament,” he warned.

Some observers have blamed the turmoil in the civil service partly to lack of accountable presidential advisers or kitchen cabinet properly schooled on matters of statecraft. They point out that politicians or those peripheral to them should refrain from hampering the technical and organizational activities of public managers – or else the party (reshuffling) won’t stop.

In the view expressed by some Permanent Secretaries, Elias Magosi, has not really been himself since joining the civil service; and has cut a picture of indifference in most critical engagements; the most notable been a permanent secretaries platform which he chairs. As things stand there is need to reconcile the imperatives of democracy and democracy in Botswana. Peace will rein only when public value should stand astride the fault that runs between politicians and public managers.

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Morupisi fights for freedom in court

19th April 2021
morupisi

Former Permanent Secretary to the President, Carter Morupisi, is fighting for survival in a matter in which the State has charged him and his wife, Pinnie Morupisi, with corruption and money laundering.

Morupisi has joined a list of prominent figures that served in the previous administration and who have been accused of corruption during their tenure in office. While others have been emerging victorious, Morupisi is yet to find that luck. The High Court recently dismissed his no case to answer application.

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Pressure mounts on Biden to suspend Covid-19 vaccine patents

19th April 2021
Joe Biden

United States President, Joe Biden, is faced with a decision to make relating to the Covid-19 vaccine intellectual property after 175 former world leaders and Nobel laurates joined the campaign urging the US to take “urgent action” to suspend intellectual property rights for Covid-19 vaccines to help boost global inoculation rates.

According to the world leaders, doing so would allow developing countries to make their own copies of the vaccines that have been developed by pharmaceutical companies without fear of being sued for intellectual property infringements.

“A WTO waiver is a vital and necessary step to bringing an end to this pandemic. It must be combined with ensuring vaccine know-how and technology is shared openly,” the signatories, comprising more than 100 Nobel prize-winners and over 70 former world leaders, wrote in a letter to US President Joe Biden, according to Financial Times.

A measure to allow countries to temporarily override patent rights for Covid related medical products was proposed at the World Trade Organization by India and South Africa in October, and has since been backed by nearly 60 countries.

Former leaders who signed the letter included Gordon Brown, former UK Prime Minister; François Hollande, former French President; Mikhail Gorbachev, former President of the USSR; and Yves Leterme, former Belgian Prime Minister.

In their official communication, South Africa and India said: “As new diagnostics, therapeutics and vaccines for Covid-19 are developed, there are significant concerns [about] how these will be made available promptly, in sufficient quantities and at affordable prices to meet global demand.”

While developed countries have been able to secure enough vaccine to inoculate their citizens, developing countries such as Botswana are struggling to source enough to swiftly vaccine their citizens, something which world leaders believe it would work against global recovery therefore proving counter-productive.

Since the availability of vaccines, Botswana has been able to secure only 60 000 doses of vaccines, 30 000 as donation as from the Indian government, while the other 30 000 was sourced through COVAX facility.  Canada, has pre-ordered vaccines in surplus and it will be able to vaccinate each of its citizens six times over. In the UK and US, it is four vaccines per person; and two each in the EU and Australia.

For vaccines produced in Europe, developing countries are forced to pay double what European countries are paying, making it more expensive for already financially struggling economies.  European countries however justify the price of vaccines and that they deserve to buy them cheap since they contributed in their development.

It is evident that vaccines cannot be made available immediately to all countries worldwide with wealthy economies being the only success story in that regard, something that has been referred to as a “catastrophic moral failure”, head of the World Health Organisation (WHO), Tedros Adhanom Ghebreyesus.

The challenge facing developing countries is not only the price, but also the capacity of vaccine manufactures to be able to do so to meet global demand within a short time. The proposal for a patent waiver by India and South Africa has been rejected by developed countries, known for hosting the world leading pharmaceutical companies such US, European Union, the United Kingdom, and Switzerland.

According to the Financial Times, US business groups including pharmaceutical industry representatives, have urged Biden to resist supporting a waiver to IP rules at the WTO, arguing that the proposal led by India and South Africa was too “vague” and “broad”.

The individuals who signed the letter, including Nobel laureates in economics as well as from across the arts and sciences, warned that inequitable vaccine access would impact the global economy and prevent it from recovering.

“The world saw unprecedented development of safe and effective vaccines, in major part thanks to US public investment,” the group wrote. “We all welcome that vaccination rollout in the US and many wealthier countries is bringing hope to their citizens.”

“Yet for the majority of the world that same hope is yet to be seen. New waves of suffering are now rising across the globe. Our global economy cannot rebuild if it remains vulnerable to this virus.”
The group warned that fully enforcing IP was “self-defeating for the US” as it hindered global vaccination efforts. “Given artificial global supply shortages, the US economy already risks losing $1.3tn in gross domestic product this year.”

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