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MAHUPELA: I will turn around Phikwe through SPEDU

Government this week announced the liquidation of BCL, a copper and nickel mining company which was the second largest employer in the country employing over 4000 people and was the heartbeat of Selibe Phikwe economy. Only Debswana, a diamond company, employs more people.

Explaining factors that led to the liquidation decision, members of a cabinet subcommittee commissioned by President Lt Gen Dr Ian Khama to evaluate and map the way forward on the future of the unprofitable mine noted the decision to liquidate was informed by the poor performance of the copper nickel in the global market.

BCL liquidation has prompted many to zoom into the leadership of Daniel Mahupela, the General Manager of BCL who took over the reins in 2011 from Montwedi Mphati who currently flourishes at the helm of Southern Africa’s largest salt and soda ash producer BOTASH. The company is enjoying positive figures ever since Mphati relocated to Sowa Town. BOTASH paid P91 million dividends to Government for the 2015 financial year alone. Currently Mahupela also doubles as SPEDU board chairman, an institution mandated to transform the town and the regional economy. This further piles more pressure on the embattled Mahupela. BCL mine workers have not hesitated to compare him to his predecessor, Mphati and he does not rank well.

At the point of Mphati’s exit from BCL, the company was enjoying a slightly positive cash flow owing to profitable global commodity prices and perhaps good corporate governance. BCL was involved in various income diversifying projects like fruit and vegetable production, Mine Museum and other CSI undertakings.

RECKLESS INVESTMENT DECISIONS UNDER MAHUPELA

Immediately after assuming office, Daniel Mahupela developed a huge appetite under what was to be name BCL investment Pty Ltd, a subsidiary company under BCL limited aimed at finding diverse ways to help expand the company’s treasury. Mahupela and his board, which was at the time led by Dr Akolang Tombale of the financially troubled  BMC, was to inject US$337 million(P2.9 billion) into BCL Investments for the acquisition of Tati Nickel Mine and 50% stake of Nkomati mine in South Africa, in both transactions  BCL was buying out Norilsk Nickel operations  from Africa.

Quoted in 2014 at a press conference announcing the acquisition, Mahupela said: “On October 17, 2014 BCL Limited through its wholly owned subsidiary, BCL Investment (Pty) Ltd entered into a binding sale and purchase agreements (the SPA’s) with Norilsk Nickel Mauritius (NNM) and other international Norilsk Nickel Group Companies for the acquisition of 100 per cent of the issued share capital of Norilsk Nickel Africa (NNAf) and Tati Nickel Mining Company.” BCL became South African billionaire’s partner in the Nkomati mine which faced possible closure before Mahupela came to rescue.

However the acquisitions never boosted BCL’s financial muscle as anticipated, but rather only added more misery to the company’s negative balance sheet. Sources close to the echelons of power revealed to WeekendPost that cabinet’s decision was influenced mainly by the Nkomati mine debt alone.

The mine alone is reported to be responsible for P3 billion of the BCL debt. “The Nkomati Bill alone is at $US265 million, the 2014 transaction is the reason why BCL is liquidating now,” said a source who preferred anonymity.

Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse also confirmed the Nkomati deal crippled BCL. Norilsk Nickel Group disinvested out of  Africa and decided to sell all of its African Operations owing to anticipated commodity price fall, and Mahupela‘s BCL Investment (PTY) Ltd was there to purchase the depleting business.

Earlier in 2014 BCL Investment bailed out another financial troubled business in Pula Steel, Daniel Mahupela approved 30 million Pula for the steel manufacture on 50.5 % equity investment. Pula Steel struggled to takeoff, a year down the line the steel casting & Manufacture Company was shut down owing to poor financial management, environmental unfriendly operations, and workers were put on indefinite no pay leave. Pula Steel is almost dead. Indications are that BCL spent roughly P150 million on Pula Steel.

MAHUPELA’S DATE WITH SPEDU

Daniel Mahupela was appointed Chairman of SPEDU board in September 2013. Selibe Phikwe Economic Diversification Unit (SPEDU) was  established in 2008 under the Ministry of Finance and Development Planning, set up to facilitate economic diversification within the area. In 2012 SPEDU was transferred to the Ministry of Investment, Trade and Industry and has since been incorporated as a company.

SPEDU was transformed into a company so as to have it operate semi-autonomously outside the cumbersome government processes. For the three years that Mahupela was presiding over major decisions and approving major financial undertakings and expenditures at SPEDU, Mahupela has been occasionally fingered on numerous alleged conflicts of interest. In July 2015 Mahupela was reported to be suspended by Minister Vincent Seretse on allegations of having used inside information to influence the formation of a Recycled Energy and Fuels company which was to be based in Sefhophe within the SPEDU region. Mahupela’s associate was to be the director of Recycled Energy and Fuels Company, owned by the Verma family who were already in partnership with BCL at Pula Steel Casting and Manufacturers, a subsidiary of BCL Limited.

Reports indicated that the project was one of the proposed undertakings by SPEDU and board members were shocked that Mahupela was involved in the formation of a similar company.

Information gathered by WeekendPost shows that SPEDU wanted to complement the steel recycling company by empowering one of the communities to start a recycling company dealing especially with used tyres but was shocked that the Vermas and Mahupelas have already started one.  Mahupela later denied his suspension and reports reveal that Vincent Seretse was brought to calm by Mahupela’s questions over James Mathokgwane’s appointment.

Again in July 2015, Daniel Mahupela reportedly had a rift with SPEDU CEO, Dr Mokubung Mokubung over the employment of former acting SPEDU CEO, Monte Phuthego as caretaker consultant for research. Phuthego was engaged as a caretaker consultant by Mahupela at a cost of P1.5 million with benefits which included a housing allowance and a company car and Mahupela had done so without consulting other board and senior management members.

SPEDU intends to transform and resurrect the economy of Selibe Phikwe with Mining, Manufacturing, Agribusiness and Tourism and of the four strategic areas; Daniel Mahupela leadership has failed dismally in all of them.  

The Pula Steel investment is best described as ‘dead man walking’- observers say this casts doubt on Mahupela’s ability to lead an entity like SPEDU.  His negligence of the BCL farm suggests he has no plans to unearth jobs and increase trade through agriculture. To date BCL is yet to set up the proposed museum that was intended to display the rich history of copper and nickel locally, proving Mahupela‘s lack of business acumen. At SPEDU, 50 percent of expenditure is directed to workers’ salaries only, this publication gathered from Parliamentary Committee on Statutory Bodies and Enterprises recently.

The committee led by Samson Guma Moyo expressed concern over SPEDU’s lack of urgency on the future of Selibe Phikwe. This publication has it on good authority that Mahupela might just have sown his appetite seed for bailing out failed companies into SPEDU’s investment plans as he is on the verge of influencing SPEDU to take over Botswana Development Corporation (BDC) stake at Talana farms after the Government equity investor liquidated the farm when Bashi Gaetsaloe took over. The deal is said to be almost complete as the other partner (yet to be disclosed) has already paid up P1.5 million to secure the farm. It is still to be seen if the man who failed dismally at the day to day driving seat of the town’s economic heart beat can resurrect the town through a vehicle called SPEDU which he chairs.

MAHUPELA REMAINS DEFIANT – I WILL TURN AROUND PHIKWE

When responding to concerns about his inability to lead Phikwe out economic crush as SPEDU chairman, the soft spoken Daniel Mahupela told weekendpost on a telephone interview Wednesday October 13th around 12:12 pm, that SPEDU has day to day executive staff that works tirelessly to transform the economy of the town. He explained that the board exists to give guidance and accountability. “I am not in a good position to comment about SPEDU, as am currently engaged in complex matters of handing over operations and paperwork to the liquidator, but I can tell you that SPEDU is in good shape and will resuscitate this town,” said Mahupela .

Sharing more on his SPEDU chairmanship Mr Mahupela told Weekend Post that he was not aware of any rifts or un-cordial relationship between or within his board and executive management. “Like I said I cannot comment much about SPEDU, we are in good progress at SPEDU, that’s why I am still chairman, you can ask the Minister if there are any developments.”

For his side of story on allegations of poor decision making at BCL, Mahupela explained that the acquisition of Nkomati mine was influenced by the desire to keep the smelter full peak operational, and that BCL was in the process of reviving the farm under new strategies that complemented the efforts of the National Agro Processing Plant.

For their part SPEDU management declined to talk about the developments, and efforts to contact Minister Vincent Seretse were unsuccessful as he was said to be engaged with back to back meetings.

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Government sitting on 4 400 vacant posts

14th September 2020
(DPSM) Director Goitseone Naledi Mosalakatane

Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.

Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.

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FNBB projects deeper 50 basis point cut for Q4 2020

14th September 2020
Steven Bogatsu

Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.

The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter.  According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.

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Food suppliers give Gov’t headache – report

14th September 2020
Food suppliers give Gov’t headache

An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.

Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.

There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.

The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.

Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.

In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.

“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.

In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.

“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”

Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.

In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.

In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.

This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.

In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.

Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.

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