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.
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.
While there is no hard-and-fast rule in politics, former Molepolole North Member of Parliament, Mohamed Khan says populism acts in the body politic have forced him to quit active partisan politics. He brands this ancient ascription of politics as fake and says it lowers the moral compass of the society.
Khan who finally tasted political victory in the 2014 elections after numerous failed attempts, has decided to leave the ‘dirty game’, and on his way out he characteristically lashed at the current political leaders; including his own party president, Advocate Duma Boko. “I arrived at this decision because I have noticed that there are no genuine politics and politicians. The current leaders, Boko and President Dr Mokgweetsi Masisi are fake politicians who are just practicing populist politics to feed their egos,” he said.
Former Botswana Democratic Party (BDP) parliamentary hopeful, Lawrence Ookeditse has rejected the idea of taking up a crucial role in the Botswana Patriotic Front (BPF) Central Committee following his arrival in the party this week. According to sources close to development, BPF power brokers are coaxing Ookeditse to take up the secretary general position, left vacant by death of Roseline Panzirah-Matshome in November 2020.
Ookeditse’s arrival at BPF is projected to cause conflicts, as some believe they are being overlooked, in favour of a new arrival. The former ruling party strategist has however ruled out the possibility of serving in the party central committee as secretary general, and committed that he will turn down the overture if availed to him by party leadership.
Ookeditse, nevertheless, has indicated that if offered another opportunity to serve in a different capacity, he will gladly accept. “I still need to learn the party, how it functions and all its structures; I must be guided, but given any responsibility I will serve the party as long as it is not the SG position.”
“I joined the BPF with a clear conscious, to further advance my voice and the interests of the constituents of Nata/Gweta which I believe the BDP is no longer capable to execute.” Ookeditse speaks of abject poverty in his constituency and prevalent unemployment among the youth, issues he hopes his new home will prioritise.
He dismissed further allegations that he resigned from the BDP because he was not rewarded for his efforts towards the 2019 general elections. After losing in the BDP primaries in 2018, Ookeditse said, he was offered a job in government but declined to take the post due to his political ambitions. Ookeditse stated that he rejected the offer because, working for government clashed with his political journey.
He insists there are many activists who are more deserving than him; he could have chosen to take up the opportunity that was before him but his conscious for the entire populace’s wellbeing held him back. Ookeditse said there many people in the party who also contributed towards party success, asserting that he only left the BDP because he was concerned about the greater good of the majority not individualism purposes.
According to observers, Ookeditse has been enticed by the prospects of contesting Nata/Gweta constituency in the 2024 general election, following the party’s impressive performance in the last general elections. Nata/Gweta which is a traditional BDP stronghold saw its numbers shrinking to a margin of 1568. BDP represented by Polson Majaga garnered 4754, while BPF which had fielded Joe Linga received 3186 with UDC coming a distant with 1442 votes.
There are reports that Linga will pave way for Ookeditse to contest the constituency in 2024 and the latter is upbeat about the prospects of being elected to parliament. Despite Ookeditse dismissing reports that he is eying the secretary general position, insiders argue that the position will be availed to him nevertheless.
Alternative favourite for the position is Vuyo Notha who is the party Deputy Secretary General. Notha has since assumed duties of the secretariat office on the interim basis. BPF politburo is expected to meet on 25th of January 2020, where the vacancy will be filled.
Botswana Democratic Party (BDP) big wigs have decided to cancel a retreat with the party legislators this weekend owing to increasing numbers of Covid-19 cases. The meeting was billed for this weekend at a place that was to be confirmed, however a communique from the party this past Tuesday reversed the highly anticipated meeting.
“We received a communication this week that the meeting will not go as planned because of rapid spread of Covid-19,” one member of the party Central Committee confirmed to this publication. The gathering was to follow the first of its kind held late last year at party Treasurer Satar Dada’s place.