A knockout punch also known as a chassis punch can end all contests decisively. It can finish fights without dispute and can save your life in grave circumstances. Government’s shocking announcement last week Saturday to place BCL under provisional liquidation with immediate effect owing to unprofitable business dealings – delivered a final blow to a mine that was battling with high operational costs, huge debts, and low commodity prices.
The decision is surely meant to stop the government purse from bleeding excess Pulas, but it shall wilt away a lot of livelihoods. Nigel Dickson Warren of KPMG has been instructed to finish off the job in four months, as a liquidator.
Addressing multitudes of mine workers in Selibe Phikwe last week Saturday (October 8) former Minister responsible for Minerals & Energy, Kitso Mokaila stated that the mine was a business running at huge loses hence the government as the single shareholder was drained by bailing out the mine countless times to prevent job losses. He said the bailouts were now crippling the national economy.
Advocate Sadique Kebonang who now heads the re-organised Ministry of Minerals, Energy and Green Technology explained that it cost double the selling price to mine the ore from BCL deposits. “BCL mines at 8 USD per tonne and sells at 4USD, that is a big loss and we cannot continue pumping money into such a business,” said new Minister who recently took over from Mokaila.
“Currently the mine needs P7.6 billion ($713 million) pula to continue operations and if the government was to inject such amount into BCL through guarantee loans or direct bailout, we would have to put the entire economy to a halt and cease provision of ARVs and tertiary education just to name a few,” emphasized Advocate Kebonang.
A cabinet subcommittee commissioned by President Lt Gen Dr Ian Khama to evaluate and map the way forward on the BCL mine explained to workers that a consensus has been reached after an intense assessment, that it makes economic sense to cease operations at the copper nickel mine because commodity prices in the market were not business friendly.
THE HISTORY OF BCL
Originally known as Bamangwato Concessions Limited, BCL was founded in 1956 in a meeting arranged by John Bunchunan, Chairman of Minerals Separation Limited, between Tshekedi Khama, Regent of Bamangwato Tribe in Bechuanaland Protectorate and Sir Ronald Prain, Chairman of Roan selection Trust (RST).
An agreement between the parties was signed on the 2nd June 1959 and subsequently ratified by the British House of Lords. This agreement with RST Exploration Limited, a subsidiary of Roan Selection Trust deployed BCL to operate the concession and to commerce mining copper and nickel discovered in Selibe area in 1963. In 1966 higher grade ore was discovered at Phikwe.
BCL continued to grow, dominated by private shareholding with Norilsk Nickel being the largest shareholder until 2013 when the government bought out the Russian mining giant by converting an outstanding P2.3 billion loan BCL owed to government into equity. At the time of that decision Norilsk was holding 6 % stake in BCL and had reduced its stake over the past two decades of operations at BCL.
In 2014 the BCL also announced buying out of all Norilsk Nickel operations in Africa and that included Tati Nickel Mine and 50% of Nkomati Mine in South Africa. The transaction was to see BCL pay P3 billion plus and, earlier on that year the company bought 50.5 % in Pula Steel Casting Manufacturing.
EVENTS THAT LED TO COMPANY LIQUIDATION
In February 2016 government agreed to guarantee a 1 billion pula BCL loan acquired from Barclays Bank. When addressing multitudes of workers at Selibe Phikwe stadium this past Tuesday, the Vice president, Mokgweetsi Masisi indicated about three weeks ago BCL management had submitted a proposal requesting another P1 billion from the government, and decision makers reached a consensus that enough was enough, no more bail out.
The Vice President explained that BCL lifespan was shortened by low copper and nickel prices in the market. “Market prices put by foreign countries who buy BCL products is the reason BCL reached a dead end sooner than expected, we don’t have control over commodity market prices, thus it was only right to close BCL in order for other economic activities to continue,” said Masisi.
The Vice President went on to explain that under these circumstances, the best decision was to put the company under provisional (voluntary) liquidation in order to protect workers packages and exit incentives . “Creditors were going to put this company under forced liquidation anyway, and that was going to be harsher on employees, thus we weighed options and approached the High Court on Sunday,” explained Masisi. He said a liquidator was appointed to asses BCL asserts, pay its debts and make final economical stance on the future of the company.
BCL POOR MANAGEMENT
However workers, opposition political parties and other pressure groups have rubbished reasons advanced by government that BCL is closed because of the prevailing low copper and nickel prices in the international market.
The Member of Parliament for Selibe Phikwe West, Dithapelo Keorapetse lashed out on the BCL management. He accused some in the leadership of corruption and poor management. He said the government lacked monitoring and proper oversight as the only shareholder. Speaking to Weekend Post on Tuesday, Keorapetse said: “I have talked about this in Parliament, that Polaris II and its Nkomati acquisition were corruption breeding exercises, and the same can be said about the shutdown undertaking – this will cost BCL and government billions of Pula.’’
The MP said the government has been ignorant and did no listen to him, “I warned the then Minister, Mr Mokaila about reckless procurement occurring at BCL, for the shutdown, billions of Pula left the mine through unprocedural processes.”
Meanwhile, government and BCL officials told Weekend Post that the shutdown of the smelter was done to allow for its refurbishment so it readies for more ore from Tati and Nkomati for processing, “We anticipated pick capacity for the Smelter and thus shut down and Nkomati acquisition was to get ready for that, unfortunately it did not work out as expected,” permanent secretary in the Ministry of Minerals, Mr Kgomotso Abi explained.
The permanent secretary said if there were corrupt dealings, those who have information should have or still should come forth. Addressing the press on Monday, Abi said: “DCEC doors were open for any corruption tip offs and the expectation is that those who were aware of any maladministration and economic crime at BCL should have reported the cases.”
THE LIQUIDATION PROCESS
The High Court on Sunday appointed Nigel Dickson Warren of KPMG to dissolve BCL Limited. Addressing members of the media on Monday, Permanent secretary in the Ministry of Mineral, Energy & Green Technology, Mr Kgomotso Abi alongside dissolved BCL board Chairman, Kholane Fichani indicated that the appointed liquidator was given four months to complete the liquidation processes. In a stakeholders’ consultative meeting on Tuesday, before addressing multitudes of workers, Vice President Masisi revealed the government will conduct a parallel inside look to the liquidation process in order to iron out any concerns that might arise.
Adding her voice, Chairman of government owned Mineral Development Company which recently bought out De Beers at Morupule Coal Mine, Reginah Sikalesele-Vaka told workers in Selibe Phikwe and its subsidiary, Tati Nickel Mine that the liquidation process intends to come up with resolutions that are in the best interest of workers.
“The liquidation process is necessary to determine and inform the government on what assert BCL has, and what can be sold at what price, as well as advice the government on possible operations or ore deposits that can be resurrected at a later stage,” said Sikalesele-Vaka.
She explained that the liquidator will most importantly determine workers’ exit packages. “The liquidator will determine how much and how you as the workers will be paid as exit compensation, I urge you to cooperate with the government and the liquidator,” she said.
Sikalesele-Vaka has just assumed duty at the government Mining Industry oversight company from Botswana Stock Exchange where she served as Chairman as well.
WORKERS SALARIES & BENEFITS
On Saturday (October 8) Minister of Investment, Trade and Industry, Vincent Seretse revealed that despite the halted of operations, workers remain BCL employees and shall receive full salaries until decision is taken on the way forward.
Seretse who is also a member of the cabinet BCL investigation subcommittee added that those occupying BCL houses shall do so until liquidation process is complete.
On Tuesday 12th October, Minister Advocate Kebonang shocked the workers with a slightly different statement at the Selibe Phikwe stadium. ‘’We guarantee full salary payments for October only, for next month and the month after next, that is entirely on the jurisdiction of the liquidator who is currently handling all paperwork and financial accounts of the company.”
For their part Botswana Miners Workers Union (BMWU) expressed concern over the rushed decision and short notice implementation of the resolution to close the mine. In an interview with this publication this week, BMWU representative, Mr Western Ebepilesaid they had anticipated that BCL operations will come to halt, but they question government lack of transparency and the supersonic decision to shut down.
“We will fight tooth and nail to ensure that our members receive their packages, if need be we will approach the court of law if there are unconstitutional delays,” said Ebipile.
THE SOCIO- ECONOMIC IMPACT OF BCL CLOSURE
Selibe Phikwe is home to over 50 000 inhabitants as per the 2011 population census and BCL had absorbed well over 4000 workers who provided socio-economic support to their families.
Consequently the closure of BCL, the largest single employer in Selibe Phikwe, and second largest private sector employer in the country, cripples other businesses that relied on 4000 BCL employees’ income for survival, from Retail outlets, SMMEs, transport providers, hair salons, the list is endless.
Speaking to Weekend Post this past week, Mr Philip Malema, a taxi driver expressed hopelessness as he shed tears, “I have been given this corolla by someone to work for it and pay back his money with interest, they are going to confiscate it as they will be no business that allows me to pay them as per our contract. It is very likely that I have worked for nothing,” said Malema who hails from Bobonong.
BCL mine closure is said to also threaten other parastatals and private companies’ production. The mine accounts for the largest stake in Morupule coal mine clientele, being the largest consumer of the coal produced from the Palapye based mine.
The complexity of the BCL operations has also seen the company being the largest consumer of electricity and water in the country, thus its closure is likely to impact heavily on the balance sheet of Botswana Power Corporation (BPC) and Water utilities Corporation (WUC).Morupule Colliery is likely to cut down its production and consequently reduce workforce unless new business is identified, especially in neighbouring countries.
Parents have also questioned government’s decision to close the mine now, they find the decision reckless and lacking vision. Speaking to this publication, Mr Boipuso Makame, a middle income parent at Botshabelo Township, told this publication that the mine closure comes at a wrong time when children are writing examinations – from primary to senior secondary schools. “They should have waited until exams are completed, psychological shock will disturb our children, our schools are likely not to do well this year,” observed Makame who also works a BCL.
GOV’T PIN HOPES SPEDU AND OTHER PARASTATALS
Various Government officials have indicated during the past two weeks that Selibe Phikwe will not be left to turn into a ghost town. In his address to workers on Tuesday Vice President Masisi revealed that SPEDU is now a revived company that will work at a high speed to resurrect the economy of Selibe Phikwe. He revealed that a cabinet sitting has already proposed more cash injection into SPEDU. “We are in the process of evaluating how much SPEDU needs to create double the employment here in Selibe Phikwe,” said Masisi.
The Vice President further indicated that CEDA and SPEDU as well as the SPECIAL ECONOMIC ZONE AUTHORITY and other business development parastatals will make proposals and the government is in a position to pump more money into those, in order to unearth other alternative economic activities.
“We will not allow Phikwe to turn into a ghost town, ’’ said the Vice President while speaking at a meeting arranged by the Ministry of Investment, Trade & Industry to engage the business community this Monday (October 10ths).
The Permanent Secretary in the ministry, Ms Peggy Serame urged the Selibe Phikwe Chamber of Commerce to put up feasible business proposals that can help resuscitate the town and the region.
According to Khumbulani Mabena, Chairperson of the Chamber of Commerce, they have been given a week to do so. “We already had those business proposals in our shelves, so we will just polish them up and submit them,” said Khumbulane Mabena.
Botswana Football Association (BFA) leadership appears to be bowing down to Nicolas Zakhem’s football pressure. The development comes to the open roughly 24 hours after the Gaborone United director publicly labelled Maclean Letshwiti and his committee failures for deciding to chop five premier league clubs under the pretext of club licensing disqualification.
As early as Wednesday noon, the BFA emergency committee met with one agenda item to discuss the possibility of reinstating the clubs. This publication gathers that the committee saw it fit to pardon the five clubs without entertaining a second thought. The committee even invited the clubs to the meeting, sources say.
Late last month, the five teams were disqualified from playing in the premier league, pending the appeal outcome. The teams are Notwane, Extension Gunners, BR Highlanders, Mogoditshane Fighters, together with Gilport Lions. The immediate decision by BFA follows what Zakhem had said and advised that it was wrong to chop clubs given the COVID-19 situation in the country.
Unbeknownst to BFA leadership, observers stress that Zakhem exerted public pressure and influenced them to change tone without asking. At the meeting, BFA president Maclean Letshwiti, his vices, Marshlow Motlogelwa and Masego Ntshingane, Aryl Ralebala, the Botswana Football League (BFL) chairman, together with Alec Fela, an ordinary member in the now stubborn NEC.
However, the reactive move by the association to reinstate the clubs is highly welcomed in certain quarters, but it also appears to have left a permanent scar, especially at BFL. As things stand, the general feeling on the ground is to oust chairman Ralebala for failing to defend these clubs before the eyes of President Letshwiti.
This publication has intercepted an ongoing petition to unseat Ralebala and his deputies from the BFL board. Strange enough, the signed petition has thus far attracted clubs with household influence in the league itself. GU, Township Rollers, Notwane, Extension Gunners, Police XI are some clubs that have already appended their signatures to have Ralebala removed.
The big clubs are believed to fighting for principle and demand fair governance at BFL. The reality is that these clubs command a large following, and sponsors can always have a say based on their presence.
When approached for clarity, Ralebala said he could not comment on allegations or issues that lack substance. He concedes that he has heard about the rolling petition but is yet to lay his eyes on it. “I have heard about the petition, but I don’t know where it is coming from. I think it is best you ask those who have signed it. My focus is to commence the league and make sure everything is on point,” said Ralebala.
Football observers state that Ralebala, together with Letshwiti, are now faced with a dilemma. Reports coming from Lekidi Football Centre, although yet to be fabricated, are that the big guns lead others to form a parallel structure where they will play on their league. The clubs are angry at their chairman for taking many of the instructions from the BFA boss, and already a general melee is gathering traction that the two must resign as football has lost direction.
Zakhem says, although he supported Letshwiti, he has a sense of duty to stand for the truth. “I knew I supported Letshwiti and his troops, but you see, these guys have lost direction. I have long advised them that chopping clubs like this will cause confusion and delay progress, but they cannot listen. Letshwiti gave BFL autonomy, but I do not know why he is still interfering,” Zakhem said.
You may, by now, have heard about the dark side of the high profile P100 billion case, but wait, there is also the brighter side. Staff Writer AUBREY LUTE explores the positives accruing from the fall of the country’s biggest financial ‘scam-dal’.
A chance to fix the country’s financial record
They have not publicly been saying it, but the state agencies and the President, Dr Mokgweetsi Masisi, have been at pains to explain and rationalise how an amount almost equal to the country’s GPD left the central bank.
Many insiders attributed the country‘s troubled financial status to the case, including the grey-listing, non-compliance and identified deficiencies, some of which were hitting citizens around the globe. Botswana was in 2018 taken aback by FATF news that the country has been listed alongside countries that do not comply with (AML/CFT). The European Union Commission later flagged Botswana in March 2019 for lacking strategic deficiencies in AML/CFT regulations.
A chance to restore the dignity of the law enforcement arms
The case, without a doubt, was a distraction object on the law enforcement agencies, which spent a chunk of their time bickering and finger-pointing. A leaked audio recording exposing the explosive meeting of the law enforcement arms of government, being the Intelligence Services, Corruption and Economic Crimes agency, and the Prosecutions division summed it all.
The case presented a monumental crisis threatening the core of their being. Following these developments, the Presidency, clearly under the influence of a tripartite member, took a spine-chilling decision to disband the DCEC, a move that was saved by the organisation’s founding director- Tymon Katlholo’s bold protest.
The DPP, the Police, and the DCEC staff were used in the process to carry out bizarre instructions, some of which left the state with an egg on its face. Mistrust and backstabbing were the order of the day within the law enforcement agencies, and the P100 billion case was to blame. “Some badly wanted the plot executed while the other side badly wanted it to end to restore sanity,” an insider says.
The source further adds that “if the case did not end soon, it was going to end a lot of people’s relationships and careers because those who refused to carry the insane instructions were seen as sympathisers to former President Ian Khama.” With the case having fallen, these agencies can reflect, reconcile and go back to work.
A chance to fix diplomatic relations…
It was not only South Africa that was accused of Sabotaging Botswana’s prosecutorial goal. The state also accused several countries of refusing or delaying to assist in the process. Of all the nations, only South Africa has decided to take Botswana to task, perhaps on its proximity to Botswana. Others long ignored Botswana’s requests for assistance to the frustration of former DPP deputy director who repeatedly told the courts that they were struggling to get responses from the international community. With the case having fallen, Botswana may get a chance to face her actions, apologise and rectify the promise that lessons have been learnt.
Pressure off the shoulders of those who have to account…
The case did not only affect the law enforcement agencies. All the stakeholders were put in the spotlight to provide answers. The first to bolt out of the circle was the central bank, Moses Pelaelo, who, like DCEC director-general, long declared the case a scam. He told the world that his books were in order and that no money was missing risking his high-paying job.
According to insiders, his superiors, the then Minister of Finance and Development Planning – Dr Matsheka and his subordinate, Dr Wildfred Mandlebe, were only whispering, without success, to the Gods that there is no money missing.
So concerned and under pressure was Dr Sethibe- then the head of the Financial Intelligence Agency- who, like his Ministry supervisors, was engaging in silent screams to warn the powers that be, all in vain. He later jumped the ship to his former employer, the University of Botswana, allegedly to protect his name and career.
At the time of the fall of the case, the DIS and the DPP were at advanced plans to higher American to come and probe the Bank of Botswana’s servers in a move that bankers feared could compromise them further.
The case was bleeding the country’s coffers…
Had it not ended, the case was likely to end up ‘genuinely’ costing the country P100 billion Pula duo to its complexity and challenges. Insiders say sources who had sold the law enforcement agencies some falsified documents were paid handsomely.
Moreover, investigations were costly as they involved the international community and frequent travelling. “We are told there was also motivation for some officers to act abysmally and out of their way,” an insider said.
Lessons leant for public officers…
Public officers are often duty-bound to obey superiors instructions, no matter how irrational. The case was an eye-opener to many public officers that principle pays in the discharge of one’s duty at all times. The professional careers of the P100 billion case conspirators are currently in shambles. And as expected, the influencers, if at all there any, are nowhere to be seen.
Botswana remains on the grey list of the Financial Action Task Force (FATF) and the “black list” of the European Union, a status quo that highlights the country as one of the high-risk jurisdictions to deal with money.
The far-reaching implications of these listings is a compromised Foreign Direct Investment drive for Botswana. In particular, these listings mean investors now have to exercise some caution and restrain when thinking about putting their money in Botswana. On Tuesday, Minister of Finance and Economic Development Peggy Serame said that Botswana could see itself out of the “undesirable listing” by October this year.
Serame called for united and concerted efforts towards liberating Botswana out of this financial noncompliance tag. She said the delisting could be archived by concerted efforts from all stakeholders: players in the financial services sector, non-financial services businesses, regulators, and every individual who deals with transactions.
Botswana is a founding member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). This regional body subscribes to the Financial Action Task Force (FATF) to combat money laundering and financing of terrorism and proliferation.
One of the membership obligations to ESAAMLG is for Botswana to be peer-reviewed by the other Member States and other international bodies like the World Bank, IMF or FATF. The most recent assessment for Botswana to gauge compliance with the FATF standards was conducted by ESAAMLG in 2016 and culminated with publishing the Mutual Evaluation Report (MER) in 2017.
Following the discussion and adoption by the Task Force and approval of the MER by the Council of Ministers, the country was placed under enhanced follow-up. This led to a one (1) year observation period in which the country was expected to improve its technical compliance (legislative framework) by correcting the deficiencies identified in the MER.
After one year, in October 2018, the Task Force decided that the country was not taking sufficient steps to implement the recommendations made by the assessors in the MER. The Task Force recommended that Botswana be referred to the International Cooperation Review Group (ICRG) for monitoring and potential listing often referred to as the ‘FATF greylisting”.
Following the FATF greylisting, the EU placed Botswana on its list of high-risk third countries, often referred to as the ‘black list.’ In 2018, Botswana and FATF agreed to an Action Plan that had six items with several timelines. In terms of Risk and coordination, Botswana was told to develop and implement a risk-based comprehensive national AML/CFT strategy, assess the risks associated with legal persons, legal arrangements, and NPOs, and operationalize the modernized company registry to obtain and maintain essential information and Ultimate Beneficial Ownership information.
Botswana was further advised to enhance the capacity of the supervisory staff, including by developing risk-based supervision manuals and providing adequate training, implement risk-based AML/CFT supervision and impose sanctions against violations.
Furthermore, Botswana was instructed to improve analysis and dissemination of financial intelligence by the Financial Intelligence Unit, including operationalizing an online Suspicious Transactions Report filing platform and prioritizing high-risk predicate crimes, and enhancing the use of financial intelligence among the relevant law enforcement agencies.
Regarding terrorism financing investigation, Botswana was instructed to develop and implement a Counter Financing of Terrorism Strategy, operationalize the Counter-Terrorism Analysis and Fusion Centre, and ensure the Terrorism Financing investigation capacity of the law enforcement agencies.
In 2018, the 11th Parliament passed 25 pieces and, later, six others related to AML/CFT/CFP. At the just ended Parliamentary session of the 12th Parliament, lawmakers passed the Financial Intelligence (Amendment) Act to address the definition of beneficial ownership.
Cabinet approved the National AML/CFT/CFP Strategy of 2019-2024 in October 2019. At the June 2021 FATF Plenary meetings, the FATF made the initial determination that Botswana had substantially addressed the Action Plan and that this warranted an on-site assessment to verify that the implementation of Botswana’s AML/CFT/CFP reforms is in place and is being sustained. Furthermore, an assessment was to be instituted to check if the necessary political commitment remains to sustain implementation in the future.
Serame said in a televised press briefing that Botswana’s exit from the FATF grey list and the EU black list would be determined by the outcome of the on-site assessment, which will be discussed at the FATF Plenary in October 2021.
She revealed that the Botswana delegation attended the Eastern and Southern Africa Anti-Money Laundering Group 42nd Task Force of Senior Officials meeting from the 26th August to the 6th September 2021, followed by the Council of Ministers on the 7th September 2021.
She told the media that at these meetings, Botswana was commended for making progress in complying with the FATF standards by addressing deficiencies in her AML/CFT/CFP framework. “We are making all these efforts of complying with the FATF standards so that we guard against our financial system being used for money laundering, terrorism financing and proliferation financing,” she said.
“We are hopeful that at the October 2021 FATF Plenary meetings, the outcome of the on-site visit undertaken by the FATF in August 2021 will bear positive results, leading to Botswana being delisted from the FATF greylisting,” she said. However, Minister Serame called on all stakeholders to support the government to remove Botswana from the greylisting.
“As Government continues its efforts of putting in place the necessary legislative and institutional framework, due diligence must be exercised by all institutions, including the ordinary Motswana, so that no one is found dealing with financiers whose credibility is wanting,” she said.
The minister reiterated that all players in the financial services sector had a role to play: “It is important that where unsolicited funds are offered, the individual or entity so receiving the offer must ensure that the funds being offered are not associated with unlawful acts. If we are not diligent, criminals may use unsuspecting people and entities to launder proceeds of crime.”
She reiterated that the government is committed to doing all within its power to remove the country from the FATF “grey list” and the EU “black list”. However, she noted that to achieve that requires the cooperation and assistance of financial institutions, designated non-financial businesses and professions and individuals to ensure full compliance with AML/CFT/CFP rules and regulations.
“These efforts will not only assist us to be removed from these mentioned lists but are for the benefit of our country to maintain a high standard of financial prudence and an economy which genuine investors can have the confidence to invest in,” Serame explained.