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Bakang Seretse triumphs against State


High Court judge, Justice Dr Godfrey Radijeng has this week dismissed with costs, an application by the State for civil forfeiture to government of 16 properties belonging to Khulaco Pty Ltd and fifteen others.

Khulaco is a company that belongs to asset manager Bakang Seretse. In answering the applicant’s case, Radijeng pointed out that it is imperative for the facts and evidence to answer the question whether the properties listed constitute proceeds of serious crime, on a balance of probabilities.

In his judgement, Radijeng noted that it was contended by the State that the Director General of the Directorate on Intelligence and Security (DIS) had, by making request of the funds from the Department of Energy, sought to defraud the National Petroleum Fund by usurping the Botswana Defence Force (BDF) and poaching mandate.

However, Khulaco represented by attorney Kgosi Ngakaagae, in answer to the supplementary affidavit contented that the State sought to rebuild a new case by presenting a new narrative as to what or how the property in issue come to be proceeds of or derived from instruments of crime related activities.

“It was contended that in making the new narrative, the State failed to present collusion between Isaac Kgosi and the persons interested in the properties the subject if the application,” Ngakaagae said.

In his judgement, Radijeng indicated that while he accepts the State’s supplementary affidavit is but a narrative as to mandate or limits of authority of different entities, he is of the view that not much is achieved or added by the affidavit in so far as the primary question for assessment before the Court is whether the facts and evidence as laid, initially by the State, fit the threshold of balance of probabilities.

“The applicant submits that given the stated internal violation of procedures and processes in the initial approval of the request and the actual disbursement of the P230 000 000.00, from the Fund, it follows that this paints every subsequent transaction flowing from it with the same brush of illegality and consequently as proceeds of criminal activities. I am not persuaded that this is the case on the facts and applying the test whether it is more probable than not that the properties the subject of the application are proceeds or instruments of a serious crime related activity,” Judge Radijeng said.

“I say so considering the facts as established by the applicant. The applicant confirms the existence of a technical advisory agreement between the Department of Energy and Basis Points Capital Pty Ltd that is attached to the founding papers. Given the existence of this agreement, that I have perused and in my assessment vests certain obligations on the Consultant, being Basis Points Capital to provide daily administration and management of the NPF, operate current and call accounts as necessary to allow for payments of daily activities of the NPF, to invest the monies of the Fund in instruments as directed by the Fund Management Committee. ”

Radijeng questioned that can it be said that Bakang Seretse sat at the table of decision-making on the approval of the initial amount disbursed and failed to disclose a conflict of interest as alleged, given the factual premise laid by the applicant.

“Given this premise, how can it be said that the respondents as interested parties committed some wrong or had knowledge or reasonable basis to know that there were internal violations?” he asked rhetorically.

Radijeng ruled that he is not persuaded that the State has established how the further distribution or disbursements of the money referenced are proceeds of a serious crime related activity.
He said that in his assessment this does not appear to have been set out, except the point of the State merely complaining that the internal processes have not or may not have been complied with, and that consequently this taints all subsequent transactions relating to the money.

“The State has not placed evidence before this court that establishes that Bakang Seretse was present when the decision approving the disbursement or altering the use of the funds was made. The State has not placed any evidence before this court that the ultra-normal process he refers to as at the discretion or exclusive preserve of the Minister of Finance and Development Planning, consequent to consultation with Cabinet, had not been adopted in this context. He relies on process and by conclusion, excludes the Minister’s process, without proof by affidavit of the principal he refers to as not having discharged the process,” he contended.

Radijeng pointed out that in the matter, the state had asserted that there was a departure or deviation in the administration and expenditure of the National Petroleum Fund that was not authorised by the Minister of Finance and Development Planning.

“The applicant asserts that such authorisation as to departure from prescribed procedure by the Minister must be by order. The applicant asserts further that it sought from the Ministry and the Department of Energy the authorization approving deviant process without success, or none was provided,” he said.

The State through an affidavit of the Director of Public Prosecutions averred to a globular amount of P230 000 000.00 having been disbursed in an irregular manner or as an illegal transaction that paints every subsequent transaction flowing from it with the same brush of illegally and consequently as proceed of criminal activities.

However, the State further asserted that they had insufficient evidence supporting the factual and legal conclusions that it more probable than not that the properties the subject of forfeiture constitute proceeds of serious crime related activities as a result of violation of the Public Finance Management and Finance and Audit Act.


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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