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 The first law suit was filed last December but later withdrawn after negotiations with the government, with Norilsk agreeing to become the creditor on the ongoing liquidation of BCL group.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.”
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.