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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 The first law suit was filed last December but later withdrawn after negotiations with the government, with Norilsk agreeing to become the creditor on the ongoing liquidation of BCL group.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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BONELA speaks on same-sex decriminalization case

18th October 2021
BONELA

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.”

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Masisi warns Gov’t officials

18th October 2021
President Masisi

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).

 

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Guma’s battle for millions of Pula give Court headache

18th October 2021
Guma Moyo

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.

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