Connect with us
Advertisement

Guma’s P50 million CEDA jackpot

United Refineries Botswana (URB), a company that has the directorship of Tati East Member of Parliament, Samson Guma Moyo and the Citizen Entrepreneurial Development Agency (CEDA) and three others is at the centre of a row between some CEDA’s Structured Finance Department employees and their seniors over questionable financing despite not meeting the basic requirements.

In the last seven years the company has been financed four times to the tune of close to P40 million but fit has not paid a dime towards the loan repayment. CEDA exposure with URB currently stands at P40 million and in November 2017, URB put forward a proposal requesting a P9 million loan from CEDA through which they claimed they wanted to refinance a short term facility as payment.

The CEDA department of Structured Financing found the request to be problematic at the word go because there was no board resolution supporting the application, there were no minutes to confirm a Board sitting; URB also failed to avail audited financial statements at the time, and when they were submitted they were not signed by their auditors – which raised eyebrows with those tasked with appraising the application by URB. Further to compound the URB request conundrum was the fact that the financials were only for the year 2015/16 but the company was first financed in 2012/13 hence the CEDA officers wanted a record of what has been happening in the company since being financed.

Things came to a head when the CEDA officials further discovered that the 40 percent shareholding of the parastatal in URB has been diluted to a paltry 18 percent – with the difference being transferred to Guma Moyo. “What concerned us the most was that there was no board resolution supplied to us to explain the shareholding dilution and the transfer of the same shares to Mr Moyo,” said a source within CEDA. He said it is very easy to track share transfer and or sale but in this instance there was “zero record”.

On asking for the subscription shareholding agreement as well as a valuation report that determined the value of the shares, and proof of payment from Guma Moyo to CEDA the officials also hit blanks. Those tasked with appraising the request by URB also got wind of the fact that the same company has financial obligations with Botswana Development Corporation (BDC) where they secured P15 million and P25 million from First National Bank Botswana who were also demanding their monies from URB. “At the time we were doing this appraisal URB was technically insolvent,” he said.

“Our view was that you can’t continue to throw money into a company that is technically insolvent. URB had also never serviced any loan that they took with us,” said our source. On the 23rd of November 2017, upon realizing that their request was not being fast tracked Guma Moyo is said to have shown up at CEDA offices where he interacted with the Head of Department – Structured Financing, James Moribame “to talk about URB request”.

In subsequent days the CEDA officers were under pressure and they approved the request on condition that URB supplies a board resolution, minutes of the board meeting, signed audited financials among other things. These demands were an impossible undertaking on the part of URB hence a difference officer was then assigned to look into their request. The appraisal was submitted on the 15th of December 2017 and was acceded to by management after one of the Structured Finance staff members, who has allegedly been dismissed put a disclaimer to the appraisal.

In her original assessment the said staff member is said to have highlighted risks faced by URB and possible mitigation measures. The Department of Structured Finance was of the view that it should get someone or a firm to manage the money on behalf of URB. Currently the company is failing to service its debts despite millions of Pula pumped into the project. Scores of its employees have not been paid in the last eleven months or so. On the other hand BDC is suing the company for failure to settle a loan of P11 million.

THE PROJECT

At the inception of the project, P40,7m was successfully raised which was intended to finance the scope of the project in full. However, the business experienced cost overruns due to the following challenging factors Depreciation of the Pula by over 37% from the inception of the project as the cost of plant and equipment was in US Dollars; Unplanned material expenditures, namely excavation and civil works on the plant site, driven by the need to hire the earth moving equipment which has been resident on site since the project started. In addition there were material additions to the plant specifications.  

Subsequent delays in disbursements resulting in movement of prices at a rate similar to the depreciation of the currency to the dollar. Against these constraints, P25, 1m was raised from FNB; BWP 12.7m from CEDA to fund the gap that developed following these material changes. The above achieved a 98% completion of the factory. Over and above the contributions, subsequent contributions were made by the founding shareholders to meet the funding requirements of the business via shareholder loans and capital calls that CEDA did not participate as indicated below as follows:

One of the original promoters of the project who spoke to Weekend Post this week Mr Tiedze Chapi explained that the company was formed by Guma and Tibe back in 2010/11. He said the two approached him and asked him to avail his plot as surety so that they could access funds to kickstart the project. He was convinced that he will become part of the company with a 40 percent shareholding while Guma was to hold 40 percent and Tibe was to own 20 percent of the business.

According to Chapi the two availed documents which had his name on  them to demonstrate that indeed he was a shareholder and they went on to ask for P11 million from BDC. Although BDC approved their request it was on the condition that they produce proof that they have assets that match that value. Unfortunately Chapi’s land valued less (P608 000) and still with infrastructure on it only went up to P4.3 million way less than the P11 million required hence BDC could not release the whole amount.

Chapi shared that the promoters then went to CEDA where they were given the P11 million. At this point Chapi was not happy with the whole operation and he threatened to pull out only to be intimidated. “I wanted to pull out because I was not sure if I am a shareholder in this company.” Chapi said at this point CEDA came into the picture and injected P7.33 million and a shareholders agreement was prepared by Armstrongs Attorneys. 

CEDA then paid another P7.33 million as debenture and the project took off. “My concern is that the money that was injected by the money funding institutions was not traceable in most cases. BDC put in money, it finished, CEDA put in money, it finished and FNBB put in money and it finished, CEDA came back to inject money and it finished and I hear the company is back at CEDA asking for more funds. We have not been audited and I am concerned that my name is in this project and public funds are being used without due process,” said Chapi. Chapi further stated that CEDA has guaranteed a loan of P9.5 million acquired by URB from FNBB at 100%. He stated that BDC has issued a letter of demand to URB and they want their money back.

“I have tried to seek legal advice on the matter and I cannot take it any further because the legal costs are prohibitive on my side. As for BDC, they are suing in the basis of an agreement that I did not sign as a one of the parties and I do not think they will succeed on my part. At some point I was kicked out of the Board and I was being threatened with political influence but I did not budge,” continued Chapi. According to Chapi, he has asked for a forensic audit of the business, “to my surprise one of the firms that was engaged to prepare the report put a disclaimer that it did not meet the required standards but URB still paid P250 000 for it.

Chapi is concerned that employees at the cooking oil plant have been going for up to eleven months without pay. “Some are at seven months without payment,” he added. He added: “Another thing that concerns me is the dilution of shareholding, something that contravenes the shareholders agreement. He said CEDA’s share has dropped from 40% to 18%; his from 12% to 7%; while Guma’s has picked from 16% to 53%.

EFFORTS TO CONTACT KEY PLAYERS

When reached by this publication, Mmoloki Tibe , who is also a shareholder, to inquire about Unified Refineries,  declined to discuss the  affairs of his company because its “a private entity.” When this publication pressed forward with the matter, putting it to him that, Unified Refineries’ dealings with CEDA maybe of public interest since CEDA is public enterprise, Tibe remorsefully agreed to share more light on the matter with this publication at later time.

His phone then later rang unattended and he could not reply inquiries sent through SMS. Dr Alfred Tsheboeng, Chairperson of the CEDA Board’s mobile phone rang unanswered the entire day, while Cynthia Sebonego, Secretary of the Board referred this publication to CEDA communications chief, Anno Tshipa. WeekendPost team managed to get hold of Tshipa but she was unable to respond to this publication’s inquiry. Weekend Post has promised to give her a right of reply next week. Meanwhile Guma Moyo’s mobile were unreachable because he was said to be in South Africa.

Continue Reading

News

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.

Continue Reading

News

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.

This content is locked

Login To Unlock The Content!

Continue Reading

News

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.”

Continue Reading
Do NOT follow this link or you will be banned from the site!