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Norilsk Nickel Group sues Gov’t for P2.8 billion

Norilsk Nickel Group is suing Botswana’s government in efforts to recover close to P3 billion after a deal gone sour. The Russian miner, in a loaded statement released on Friday, says the lawsuit is the last resort after it failed to find an amicable solution, laying blame on the lack of commitment from the government of Botswana.


“MMC Norilsk Nickel Group (hereinafter “Norilsk Nickel”) has served notice that it intends to commence legal proceedings in Botswana against the Government of Botswana in respect of its involvement in the reckless trading of BCL Limited and BCL Investments Proprietary Limited (together “BCL”), with a view of recovering the USD 271 million plus damages and other costs that are owed to Norilsk Nickel in relation to the sale of a 50% interest in the Nkomati mine in South Africa (“the Nkomati deal”) and the USD 6.4 million that are owed to Norilsk Nickel in relation to the sale of the Tati mine in Botswana,” the company said in a press release statement.


Norilsk says it is suing the Botswana’s government since it is the ultimate shareholder of BCL through its corporate vehicle MDCB, adding also that the notice to sue was served under section 4 of the State Proceedings (Civil Actions by or against Government or Public Officers) Act and was served on the Attorney General of Botswana, the Minister of Mineral Resources, Green Technology and Energy Security, and the Minister of Finance.


This is the second attempt by the Russian miner to sue the government for breach of contract. The first law suit was filed last December but later withdrawn after negotiations with the government, with Norilsk agreeing to become the creditor on the ongoing liquidation of BCL group. In the centre of the lawsuit is a deal gone wrong that began when Norilsk agreed in October 2014 to sell their operations in Africa to BCL for a total price of $337 million (P3.5 billion), though that amount was later reduced when Norilsk agreed to price concessions requested by BCL and the Government. The concessions by Norilsk were in light of falling commodity prices.


The Russian miner’s main line of arguments are that the Nkomati deal, which was announced by BCL as a strategic priority as part of its high-profile “Polaris II” diversification and investment strategy, was designed to guarantee the long-term future of BCL’s operations by securing the supply of concentrate to its smelter in Selebi Phikwe, Botswana. This line of argument by Norilsk is intended to highlight the overarching role of the government of Botswana in the deal.


“The Government was involved in or approved all material decisions relating to this transaction. It is well known that BCL had always historically relied on financial support from the Government to survive and, in view of BCL’s financial position, it was clear that most if not all of the funding for the Nkomati deal would have to come from or be guaranteed by the Government,” the company explained in the press statement.


The trouble began to emerge when the government started developing cold feet. According to the press statement, BCL became obliged to buy Nkomati on 13 September 2016. However, BCL and the government have made no attempts to complete the deal, in clear breach of the agreement with Norilsk.


In a shock twist, Norilsk says in October 2016, it learned through the media that BCL had been placed into provisional liquidation by the government in an apparent attempt to avoid its obligations to Norilsk. At that point, the Russian miner says it has tried on numerous occasions, and through numerous channels, to reach a satisfactory and amicable resolution, but none has been forthcoming.


“Norilsk has therefore been left with little option but to pursue a resolution through legal channels.  In its claim against the Government, Norilsk asserts that the business of BCL has been carried on recklessly and that the Government was party to that recklessness through the actions of individual Government Ministers, MDCB and the Government-appointed directors on BCL’s board,” read part of the statement.


The statement goes on to explain how the Botswana government cannot just simply walk away from the deal since it was the government that was instrumental and gave surety that it will come to the BCL rescue should BCL find itself in a financial mess. “In addition to the Government taking and being involved in material decisions in relation to the management of BCL, it was also aware of BCL’s financial situation throughout, and knew or ought to have known that there was no reasonable prospect of it being able to pay the amounts due to Norilsk without support from the Government.

 

Norilsk was also provided with assurances throughout the negotiations for the deal that the Government was fully supportive of the Nkomati transaction, and that BCL would perform its obligations in full.  Yet, when the time for completion of the deal came, it became apparent that the Government had had no intention of supporting BCL and had in fact taken steps which meant that BCL would not be able to perform its obligations.”


In its claim, Norilsk will ask for a court order making the government responsible for paying all of the liabilities due from BCL under its agreement with Norilsk and the costs of the intended court proceedings.  “The Government has displayed a complete disregard for the fair, frank and reasonable dealing with outsiders which BCL’s insolvent circumstances demanded.  It has failed to honour the obligations under the sale agreement concluded with Norilsk in October 2014,” said Michael Marriott, Norilsk Nickel Africa CEO.


“Throughout the process Norilsk has acted in good faith, and given the Government and BCL repeated opportunities and offers of assistance to complete the transaction, including concessions to significantly reduce the sale price,” he added. The lawsuit is expected to bring the spotlight on Botswana’s government which has been for many years known for its respect for the rule of law. Just recently, the country was ranked highly as the most attractive investment destination in Africa in an Africa Investment Index 2016 by Quantum Global’s independent research arm, Quantum Global Research Lab


“Botswana has a reputation as one of the safest and best places to invest in the whole of Africa and it has earned the strongest credit rating on the continent on that basis.  The way that the Government of Botswana has acted over BCL brings the validity of that reputation into question.  The negative ramifications could be felt across the economy of the whole country,” the CEO of Norilsk Africa said in a thinly veiled threat. The press statement concluded with a threat to block any sale of BCL assets to any interested investor if the Botswana government fails to recognise the rights of Norilsk and what is due to them.


“On a related issue, it would appear that the Government of Botswana is in negotiations with potential investors about a possible sale of BCL. Norilsk reiterates its rights in relation to the Nkomati and Tati transactions and will continue to seek the repayment of the outstanding debts by all legal means. In this regard, Norilsk expects its rights to be recognised by the Government in its negotiations and in any agreement ultimately reached in relation to BCL, failing which Norilsk reserves its rights, including to challenge any such agreement.”

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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.

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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.

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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.”

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