The Management of the National Development Bank (NDB) is accused of interfering in debt collection of some accounts in which they have strong interests, the WeekendPost can reveal.
This publication has established that as a result of a decline in financial position, the bank is on a debt collection rampage and, to achieve this, it has identified top 20 accounts that contribute significantly to the Non Performing Loan (NPL).
This publication has intercepted communication between the bank Senior Monitoring Officer and Credit Portfolio Manager concerning the alleged management interference.
It is understood that a department at the bank – Monitoring and Collection Unit has been mandated to reduce the Loan Book to acceptable levels but management is poking its nose in the operations of the department. The Senior Monitoring Officer Modiri Itseng indicated in the communiqué that management was prying in the accounts of Trilobite Holdings, Tomorrow (pty) Ltd and Tati River Lodge – which altogether owe NDB almost P30 million.
With regard to Trilobite Holdings, Itseng stated in his complainant letter that after Trilobite failed to pay off its arrears and while they were at a time of issuance of a summons to the company, they received an instruction from the Chief Operating Officer (COO) to “halt collections activity until given a go ahead” by him.
“We are not aware of the reasons advanced by the COO as to why we should not demand payment from the client given the status of the account,” the letter stated.
Itseng further decried that it seemed that the said client was given preferential treatment under circumstances that may be questionable. He went on to say, “you will further recall that the promoter owns Lurid Investments (pty) ltd which is currently being written off after the client was favoured with a discounted settlement of over P149,000. 00. The total amount being written off is over P177,000.00.”
This publication has also gathered that Trilobite Holdings is under the directorship of a renowned farmer Monty Chiepe. The account contributes to over a whooping P10 million on the bank NPL book.
According to Itseng, another company, the Tati River Lodge‘s account, as per the end of January portfolio report contributed to over 8million on the NPL book.
Itseng stated in the letter that Tati River Lodge in Francistown failed to pay as advised and they commenced collections process demanding payment of arrears failing which, legal proceedings would have been instituted.
“Upon following the rightful procedure of which we were on the verge of having a summons issued, the COO, without advising the collections team handling the account, committed the bank in agreement with the client by signing an offer letter of rescheduling the loan account,” he said.
According to the Senior Monitoring officer, this lack of communication from the COO’s office has in part defeated the purpose of arrears collection.
“Non collection, in this instance a rescheduling without prior payment by client is detrimental to the state of the business in that, our cash flow is adversely affected. A rescheduling is merely a postponement of payment which the bank should not encourage. (Unless the clients demonstrate commitment by reducing arrears before rescheduling is considered)” he pointed out.
According to the Senior Monitoring Officer, staff morale at the bank was also affected as the lack of communication reflected that there was no trust that officers could fully execute their duties without senior management interference.
“This was not only demoralizing to officers attempting to collect from the client, it was also embarrassing to have issued conflicting and contradicting information from the same bank.”
It is understood that Tati River Lodge’s sister company Prideaux (by the same directors) – was foreclosed due to default of payment.
It also said that judgement was granted in favour of the bank but the deputy sheriff, duly instructed by the internal attorney responsible for collections was stopped from executing the writ.
“I have been reliably informed by Senior Collections Officers in Francistown that the instruction not to execute was issued by the COO. Prideaux contributed over P1.7million in NPL as at end of January portfolio report,” Itseng stated.
Another similar intervention by the NDB COO was exercised in respect of Tomorrow (pty) Ltd, whose account also is a major contributor to the NPL book, adding over 8 million as at end of January 2015. The client was offered rescheduling of the loan account without the officers who were pursuing the client to pay off the arrears being informed.
“Please note that we have agreed with you that clients should be advised to demonstrate commitment by reducing arrears before indulgence to reschedule could be given. This was to be the case on accounts with high arrears and contribute significantly to the NPL book such as the above stated accounts,” the NDB official lambasted.
Itseng further stated he believed that the same clients that NDB management was always willing to give indulgence to were servicing their loans elsewhere for fear of litigation, but are taking advantage of being considered “high profile clients” by NDB and that they could phone the CEO to avoid servicing the loans.
“This is an impediment to our collection strategy efforts. I therefore employ you to impress upon the CEO and COO, to let us, through your office and that of the Head of Operations carry out our mandates to manage the bank’s portfolio and collect,” he decried.
Itseng reminded the Credit Portfolio Manager that, “you will recall that on several meetings, both the Head of Operations and yourself have continued to remind us of our targets and the ultimate goal of the recovery plan the bank has embarked on, which is to collect on ALL arreared loans in order to reduce our NPL and improve our cash flow. It comes as a surprise that you have forwarded the instruction form the COO’s office without interrogation and subsequent explanation to the collection team regarding the suspension of collection on the account.”
The accounts are also said to be targeted by the Collections Strategy Project Implementation Committee which reduces loans because of their value and resultant contribution to the Non Performing Loan Book. The Project Implementation Committee is tasked to among other things, follow up on the top 20 accounts (including the 3 stated) and demand payment of arrears and ultimately have the accounts removed from the NPL book.
When reached for comment the Marketing and Communications Manager Harry Marks said the bank, like any financial institution in the country, is exposed to economic cycles and has lately had to contend with limited liquidity (more so that it is not yet deposit taking), low interest rates; “higher than average incidence of non-performing loans” and squeezed margins.
“In its 51 years in existence, NDB has successfully circumnavigated the business terrain in which it operates, and of recent past as a self-sustaining entity,” Marks said.
According to Marks, the bank has in this regard been able to touch the lives of many Batswana by focusing on business landscapes that other Banks are not keen to finance, such as agriculture and start-ups. “To date the Bank has paid government dividends amounting to P130.2 million in the past two decades. The Bank consistently executes its mandate towards economic diversification of the country and has a proud record of development to showcase. It is our commitment to continue on the path of aggressively executing this mandate,” he said.
However indications are that the accounts owing the bank millions of pula are treated with kids’ gloves and affecting the bank negatively. Altogether the accounts total exposure for Gaborone branch amounted to 81 million as at end of October 2014, a figure which continues to increase exponentially recording a high of 93 million as at end of December last year.
Efforts to solicit a comment from National Bank Development Employees Union (NDBEU) President Gilbert Watshipi proved futile at the time of going to press.
Meanwhile the former Secretary General of NDBEU John Matlapeng, who has since been replaced by Bose Masuke, has through a communication of 12 December 2014, warned the board chairperson Mr Vincent Seitei about the effects of the uncollectable debt.
“To date, and as is the case every year, management is struggling to persuade the external auditors to endorse the annual accounts. As usual, management and staff are called upon to cook up some gymnastic explanation with regard to its bad debt provisioning methodology, and generally account for how it has factored the impact of its substantial uncollected debt. Such a situation cannot be allowed to persist as an annual ritual, year in and year out.”
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.