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Labour audit report is ‘empty’

Pressure mounts on Edwin Batshu to release Unions audit report

The Minister of Labour and Home Affairs, Edwin Batshu finds himself pelleted with strong words from union members who want the release of an audit report carried out on various unions in the country to establish if they were complying with requirements of the Societies’ Act.


Recently, concerned members of the Botswana Mine Workers Union (BMWU) wrote a letter (on 8 July 2015) to the minister demanding “a full report as the union will be going for an elective congress during the month of September 2015, so that members can have knowledge of what transpired.”


The letter, authored by the general secretary of the union, Bob Malele futher reads, “Notwithstanding that, we request for a meeting with the minister to motivate the issue whose meeting is proposed for Wednesday 15 July 2015 or Friday 17 July 2015 at your premises…” However the minister did not respond or give the concerned members an audience.


However, the President of the union, Jack Tlhagale on the 13 July 2015, wrote another letter requesting the national executive committee members of the union to urge Malele to withdraw the letter to the Minister: “…I therefore require of you to ask him to withdraw the letter immediately by lunch tomorrow failing which I will address the Minister directly on lack of internal consensus on the meeting being sought,” wrote Tlhagale.


Despite Tlhagale’s intervention, the concerned union members have now written a second letter to the minister in which they thank the minister for invoking powers invested in him by section 49 of the Trade Unions and Employers’ Organisations Act of 2004 to institute investigations into “what we suspect to be misappropriation of union funds and or maladministration at Botswana Mine Workers Union,” reads the letter. They state that it is on this basis that they demanded answers on the outcome of the investigation.


The investigation by the Ministry was headed by the deputy head of the Criminal Investigations Department (CID) who was seconded to the Ministry. Union members suspected that the outcome of the audit has been communicated to their leaders and were not sharing it.

However WeekendPost has established that the investigating team came out empty handed across most unions because there is no evidence and there is no filing or documentation that could help inform an investigation, instead, the investigating team could only offer recommendation in regard to filing information and keeping track of members’ subscriptions.

A CASE OF MISSING FUNDS

Further to the Minister’s investigation, BMWU executive instituted another investigation into the use of union funds. The audit was conducted by Ernest & Young Management Services, this came after one of the union employees was found to be involved in fraud activities in connection with union funds.

“The report of the investigation has also been availed to us and its findings are also noted with concern. In addition to the above investigations, the audited financial statements for the year ending the 31st December 2011 and 31st December 2012 were presented to us and the disclaimer opinion by the auditors for both years have also been noted with great concern,” reads the letter to Batshu.


The members wrote that they have observed that generally no financial records of any other signed minutes of the NEC meeting authorising payment as per the requirement of the constitution were kept. They also noted discrepancies in the union’s internal control systems or that no systems were in place at all. In addition there are no adequate backup procedures for the union’s financial payroll systems implemented or maintained. “Despite tax being deducted from employees over the period 2004-2010, no amount was remitted to Botswana Unified Revenue Services (BURS).”


They further state that BURS has requested a detailed breakdown of employees and their remunerations over the period 2004-2010 for which deductions were made but not remitted to BURS, but BMWU is currently unable to provide required information because the information is not there, they state.


“Audited financial statements for the years 2006-2012 were not submitted to the registrar as required by law or were not done at all up until the registrar threatened to deregister the union. They were urgently done by the current NEC albeit with some difficulties in finding relevant information and were submitted towards the end of 2012. It is apparent as stated in the reports that all the above failures or administrative lapses occurred between the years 2004-2010 and escalated to the 2011/12 financial year,” reads the report to Batshu.  


In May 2009 about six cheques were removed from the union cheque book and there is no bank statement for the same period. “It is our considered view as members that information was not kept or destroyed deliberately in order to conceal the truth. We believe there was a beneficiary of the missing cheques and that they were obtained fraudulently. We are concerned that our information was not kept in an appropriate manner and in accordance with international best practice.”  


The concerned members state that failure to keep records and or submit audited financial statements as required by section 29 and 30 of the Trade Union and Employers’ Organisation Act is by itself an offence punishable under the same Act. BMWU has 8000 plus members, and the multitudes who signed the concern letter to Batshu want action to be taken against those who perpetrated the alleged fraud at the organisation.  “If they are in leadership they must be removed and prosecuted,” they charge.


In addition to the misappropriation of funds and the maladministration, the concerned union members allege that they have discovered that union funds were used for personal gain by some individuals and there is also evidence that there is money that went missing at the hands of certain individuals, “…but because of favouritism or maladministration entrenched in our organisation, leadership has failed to take appropriate action to protect union funds,” they wrote.


One of the members is alleged to have defrauded the union over P10 000 during the period 2009 and 2013. “He was only dismissed from work and no criminal case was opened against him.”


“An amount of P51 000 was cashed at Jwaneng branch account after signatures were forged. BMWU cheque was used to cash from this account. The matter was reported to the police but no follow up was ever made by the leadership.


BCL branch leadership failed to account for P10 000 which was given to the branch for administrative purposes. The NEC then instituted investigation which was carried by a private company called Financial Modellers & Business Consultants. After the conclusion of the investigation, the report implicated them on criminal deception over the money. During the investigation period, the concerned office bearers were suspended from office by the NEC, surprisingly they were reinstated immediately after the report was handed to the leadership,” reads part of the detailed letter.


“Having elaborated more on criminal acts, poor administration, lack of corporate governance, non-compliance to laws of the land, favouritism and opportunism bedevilling our organisation, we have decided to stand up as active members to protect our organisation and resources from any further damage by some individual leaders who are not even paying any subscriptions to the union. Subsequently we hereby make an appeal to the Registrar to invoke his powers under section 44 of the Trade Unions and Employers Organisation Act to prosecute and interdict these leaders from holding office and controlling union funds,” they wrote.


When asked to comment on the issues, general secretary, Bob Malele, could not deny or confirm the allegations. He said if there are internal matters they will be addressed at the appropriate forums. As the union prepares for its congress, the financial pitfalls are expected to play a major role in the campaigns and the lobbying.

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Botswana’s development agenda in jeopardy

21st September 2020
Botswana’s-development-agenda-in-jeopardy--water-construction

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.

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OP leases Orapa House

21st September 2020
Orapa House

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.

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Sad state of Brigades: dumped and ignored!

21st September 2020
Brigades

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.

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