As things stand, about P750 million is poised to leave the coffers of the Botswana Railways in the course of the next two financial years, but it has come to light that brazen oversight will be required to ascertain that this money represents the true value of services offered to the organisation and that the characters involved are not up to no good.
The Directorate on Corruption and Economic Crime (DCEC) and the Directorate on Intelligence Security (DIS) were this week called to action to prove or disprove allegations of corruption against some top executives of the Botswana Railways. Three of them ended up spending a night in jail; some had their gadgets confiscated by the corruption busting agencies.
“This serves to confirm that the Directorate on Corruption and Economic Crime (DCEC) is currently conducting investigations on Botswana Railways. The investigations have been ongoing for more than a week now,” wrote Botswana Railways CEO Dominic Ntwaagae in a memo to staff on Wednesday.
Botswana Railways in currently involved in a number of transactions involving millions of Pula, hence some staff members have noticed questionable decisions within the organisations that border on corruption on the part of some executives hence the involvement of the DCEC. Some Board members have told this publication that they have been reduced to puppets by the management and they could not continue to watch the alleged corruption episode explode without intervention of the authorities.
“We wish to inform staff that as an organisation, being owned by government, it is expected and appreciated that from time to time government agencies mandated to carry out such exercises may visit us to ensure that processes and procedures are dully followed,” Ntwaagae further expressed in his ‘call for calm’ memo to staff. He further indicated that his organisation should be held to account in all its dealings. He vowed to be supportive to “the ongoing investigations, to clear all allegations of corruption against the organisation”.
Ntwaagae said the organisation would not reveal the detail or discuss the contents of the investigations, “as professionally we believe it is unethical to discuss the matter while the investigations are still underway”. In his memo, Ntwaagae did not put a face behind the investigation; he randomly used words to indicate that it was the “organisation” that was being investigated for corruption and “to clear allegations of corruption”.
THE GENESIS OF SPOOKY COACHES
Government through the Ministry of Transport and Communications, headed by Tshenolo Mabeo has committed Botswana Railways to bring back the passenger train.
Ntwaagae, the BR CEO told staff this week that the Passenger train will be launched on March 22, 2016 at Lobatse, behind Peleng Dam. Weekend Post has established that it will be a mixed train along the way, because the margins are not adding up in terms of profit when it comes to operating the passenger train. The night passenger trains will commence on March 23rd from Lobatse and Francistown.
As a result of the decision to reintroduce the passenger train, which was stopped in 2009, Botswana Railways was forced to procure new coaches. A tender was flighted and several companies from Africa and Asia expressed interest in supplying the Botswana Railways with 37 coaches. Currently the Botswana Railways offices are more like a war zone, where words are weapons, on who actually won this tender.
A Board member who spoke to this publication on condition of anonymity disclosed that a committee member had told him that the tender was initially awarded to a Chinese company. China is known for trading in steel and it has a developed manufacturing sector for coaches. “But it later came out that the assessment marks were tinkered with to undermine the Chinese company,” he said. But this, he said, was for the investigators to prove or disprove.
South African based Transnet Engineering which has bases in Cape Town and Pretoria was given the job to construct 37 NEW coaches for Botswana Railways at the tune of P280 million. Botswana Railways has already paid R82 million towards the job. It is expected that before March 22nd they will have supplied Botswana Railways with at least 10 coaches. Weekend Post has learnt that Minister Mabeo, the CEO, Director of Operations and Engineering, the Board chairman – Modise Modise and others visited South Africa recently to go and assess the extent of progress in relation to the supply of the coaches. The plant sites are in Cape Town and Pretoria, they visited both.
Indications are that the deadlines for the delivery of the 37 coaches are too tight for the supplier despite initially agreeing to the terms and conditions of the deal. This publication is informed that a deal was struck to the effect that they could instead supply Botswana Railways with old coaches as long as there was a patch up job of repainting them.
Impeccable sources indicate that priority was given to the deadline of launching the passenger train, but it is not clear how the costs will be dealt with, “for example, if there is need to revise down the cost of the initial quote”, a board member revealed. The board member further indicated that some of them had asked these questions and they were shot down fast. Another matter that arose is that of the bogie (the steel base or frame that supports the coaches); it is clear that Transnet will have to order it from elsewhere, presumably China. Board members had asked why the deal was not given to a company that could bring a complete package; still they were hauled at by part of management.
Therefore Transnet will patch an old bogie and deliver it in the meantime.
MORE QUESTIONS FROM THE BOARD
Meanwhile the Botswana Railways management is said to be confident that all the coaches will be delivered by the end of April this year. But some of the Board members want the DCEC to ask direct questions regarding the P280 million deal, they want the original tender documents, they want to know how much was revealed to the minister in relation to the coaches and the repainting job, they want to know how this will affect the original cost and whether there will be compensation to the Botswana Railways. It is evident that the Board had in most cases been overlooked when these deals were reached or approved.
AMERICANS GET P375 MILLION DEAL FROM RAILWAYS
Meanwhile as the Botswana Railways top brass has to ward off corruption allegations levelled against the ‘organisation’, an American company, Electro Motive Diesel is demanding that it be furnished with a Letter of Credit for the manufacture and supply of eight locomotives.
Botswana Railways has awarded the American company the deal at a value of $34 million. This publication has established that Botswana Railways paid 50 percent of the amount in September 2015 but has been dilly dallying when asked to produce the Letter of Credit. The New York based company has indicated that it will need 18 months to put the heads together and be in a position to supply.
The deal between the two parties was supervised by attorneys from Collins Newman and they have since slapped Botswana Railways with a bill of P8 million, which the Botswana Railways Board had wanted to distance itself from only to realise that management had committed to the Law firm already. The negotiations and the deal were sealed at Rail Park mall last year.
UNREPORTED LOCOMOTIVE ACCIDENTS
Three Botswana Railways locomotives veneered off the railway line and crashed on 22nd December last year and the incident was never reported. One of the locomotives is said to be almost beyond repair but management is said to have decided to repair all the three anyway. A source at the Ministry of Transport and Communications revealed that the accidents occurred as a result of negligence because the locomotives actually sped off unmanned for 5km after a mechanical error occasioned by one of the engine men. It is estimated that the cost of the damage is in the region of P50 million. The damaged locomotives are currently piled at Lobatse.
Stanbic Bank Botswana Quarterly Economic Review indicates that Botswana will fail to meet some of its Vision 2036 targets, particularly unemployment reduction and reaching high-income status.
The report says this is mainly due to the slow economic growth that the country is currently experiencing. This Quarterly Economic Review focuses on the 2020 Budget Speech.
The first paper reviews the entire budget with its key observations being that this budget is prepared as prescribed by the Public Finance Management Act; the priorities it seeks to address are drawn from Vision 2036 and the eleventh
The 2020 budget Speech, which was the maiden speech by the Minister of Finance and Economic Development, Dr. Thapelo Matsheka, and the first after the 2019 general elections, was delivered to Parliament on the 4th of February 2020.
It has been well received by the labour unions, business community, and the public at large as well as international organisations such as the International Monetary Fund (IMF).
It mainly derived its support from key facets including, emphasis on changing the business-as-usual approach to development; outlining the transformation agenda; fiscal reform that minimizes the negative impact on economic development and human welfare, competiveness and the decision to implement the 2019 negotiated and agreed public sector.
The budget’s progress review shows that economic growth was consistent with the NDP 11 projections, with growth of around 4 percent. At this growth rate, the country would neither ascend to a high-income status nor reduce unemployment towards the Vision 2036 target of a single digit.
Simple calculations of this review confirm that the economy will need to grow the Vision 2036’s target of 6 percent over the next 16 years for per capita income to increase from around USD 8,000.00 to above USD 12,000.00 in current prices.
Further, the population is anticipated to grow by only 2 percent per annum.
For this reason, the focal areas for the forthcoming FY’s budget include measures to increase economic growth towards an average of 6 percent per annum.
Economic diversification is reportedly progressing fairly well. The report says, the share of the non-mining private sector in value added has risen to 66 percent in 2018 from to 63 percent in 2015.
The sectoral pattern of growth showed that the performance of services sector (particularly transport & communications, trade, hotels & restaurants, and finance & business services) has been the silver lining and that of mining sector was subdued whilst the utility sector disappointed.
The drive towards the service sector of the economy, especially to low-productivity activities (tourism, public administration, wholesaling and retailing) does not bode well for the country’s development aspirations.
In the previous versions of this Quarterly Review, it was noted that there is need for the rethinking of economic diversification. Since the country’s domestic market is small, it is inevitable that economic diversification not only focus on broadening the product mix, but also the composition of exports and markets.
This understanding of economic diversification has not been embraced by this year’s budget. Consequently, Botswana’s exports are still overwhelmingly diamonds, which means that the rest of economic sectors are still highly dependent on foreign-exchange earnings from diamonds. Thus, “the transformation programme requires a review of the country’s entire ecosystem”.
The budget review of the economic context also depicts that an economy with positive medium-term prospects, with growth expected to recover to 4.4 percent in 2020 from the expected growth of 36 percent in 2019 largely due to faster growth of services sectors and, thereafter, to slow-down to 4 percent in 2021.
These projected growth rates are comparable to those of the IMF staff’s baseline scenario of 4.2 percent in 2020 and 4 percent in 2021. Thus, the business-as-usual scenario produces growth rates that are still too low to achieve Botswana’s development objectives and create enough jobs to absorb the new entrants into the labour market.
Trade tensions between the two major markets for diamond exports, viz., the United States of America and China, is one of the factors that are cited as contributing to, indeed, undermining not only the domestic growth, but also the fiscal position.
Another notable downside risk to both global and domestic growth is outbreak of the coronavirus in China around January 2020. This has been declared as a global health emergency. In an attempt to contain the spread of the novel coronavirus pneumonia, the Chinese authorities have ordered city lockdowns and extended holidays, of course, at the expense of near- term economic growth, according to the new Stanbic Bank Botswana report.
According to Nomura Holdings Inc., fewer migrant workers returned for work than in previous years and business activities have been slow to pick up. The havoc wreaked by the virus on the world’s second largest economy is likely to spill over to the global economy. In fact, it has resulted in a glut in crude oil and, thereby placed oil markets into a contango, i.e., a market structure where near-term prices trade at a discount to future contracts.
It also presents significant risks one of Botswana’s main drivers of economic growth, diversification and foreign exchange earnings. According to the Financial Times (February 13, 2020), Chinese tourists spent $130 billion overseas in 2018. Regardless of whether the growth materializes, the projected domestic growth rate would not transform the economy to a high-income one.
Progress towards reduction of unemployment, to a target of single digit, and poverty and achieving inclusive growth has also been relatively slow, the Stanbic Bank Botswana Review says.
Ministry of Presidential Affairs, Governance and Public Administration (MOPAGPA) has through the Office of the President (OP) proposed to avail Orapa House for use by private training institutions as well as research institutions involved in the area of technology development.
For a very long time the monumental building located in the heart of the city has been a white elephant, despite government purchasing it for nearly P80 million from De Beers in 2012.
However, government has now identified a productive use for the iconic building. “The overall vision is for the building to be transformed into a hub for digital technology research and development to be carried-out by institutions, such as; Limkokwing University, BIUST, BITRI and other relevant stakeholders.”
The decision was taken as government traverse a new path of transforming the economy from a mineral led economy to a knowledge based economy through the promotion of research and innovation. However, the facility will need major maintenance to be carried-out in order to meet the requirements of the proposed change in use.
“The work will include provision of laboratories, work stations, production areas and seminar rooms; audio visual centre, high speed internet connectivity, exhibition areas and offices,” reads the proposal note for the development.
These developments will be done through the refurbishment and maintenance of the main building, workshop, and ablution block, gate house, parking area, grounds, and access control and security service.
“There will be minimal modifications to the structure as it stands. The project is estimated to cost approximately P50, 000, 000,” says the report. In this regard, it is said, the initial scope of the OP facility will be modified to accommodate the envisaged digital technology research and development hub.
With funds needed to improve the building, OP has requested that; “the 2020/21 annual budget provision for Orapa House will need to be increased by P37,500,000 from P2,500,000 to P40,000,000 to kick start the maintenance works.” Funds will be sourced from the projects that have been delayed due to Covid-19 protocols during the 2020/21 financial year.
The building has been a thorny issue for government for years. Initially, OP was expected to move there but the move never materialised. At one point it was a question of whether the Office of the President and the Ministry of Finance and Economic Development were planning to override a decision by Parliament which rejected the proposal to buy Orapa House under the belief that government may be buying its own property. The building was to be bought at a negotiated cost of P79 million.
Again in 2012, Government had wanted to buy Orapa House for a negotiated P79m but the Finance and Estimates Committee of Parliament had rejected the request because of the inconsistencies realised in the supporting documents of the proposed procurement. The valuation of the building was put at P74 million.
The Ministry of Lands and Housing had initially offered De Beers P73, 000,000 as the purchase price. However, De Beers countered with P85, 000,000. On negotiation and converging of the minds, the selling price was finally agreed at P79, 000,000.
Auditor General, Pulane Letebele, has expressed discontentment at the worrying and deteriorating state of brigades in the country.
In an audit inspection which was carried out at Tshwaragano Brigade in Gabane, a number of observations showed weaknesses and shortcomings in the conduct of the financial affairs of the institution.
According to Letebele’s report, former students of the brigade had been engaged to carry out maintenance works on the school premises, comprising of painting, tiling, plumbing and electrical works, which covered the period from July 2017 to June 2018.
Although the agreed maintenance period had elapsed, the works had not been completed because of unavailability of funds and this situation had persisted up till the time of inspection in November 2019.
Auditor General says arrangements should have been made in time for funds to be available to complete these relatively minor works even before the works commenced.
Various contractors had been engaged for clearing the bush and for the supply of concrete stones, pit and river sand and hiring equipment for digging the trench towards the construction of an auto mechanics workshop, the report said.
It stated that the cost of services and supplies provided totalled P117 949.80. However, despite the services and the supplies having been paid for, the construction works had not commenced for a long period afterwards, resulting in the trench filling back in.
The audit inquiries had not elicited satisfactory responses as both the institution and the Ministry had not accepted the responsibility for the project, although orders for the provision for the supplies had been made. For their part, the Ministry had stated that they had sub warranted funds for the purchase of porta cabins.
Letebele indicated that it is therefore confusing that a project which is critical to the functioning of an institution such as this one would commence without a well-defined plan.
Furthermore, the accounting and maintenance of records for the supplies items were not of the standard prescribed by the Supplies Regulations and Procedures in that the supplies ledger cards, the main accounting records for Government assets, were not properly maintained for the recording of receipts and issues.
This had resulted in significant discrepancies between physical and ledger balances, while in other instances the supplies items had not been recorded at all.
The report says 24 of the 91 new computers found in the computer laboratory at Kumakwane ABC campus were not recorded anywhere, as were the other computers in the storeroom which could not be counted due to the disorderly storage conditions.
The institution had entered into a contract agreement with a security company for the provision of security services at Tshwaragano Brigade, ABC and Horticulture campuses at Kumakwane for a 2-year period which ended in June 2018, WeekendPost learnt.
After the contract expired in June 2018, an extension was granted till the 30th September 2018. Since then, there has been no security service coverage for the institution to-date. According to Auditor General, in the face of prevailing crimes, it is of paramount importance that government properties be protected by provision of security services at all times.
At Tlokweng Brigade, it was noted that the kitchen staff were working under difficult conditions as the kitchen facilities and equipment, such as the cold room, tilting pot, food warmers and solar power for hot water were dysfunctional. The kitchen roof was leaking and men’s restrooms was not working. All these need to be brought to a reasonable and functional state of repair.
The kitchen staff should use a purpose-designed Rations Ledger for the recording of receipts and issues of foodstuffs to reflect the usage of those items. As far back as 2014 the Department of Buildings and Engineering Services had found that the house occupied by the bursar was uninhabitable on account of structural defects, the report said.
A site visit during the audit had established that the house was indeed unfit for occupation as there were cracks on the walls, power switches were not working and the roof was leaking. On a sadder note, there were a number of finished items of clothing, such as dresses, shirts, and jackets from students’ practical exercises from the Fashion Design Textiles Workshop.
Auditor General shared her take on this, saying: “I have not been able to ascertain the policy on the disposal of products from these practicals. A trace of 103 green acid-proof overalls which had been purchased in August 2018 had indicated that there was no record of these items having been recorded or issued, nor were they available in stock. I was not able to obtain any explanation for this situation.”
Kgatleng brigade was also audited and inspected by Auditor General who observed that the brigade has 26 institutional houses at Bokaa, both old campus and new campus. Some of these houses are very old and dilapidated, with two declared uninhabitable. The condition of the houses is a clear indication of lack of care and maintenance of these properties.
At the time of the audit, there was no contractor engaged for the provision of security guard services at the new campus, after expiry of the previous one in July 2019. It is hoped that steps would be taken to safeguard the security of the premises and government properties against any acts of hooliganism.
In August 2019, there was a break-in at the electrical and at the plumbing maintenance workshops and a number of high value items, such as drilling machines, bolt cutters, spanners and cables, were stolen. The break-in and theft were reported to the police.
“However, at the time of writing this report I was not aware of the outcome of the police investigation, nor of any loss report submitted in terms of the Supplies Regulations and Procedures,” Letebele said.