CMB, BPOPF tussle over assets
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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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DCEC granted warrant to arrest Khama twins
The Directorate on Corruption and Economic Crime (DCEC) has been granted permission to apprehend the former Minister of Environment, Wildlife and Tourism, Tshekedi Khama, and his twin brother Anthony Khama.
Information gathered by this publication suggests that the DCEC is actively searching for the Khama brothers, this is in connection with events that transpired whilst Tshekedi was Minister of Environment. The duo is currently in exile in South Africa together with their elder brother, and former President Lt Gen Ian Khama.
Approximately two weeks ago, the corruption-busting agency discreetly filed for an arrest warrant that was approved by the Broadhurst Magistrate Court for the two to be taken into custody, according to a highly placed source within the government enclave.
DCEC is also said to have filed an affidavit signed by a high-ranking officer known to this publication. Reports indicate that after being presented with details of the case, the Broadhurst magistrate issued the agency an arrest warrant.
It is also believed that the agency has been conducting extensive investigations into the supposed suspects for quite some time. Furthermore, Weekend Post has it on good word that the DCEC has been looking for methods to summon the two for questioning but has been unsuccessful.
According to unconfirmed reports, DCEC met with attorney Victor Ramalepa, who refused to accept the summons, saying that he is not their attorney. Furthermore, it is believed that DCEC has enlisted the assistance of the Botswana Police Service (BPS) in flagging the suspects’ names in the International Criminal Police Organisation INTERPOL.
Responding to WeekendPost enquiries, DCEC spokesperson Lentswe Motshoganetsi said, “I am not in good position to confirm or deny the allegation,” adding that such allegations may fall within the operational purview of the DCEC.
When contacted for comment, Ramalepa briefly stated that he is unaware of the purported arrest warrant. “I know nothing about the warrant and I haven’t been served with anything,” he said.
Meanwhile, former president Lt Gen Ian Khama recently issued a statement stating that DIS is intensifying the harassment and intimidation of him, family, friends and office employees.
“It is reprehensible for state officials and agencies to abuse government resources to terrorise their own citizens for personal gain,” said the former president in a statement.
He also stated that his brother TK’s staff and security were ordered to falsely implicate him. “Their desperate tactics will never work, it only serves to motivate me more to pursue regime change and free Botswana from tyranny,” he said
This comes after the corruption busting agency wants to interview the alleged suspects as they are still hiding in South Africa since last year.
Despite the hostility between government and Khama family going unabated, last month, Masisi extended an olive branch to Khama in political rally, indicating that he hopes the two of them settle their differences, of which the former responded by welcoming the gesture.
Khama further said his brother, Tshekedi, will facilitate the reconciliation of his behalf. Many have indicated that Masisi did not say what he said in good faith, and was only scoring political brownies since he was in Khama’s territory in Shoshong.
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DCEC’s Tshepo Pilane still has his mojo
Tshepo Pilane silenced his critics after being named the head of the Directorate on Corruption and Economic Crime (DCEC) in May of last year and served his opponents humble pie. Many believed he would only last for a month, but almost a year later, he is still standing.
Pilane, a trained soldier whose appointment surprised both the general public and some officers within the DCEC walls, has never glanced back in his duty to steer the DCEC ship forward.
It is alleged that immediately after his appointment the man embarked on a nation-wide trip touring the DCEC offices across the country in order to confirm and reaffirm the DCEC’s mandate. Sources from inside the DCEC claim that Pilane won the hearts of many DCEC employees due to his humility and plain message; “people at the top of the DCEC will come and go but the mandate of the DCEC remains relevant and unchanged.”
Pilane was appointed the Acting DCEC Director General at a time when the organisation was undergoing turbulence through court proceedings in which the suspended Director General Tymon Katlholo had interdicted the Directorate of Intelligence and Security (DIS) from accessing the DCEC premises. At the time, the DIS had raided the DCEC offices in the absence of Katlholo claiming to be looking for high profile corruption cases allegedly held by Katlholo.
At the time Pilane was Head of the DCEC Intelligence Division holding the position of Senior Assistant Director General reporting directly to the Deputy Director General Operations Ms Priscilla Israel. Contrary to his detractors, Pilane who is a reserved and humble person by nature won the support and backing of many DCEC officers due to his unassuming nature.
In a recent questionnaire sent to the DCEC regarding Pilane’s term in office, the DCEC was resolute on its commitment towards the fight against corruption. When quizzed on allegations of rife corruption since he took over, Pilane through his Public Relations (PR) office stated that the corruption landscape in Botswana remains unchanged as the DCEC continues to receive reports on allegations of corruption with sectors such as procurement (tenders and supplies), Transport (licensing and certificates), and land (dubious allocation and collusion) still leading issues reported. This trend has been consistence in the DCEC database for more than 10 years.
When further quizzed on accusations that suggest that due to the infighting at the agency, particularly at the top management, Investigations of cases has dropped significantly the DCEC claimed ignorance to the matter, stating that they are not aware of any “infights” at the DCEC “at the top management”, further stating that, investigations of cases has increased significantly, contrary to the allegations raised. “The DCEC is currently seeking new ways of expediting the investigations in order to fast track its enforcement role,” said the DCEC Head of Public Relations Lentswe Motshoganetsi. He further stated that the DCEC is in pursuit of high profile cases involving money and assets valued over P900 million. Three companies are involved in the scandal and two cases have already been committed to court while on one, investigations are about to be completed.
When WeekendPost inquired about Pilane’s roadmap, the DCEC stated that in the past, anti-corruption interventions were reactive, particularly in dealing with national projects that involve large sums of money. It was further started that in most instances investigating such matters takes a long time and in most instances, the money looted form Government in never recovered. As a result, the DCEC has taken a deliberate stance to attach its officers from the Corruption Prevention Division to be part of the implementation of these projects before, during, and after implementation.
The DCEC cited the Economic Stimulus Programme which, although meant to grow the economy and uplift Batswana from poverty, yielded incidents of corruption and poor workmanship. To date, the DCEC is still grappling with cases as some projects were not done, or were completed with defects beyond repair. Currently the DCEC is involved at the Ministry of Education conducting project risk management in the Multiple Path Ways Program at Moeng College and Maun Senior School. This intervention will spread to other sectors of the economy as part of the DCEC’s corruption prevention strategy.
Of recent, the DCEC has been in the media for all the wrong reasons following leakage of high profile cases and allegations claiming that the executive management is at war with each other more particularly with some within the agency harbouring ambitions to dethrone Pilane from the Directorship.
Although the infighting was denied by Pilane’s Office, he acknowledged that leakage of information is a problem across Government and stated that it is a pain at the DCEC. He however stated that Staff has been cautioned against leakage of investigation information and that they have roped in the Botswana Police to assist in investigating incidents of leakage. He further stated that they have increased continuous vetting and lifestyle audits for DCEC employees in order to enforce discipline.
Pilane’s term comes to an end in May 2023 after serving the DCEC for a year on acting basis. It will be in the public interest to see who will be given the baton to continue the anti-corruption journey if Pilane’s contract is not renewed. The DCEC has seen arrival and departure of Director Generals having alternated the top seat five times in less than seven years.
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Botswana firms ICC support amid arrest warrant for Russian President
The Parliament is set to discuss proposed amendments to the laws related to the International Court Court (ICC). This development coincides with reports that the ICC has issued an arrest warrant for Russian President Vladimir Putin for his alleged role in the conflict in Ukraine.
It is not clear if this is a coincidence. For the fourth time, last year Botswana voted against Russia during the UN General Assembly’s condemnation of Russia’s attack on Ukraine.
The country’s continued support for the ICC is expected to irk other African countries that are still questioning the credibility of the ICC and those have also sworn alligence to Russia.
It has been reported that the Minister of Justice, Ronald Shamukuni, is expected to table the Bill regarding the amendments to the laws concerning the ICC in the Parliament soon.
The Bill seeks to criminalize various international crimes, including genocide, war crimes, and aggression. It also proposes to repeal and replace the 2017 Rome Statute of the ICC with amendments.
The latest Government Gazette indicated that the 2017 Act has some legal and constitutional implications. The proposed amendments seek to address these issues.Therefore, the Bill seeks to replace the 2017 Act with a new statute that will retain some of the provisions that do not conflict with Botswana’s Constitution.
The Bill aims to ensure that the obligations of Botswana as a State Party to the Rome Statute of the ICC do not conflict with the country’s Constitution.
The proposed Act will include addition of the crime of aggression which was not there in the 2017 Act. The proposed Act will remove clauses that conflict with Botswana’s Constitution such as article 17 of the Rome Statute of the ICC which provides that official capacity as Head of State shall in no case exempt a person from criminal responsibility under the ICC Statute.
The import of this provision (which the new law seeks to repeal) is that Botswana Courts will be constrained by section 41 of the Constitution to try a sitting President but the International Criminal Court will not be so constrained.
The proposed Act will also result in the amendment to the extradition Act which will provide for instances where Botswana is unable to extradite, for the Director of Public Prosecution (DPP) to instead prosecute on behalf of the foreign country (ICC) where it is determined that there is sufficient evidence to prosecute and sharing of suspected proceeds of crime and confiscated property with other countries.
“In this regard, the amendment to the Mutual Assistant in Criminal Matters Act empowers the DPP to enter into agreements for the reciprocal sharing of with a competent authority in a foreign country,” reads the note in part.
The Bill also includes a clause dealing with conspiracy which provides that a person who conspires in Botswana to commit an offence, in or outside the territory of Botswana, or who conspires outside Botswana to commit an offence in Botswana commits an offence and is liable to the same penalty as the penalty for the actual offence.
Other provisions of the Bill include those relating to superior orders not being a defence as well as the responsibilities of commanders and other supervisors. Furthermore, the Bill deals with issues such as jurisdiction which allows for proceedings to be instituted against a person under certain circumstances, where an act of constituting an offence under the Bill is committed by any person outside the territory of Botswana.
The Bill also provides that the limitations on certain criminal offences will not be applicable to the offences under the Bill. This means that the Prescriptions Act and other statutory limitations will not be applicable to the offences under the Bill. Other provisions of the Bill include the establishment of regulations and the powers of the Minister to make amendments to laws.
The latest developments involving the ICC have raised concerns about Botswana’s continued support for the court. Some of the countries that are critical of the court include Uganda and Kenya. They believe that the court only targets African countries for its alleged involvement in war crimes. In 2016, South Africa decided to withdraw from the ICC. South Africa was the second African nation to withdraw from the court after Burundi.
The decision by South Africa followed a controversy in 2015 when Sudan’s President Omar Al-Bashir was invited to the country despite an ICC warrant for his arrest. Yoweri Museveni, the Ugandan President, at that time commended South Africa for its decision to withdraw from the court.