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CMB, BPOPF tussle over assets

Capital Management Africa and Rapula Okaile have filed papers with the High Court opposing the liquidation proceedings against Capital Management Botswana (CMB). They want the court to rescind and set aside the final winding order issued on 18th of September 2018.

The tussle between the two entities is said to be motivated by the urge to regain assets which are estimated at a value of close to P477 million. Shareholders of CMB are accusing Non-Bank Financial Institution Regulatory Authority and Botswana Public Officers Pension Fund (BPOPF) of using false information to motivate the court to liquidate CMB.

There has been numerous court battles relating to Capital Management Botswana (Pty) Ltd (CMB), the Non-banking Financial Services Regulatory Authority (NBFIRA); the Botswana Public Officers Pension Fund (BPOPF), and Bona Life (Pty) Ltd (Bona). The matter involved a process instituted collectively by NBFIRA, BPOPF and Bona to place CMB under statutory management. The appointment of statutory manager Peter Collins was rejected by the High Court but subsequently the Appeal Court confirmed the Collins’s appointment.

Non-Bank Financial Institution Regulatory Authority and Capital Management Botswana (CMB) are first and second respondents respectively. Okaile has a 25% shareholding in CMB which he says justifies his joining in of the liquidation proceedings; on the other hand CMA is also a shareholder in CMB with a 75% stake.

NBFIRA brought the liquidation proceedings against CMB. “I am advised by my attorneys which advise I verily believe that in terms of the Section 166 of the Companies Act, the court in an application by shareholders of a company may grant leave to intervene and or join legal proceedings in which the company is involved,” writes Okaile.

“…we as shareholders of the 2nd respondent wish to be permitted to intervene and join the said proceedings and oppose the liquidation of the 2nd Respondent.” Okaile states that as shareholders of CMB and also respondents to the petition they have a direct interest in the liquidation proceedings hence their move to join the proceedings.

Okaile and CMA say they wish to intervene and be joined as co-respondents in the liquidation proceedings to oppose the proceedings on the basis that once the 2nd Respondent/ Respondent which as per the petition has been placed on statutory management and the statutory manager has compiled his reports and is done with statutory management, there is therefore no basis whatsoever to liquidate the 2nd Respondent/ Respondent.

According to the petition, the basis of the winding up order is basically that the Respondent (CMB) is insolvent and it is unable to pay its debts and its liabilities exceed its assets, and that there are no prospects that the Respondents will be restored to solvency within a reasonable period.

“I dispute and deny that the respondent is insolvent. I would aver that the Respondent owns a block of flats whose market value is P14 million, as shown by the valuation report…I also dispute and deny that even supposing without conceding that the Respondent was insolvent, that it cannot be restored to solvency within reasonable period…I dispute and deny that the CMB is even if it was there, it would have provided sufficient grounds for the liquidation of the Respondent as a suit is simply a suit and not a debt and it cannot be ground for liquidation,” writes Okaile.

Okaile narrates that the basis upon which the liquidation is alleged to be made is patently false and goes on to indicate that the petitioner has failed to demonstrate as to why it is alleged that there are no prospects that CMB could be restored to solvency within a reasonable time.

Okaile denies claims that CMB has rental arrears; further says the company does not have any employees because they were dismissed way back in April 2018 by the Statutory Manager. According to Okaile, the statutory manager has never made an attempt to demand for recapitalization of CMB, “should such a demand for capitalization have been made, the Applicants would have made an effort to do so.”

In another matter that Okaile denies, “The Respondent does not owe Lobatse Clay Works (Pty) Ltd and Yarona Media Holdings (Pty) Ltd P60 million and P17 million respectively. The monies alleged as debts are monies which the Botswana Opportunities Partnership (BOP) comprising of CMB and BPOPF were to invest in the said companies. These are not debts but proposed investments that the BOP and not the Respondent were to make in the said companies.” Okaile writes that the investments were not made because the partners in the BOP fell out.

THE BACKGROUND TO THE DISPUTE – ACCORDING TO PETER COLLINS 

“CMB was appointed by BOP as its fund manager and CMB, in its capacity as General Partner delegated responsibility for the management of BOP to CMB in its capacity as fund manager. BPOPF made a capital commitment1 to contribute up to BWP500,000,000 to BOP. In 2015 and 2016 various drawdown notices were issued to BPOPF by CMB on behalf of BOP for the purpose of investing in certain identified private equity investments and for agreed fund expenses and fees. BPOPF duly paid the aforesaid drawdown notices amounting in aggregate to some BWP470,000,000.00.

On 24th August 2017, BPOPF notified CMB that it was in breach of the BOP Agreement, and demanded an explanation from CMB and rectification of various issues, arising out of the BOP Agreement. On 20th September 2017 a drawdown notice was issue by CMB for an amount of BWP77,000,000.00 (“Disputed Notice”) for the purchase of shares in Lobatse Clay Works (Proprietary) Limited and Yarona Media Holdings (Proprietary) Limited.

BPOPF refused to pay and contended that the Disputed Notice was not binding on BPOPF. They asserted that their refusal to comply with the Disputed Notice did not result in an actionable breach of the BOP Agreement, because inter alia: The amount requested in the Disputed Notice exceeded the Capital Commitment made by BPOPF to BOP. The Disputed Notice was not a Drawdown Notice as defined in the BOP Agreement.”

Peter Collins is of the view that the Disputed Notice gave insufficient notice to BPOPF. He sates in the letter that the BPOPF's Capital Commitment, as set out in the Deed of Adherence, was BWP500,000,000. Further stating that the total disbursed drawdowns from notices issued by CMB totalled some BWP470,000,000. As at the date of the Disputed Notice, BPOPF's undrawn Capital Commitment was therefore BWP30,000,000 or thereabouts.

“The total amount that the General Partner sought to draw down in terms of the Disputed Notice was BWP77,000,000.2 This exceeded the available Capital Commitment available. As noted above, the BOP Agreement prohibits drawdowns of amounts from any Partner in excess of their Capital Commitment. The Disputed Notice was therefore invalid because it purported to draw down more capital than was available.

There were discussions, in 2016, between BPOPF and CMB about BPOPF potentially increasing its capital commitment. BPOPF advised CMB, in a letter dated 22 November 2016, that BPOPF had allocated P380,000,000 to BOP but the allocation was expressly conditional upon receipt by BPOPF of a reconciliation of the funds drawn so far, proof of payment of 1% contribution by CMB and a full accounting for BPOPF's capital invested in the BOP Fund.

CMB never contributed the Limited Partner's 1% capital contributions that it had agreed to contribute3 nor did CMB provide the requested reconciliation and accounting. BPOPF's conditional allocation did not therefore ever become an actual commitment by virtue of failure of the suspensive conditions aforesaid. The Disputed Notice did not meet the definition of a Drawdown Notice contained in the BOP Agreement.4 As noted above, "Drawdown Notice" is defined as a notice in substantially the form of Schedule 5 to the BOP Agreement (the "Prescribed Form").

I have also reviewed the documentation relating to the purported removal of BPOPF by CMB as Limited Partner. The documentation reveals that on the 19 October 2017, CMB sent a letter to BPOPF, which purported to be a notice of default. CMB advised that it would proceed to declare BPOPF to be a Defaulting Limited Partner if BPOPF did not pay the Drawndown Amount set out in the Disputed Notice.

On 30 October 2017, BPOPF responded noting that the Disputed Notice was invalid and that BPOPF was therefore not in breach of its obligations under the BOP Agreement. On 28 November 2017, the Advisory Board of BOP exercised its powers under the BOP Agreement5 to remove CMB as the General Partner. Notice was given by BPOPF to CMB of said removal on 1 December 2017.

On 11 December 2017, CMB responded to BPOPF advising that BPOPF's interests in BOP had been sold on for BWP50,000,000.00. CMB did not name the party which had purchased that interest. I have since established that that the payment of P50,000,000 was made out of an account operated by CMB for BOP fiduciary business and not from a third party or from CMB’s own funds.

Peter Collins is of the view that the disposal was accordingly a sham and unlawful for these reasons and for the reasons stated in the agreement I entered into with BPOPF dated 8th August 2018. “You have seen this agreement and you will therefore have read the My decision to enter into the settlement agreement was taken after due deliberation over an extended period while the litigation in both the High Court and Court of Appeal was pending.

I had more than sufficient, objective, uncontradictable evidence at my disposal to come to the conclusion which I did. CMB’s prospects in the arbitration proceedings were not simply dismal, there were no prospects at all on the written demonstrable facts. Lastly, as you are aware, CMB has been now placed under provisional liquidation and the management and control of the affairs of CMB currently vests solely with the provisional liquidator. I suggest that any future enquiries relating to matters of CMB which you may have, be directed to the provisional liquidator,” reads an extended letter from Peter Collins.

BACKGROUND TO THE DISPUTE – ACCORDING TO CMB

“By way of background, BOP’s relationship with the BPOPF was terminated almost a year ago when it proved to be an unreliable partner, it having defaulted on its financial obligations to BOP and the companies that it invested in. The BPOPF’s default had major consequences for a company which BOP intended to invest in, resulting in a loss of some 2000 jobs.

As a consequence of the BPOPF’s default, CMB was obliged in terms of the partnership agreement ruling at the time to seek a new limited partner, which it did, and disposed of the BPOPF’s stake to the highest bidder. The BPOPF waited months before heading to the High Court (on 27 December during the court recess of all things), claiming it was still a limited partner even though it had been paid for its share months prior and kept the money.

The court rejected the BPOPF’s case and pointed out it was supposed to enter arbitration. The BPOPF then waited months again before going the arbitration route, in the interim pushing a massive defamatory media campaign against CMB and working hand in glove with its co-conspirators NBFIRA and Bona Life. Bona Life, which is a company BOP / CMB rescued from insolvency, had blown its capital and wanted more money from the BPOPF.

Thus it found a willing partner in the BPOPF to wage its defamatory war, having been promised a new nest egg in return. Prior to Bona’s management ditching CMB in favour of the BPOPF, CMB had raised numerous awkward governance questions with Bona which no doubt sparked off Bona’s campaign against CMB.

Bona had no “dirt” on CMB, so it made numerous false and defamatory allegations against a CMB sister company (CMBF1), which was not regulated by NBFIRA, working closely with Collins (who was at that point not statutory manager but simply a legal advisor on a deal CMB attempted to broker between CMBF1 and Bona. NBFIRA used Bona’s false claims as an excuse to take over the running of CMB.

All of Bona’s claims were proven to be false. However, the triumvirate succeeded in getting the matter before court. Unsurprisingly, the High Court threw out their case with disdain, but in a peculiar twist, the Appeal Court with ruled in favour of NBFIRA without any lawyers from CMB being present to present their case and delivered its judgment in a matter of days.

Thus NBFIRA (and the BPOPF) was able to assume control over CMB using Collins as statutory manager. In the roughly four weeks that CMB was under statutory management, Collins tossed out the arbitration process (which would have resulted in the true facts being made a matter of record) and entered into a flimsy “settlement agreement” with the BPOPF in terms of which he sought to reverse the sale of the BPOPF’s interest in BOP.

The settlement “agreement” is not worth the paper it is written on. It is an “agreement” between two parties that are not party to, or signatories to, any the legal agreements that underpin BOP. By way of background, CMB was removed by the BOP Advisory Board as the general partner of BOP in mid-January (prior to the commencement of NBFIRA’s shenanigans relating to statutory management). A consequence of that was the automatic cancellation of the BOP partnership agreement and the replacement with a new partnership agreement – in other words, the contracts that the BPOPF was party to no longer exist – and have not for some considerable time.

Thus, Collins, who deliberately chose not to verify this, was unable to reverse the previous contracted sale simply because he had no locus standi to do so. Further, in terms of the settlement “agreement”” the BPOPF has attempted to return the funds it received to the buyer – however the buyer (and new limited partner) has rejected the offer to return the funds and thus remains the lawful limited partner of the BOP.

(For more information please see attached a notice directed to the BPOPF’s lawyers in this regard.) Consequently, neither the BPOPF (nor its company Viltry (Pty) Ltd), have any legal standing with BOP and by extension yourself. They are not entitled to demand, or request, any information from yourself, or to demand, or request and particular action from yourself at all.

For Viltry (or the BPOPF) to attain any legal standing they are required in law to seek declaratory relief from the High Court confirming that their actions and the actions of Collins are valid. Understandably, despite this having been pointed out to them, they have not sought the declaratory relief as they know they will lose – they have no case whatsoever. They are instead again relying on aggressive bullying tactics and their defamatory media campaign to try to gain by deception that which they could not obtain through legal means.

Please be advised that as BOP is a major shareholder in your company, it takes a dim view of the actions of the BPOPF (and Vlitry) and all necessary steps will be taken to safeguard the interests of BOP and yourself. You are requested not to assist the BPOPF nor Viltry in its fraudulent attempt to highjack BOP and its assets. Factually, the BOP is in the process of being dissolved and you will be contacted in due course by the entity appointed for this process for further guidance.

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State forged Kgosi’s arrest warrant

22nd July 2021
FORMER DIS BOSS: ISAAC KGOSI

In a classic and shocking case of disgrace and dishonour to this country, the law enforcement agencies are currently struggling to cover up a damaging and humiliating scandal of having conspired to forge the signature of a Palapye Chief Magistrate, Rebecca Motsamai in an unlawful acquisition of the much-publicised 2019 warrant of arrest against Isaac Kgosi, the former director of the Directorate of Intelligence Services (DIS).

The cloak-and-dagger arrest was led by the DIS director, Brigadier Peter Magosi supported by the Botswana Police, Botswana Defence Force (BDF), with the Botswana Unified Revenue Services (BURS) which accused Kgosi of tax evasion, in the backseat.

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UDC parties discuss by-elections

22nd July 2021
UDC

Umbrella for Democratic Change (UDC) constituent members are struggling to reach an agreement over the allocation of wards for the imminent ward by-elections across the country.

Despite a Memorandum of Understanding (MoU) between Umbrella for Democratic Change (UDC), Botswana Patriotic Front (BPF) and Alliance for Progressives (AP) are said to be active, but the nitty-gritties are far from being settled.

The eight bye-elections will be a precursor of a somewhat delayed finalisation of the brittle MoU. The three parties want to draw a plan on how and who will contest in each of the available wards.

This publication has gathered that the negotiations will not be a run off the mill because there is already an impasse between the Botswana Congress Party (BCP) which is a UDC constituent and AP (currently negotiating to join umbrella).

The by-elections joint committee met last week at Cresta President Hotel in a bid to finalise allocation but nothing tangible came out of the gathering, sources say.

The cause of the stalemate according to those close to events, is the Metsimotlhabe Ward which the two parties have set their eyes on.

In 2019, he ward was won by Botswana Democratic Party’s (BDP) Andrew Sebobi who unfortunately died in a tragic accident in February last year.

Sebobi had convincingly won by 1 109 votes in the last elections; and was trailed by Sephuthi Thelo of the UDC trailed him with 631 votes; while Alliance for Progressives’ Innocent Moamogwe got 371 votes.

Thelo is a BCP candidate and as per UDC norm, incumbency prevails meaning that the BCP will contest since they were runners up. On the other hand, AP has also raised its hand for the same.

“AP asked for it on the basis that they have a good candidate but BCP did not agree to that request also arguing they have a better contestant,” one UDC member confided to this publication.

Notwithstanding Metsimotlhabe Ward squabble, it is said the by-election talks are almost a done deal, with Botswana National Front (BNF) tipped to take Boseja South ward in Mochudi East constituency. Botswana Patriotic Front (BPF) will be awarded Tamasane Ward in Lerala/Maunatlala constituency, sources say.

“But the agreement has to be closed by National Executive Committee (NEC),” emphasized the informant.

The NEC is said to have been cautioned not to back the wrong horse but rather rate with reason and facts.

UDC President, Duma Boko has told this publication that, “allocation is complete with two wards already awarded but with only one yet to be finalized,” he could not dwell into much details as to which party got what and the reasons for the delay in finalisation.

Chairperson of the by-elections committee, Dr. Phenyo Butale responded to this publication regarding the matter: “As AP we contested and as you may be aware we signed the MoU with UDC and BPF to collaborate on bye-elections. The opposition candidate for all bye-elections will be agreed by these parties and that process is still ongoing,” he said when asked if AP is interested on the ward and how far with the talks on bye-elections.

Butale, a former Gaborone Central Member of Parliament, who is also AP Secretary General continued to say, “As the chairperson of the bye-elections committee we are still seized with that matter. We should also do some consultations with the local structures. Once the process is complete we will issue a notice for now we cannot talk about the other two while the other is still pending the other one”.

Butale further clarified: “There is no such thing as AP and BCP not in agreement. It is an issue of signatories discussing and determining the opposition candidates across the three wards.”

Apart from the three wards, there are five more council wards that UDC is yet to allocate to cooperating partners.

FROM PALAPYE MEET: BPP CAUTION NEC MEMBERS  

With the UDC cheerful from last weekend’s meeting in Palapye, the meeting however was very tense on the side of both BCP and BNF, with only BPP flexing its muscle and even lashing out.

BCP going into the meeting, had promised to ask difficult questions to the UDC NEC.

BCP VP and also acting Secretary General, Dr. Kesitegile Gobotswang, presented their qualms which were addressed by UDC Chairperson Motlatsi Molapisi, informants say.

It is said Molapisi is fed up and concerned by some UDC members especially those in the NEC who ‘wash party’s dirty linen in public’.

Insiders say the veteran politician cautioned the NEC members that they “will not expel any party but individuals who tarnish the image of the UDC.”

It is not the first time BPP play a paternalistic role as it once expressed its discontent with BCP in 2020, saying it should never wash UDC linen in public.

At first it is said, BPP, the oldest political formation in Botswana, claims disappointment on BCP stance that UDC should be democratised especially by sharing their stand with the media. Again, BPP was not happy with BCP leader Dumelang Saleshando’s decision to air his personal views on social media regarding the merger of UDC party.

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DIS infiltrates Police fingerprint system

22nd July 2021
Makgope

Botswana Police Service (BPS) Commissioner, Keabetswe Makgophe, has of late been dousing raging fires from various quarters of society following the infiltration of the police fingerprint system by the Directorate on Intelligence and Security (DIS), WeekendPost has learnt.

Fresh information gleaned from a number of impeccable sources, points to a pitiable working relationship between the two state organs. Cause of concern is the DIS continuous big brother role to an extent that it is now interfering with other institutions’ established mandates.

BPS which works closely with the DIS has been left exasperated by the works of the institution formed in 2008. It is said, the DIS through its Information Technology (IT) experts in collusion with some at BPS forensics department managed to infiltrate the Fingerprint system.

The infiltration, according to those in the know, was for the DIS to “teach a lesson” to some who are on their radar. It is said the DIS is playing and fighting dirty to win the fights they have lost before.

By managing to hack the police finger print system, a number of renowned businessmen and other politically exposed persons found their fingers in the system. What surprised the victims is the fact that they have never been charged of any wrongdoing by the police and they were left reeling in shock to learn that their fingers are on the data-base of criminals.

In fact, some of those who their fingerprints were falsely included in the records of those on the wrong side of law learnt later when other errands demanded their fingerprints.

“We learnt later when we had to submit and buy some documents and we were very shocked,” one politician who is also a businessman confided to this publication this week.

“We then learn that there are some fabricated criminality recorded for us, as to when did we commit those remained secret to the police, but then we had to engage our lawyers on the matter and that is when we were cleared,” said the politician-cum- tenderpreneur.

The lawyers have confirmed engaging the police and that the matters were settled in a gentlemen’s agreement and concluded.

All these happened behind the scenes with the police top brass oblivious only to be confronted by the irked lot, police sources also add. The victimized group who most of them have been fighting lengthy battles with the DIS read malice and did not blink when it was revealed that these were done by the DIS.

“And it was clear that they (DIS) are the ones in this dirty war which we don’t understand. Remember when we sue, it will be the Police at the courts not the DIS and that is why we agreed to a ceasefire more so they also requested that be kept under carpet,” said the victim.

Nonetheless, the Police through its spokesperson Assistant Commissioner, Dipheko Motube, briefly said: “we do not have any system that has been hacked.” On the other hand DIS mouthpiece Edward Robert was not in office this week to comment on the matter.

Reports however say DIS boss, Peter Magosi, who most of the victims accuse of the job, is said to have met his police counterpart Makgophe to put the matter to bed.

COVID-19 RAVAGES POLICE

As frontline workers, Police have not escaped the wrath of Covid-19. Already the numbers of those infected has reached the highest of high and they suggest that they be priorities on vaccine rollout.

“Our job is complicated, firstly we arrest including those who are non-compliant to Covid protocols and we go to accidents and many more. These put us at risk and it seems our superiors are not bothered,” said one police officer this week.

The cops further complain about that working spaces are small, as such expose them to contact the virus.

“Some tests positive and go for quarantine while the rest of the unit will be left without even test carried out. If at all the bosses are serious all the police officers should every now and then be subjected to testing or else we will be no more because of the virus,” added another officer based in Gaborone.

The government has since placed teachers on the priority list for the vaccines, it remains to be seen whether the police, who also man road blocks, will be considered.

“But our bosses should convince the country leadership about this, if not then we are doomed,” concluded a more senior officer.

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