BCL is not likely to resume operation anytime soon, the company provisional liquidator, Nigel Dixon Warren revealed this week Tuesday. Furthermore, Dixon Warren revealed, February 7 2017 contrary to popular belief, is not the date in which the liquidation period ends, but only a return date where the court will decide the final fate of the company.
“There is absolutely no intention to restart operation at the mines , no prospects or what so ever, not anytime soon ,either after February 7th or 1st meeting of creditors and we are looking at possibly beyond 2017,” he said emphasizing that currently there are no resources available to finance operations.
“I have currently placed the mines under care and maintenance, that decision was very paramount to safeguard the assets and preserve the company value,” he explained. Dixon Warren revealed that he was advised by professional smelter experts to shut down the BCL smelter which is the most valuable asset of the company, explaining that it would be very costly to keep it running until final liquidation is complete.
“When I arrived here the Smelter was shut down from 7th October as per order by the main shareholder; the government, but the BCL engineers advised me to restart it and operate it at a warm temperature as it gets damaged and looses value when it’s not operational, but I later engaged an expert who consulted the manufactures of the smelter and we arrived to a conclusion that it would cost us 5 million pula per month on fuel alone to keep the smelter operational , thus I decided to shut it down.”
“It is not usually the procedure within liquidation dealings for the liquidator to address media and issue out information to the public, but considering the amount of public interest in this matter, I have seen it fit to assemble the media and clear out certain misconceptions and misunderstandings making rounds in the publication circles that are also polluting public knowledge consumption,” further highlighted Dixon Warren at the Tuesday press briefing in Selibe Phikwe.
He unpacked that on February the 7th, 2017, the High Court will decide if the companies being BCL Limited, BCL Investments, and Tati Nickel Mine should be placed under final liquidation or the initial reasons presented to the Court can be dismissed. “The order granted in 9th October 2016 to wind up the companies was only a provisional liquidation or rule nisi,” he said. “Per the court order any interested party may apply to high court to prevent the Court not to grant the final order which winds up the company’s liquidation.”
According to him the court can decide to extend the provisional liquidation period and delay the final winding up (complete liquidation) order if it deems it necessary. He further noted that for the final liquidation order to be delayed or not be granted, it would require a clear demonstration satisfactory to the court that the companies were not insolvent.
“That’s to say who ever the interested party logging that application would be, will have to prove beyond reasonable doubt why the winding up petition should be dismissed, of which according to my assessment all the three companies are fatally insolvent, like they have no money or funds or whatsoever and have been making massive losses,” he said.
BEYOND FEBRUARY 7TH 2017
Nigel who is a well experienced professional housed under KPMG Chartered Accountants Advisory observed that it is in the best interest of all the creditors that the companies be finally wound up into liquidation process followed to its conclusion. According to him, “After February the 7th this year, the formal liquidation process commences.” He further added that the winding up process includes holding meetings of creditors and sale of assets, a process he revealed takes months to over a year.
“What happens is that at the return date if there is no application to dismiss the final liquidation order, the Master of the High Court who oversees the liquidation now takes the reins and convenes a formal meeting of creditors.” Furthermore, he revealed, creditors meetings are held so that they (creditors) can prove their claims against the companies (i.e. have them recognized as the creditors in the liquidation) so that they can issue instructions to the liquidator and ultimately receive payment against their claim (a dividend) at the end of liquidation process.
This, he said, would be if there are sufficient funds realized in the sale of assets to cover the costs of the liquidation and pay a dividend to creditors. Warren Dixon also revealed that erstwhile directors of the companies will be required to attend the two meetings of creditors so that they can answer questions by creditors and the liquidator.
“I am only a provisional liquidator appointed by the High Court, at the 1st meeting of creditors, the proven creditors now nominate the final liquidator, this isn’t always the same person as provisional liquidator but in many cases creditors appoint the same person for continuity as the provisional liquidator would already be familiar with the liquidation and insolvent company records,” he explained. He also indicated that at that meeting, he as the provisional liquidator will present a report written in terms of Section 44 of the companies Act.
“This report provides creditors with details of assets and liabilities of the companies and a reason as to why the entities failed in the first place. It was also observed that if the BCL companies are put on final liquidation on the 7th February 2017 it is expected that the first meeting of creditors be held in April 2017.
Dixon-Warren noted that the date of the meeting is not set by the provisional liquidator but by the Master of the High Court. “I have to prepare a report and submit claim forms to all known creditors. Considering that these companies are relatively many I will need time after February 7th to undertake this,” he further stipulated.
The BCL Undertaker further added that the second meeting of creditors of which the reins will be with the final liquidator who might not be him, will give an opportunity to creditors to further prove their claims. “Ordinarily this second meeting occurs between three to six months after the first, and the final liquidator will report on the affairs of estate and will be given direction from the creditors as to the sale of the assets.”
THE RUSSIAN NORILSK MATTER
The Liquidator also cleared misconceptions on the Russian Norilsk matter which has been making rounds , BCL had entered into an a share purchase agreement with Norilsk Nickel Mauritius and Norilsk Nickel International Holdings Limited to acquire Norilsk interest in South African Nkomati Mine and Tati Nickel Mine in Francistown.
Dixon Warren explained that prior to the liquidation there was a dispute between parties to the agreement as to whether the conditions precedent was met and therefore whether the contract has full force and effect. “Since Norilsk has taken the matter to court at the High Court of Botswana and in London, there are no further comments I can make on the issues,” he said observing that once the issue is dealt with at the court of law, if the case went in favor of Norilsk they can approach him and claim their rightful argument as a creditor He also revealed that BCL has a number of creditors which the company had entered into operational contracts with.
He further clarified that Pula Steel, contrary to the belief of many, is not part of BCL or BCL Investment, stating that it’s a separate entity in which BCL has shares and is not affected by BCL’s liquidation. “As a matter of fact Pula Steel owes BCL millions in dividends, it is actually one of the few debtors which will have to pay us soon,” he explained adding that RealZim , MTO, Glecon , Zimbabwean Copper companies also owe BCL a few chunks of millions, but emphasized that BCL creditors sit at billions all together.
Though no formal offers have been made yet and far from being put forth, the liquidator revealed that a number of interested parties, both local and international have expressed interest in the mine. According to Warren any conclusion to sell will be considered after the second meeting of creditors observing that it will only be looked into if it’s in the best interest of the creditors. He however stressed that even if sold, the mine would need time before reopening as it would require restructuring, refurbishment of equipment and re-designing of shafts to start up the mine on profitability.
FORMER BCL EMPLOYESS
“As we all know I was forced to terminate over 4000 employees contracts, I have paid terminal benefits to almost all of them, only just over 180 have not yet received their benefits,” he explained, adding that reasons were that the 180 are still yet to be contacted, some changed addresses amongst other reasons.
He observed that he initially retained about 400 employees to help him with care and maintenance but have reduced the number to just over 350. “I have fired some of my staff and re-hired some of the initially terminated, because I operate under a limited budget and time so I cannot afford incompetent staff,” he asserted.
Furthermore, he revealed that all former BCL employees who occupied staff houses have been allowed to stay in the houses. “We have signed leases with them up to 31st October 2017, and as per our agreement the occupants will not be paying rent in return we want them to keep the houses in good shape and suitable state, however as stated before, occupants will pay for their own utilities bills,” he said”.
BCL which has been in operation for the past 40 years was put under provisional liquidation last year October 9th after operations were halted 2 days earlier. Meanwhile, reports indicate that copper and nickel prices have bounced back by 20%.
Botswana has made improvements on preventing and ending arbitrary deprivation of liberty, but significant challenges remain in further developing and implementing a legal framework, the UN Working Group on Arbitrary Detention said at the end of a visit recently.
Head of the delegation, Elina Steinerte, appreciated the transparency of Botswana for opening her doors to them. Having had full and unimpeded access and visited 19 places of deprivation of liberty and confidentiality interviewing over 100 persons deprived of their liberty.
She mentioned “We commend Botswana for its openness in inviting the Working Group to conduct this visit which is the first visit of the Working Group to the Southern African region in over a decade. This is a further extension of the commitment to uphold international human rights obligations undertaken by Botswana through its ratification of international human rights treaties.”
Another good act Botswana has been praised for is the remission of sentences. Steinerte echoed that the Prisons Act grants remission of one third of the sentence to anyone who has been imprisoned for more than one month unless the person has been sentenced to life imprisonment or detained at the President’s Pleasure or if the remission would result in the discharge of any prisoner before serving a term of imprisonment of one month.
On the other side; The Group received testimonies about the police using excessive force, including beatings, electrocution, and suffocation of suspects to extract confessions. Of which when the suspects raised the matter with the magistrates, medical examinations would be ordered but often not carried out and the consideration of cases would proceed.
“The Group recall that any such treatment may amount to torture and ill-treatment absolutely prohibited in international law and also lead to arbitrary detention. Judicial authorities must ensure that the Government has met its obligation of demonstrating that confessions were given without coercion, including through any direct or indirect physical or undue psychological pressure. Judges should consider inadmissible any statement obtained through torture or ill-treatment and should order prompt and effective investigations into such allegations,” said Steinerte.
One of the group’s main concern was the DIS held suspects for over 48 hours for interviews. Established under the Intelligence and Security Service Act, the Directorate of Intelligence and Security (DIS) has powers to arrest with or without a warrant.
The group said the “DIS usually requests individuals to come in for an interview and has no powers to detain anyone beyond 48 hours; any overnight detention would take place in regular police stations.”
The Group was able to visit the DIS facilities in Sebele and received numerous testimonies from persons who have been taken there for interviewing, making it evident that individuals can be detained in the facility even if the detention does not last more than few hours.
Moreover, while arrest without a warrant is permissible only when there is a reasonable suspicion of a crime being committed, the evidence received indicates that arrests without a warrant are a rule rather than an exception, in contravention to article 9 of the Covenant.
Even short periods of detention constitute deprivation of liberty when a person is not free to leave at will and in all those instances when safeguards against arbitrary detention are violated, also such short periods may amount to arbitrary deprivation of liberty.
The group also learned of instances when persons were taken to DIS for interviewing without being given the possibility to notify their next of kin and that while individuals are allowed to consult their lawyers prior to being interviewed, lawyers are not allowed to be present during the interviews.
The UN Working Group on Arbitrary Detention mentioned they will continue engaging in the constructive dialogue with the Government of Botswana over the following months while they determine their final conclusions in relation to the country visit.
Standard Chartered Bank Botswana (SCBB) has informed the government that it will not be accepting new loan applications for the Government Employees Motor Vehicle and Residential Property Advance Scheme (GEMVAS and LAMVAS) facility.
This emerges in a correspondence between Acting Permanent Secretary in the Ministry of Finance Boniface Mphetlhe and some government departments. In a letter he wrote recently to government departments informing them of the decision, Mphetlhe indicated that the Ministry received a request from the Bank to consider reviewing GEMVAS and LAMVAS agreement.
He said: “In summary SCBB requested the following; Government should consider reviewing GEMVAS and LAMVAS interest rate from prime plus 0.5% to prime plus 2%.” The Bank indicated that the review should be both for existing GEMVAS and LAMVAS clients and potential customers going forward.
Mphetlhe said the Bank informed the Ministry that the current GEMVAS and LAMVAS interest rate structure results into them making losses, “as the cost of loa disbursements is higher that their end collections.”
He said it also requested that the loan tenure for the residential property loans to be increased from 20 to 25 years and the loan tenure for new motor vehicles loans to be increased from 60 months to 72 months.
Mphetlhe indicated that the Bank’s request has been duly forwarded to the Directorate of Public Service Management for consideration, since GEMVAS and LAMVAS is a Condition of Service Scheme. He saidthe Bank did also inform the Ministry that if the matter is not resolved by the 6th June, 2022, they would cease receipt of new GEMVAS and LAMVAS loan applications.
“A follow up virtual meeting was held to discuss their resolution and SCB did confirm that they will not be accepting any new loans from GEMVAS and LAMVAS. The decision includes top-up advances,” said Mphetlhe. He advised civil servants to consider applying for loans from other banks.
In a letter addressed to the Ministry, SCBB Chief Executive Officer Mpho Masupe informed theministry that, “Reference is made to your letter dated 18th March 2022 wherein the Ministry had indicated that feedback to our proposal on the above subject is being sought.”
In thesame letter dated 10 May 2022, Masupe stated that the Bank was requesting for an update on the Ministry’s engagements with the relevant stakeholder (Directorate of Public Service Management) and provide an indicative timeline for conclusion.
He said the “SCBB informs the Ministry of its intention to cease issuance of new loans to applicants from 6th June 2022 in absence of any feedback on the matter and closure of the discussions between the two parties.” Previously, Masupe had also had requested the Ministry to consider a review of clause 3 of the agreement which speaks to the interest rate charged on the facilities.
Masupe indicated in the letter dated 21 December 2021 that although all the Banks in the market had signed a similar agreement, subject to amendments that each may have requested. “We would like to suggest that our review be considered individually as opposed to being an industry position as we are cognisant of the requirements of section 25 of the Competition Act of 2018 which discourages fixing of pricing set for consumers,” he said.
He added that,“In this way,clients would still have the opportunity to shop around for more favourable pricing and the other Banks, may if they wish to, similarly, individually approach your office for a review of their pricing to the extent that they deem suitable for their respective organisations.”
Masupe also stated that: “On the issue of our request for the revision of the Interest Rate, we kindly request for an increase from the current rate of prime plus 0.5% to prime plus 2%, with no other increases during the loan period.” The Bank CEO said the rationale for the request to review pricing is due to the current construct of the GEMVAS scheme which is currently structured in a way that is resulting in the Bank making a loss.
“The greater part of the GEMVAS portfolio is the mortgage boo which constitutes 40% of the Bank’s total mortgage portfolio,” said Masupe. He saidthe losses that the Bank is incurring are as a result of the legacy pricing of prime plus 0% as the 1995 agreement which a slight increase in the August 2018 agreement to prime plus 0.5%.
“With this pricing, the GEMVAS portfolio has not been profitable to the Bank, causing distress and impeding its ability to continue to support government employees to buy houses and cars. The portfolio is currently priced at 5.25%,” he said. Masupe said the performance of both the GEMVAS home loan and auto loan portfolios in terms of profitability have become unsustainable for the Bank.
Healso said, when the agreement was signed in August 2018, the prime lending rate was 6.75% which made the pricing in effect at the time sufficient from a profitable perspective. “It has since dropped by a total 1.5%. The funds that are loaned to customers are sourced at a high rate, which now leaves the Bank with marginal profits on the portfolio before factoring in other operational expenses associated with administration of the scheme and after sales care of the portfolio,” said the CEO.