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BCL faces P3 billion lawsuit

The embattled BCL mine now faces legal action over an acquisition deal worth 3 billion Pula that it initiated in South Africa but has now failed to see through.

For a period of two years since 2014, BCL was locked in the process of acquiring a 50% ownership of Nkomati mine in South Africa. The transaction was finally given the green light by South Africa’s Mineral Resources Minister, Mosebenzi Zwane, in August this year.

After going through all the necessary processes for acquiring the stake, BCL then failed to trigger the final process of the exchange of shares and the P3 billion payment because it simply did not have the money.

BCL said that at the time it negotiated the acquisition the market was still profitable but when it finally came to fruition, it had become unprofitable.

“The reality of the matter regarding Nkomati is that even though the transfer was approved by the Mineral Resources Minister in South Africa, BCL was simply not in a position to pay, so we never got the ownership of that company,” Permanent Secretary in the Ministry of Minerals, Green Technology and Energy Kgomotso Abi stated.

“Clearly they have their legal options that they can exercise and at this juncture I am not willing to speculate on what action they will be taking,” Abi added.

The move to acquire the South African asset was made after the Polaris II strategy that put the remaining years of life for BCL at 10 and forced management to look elsewhere to continue business by smelting ore at BCL.

Chairman of BCL’s now dissolved board of directors, Dr Khaulani Fichani stated that the South Africans have indicated that they will indeed sue for the P3 billion and that there has been a flurry of communication between BCL’s legal minds and that of Nkomati owners, Norsirlk Africa.

“Now when you get the ministerial approval from South Africa, that they call the section 11 approval, that is a share transfer, now that means that that agreement has now been completed, in other words when that share transfer was approved, BCL owes Norisikl Africa an amount close to P3 billion. It’s the kind of situation we are in, where is that money going to come from? We could either wait for the letter of demand that says listen, we are now following this agreement we signed and according to the agreement, you owe us P3 billion, and we don’t have P3 billion, so that’s when we seek the protection of the courts,” Fichani related.

He further continued: “They promised us that they reserve their legal right, which means that they are going to sue for the P3 billion and this was the real danger because if they came and sued they would control the liquidation process.’’

“There was concern that they would not have the same interests as us because with individual creditors, they would indicate what they want to attach, then sell and leave, but if you do it yourself, as we have done it with a provisional liquidation, we ask ourselves, what can be done?” said Fichani.

Fichani further indicated of the deal with the South Africans: “that agreement was started in 2014 and we got the ministerial approval in August. That meant that we now actually had to make good on our intention to acquire that asset. But the sad thing is that when we talk about the mining business…the prices are cyclical so when the deal was concluded, it was concluded at a time when metal prices were healthy…and at the time of conclusion the metal prices had taken a 180 degree turn and there was no longer a business case for us to do that.’’

“So, our ability to actually follow through with that became a serious liability,’’ he further added.

Furthermore Fichani revealed that between the two options of being liquidated by a creditor or actual liquidation by themselves, they chose the latter as it gave them some level of protection. “In trying to understand why we are here today, in this situation we are in, if you are not able to meet your obligations really, you need some form of protection and the route that was chosen was to seek compulsory liquidation by the shareholder,” Fichani said

He also said that the Nkomati deal had gone through a robust acquisition process that involved both legal and financial transactional advisors. “Just to give the assurance that when you do a deal such as the Nkomati it is not just one individual involved, you are involving the lawyers, and you’re involving the banks, so all of those processes were ticked, it’s not one individual, the banks do their due diligence…we then got our team to do our due diligence as well. All of these steps were done,” Fichani said.

The BCL mine has now been put under the curatorship of Nigel Warren Dickson of audit firm KPMG. Dickson was appointed by the High Court on Sunday to determine the way forward for the mine and in his hands and mind, lies and weighs heavily, the fate of 5000 miners.

However, Abi also stated that at present the liquidator is now in charge of the mine and by extension its future. He further said that the liquidator will determine whether the mine’s assets can be salvaged such as several shafts in Selibe Phikwe which he said “can be worth a profit’’.

“What I wish to say now in terms of who is in charge, it’s the liquidator who can make decisions regarding the of the future of the mine but obviously he has not been part of the BCL situation so in fact he will be in consultation with the shareholder being government and BCL management so that whatever he decides, he will have the relevant information to make the rightful decisions,” Abi declared.

Fichani also stated that among other options, the liquidator will also be charged with assessing whether BCL cannot find a partner so that, “this is not a 100% government owned mining company”.

Dickson is expected to finish his job in a period of four months and thereafter hand in his report back to the High Court. Among a raft of options on the table includes the final liquidation of the mining company, restructuring BCL to operate in a different form or closure of the BCL mines.

He further said that the cost of extracting a pound of nickel at BCL had been exorbitant peaked at $8 while the price for the same pound was only $4. “This then means that for each pound we were producing there was a deficit of $4 per pound,” Fichani said.

He also stated that the liquidator will also have to look at what is to be done to change the current production costs at BCL, something he said the board had battled with for some time.

Fichani further stated that the Polaris II strategy has in fact not failed. “Instead it has presented an opportunity that even the liquidator, considering the business case of BCL now, that part of its centre of gravity clearly is shifting towards Tati. Remember we are saying that, the mines that we have at BCL are old mines, deep mines, we are talking about mining more than 2 kilometres underground. That is a challenge on its own, so our centre of gravity is being helped by the fact that we have Tati on board,” Fichani stated.

He further said that government’s injection of funds and Polaris strategy was beneficial because it cleaned the balance sheet of BCL making it attractive to investors. He also said that even the Nkomati deal materialised because of the company’s clean balance sheet. “There was no way we were going to get a partner if the company’s balance sheet declared that there were huge debts there.”

In terms of the quality of the leadership of BCL, Abi said: “Regarding the competence of the management or the board, hindsight is such a good teacher, anybody with the benefit of hindsight can say we could have done this differently and so forth.”

“Obviously there are things that we could have done better…At the core of things is: if you sell a product at $4 while your operational cost was $8, can you make a profit?”

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DIS blasted for cruelty – UN report

26th July 2022
DIS BOSS: Magosi

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.

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Stan Chart halts civil servants property loan facility

26th July 2022
Stan-Chart

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.

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Botswana ranked 129 in female MPs representation

26th July 2022
Minister of Finance & Economic Development Peggy Serame

The Global Gender Gap Index, a report published by the World Economic Forum annually, has indicated that Botswana is among countries that fare badly when it comes to representation of women in legislative bodies.

The latest Global Gender Gap Index, published last week, benchmarks the current state and evolution of gender parity across four key dimensions (Economic Participation and Opportunity, Educational Attainment, Health and Survival, and Political Empowerment). It is the longest-standing index which tracks progress towards closing these gaps over time since its inception in 2006.

This year, the Global Gender Gap Index benchmarked 146 countries. Of these, a subset of 102 countries have been represented in every edition of the index since 2006, further providing a large constant sample for time series analysis.

Botswana ranks number 66 overall (out of 146 countries), with good rankings in most of the pillars. Botswana ranks 1st in Health and Survival, 7th in the Economic Participation and Opportunity, 22nd in Educational Attainment, and 129th in Political Empowerment.

The Global Gender Gap Index measures scores on a 0 to 100 scale and scores can be interpreted as the distance covered towards parity (i.e. the percentage of the gender gap that has been closed). The cross-country comparisons aim to support the identification of the most effective policies to close gender gaps.

The Economic Participation and Opportunity sub-index contains three concepts: the participation gap, the remuneration gap and the advancement gap. The participation gap is captured using the difference between women and men in labour-force participation rates. The remuneration gap is captured through a hard data indicator (ratio of estimated female-to-male earned income) and a qualitative indicator gathered through the World Economic Forum’s annual Executive Opinion Survey (wage equality for similar work).

Finally, the gap between the advancement of women and men is captured through two hard data statistics (the ratio of women to men among legislators, senior officials and managers, and the ratio of women to men among technical and professional workers).

The Educational Attainment sub-index captures the gap between women’s and men’s current access to education through the enrolment ratios of women to men in primary-, secondary- and tertiary-level education. A longer-term view of the country’s ability to educate women and men in equal numbers is captured through the ratio of women’s literacy rate to men’s literacy rate.

Health and Survival sub-index provides an overview of the differences between women’s and men’s health using two indicators. The first is the sex ratio at birth, which aims specifically to capture the phenomenon of “missing women”, prevalent in countries with a strong son preference. Second, the index uses the gap between women’s and men’s healthy life expectancy.

This measure provides an estimate of the number of years that women and men can expect to live in good health by accounting for the years lost to violence, disease, malnutrition and other factors.
Political Empowerment sub-index measures the gap between men and women at the highest level of political decision-making through the ratio of women to men in ministerial positions and the ratio of women to men in parliamentary positions. In addition, the reported included the ratio of women to men in terms of years in executive office (prime minister or president) for the last 50 years.

In the last general elections, only three women won elections, compared to 54 males. The three women are; Nnaniki Makwinja (Lentsweletau-Mmopane), Talita Monnakgotla (Kgalagadi North), and Anna Mokgethi (Gaborone Bonnington North). Four women were elected through Specially Elected dispensation; Peggy Serame, Dr Unity Dow, Phildah Kereng and Beauty Manake. All female MPs — save Dow, who resigned — are members of the executive.

Overall, Botswana has 63 seats, all 57 elected by the electorates, and six elected by parliament. Early this year, Botswana Democratic Party (BDP) secretary general and Gaborone North MP, Mpho Balopi, successfully moved a motion in parliament calling for increment of elective seats from 57 to 61. Balopi contented that population growth demands the country respond by increasing the number of MPs.

In Africa, Botswana play second fiddle to countries like Rwanda, Namibia, South Africa, Burundi, and Zimbabwe who have better representation of women, with Rwanda being the only country with more than 50 percent of women in parliament.

The low number of women in parliament is attributed to Botswana’s current, electoral system, First-Past-the-Post. During the 9th parliament, then MP for Mahalapye East tabled a motion in parliament in which she sort to increase the number of Specially Elected MPs in parliament to augment female representation in the National Assembly.

The motion was opposed famously, by then Specially Elected MP, Botsalo Ntuane, who said the citizens were not in favour of such a move since it dilute democracy, instead suggesting the Botswana should switch to Proportional-Representation-System. Botswana is currently undergoing Constitutional Review process, with the commission, appointed in December, expected to deliver the report to President Mokgweetsi Masisi by September this year.

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