Minister says one law firm may have caused delay in privatisation
The Minister of Transport and Communication Tshenolo Mabeo has said that the engagement of sole law firm in managing the process of BTCL privatisation may have led to the delay in allowing Batswana to participate in the purchase of the BTCL shares.
In an interview with the WeekendPost Mabeo indicated that there has been delay in opening the shares to the public which he partly attributes to engagement of Monthe Marumo law firm in solely providing the advisory roles of parastatals Botswana Fibre Network (BOFINET) and Botswana Telecommunications Corporation Limited (BTCL).
“The danger of engaging one law firm in this process, which of course is in conflict of interest, may be that government business may have been delayed in the process,” he emphasised.
If it was different firms, they could have long concluded this privatisation process and shares opened for Batswana to take part, Mabeo highlighted. He said they could have concluded the process in December last year but were forced to postpone. The Minister pointed out that it consequently delayed services to the public.
According to Mabeo, engaging one law firm in BTCL privatisation process also puts the government at risk as it will act based on the informed foundation and decision from the law firm. The Minister stressed that the law firm should have declared its dual engagement by the parastatals and by extension the ministry in the process of privatisation – by making the government aware.
He added that it is a clear conflict of interest on the part of the law firm and that Law Society of Botswana which regulates lawyers should look into the matter. When asked by this publication, if it was not the responsibility of the ministry and concerned parastatals to avoid the conflict of interest by the law firm, the minister defended the latter saying “it was upon the engaged law firm not parastatals.”
Mabeo was speaking to the WeekendPost following a parliamentary business question session that revealed the alleged conflict in the process and progress of privatisation of the BTCL.
Member of Parliament for Gabane Mmankgodi, Pius Mokgware had asked Minister Mabeo to state the law firms involved in privatisation of BTCL process and the fees paid, including whether individuals involved are not from one law firm or partners in one law firm. Mokgware also asked the criterion that was used to select the law firms in both situations.
In answering, Mabeo stated that the two individuals advising BTCL and Botswana Fibre Network (BOFINET) are from the same law firm of Monthe Marumo and company incorporating Molatlhegi and Associates. He added that neither Bofinet nor BTCL were aware of this conflict until this week Monday (30th March 2015). The onus on declaring conflict of interest was declared by Monthe Marumo and Company incorporating Molatlhegi and Associates, Mabeo told parliament on Wednesday.
However, Mabeo said Monthe Marumo and Company incorporating Molatlhegi and Associates was directly appointed by both BTCL and Bofinet from their approved panel of legal firms. The panel of legal firms, he said was selected through selective tendering. He also noted that Collins Newman and Delloite Consortium were appointed by PEEPA through a competitive public tender process.
According to Minister of Transport and Communication, the official transaction advisors to government (the selling shareholder), appointed by the Public Enterprises Evaluation and Privatisation Agency (PEEPA), are Collins Newman and Deloitte (CND) Consortium. The total amount of the Consortium (transaction advisors) is P9.5 million.
The legal advisors in the consortium are Collins and Newman & Company. The legal fees according to the consortium contract with PEEPA signed in March 2011 are P2, 987, 000.00. “The legal advisors to the BTCL are Monthe Marumo and Company (in partnership with ENS Africa). They were engaged on the 6th of March 2014 at total fees of P1, 703, 916. 85.”
Bofinet further engaged Monthe Marumo and Company incorporating Molatlhegi & Associates to review and advise them on the draft possession and use Agreement and were paid a total amount of P47, 181.67 VAT inclusive.
In another question related to BTCL privatisation, in particular BTCL and Bofinet agreement, Mokgware had wanted the Minister to state whether the 4th November 2014 version of the Possession and use Agreement have been signed, and if the BTCL Initial Public Offering (IPO) has been launched as at 31st December 2014 as was planned, as well as if the postponement will attract legal costs.
“The BTCL IPO was not launched on the 31st December 2014. Government decided to postpone the launch to enable it to conclude the process of raising funds for the underwriting arrangements. Further, it was intended that the postponement would give Batswana ample time to raise capital to effectively participate in the purchase of the BTCL shares,” Mabeo answered.
According to Mabeo, the postponement of the IPO launch will not only attract additional legal fees but additional transactional advisory services. This is because some of the activities under the scope of transactional advisory services will have to be redone or updated, he said.
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.