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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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 Zakhem vindicated

15th September 2021
Zakhem

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.

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The untold brighter side of the P100bn case fall

15th September 2021
President Dr Mokgweetsi Masisi

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.

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Botswana could exit FATF “greylisting” in October 

15th September 2021
President Dr Masisi & Minister of Finance and Economic Development Peggy Serame

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.

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