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BAOA keeps close eye on beleaguered KPMG

The Botswana Accountancy Oversight Authority (BAOA) continues to monitor the South Africa situation involving auditing giant, KPMG, with keen interest following a well-publicised saga involving Gupta Group of Companies.

BAOA Chief Executive Officer (CEO), Duncan Majinda told this publication this week that there are notable occurrences including some key KPMG clients having migrated away from the KPMG client portfolio. “These included the South African Auditor General, in addition there are allegations of a possible loss of 400 jobs,” Majinda said.

“While the problem is localised in South Africa, there is a concern that global network could also be affected. Botswana is concerned that worst-case may reflect KPMG’s going concern status being threatened, potentially with a significant impact upon the country’s auditing landscape as KPMG audits about 70 percent of the commercial banks in Botswana.” Majinda indicated that another concern is that under normal circumstances, standard international practice has established the Mandatory Audit Firm Rotation which is now in progress in South African and other parts of the world.

“Under the circumstances, the KPMG situation could compromise the audit rotation and other aspects across all firms in Botswana, particularly that some decisions are taken at global firm level,” argued Majinda. The investigations in South Africa on the KPMG saga are still ongoing from various investigating authorities including the South African Audit Regulator, and Independent Regulator Board of Auditors (IRBA).

The results are expected in late November to December 2018 according to BAOA supremo.  “Pending the outcome of the investigations, the Authorities in Botswana will rely on undertakings by the global firm which has instituted a regime of clinical internal control protocols at firm level,” he said. “These monitoring control ecosystems are aimed at the review strengthening of controls and governance frame works within the firm along the lines of King IV. We believe a set of remedial actions by the global firm have been introduced in the area of the audit quality control.”

PERFORMANCE OF LOCAL AUDITORS

BAOA has a broad mandate as an independent regulator of the accounting and auditing profession in Botswana and oversees among others; the auditors and audits firms; professional bodies like BICA, ACCA, CIMA; financial reporting of public interest entities and their corporate governance and, standards  setting of auditing, financial reporting, accounting education and code of ethics. “In essence, the Authority has an across the board and the overall oversight of the entire accountancy profession in the country,” said Majinda.

“Our main interest is audit quality and the compliance with international standards on auditing and that the assurance they give on financial statements is credible and appropriate.” According the BAOA CEO, in summary, 70 percent of the auditors largely meet the required auditing standards while 30 percent require some improvement in their quality.

Majinda noted that auditors and audit firms that do not meet the expected standards lose their practising licenses, indicating that so far, three sole practitioners have lost their practising certificates since the Authority started its reviews in 2013. Interestingly, Majinda observed following an introduction of a new area in the mandate of the institution, regarding corporate governance and financial reporting monitoring, it has merged that private and listed companies, and banks perform significantly better than state-owned enterprises

DIFFERENTIAL PERFORMANCES BETWEEN PRIVATE AND PUBLIC SECTOR

According to Majinda, poorly constituted boards without requisite balance of knowledge, skills and expertise are the main problems of poorly performing entities. “The engine of a car is the most important component of the car without which it cannot operate. By the same token, in an organisation, the Board and executive management is the engine of the entity,” he argued.

“Private and listed companies have very strong boards constituted along best international practice through corporate governance codes like King III and King IV.  Parastatals on the other hand are dominated by pre-determined ex-officio appointments so that if there is such a balance, it is by coincidence rather than design.” Majinda said committees such as Remuneration, Nominations, Risk are not common with parastatals.

He however said, other determining factor maybe the fact that these public institutions have different mandates, as some are commercially oriented while others are geared towards providing a public good or service where commercial initiatives are constrained through, for example, controlled prices and levies. “That notwithstanding, good corporate governance can be applied right across industries and sectors, public or private, profit making or non-profit making, to ensure efficiency, effectiveness and economy in doing business,” he insisted.

Majinda stated that entities that fall short of expected standards may end up losing their practising certificate. “For other entities the law provides for heavy penalties and the regulator can also report them to their corresponding regulators and shareholders,” he said. BAOA recently signed a Memorandum of Understanding (MoU) with Public Enterprises Evaluations and Privatisation Agency (PEEPA) and together they will agree a coordinated way of instituting performances monitoring and compliance controls.  

Majinda said, as President Mokgweetsi Masisi and Minister of Finance and Economic Development indicated their expectation of BAOA in the inauguration speech and budget speech respectively, it is in the interest of the public public for the state-owned entities to perform to expected standards and achieve the objectives for which they were established. “The other expectation is that of proper accountability so that the true figure of taxes due to government are declared and paid. The expectations are, therefore, legitimate and subject to the availability of resources to implement them, the profession should react accordingly,” he said.

ON HAVING TOO MANY REGULATORS

There is believe that Botswana have too many regulators such that they end up of cancelling each other’s work therefore creating a duplication. Majinda however does not believe this is necessarily true, indicating that the occurrence is bound to happen where an institution is regulated by various regulators. Majind said, an example can be a listed bank with an insurance arm for its loan book and a pension fund.

“Since the bank is listed, the BSE will regulate it to ensure that it complies with listings requirent; the Bank of Botswana will regulate it to ensure compliance with the banks’s prudential requirement; NBFIRA will regulate its insurance and pension business and BAOA will regulate it to ensure compliance with financial reporting, auditing and corporate governance,” he argued. “By the virtue of its presence in all these sectors, this bank could find itself being subject to regulation by four different regulators.”

Majinda contended that while there is a potential albeit limited overlap in the regulators’ mandates, albeit in a limited number of cases, the regulators have signed MoUs to buttress the potential duplication effort.“The allegations of multiple regulation are by those entities that are active in many different sectors and therefore do not want regulation by many regulators, however, it is not possible for one regulator to take care of all these difference business segments.,” he said.

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Details emerge in suspected Batswana poachers in Namibia

28th June 2022
suspected Motswana poacher arrested

New details about a suspected Motswana poacher arrested in Namibian and his accomplice who is on the run were revealed when the suspect appeared in court this week.

The Motswana Citizen who was shot and wounded by Namibia’s anti poaching unit is facing criminal charges under criminal case number (CR NO 10/06/2022) which was registered at the Divundu Police Station in the Mukwe constituency of the Kavango East Region on 10 June 2022.

It is alleged that a patrol team laid an ambush after discovering a giraffe’s fresh carcass in a snare wire and hanging biltong.  According to the Charge Sheet, the suspect Djeke Dihutu, aged 40 years, is charged with contravening and transgressions of Nature Conservation Ordinance andcontravening Immigration Act 07 in Mahango Wildlife Core Area, Bwabwata National Park. Dihutu’s first court appearance was on the 17th of June 2022, Rundu and it was postponed to the 07 July 2022. He is currently hospitalized in hospital under Police Guards.

Commenting on this latest development, the Namibian Lives Matter Movement National Chairperson Sinvula Mudabeti applauded the Namibian Anti Poaching Unit for its compliance with what it called the universal instrument on the Code of Conduct for Law Enforcement Officials adopted by the United Nations General Assembly resolution 34/169.

“We are aware that the duties of the police carry a great deal of risk, but our police has shown that they have a moral calling and obligation to protect even foreigners suspected of serious crimes on Namibian soil,” said Mudabeti.

According to him, whereas the Botswana Police Service, the Botswana Defence Force (BDF) and Directorate of Intelligence Service (DIS) have “very low moral ethics, integrity, accountability and honesty, the Namibian security agencies has shown very high levels of ethical leadership in the discharge of their duties even under duress.”

He said Namibian’s anti poaching unit has exercised one very important value, that is, the use of force only when it is reasonable and necessary. Mudabeti said this is in harmony with international best practices as enshrined in Article 2 of the UN instrument on law enforcement conduct, “In the performance of their duty, law enforcement officials shall respect and protect human dignity and maintain and uphold the human rights of all persons.

Our police have protected the life of a Botswana poacher and accorded him dignity, which is very foreign to our Botswana counterparts,” he said. He said article 3 of the same instrument above, calls for Law enforcement officials to use force only when strictly necessary and to the extent required for the performance of their duty.

“This provision emphasizes that the use of force by law enforcement officials should be exceptional; while it implies that law enforcement officials may be authorized to use force as is reasonably necessary under the circumstances for the prevention of crime or in effecting or assisting in the lawful arrest of suspected offenders, no force going beyond that was used by our Police,” he said.

Furthermore, Mudabeti said, whereas the universally accepted norm of the law of proportionality ordinarily permits the use of force by law enforcement, it is to be understood that such principles of proportionality in no case should be interpreted to authorize the use of force which is disproportionate to the legitimate objective to be achieved.

“Our police have used force proportional to the situation at hand. Great work indeed! Article 6 urges law enforcement officials to ensure the full protection of the health of persons in their custody and, in particular, shall take immediate action to secure medical attention whenever required,” he said.

Mudabeti said the Botswana poacher was immediately taken to hospital whereas the Nchindo brothers who were captured on Namibian soil, beaten, tortured and executed while pleading to be taken to the hospital we left to die.

“The Namibian Doctor gave evidence in court that Sinvula Munyeme’s lungs showed signs of life (during the autopsy) and that he could have survived if he was accorded immediate medical assistance in time but was left to die while BDF soldiers looked and possibly ignored his cry for help,” he said.

Mudabeti said unlike in Botswana where there are no clear separation of powers between the BDF, Botswana Police Service, Department of Intelligence and their Directorate of Public Prosecutions,” we have a system that allows for checks and balances and allows our people and foreigners who are found on the wrong side of the law to be accorded the right to a fair trial.”

He said Botswana citizens are treated with dignity when apprehended in Namibia and not assaulted, tortured and executed. “We are a civilized country that respects international law in dealing with non-Namibian criminals. The Namibian Police have not mistreated the Botswana poacher but have given him the benefit of the doubt by allowing due processes of the law to be followed,” he said.

He added that, “We are a peace loving nation that has not repaid Botswana by the evil that Botswana has done to Namibia by killing more than 37 innocent and unarmed Namibians by the trigger happy BDF.” He concluded that, “Our acts of mercy in arresting Botswana citizens should never be mistaken for cowardice.”

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Gov’t, Unions clash over accommodation

28th June 2022
accomodation

The government has reportedly taken a decision to terminate provision of pool housing and subsidy for civil servants as it attempts to trim the public service wage bill.

This emerges in a dispute that is currently before the Labour Office headquarters lodged by unions representing thousands of civil servants across the country. This publication understands that the decision to cease providing pool housing and rental subsidy for public officers is part of proposals that government put on the table during its negotiations with public service unions in order for it to adjust salaries.

A letter from Labour Office addressed to the Directorate of Public Service Management (DPSM) shows that the directorate is cited as the First Respondent. The letter is titled, “Dispute lodged: Cessation of provision of pool housing and subsidy for pubic officers.”

“This serves as a notification and requirement to a mediation hearing,” the letter informed DPSM. According to the letter, the Botswana Teachers Union (BTU), Botswana Sectors of Educators Trade Unions (BOSETU) Botswana Nurses Union (BONU) and Botswana Land Board &Local Authorities &Health workers Union (BLLAHW) who lodged the complaint are cited as the Applicant.

“Please come for mediation hearing. The hearing will be conducted by Mr Lebang. The hearing is scheduled for date/time 29th June 2022, 09: 00HOURS at Block 8 District Labour Office, Gaborone. Please bring all relevant documents,” reads the letter in part.

According to a document described as a proposal paper on the negotiations on salaries and other conditions of employment of public officers by the employer (government), the government did not only propose to stop providing accommodation to civil servants but also put a number of proposals on the table.

The proposal papers states that the negotiations (which have since been concluded) cover three government financial years; 2022/23, 2023/24 and 2024/25. The government proposed an across the board salary adjustments as follows; 3% for the financial year 2022/23 effective 1st April 2022, across the board salary adjustment of 3.5% for the financial year 2023/24 effective 1st April 2023 subject to performance of the economy and across the board salary adjustment of 4% for the financial year 2024/25 effective 1st April 2024 subject to performance of the economy.

The government also proposed phasing out of retention and attractive (Scarce Skills) Allowance with a view to migration towards clean pay, renegotiate and set new timelines for all outstanding issues contained in the Collective Labour Agreement, executed by the employer and trade unions on the 27th August 2019, to ensure proper sequencing, alignment and proper implementation.
The government also proposed to freeze public service recruitment for the 2022/23 financial year and withdraw the financial equivalence of P500 million attached to vacancies from Ministries, Department and Agencies (MDAs).

Another proposal included phasing out of commuted overtime allowance and payment of overtime in accordance with the law and review human resource policies during the financial year 2022/23, 2023/24 and 2024/25.

The government argued that its proposals were premised on affordability and sustainability adding that it was important to underscore that the review of salaries and conditions of service for public officers was taking place at a time when there were uncertainties both in the global and domestic economies.

“Furthermore there is need to ensure that any collective labour agreement that is concluded does not breach the fiscal deficit target of 4% of GDP,” the proposal paper stated. The proposal paper further indicated that beyond salary adjustments, the Government of Botswana is of the view that a more comprehensive consideration “must be taken on the issue of remuneration in the public service by embracing principles such as total rewards compensation which involves taking a fully comprehensive and holistic approach to how our organization compensates employees for the work.”

The proposal paper also noted that, “Clearly, the increase in salaries and changes to other conditions of service which have monetary consequences will further increase the proportion of the budget taken by salaries, allowances and other monetary based conditions of services.”

“The consequential effect would be a reduction of the portion that can be used for other recurrent budget needs (e.g. maintenance of assets, consumable supplies such as medicines and books) and for development projects,” the proposal states.

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BPF NEC probes Serowe squabbles

28th June 2022
BPF

Opposition Botswana Patriotic Front (BPF) National Executive Committee will in no time investigate charges party members worked with the ruling Botswana Democratic Party (BDP) membership to tip the scales in favour of the latter for Serowe Sub-council Chairmanship in exchange for deputy seat in a dramatic 11th hour gentleman’s deal, leaving the ruling party splinter under the political microscope.

In a spectacular Sub-council election membership last Thursday, the ruling BDP’s Lesedi Phuthego beat Atamelang Thaga with 14 votes to 12 for Serowe Sub-council Chairmanship coveted seat and subsequently the ruling party’s councilor Bernard Kenosi withdrew his candidacy in the final hour for the equally admired deputy chair paving the way for Solomon Dikgang of BPF, seen as long sealed ‘I scratch your back and you scratch mine’ gentleman’s agreement between the contenders.

Both parties entered the race with a tie of votes torn between 12 councillors each, translating for election race that will go down to the wire definitely. But that will not be the case as two BPF councilors shifted their allegiance to the ruling party during the first race for Chairmanship held in a secret ballot and no sooner was the election concluded then the ruling party answered back by withdrawing its candidacy for the deputy chair position to give BPF’s Dikgang the post on a silver platter unopposed.

BPF councilor Vuyo Notha confirmed the incident in an interview on Wednesday, insisting the party NEC was determined to “investigate the matter soon”. “During the race for the Chairmanship, two more BPF voted for alongside the ruling party membership. It was clear Dikgang voted alongside the BDP as immediately after the vote for Chairmanship was concluded, Kenosi withdraw his candidacy to render Dikgang unopposed as a payback,” Notha added.

As for the other vote, Makolo ward councilor will not be drawn for the identity preferring instead to say: “BPF NEC will convene all the councilors to investigate the matter soon and we will take from there.” Notha will also not be drawn to conclude may be the culprit councilors could have defected to the ruling party silently.

“If they are no longer part of us they should say so and a by-election be called,” was all he could say. As it stands now, the law forbids sitting Councilors and Parliamentarians from crossing the floor to another party as to do so will immediately invite for a new election as dictated by the law. Incumbent politicians will therefore dare not venture for the unknown with a by-election that could definitely cost their political life and certainly their full benefits.

Notha could also not be dragged to link the culprit councilors actions to BPF Serowe region Chairperson Tebo Thokweng who has silently defected to the ruling party and currently employed by the party businessman and former candidate for Serowe West Moemedi Dijeng as PRO for the highly anticipated cattle abattoir project in Serowe.

“As for Thokweng he has not resigned from the party but from the region’s chairmanship,” he said. WeekendPost investigations suggest Thokweng is the secret snipper behind the recruitment drive of the votes for the elections and is determined to tear the party dominance in Serowe and the neighbouring villages asunder including in Palapye going forward.

This publication’s investigations also show BPF’s Radisele and UDC’s Mokgware/Mogome councilors are under the radar of investigations for the votes-themselves associated with the workings and operations of Thokweng.

“NEC will definitely leave no stone unturned with their investigations to get into the bottom of the matter. Disciplinary actions will follow certainly,” Notha concluded, underscoring the need to toe the party line to set a good precedent. For the youthful councilor, the actions of his peers has set a wrong precedent which has to be dealt with seriously to deter future culprits.

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