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The BMC false paralysis exposed

The skeletons at Botswana Meat Commission (BMC) are difficult to bury, the Feedlotters Association of Botswana has said in a scathing ‘confidential’ report channelled to the Minister of Agriculture and Food Resources, Patrick Ralotsia.

They express shock at the establishment’s attempt to wish BMC problems and alleged corruption away by pushing numerous damning reports under the carpet.


The report titled ‘Overview of BMC 2013-2016’ is uncompromising in detailing how some executives at BMC in cohort with some third parties are ensuring that the BMC is seen as an unprofitable venture. The Feedlotters are of the view that there is a deliberate move to ensure that the BMC remains unprofitable and does not identify new markets.


In their explosive report, they write: The recent “Shambles” that bedevilled the BMC resulting in the institution of two state Commissions of inquiries to investigate the wrongs of the BMC itself does not seem to have solved anything at BMC. They have no kind words for the current management of the BMC; they allege that it is the worst in many years.


“If managed properly, BMC is a sustainable business that can go far in empowering and enriching communal farmers in Botswana. The country as a whole is being deprived of the values and sustainable incomes that could be available through a thriving cattle industry, under the leadership of a viable and profitable BMC,” the Feedlotters write in their report.


They point out that the nation was recently shocked by a government decision to shut down BCL mine in Selibe Phikwe, they fear that the same fate may befall BMC, “and the looters will have a field day, taking ownership of the country’s biggest butchery.”
According to the Association of Feedlotters, the Parliamentary Select Committee that investigated the BMC 2013 came up with a list of findings and recommendations that could have been adopted to save the BMC and protect the interests of the many Batswana who depend on the BMC for livelihoods.


“Three years later and as at today, October 2016, the Parliamentary Select Committee’s findings were a mere exercise in futility, carried out at such a cost to the nation but none of their recommendations were considered.”


THE SELECT COMMITTEE’S FINDINGS, CONCERNS
The Committee had found that BMC CEOs, with few exceptions, have been chosen from the ranks of retired civil servants not based on merit or their commercial experience. The MPs had also pointed out that the BMC management practiced poor governance and there were bad relations between the board and management. It discovered productions inefficiencies caused by over staffing, declining productivity, and high marketing costs. There was no proper and efficient system of financial controls. The BMC became financially insolvent over the 2009-2012 period.


The Parliamentary Select Committee at the time picked on the issue of BMC marketing, pointing out that “At present BMC’s marketing agent, Global Protein Solutions (GPS) provides for a legal monopoly on exports. The BMC should seek to revise the contract and segments of the global beef export market to hedge against a monopoly of the marketing of the Botswana beef produce.”


Interestingly the Committee also declared that an investigation be undertaken by the Directorate on Corruption and economic Crime (DCEC) into the award of the marketing contract by BMC in favour of GPS and consideration be made for a review and renegotiation of the contract terms to ensure residual contract of the beef export marketing by the BMC. The Committee also discovered a “strong circumstantial evidence of under-pricing of beef to the EU, South Africa, and domestic markets over the period. The recommendations by the committee were never considered.


The Parliamentary Select Committee also decided that Feedlot activities should be undertaken by the Botswana private sector and not by the BMC.


THE BMC SITUATION IN 2016
According to the Feedlotters, “in today’s BMC, management does not seem to have heeded the findings of the Special Parliamentary Committee, one wonders if they even read the report.” They point out that some in the BMC management continue to demonstrate a high level of arrogance, wilful dishonesty, breaches of contracts, and bad corporate governance.

They cite poor financial management as another devil at the BMC, hence the constant failure to pay farmers, agents, or anyone connected to the Beef industry and associated with BMC, on time. The Feedlotters are also concerned that marketing Botswana beef through a monopoly and under suspicious contracts instead of marketing direct to cut off the middleman, in this case GPS.


On the management of the BMC, Feedlotters point out that the organisation currently has the worst management. “This is visible in the dreadful way they treat and handles producers.” According to the Feedlotters, BMC management has developed a culture of ignorance and arrogance whereby producers are talked down to and financially threatened if they complain.

“Managers rarely, if they ever do, answer correspondence and they actively avoid meetings that may be heated.” Feedlotters allege a culture of non-cooperation, non-accountability and secrecy. They also point out that executive management is not proactive, but are prone to sweeping problems under the carpet, in the hope that problems will simply solve themselves and go away.

As a result, these very problems are invariably never to be seen by those who should know what is going on and are authorised to take appropriate action. “It is our experience that the Chief Executive Officer, Dr Akolang Tombale seems not to be aware of what is happening within the BMC, and unfortunately reports on issues are usually manipulated to hide the actual truth at BMC.”


Feedlotters accuse Tombale of placing blind faith in everything said or presented to him by his executive managers. “Most of these executives do not report the truth but distort facts to provide the impression that all is well within the BMC where as in actual fact all facets of the Value Chain of the BMC are complaining bitterly about various vitally important functions of the BMC.”


According to the report by the Feedlotters Association, the executives report to the CEO to impress him, but not to inform him of the true position which then leads him to misrepresent the situation at board level, Cabinet and ultimately Batswana. “Of particular concern is the influence and seemingly vast control that is exercised by the Chief Financial Officer (CFO). The Feedlotters Association says the CFO is the only person who knows the basis of contracts with the marketing company, GPS, and how they operate. They point out that his influence is unhealthy for the BMC.


“The BMC has no ability to market because no capacity has been built in Botswana and the BMC is now more dependant than ever on the relationship with GPS which is under the control of the CFO. The unhealthy relationship with GPS ensures that this single agent of the BMC has complete control of all of Botswana’s external markets. Thus GPS through the CFO control the BMC and decide how the BMC gets paid which leads to continuous failure to manage BMC cash flows.”


RESIGNATIONS GALORE


Frustration over the GPS contract has seen top executives leave BMC in the recent past, the Feedlotters say. “The Internal Auditor, Distribution Manager was transferred to Capetown, Marketing Manager was turned into a plant manager and banished to Maun, The Finance Manager and the Chief Accountant both left.” In a period of three years, the BMC has lost two financial managers and chief accountant all reporting to the CFO.


The Feedlotters Association is concerned that GPS which markets Botswana beef also has a similar arrangement with competitors such as Meat Corporation of Namibia and Woodhead Brothers United Kingdom.  
“The whole conflict of interest issue comes to the fore when one is aware of the fact that Meatco of Namibia has recently entered into a supply contracts with both the USA and China. Whilst at the same time no new markets have been structured and or created for the BMC.”

The Feedlotters Association further observes that GPS is also associated with the Woodheads Brothers United Kingdom.  They are one of Britain’s biggest food manufacturers. The Feedlotters are concerned that the BMC does not know its customers; everything is secretive and managed by the CFO and GPS. “This makes it difficult for the BMC to decide to terminate the GPS contract, or to demand transparent marketing picture. The Association want this matter to be looked into as soon as possible. The BMC is said to have recently dismantled an internal marketing team and handed everything to GPS.


“It is known and reported fact that GPS buys more than 40 percent of all EU bonded meat. This it is believed is at a cheaper price. GPS then gains a commission from the BMC for selling this meat but it now also benefits from later selling the same meat at a higher price for their own profit. This is a question many senior Financial Managers have asked only to lose their positions within the BMC, by either being banished, resigning of their own accord due to frustration…” writes the Feedlotters Association of Botswana.


They are concerned that GPS does not allow BMC to find other markets and thus forces the BMC to sell meat at a loss to the South African markets just to satisfy the GPS commission. “Interest was exhibited by a group in Norway, who were introduced to the BMC by the Feedlot organisation, but was immediately turned down by the CEO and CFO, citing contractual obligations with GPS.


A further example was a group representing a very reputable American organisation, MI, introduced to the BMC by a well-known personality in the beef sector of Botswana, who wanted to market BMC beef in China but were also turned down. GPS has made it clear that no one is allowed to market Botswana beef. The Angolan market, which is said to be profitable, was also turned down after internal lengthy discussions.”


WASTAGE AND SABOTAGE
The Feedlotters Association allege that in 2014/2015 the BMC embarked on a destructive and aggressive cattle buying spree, believed to have been engineered by the CFO in order to capture the whole market in Botswana.
They further say the aggressive buying resulted in overstocked feedlots and overstocked back grounding farms. They point out that thousands of cattle died as a direct result of this reckless move by the BMC against the very industry that the BMC act was designed to protect and nurture.


“The losses of the huge numbers of cattle due to DCP decision, seems to have escaped prudent and well-structured financial accountability when the internal auditor was released. The BMC lost millions of Pula during this crusade,” wrote the Feedlotters Association.”

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