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Kgosi abandons P50 million judgment

Isaac Kgosi

The former Directorate on Intelligence and Security (DIS) Director General who is also its founder, Isaac Kgosi, has in an unexpected twist of events decided to abandon last week’s Judge Zein Kebonang’s order to award him P50 million in damages for the 2019 controversial Hollywood like arrest.

The damages claim of P 50 000 000.00 being an unliquidated amount was to be assessed on the 2nd August 2021.

Kgosi, in court papers seen by this publication, submitted to the registrar, Botswana Unified Revenue Service (BURS) lawyers and the Attorney General (representing the other 10 respondents) on the 21st of this month, did not reveal any reason to that effect.

From the papers, Kgosi’s lawyers, Thabiso Tafila Attorneys briefly submitted; “Be pleased to take notice that the 1st respondent (Kgosi) having barred and obtained judgment against the 1st applicant (BURS) and 2nd applicant (Kaone Molapo-BURS General Manager Compliance) and desirous of obtaining finality in the proceedings before court hereby abandons his judgment in his favour on the 12th July 2021.”

There are no reasons backing up this decision, but highly placed sources hint that the idea is to focus on what looks like an easy catch – a forgery case in which some government institutions connived to forge Palapye Magistrate Rebecca Motsamai’s signature to obtain a warrant of arrest to apprehend Kgosi.

In the judgment Kgosi is now abandoning, BURS is accused of failing to have provided further and better particulars to the plaintiff by 16 July 2021.

It was then ordered that defendants having failed to file and deliver their plea are now barred from  doing so, judgment is entered in favour of the plaintiff with costs.

Those close to the twist and turns of the developments say, Kgosi is aware of the insurmountable task he is facing with BURS. Furthermore, it is said even in his calculations he is mindful that when the P50 million he was awarded was going for examination he was never going to come up with a third of that amount.

BURS who have since applied for Justice Kebonang to recuse himself on the matter is confident that Kgosi evaded tax in the affected years of 2008 to 2019. In their court papers, BURS have chronicled Kgosi’s tax transgression for 10 years. BURS maintain that Kgosi was willfully defaulting to pay tax while on other occasions submitted false tax returns.

TAX YEAR 2008-2010

According to BURS documents filed at the courts, Kgosi did not declare other income for tax purposes which were later discovered through a review of the bank deposits made by his different associates. A payment of P45, 000 was made to Collins Newman & Co for the purpose of Sentlhane farm. “In the result, a total income of P155, 000.00 is determined to have been derived and not disclosed and declared by Kgosi. He is obliged to have declared the other income in the tax year and pay resultant tax of P19, 625.00,” read court papers submitted by BURS.

The tax man cautioned the former spy boss that failure to disclose and declare this income, it attracted a penalty of P39, 250 charged at the rate of 200% on the tax that has been lost to the Commissioner General owing to Kgosi’s willful default.

In the tax year 2009, another payment of P400, 000.00 was made to the same law firm for the purchase of Sentlhane farm. It is said, a total income of P698, 197.75 is determined to have been derived and not disclosed. Kgosi is obliged to have declared the other income in the tax year and pay the resultant tax of P155, 424.44.  Failure to declare this income attracted a penalty of P310, 848.88.

The trend continued even in 2010 where transactions of P687, 281. 29 and P22, 600.00 were made to Collins Newman & Co for the purchase of Sentlhane farm. This resulted in a total income of P1, 187,018.84 to have been derived and not disclosed and declared whereby Kgosi could have declared the other income and pay tax amounting to P277, 629. 71. This has now left Kgosi with a penalty of P555, 259. 42.

TAX YEAR 2011

In this year, BURS in its affidavit says cash payments were made to BH Botswana for generators and could also not trace employment income amounting to P70, 000. 00. It is further added that there were various deposits in the bank statements including K Binns and L.T. & Associates amounting to P184, 000. 00. In the result, a total income of P254, 000. 00 was not disclosed and derived and therefore is obliged to pay tax of P44, 375. 00.   Failure to disclose and declare the above income has attracted a penalty of P88, 750.00.

TAX YEAR 2013

Here, it surfaced that Kgosi had other income streams that were discovered through review of payments made for school fees, boreholes and small stock purchase and Skip Hire cash payments for water. It later came out that he had a total income of P1, 682, 982. 53 which was not declared and could have paid a tax of P558, 635. 53. Defaulting to pay has now invited a penalty of P841, 491. 26.

TAX YEAR 2014

Kgosi’s other undeclared income for tax purposes were exposed by review of payments of school fees, transportation at PCJ Motors, payment at Skip Hire and sale of cattle at Botswana Meat Commission (BMC), BURS says in court papers.

It later came out that an income of P844, 532. 00 was concealed which could have seen tax amounting to P353, 280. 35 being paid. This has seen a cumulative penalty of P422, 266. 18 awaiting the former spy boss.

TAX YEAR 2015

BURS while sniffing for malpractice on Kgosi managed to uncover that he had a total income of P2, 225, 413. 55 from review of payments for school fees, transportation ay PCJ Motors, amounts to buy a car at Lesedi Motors and other various deposits into bank accounts. The undeclared income could have Kgosi paying a resultant tax of P710, 411. 88 and now it has escalated to P 1, 112, 706. 74.

TAX YEAR 2016

School fees at Northside Primary School and PCJ motors transportation allowed the tax man to unearth income of P128, 270.00 which were not declared. The income would have attracted a tax of P58, 047. 37, however refusal to disclose the income and payment of the subsequent tax now has Kgosi owing BURS P64, 135.00.

TAX YEAR 2017

Review of payments made again for the above school fees, generator at BH Botswana, transportation at PCJ cash payments for livestock and various bank deposits, also exposed Kgosi’s total income of P2, 052, 402. 40. A resultant tax of P724, 281. 15 could have been paid but failure to do so has attracted a penalty of P1, 558, 105.35 which the tax body has lost due to the willful lodgment of incorrect tax return.

TAX YEAR 2018

The school fees payment appear again in this tax year, with the generator acquisition, payments of livestock, various bank deposits, payments for two DAF trucks ordered from UK, a Nissan Truck purchased by Bash Carriers from Nuco Auctioneers SA, and directors remuneration from Silver Shadows.

In the results a total income Of P1, 415, 176. 85 which was not disclosed. If the amount could have wilfully declared a tax of P501, 887.95 would have been settled. Failure to declare this income has attracted a penalty of P711, 157.74.

TAX YEAR 2019

In this year, there was no employment income assessed as he was relieved of his duties as DIS boss in preceding year. However, BURS says other income from other sources evidenced by school fees payment, cash payment to Furniture Paradise, transportation by PCJ Motors, sale of livestock to BMC and sale of Forex was assessed.

In the result, a total income of P1, 829, 320. 77 is determined to have been derived by Kgosi in the tax year and a resultant tax of P434, 380.19 and penalty of P868, 760. 38 were raised.

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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