The Fengyue Glass project shenanigans are refusing to go away, especially after Specially Elected Member of Parliament, Mephato Reatile took aim at the imbalance demonstrable in the sale of the failed plant equipment and 100 hectares of land. But Government has indicated that it was well aware that it will never recover the P500 million gobbled by the briefcase Chinese company behind the glass project.
The inquisitive legislator had asked the Minister of Trade Industry and Investment whether in view of approximately half a billion Pula of public revenues expended on the Botswana Development Corporation (BDC) Fengyue Glass Manufacturing Plant in Palapye, due regard was made by his Ministry in its decision to sell the Plant for the price for which it was sold by the Liquidator. Reatile also wanted to know how much the 100 hectares of the Plant consisting of a glass producing Plant, Power Sub-Station and the Railway Spur was sold for; and how much was realised after the sale of the 100 hectares of the Fengyue Glass Manufacturing Industrial Estates.
Responding directly to Reatile, Assistant Minister, Biggie Butale indicated that in November 2013, the Board of BDC resolved to place Fengyue Glass Manufacturing Botswana (Pty) Ltd under liquidation and a provisional liquidator was appointed. “Liquidation is a process by which a company is dissolved or wound up, and the assets and properties of the company are sold and the proceeds thereof redistributed to shareholders,” he explained.
The Minister apportioned all blame to the liquidator: “the liquidator is responsible for the process of winding up the company which includes receiving all claims from creditors as well as the distribution of assets. The liquidator works under the supervision of the Master of the High Court. As such, BDC as a company nor my Ministry had any control or influence over this process.”
However, Butale confirmed that BDC spent half a billion Pula on the project, but stated that it was not possible to recover the money. “Whilst it is acknowledged that BDC spent half a billion Pula through its investment of debt, equity and purchase of the assets of the Fengyue Glass Manufacturing Plant in Palapye, it should be made clear that it was unlikely that the Corporation would recover the capital invested.”
Further, the minister said the sale conducted by the Liquidator was not in respect of the business and equity. “On the contrary, the sale was in respect of the assets of the company. I should however indicate that a credible, auditable and fair process was used by the Liquidator to value the assets of the entity prior to the sale. The assets of the entity were in this regard valued by a Certified Professional Valuer.” He said the valuation report demonstrated that the technical equipment to be sold was either used, incomplete, considerably deteriorated and/or certainly out of any possible warranty by the manufacturer or the supplier.
Butale the liquidator opted for an online auction to maximise recoveries hence ensuring that as many local and international bidders would have access to the sale. According to the Minister, the auction attracted a total of 2 713 bids of which 60 per cent or 1 628 were from Botswana bidders.
He further indicated that the Ministry could not have any say in the amount to be realised from the sale of Fengyue Glass Manufacturing Plant’s assets through the sale process. The junior minister said following a valuation of the assets as explained above, the land, plant, power station and railway spur were sold for the sum of P54 382 000.00 inclusive of Value Added Tax. “What remained following the sale of 110 hectares of Fengyue Glass Manufacturing Industrial Estate was sold for P50 million, these being the movable assets.”
Warren Schewitz’s company was awarded an auction by KPMG for the sale of Fengyue Glass Plant. This publication has established that every bidder who participated was FICA registered and had paid a refundable P5000 deposit. In total there were 2 713 bids placed on 79 assets with an average of 34 bids per asset. Weekend Post understands that following the auction, two high bidders, namely G4 Consulting Engineers and Sable Transport of Zambia failed to pay despite numerous and vigorous correspondence. It has been verified that both actually attended the viewing day and wanted to bid for the entire plant and as such bid extensively on almost every item.
In the first planned auction in 2015, no buyers had shown interest in purchasing the BDC’s Fengyue Glass Manufacturing plant. The plant, situated in Palapye, was sold after the project collapsed amid allegations of corruption and was put under liquidation. The Fengyue glass project was expected to create hundreds of jobs for residents of Palapye and surrounding areas. Amongst the company assets that were up for auction is a float glass plant and equipment. An advert on the sale indicates that the float glass is designed to have a daily melting capacity of 450 tonnes of molten glass and designed in compliance with the China Louyang Float Glass Standards. The majority of the plant and equipment remained in its original packaging. A list of other goods that are on site has been prepared by the contractor, though it has not been independently checked or verified.
The plant also boasts of a 100 hectare piece of land close to the centre of Palapye and has a dedicated electricity substation with a railway spur. Of the area, 1,000 m by 600m has been fenced. There are also 11 temporary accommodation blocks on site. But these have been temporarily rented out to a third party for a period of two years with 18 months remaining on the lease.
Civil engineering works had commenced on most of the plant and required utilities buildings with the foundations been laid. Also, varying degrees of civil steel and concrete had been completed, though the exact level of completeness is not known. The advert further stated that there are also construction plant and equipment consisting of small tools and heavy plant equipment and machinery, as well as assets from office and accommodation blocks for construction workers. The oxygen plant is believed to be complete and the oxygen is on site but in a self-contained area. The oxygen plant consists of three independent buildings outside the area of the plant, but access to it can only be gained through the main entrance of the plant.
Minister recognizes the BDC journey
This is how Assistant Minister Butale began his response to Reatile’s question: “BDC is a company limited by guarantee which was registered on the 15th April 1970. The company has played a pivotal role in pioneering growth in a number of sectors such as; Aviation with Air Botswana, Car rental with Avis Property Development, Hospitality through Cresta Group of Hotels. BDC has led the industrial development drive of Botswana through the likes of; Sechaba Breweries, Nortex Industries, Kromberg and Schubert, Kwena Rocla and Can Manufacturers.
These companies have been important in the creation of sustainable employment for Batswana. Having started off with an investment base of R20 000.00, BDC now has an asset base of P4.2 Billion. Mr Speaker, let me now respond to the Honourable Member’s specific question on the Fengyue Glass project.” The Minister wants the role BDC played in the past in industrialization and employment creation to be recognized, instead of the Fengyue blemish.
In June 2019, a case involving the Attorney General was brought before the High Court, in which the applicant Letsweletse Motshidiemang challenged Sections 164 (a) and 167 of the Penal Code. The applicant contended that these sections are unconstitutional because they violate the fundamental rights of liberty and privacy.
The applicant argued that these sections violated his right and freedom to liberty as he was subject to abject ignominy. These laws subjected the LGBTIQ community to brutal and debasing treatment through social control and public morality. On the 1st of November 2017, the Botswana High Court further allowed Lesbians, Gays and Bisexuals of Botswana (LEGABIBO) to join the case as amicus curiae.
However, in July 2019, the respondents, in this case, i.e. the Government, filed an appeal against this iconic High Court ruling seeking re-criminalization of homosexuality. Human Rights Group has criticized this move of the Government all over the world. The appeal was heard before five judges at the Court of Appeal on Tuesday. The State was represented by Advocate Sidney Pilane, while LEGABIBO and Letsweletse Motshidiemang were represented by Tshiamo Rantao and Gosego Rockfall Lekgowe, respectively.
Non-Governmental Organizations advocating for the LGBTIQ+ community joined the two parties at the Court of Appeal during this case. They argue that the minority group should enjoy their rights, especially the right to privacy and health. Botswana Network on Ethics, Law and HIV/AIDS (BONELA) Chief Executive Officer, Cindy Kelemi says the issues being raised by LEGABIBO are that as individuals belonging to the LGBTIQ community, they have and must share equal rights, including the right to privacy, which also speaks to being able to involve in sexual activities, including anal sex.
“Those rights are framed within the constitution, and therefore a violation of any of those rights allow them to approach the courts and seek for redress. We do not need the law to be regulating what we do in the privacy of our homes. The law cannot determine how and when we can have sex and with who, so the law does not have any business in that context. What we are saying is that the law is violating the right to privacy,” she said on the sidelines of the decriminalization case in Gaborone on Tuesday.
The first case involving the homosexual act was the Utjiwa Kanane vs the State in 2003. Contrary to section 164(c) of the Penal Code, Kanane was charged with committing an unnatural offence and engaging in indecent practices between males, contrary to section 167. The conduct at issue involved Graham Norrie, a British tourist, and occurred in December 1994. (Norrie pleaded guilty, paid a fine, and left the country.)
Kanane pleaded not guilty, alleging that sections 164(c) and 167 both violated the constitution. The High Court ruled that these sections of the Penal Code did not violate the constitution. Kanane then appealed to the Court of Appeal. BONELA CEO recalls that in its judgment then, the High Court indicated, Batswana were not ready for homosexual acts. Twenty years later, the same courts are saying that Batswana are ready, she says.
“They gave the explicit example that shows that indeed Batswana are ready. There are policies and documents in place that accommodate people from marginalized communities and minority populations. The question now is that why is it hard now to recognize the full rights of an individual who is of the LGBTI community?” She further says intimacy is only an expression. The law that restricts homosexuality makes it hard for LGBTIQ members to express themselves in a way that affirms who they are.
“We want a situation where the law facilitates for the LGBTIQ community to be free and express themselves. The stigma that they face in communities is way too punitive. They are called names; some have been physically violated and raped at times. It shows that the law doesn’t not only prevent them from expressing themselves, it also exposes them to violence.” The law on its own, Kelemi submits, cannot change the status quo, adding that there is a need for more awareness and education on human rights and what it means for an individual to have rights.
“As it is now, it is very tough for some to do that because of a legal environment that is not enabling. We also want to see a situation where LGBTIQ+ people can access services and be confident that they are provided with non-discriminatory services. It is challenging now because health care providers, social workers and law enforcement officers believe that it is illegal to be homosexual. What we are saying is that if you have an enabling law, then that will facilitate for people to be able to express themselves, including accessing health services,” Kelemi said.
“As we are doing this advocacy work, one of the issues that we picked up is that there is lack of capacity, especially on the part of healthcare workers. We noted that when we provide services or mobilize Men who have sex with other men (MSM) to access health facilities, health care workers are not welcoming, forcing them to hideaway. We must put an end to this to allow these people the freedom that they equally deserve.”
The President, Dr Mokgweetsi Masisi, has declared as an act of corruption the attitude and practice by government officials and contractors to deliver projects outside time and budget, adding that such a practice should end as it eats away from the public coffers.
For a very long time, management problems and vast cost overruns have been the order of the day in Botswana, resulting in public frustrations. Speaking at the commissioning of the Masama/Mmamashia 100 Kilometres project this week, Masisi said: “There is a tendency in government to leave projects to drag outside their allocated completion time and budget. I want to stress that this will not be tolerated. It is an act of corruption, and I will be engaging offices on this issue,” Masisi said.
In an interview with this publication over the issue, the Director-General of the Directorate on Corruption and Economic Crime (DCEC), Tymon Katholo, says, “any project that goes beyond its scope and budget raises red flags.” He continued that: “Corruption on these issues can be administrative and criminal. It may be because government officials have been negligent or been paid to be negligent by ignoring certain obligations or procedures. “This, as you may be aware has serious implications on not only of the economy but even the citizens who use these facilities or projects,” Katlholo said, adding that his agency is equally concerned.
According to the DCEC director, the selection, planning and delivery of infrastructure or projects is critical. In most cases, this is where the corruption would have occurred, leading to a troubled project. A public finance expert at the University of Botswana (UB), Emmanuel Botlhale, attributes poor project implementation to declining public accountability, lack of commitment to reforming the public sector, a decline in the commitment by state authorities and lack of a culture of professional project management.
In his research paper titled, ‘Enhancing public project implementation in Botswana during the NDP 11 period,’ Botlhale stated that successful implementation is critical in development planning. If there is poor project implementation, economic development will be stalled. Corruption is particularly relevant for large and uncommon projects where the public sector acts as a client, and experts say Megaprojects are very likely to be affected by corruption. Corruption worsens both cost and time performance and the benefits expected from such projects.
Speaking during this week’s Masama/Mmamashia pipeline commissioning, Khato Civils chairman said Africans deserve a chance because they are capable, further adding that the Africans do not have to think that only Whites and Chinese people can do mega projects. During his rule, former president Ian Khama went public to attack Chinese contractors for costing the government a move that ended up fuelling tensions between China and Botswana after Khama dispatched the then Minister of Foreign Affairs, Pelonomi Venson Moitoi, to China to register Botswana’s complaints with Chinese government-owned construction companies. Botswana had approached the Chinese government for help in its marathon battle with Chinese companies contracted to build, among others, the failed controversial Morupule B power plant and refurbishment of Sir Seretse Khama International Airport (SSIK).
A legal battle between former Botswana Democratic Party (BDP) legislator Samson Moyo Guma and First National Bank (FNB) over a multimillion oil refinery project intensified this week with Justice Zein Kebonang referring the matter to Court of Appeal for determination. The project belongs to Moyo Guma’s company called United Refineries which he has since placed under judicial management.
The war of words between Moyo Guma and FNB escalated after the company’s property worth millions of Pula were put up for sale in execution by the bank and scheduled to take place on 8th October. It emerges from Court papers that the bank had secured an order from the High Court to place the company’s property under the hammer.
Moyo Guma then also approached the High Court seeking among others that the public auction scheduled for 8th October 2021 be stayed. He contended that the assets that were to be sold belonged in reality to United Refineries and that as the company had been under judicial management at the time of the attachment, the intended sale in execution was unlawful.
He also sought the Court to declare that the writs of execution against the properties of guarantors and sureties of United Refineries Botswana Holdings Propriety Limited (the company) are unlawful. Moyo Guma also sought a stay of the execution against the property known as Plot 43556 in Francistown, that is, the land buildings, plant and machinery which make up the property and any all immovable or movable property belonging to the guarantors and sureties of the company pending finalization of the winding up of United Refineries.
But FNB disputed Moyo Guma’s assertions and submitted that the properties in question belonged to TEC (Pty) Ltd and not United Refiners. TEC Pty Ltd which is one of the shareholders in United Refineries is one of the sureties and co-principal debtors of a debt amounting to P24 million owed by United Refineries to FNB. FNB argued in papers that the properties belonged to TEC because it was TEC which had passed a covering mortgage bond in its favour over the property it now sought to execute.
Moyo Guma submitted that the covering mortgage bond passed in favour of FNB did not tell the full story as the property in question was in truth and fact owned by United Refineries and not TEC Pty Ltd. He maintained that the shares had been had been passed by the company in exchange for the properties in question and that the parties had always been guided by the spirt of the share agreement in dealing with each other despite delays in the change or transfer of ownership of plots 43556 and plot 43557 in Francistown.
Kebonang said it was clear to him that the two plots (43556 and 435570 belonged to United Refineries notwithstanding that TEC (Pty) Ltd had passed a mortgage bond over them in favour of FNB. “For this reason the properties were immune from attachment or sale in execution so long as the judicial management order was in place,” he said.
The background of the case is that Moyo Guma together with five other investors, namely Elffel Flats (Pty) Ltd; Mmoloki Tibe; TEC (Pty) Ltd; Profidensico (Pty) Ltd and Tiedze Bob Chapi, each bound themselves as sureties and co-principal debtors in respect of a debt owed by a company called United Refineries Botswana Holdings (Proprietary) Limited (the Company), to First National Bank Botswana (FNBB) (1st Respondent).
FNB had extended banking facilities to the company in the amount of P24 million which was then secured through the suretyship of Moyo Guma and other shareholders. Court records show that Moyo had on the 11th February obtained a temporary order for the appointment of a provisional judicial manager in respect of United Refineries and it was confirmed by the High Court on 24th September 2019.
In terms of the final court order by the High Court issued by Justice Tshepho Motswagole all judicial proceedings against the company, execution of all writs, summons and process were stayed and could only proceed with leave of Court. Court documents also show that First National Bank had sued the company and the sureties for the recovery of the debt owed to it and through a consent order, the bank withdrew its lawsuit against the company.
But FNB later instituted fresh proceedings against Moyo Guma and did not cite the company in its proceedings. “There is no explanation in the record as to why the Applicant was now reflected as the 1st Defendant and why the company had suddenly been removed as the 1st Defendant. There was no application either for amendment or substitution by the bank,” said Justice Kebonang.
FNB had also argued that it sought to proceed to execute against Moyo Guma and other sureties on the basis of the suretyship they signed and that by signing the suretyship agreement, Moyo and other sureties had renounced all defence available to them and could therefore be sued without first proceedings against the principal debtor (United Refineries). The question, Kebonang said, was that can FNB proceed to execute against Moyo Guma and other sureties on the basis of the suretyship contracts they signed?
“The starting point is that the Applicant (Moyo Guma) and others by binding themselves as sureties became liable for debts of the principal debtor and such liability is joint and several. He said the consequences of placing the company under judicial management means that every benefit extended to it should also extend to sureties.
“If the company is afforded more time to pay or its debt is discharged, reduced or compromised or suspended the obligation of sureties is to be likewise treated. It follows in my view that where judicial proceedings are suspended or stayed against the company, then any recourse against the sureties is similarly stayed or suspended,’ said Kebonang.
He added that “In the circumstances of this case, it seems to me that so long as the company is under judicial management, the moratorium that applies to it must also apply to its sureties/guarantors and no execution of the writs should be permitted against them. Any execution would be invalid.”
“Mindful that there is judicial precedent on this point in Botswana, at least none that I am aware of, and given its significance, I consider it prudent that the Court of Appeal must provide a determinative answer to the question whether a creditor can proceed against sureties where a company is under judicial management,” said Kebonang.
Pending the determination of the Court of Appeal, he issued the following order; the execution of writs issued in favour of FNB against Moyo and other sureties/guarantors of United Refinery are hereby stayed pending the determination of the legal question referred to the Court of Appeal.