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P100 billion case: RSA judge says it is falsehood 

Welheminah Mphoeng Maswabi codename 'Butterfly'

A South African judge, Justice Dennis Davis, long found that the P100 billion looting case was based on falsehoods. His findings, though not publicized, were made before Gaborone High Court Judge Dr. Zein Kebonang arrived at the same conclusion in a related case in which suspended intelligence officer Welheminah Mphoeng Maswabi codenamed ‘Butterfly’ was sought for her charges to be quashed. Maswabi faced terrorism financing, money laundering, and corruption charges. Judge Kebonang found that the charges were fabricated. 

South African businesswoman, Bridgette Motsepe who is implicated alongside former President Ian Khama and former Director of Directorate of Intelligence and Services (DIS), Isaac Kgosi, enlisted the services of Justice Davis, who has retired from the bench and currently consults for South African Revenue Services to offer a legal opinion in a related case in which the Directorate of Public Prosecutions through Afriforum brought an application before the Gauteng High Court to compel the South African government to provide necessary information and assistance in terms of a Mutual Legal Assistance based on allegations money laundering. He also offered another legal opinion in a case in which she is suing Botswana Government for defamation.

In the first legal opinion, dated 26 June 2021, Davis explained that he had been instructed that the Botswana State’s case appeared to be that former President and Motsepe intended to use those funds to generate opposition against the current President of Botswana Mokgweetsi Masisi.

Davis further explained that “Although the politics appear to dominate the entire saga, this opinion is focused on one issue. It appears that the Afriforum application is designed to obtain mutual assistance concerning the involvement in the secreting of funds out of Botswana in breach of the relevant Botswana law, and the Ambassador (Motsepe) is implicated therein.”

He said that while this opinion is concerned solely with the allegations against Motsepe and thus is not designed to express any view on the prosecution of Maswabi, of necessity, it is required to traverse some of the relevant issues concerning the case.  Davis said the allegations against Motsepe begin with the supposed role played by Mahktota Bank, which is allegedly a financial institution located in Jarkata, Indonesia.

Davis found that it has no internet presence besides its site, its blog, and other websites that state it exists.  “The website itself does not list its license number nor the link for its banking filing. Further, a series of publicly available communications suggest nothing more than a front for financial scams. The dubious role of Mahkota bank is reflected in the fact that in records maintained by the Indonesian Financial Services Authority and the Indonesian Central Securities Depository, there is no entity of that kind that is authorised to act as a financial institution in India,” said Davis.

He said on its own this might not be conclusive evidence to justify my conclusion. However, most certainly, it should place any lawyer acting according to the standard of a reasonable practitioner on their guard.

“Mr. Hubona ((Jako Hubona, the investigating officer in the case) then alleges that on 15 February 2019, Mr. Khrisna transferred USD 48 million from Mahkota Bank to an account number 200904299 held at the Alberton branch of Standard Bank of South Africa. It is further alleged that these funds were cleared by the South African Reserve Bank on 21 February 2019,” said Davis. However, he said, on 13 August 2020, the South African Reserve bank refuted the existence of this alleged transfer in a letter that was addressed to Motsepe via her attorney Dr. Dario Milo.

“This view has been confirmed to me by Deputy Governor Kuben Naidoo. I have also confirmed with Mr. Reggie Reatile, a member of the Botswanan Parliament who asked the Governor of the Bank of Botswana questions about whether funds had flowed out of Botswana and which would substantiate the allegations that were made. He confirmed that the Governor refuted any such claims as baseless,” said Davis.

He added that “If any further justification is required for the conclusion that any case which has been brought has been predicated not on legal but on exclusively political grounds, then that can be found by an examination of the affidavit written and signed by Mr. Hubona.” According to Davis, it is difficult to find an affidavit that lacks legal substance, accurate factual averments, or any plausible case against anyone named in the affidavit.

He said disturbing inconsistencies are evident in the various allegations set out in the affidavit.  In another supplementary legal opinion dated 30 June 2021, Justice Davis questioned the integrity of the then lead Prosecutor in the case Priscilla Israel (now Deputy Director of Directorate on Corruption and Economic Crime) and Hubona as the investigating officer in the case.

Davis cited an email of Priscilla Israel, then the head of the International Cooperation Unit within Botswana’s Directorate of Public Prosecutions, to Berdine Schutte and Herman Van Heerden of South Africa’s Department of Justice.

Israel reportedly states the following; “We submitted an urgent request on Mutual Legal Assistant relating to the Bank of Botswana fraud and Money Laundering case. Another matter related to it (sic) is a request for mutual legal assistance concerning Avante Securities.” The request relates to Motsepe and Makaku Mining.

Davis stated that on 23 November, Israel deposited a supporting affidavit which was filed together with the Government of Botswana’s answering affidavit in the defamation application launched by Motsepe on 23 October 2020 before the High Court of Botswana.

She reported that “During our inquiry, we discovered that the applicant was involved in the transfer of funds to the Republic of Botswana for the benefit of the former President Dr. Ian Khama Seretse Khama through a Botswana registered company the name of Avante Security Services (Pty) Ltd.”

She added in the affidavit that “I must point out prior my departure I was aware that the Botswana Police Service) was investigating an allegation of money laundering against Makua Mmakau mining, Mr. Olebeng Ngwakwena, Lazarus Mbethe, Mr. Paul Langa and Zonkezizwe Pty Ltd which matter is registered in our office for mutual legal assistance under file number CCG 2/14/68having been received om the 14th May 2019 from the Botswana Police Services.”

Israel also stated that “Furthermore, a request for mutual legal assistance had already been sent to the Republic of Seychelles on 2nd September 2019 and to the Republic of South Africa on the 9th October 2019. A further request was subsequently made to India on the 20th of January 2020.

We have received responses from India and Seychelles, but we are still following up with these countries. We are awaiting a response from the Republic of South Africa.” “The investigations revealed that Avante Security Services Botswana was initially wholly owned by a Botswana citizen Mr. Olebeng Ngwakwena.

However, in 2017, it was purchased by Zonkezizwe Pty Ltd, a South African registered entity. The said company is the owner (sic) and controlled by a Mr. Langa and a Mr. Mbethe. Mr. Olebeng Ngwakena’s shareholding has been reduced to 26% with Zonkizizwe holding 74%,” Israel is quoted as saying in her affidavit.

Giving a legal opinion on this, Davis said a careful analysis of these documents confirms that which he had concluded in his previous opinion, namely that Israel and by extension the application for mutual assistance “is based on so flimsy a legal edifice to justify the conclusion that these proceedings are based on a political as opposed to a legal agenda.”

He said,

“Israel’s affidavit is truly a problematic document in that it is replete with pure unsubstantiated speculation,” adding that “a few examples suffice to justify this.”
According to Justice Davis, confronting the problem that the South African Reserve Bank (SARB) has stated that no money passed through its records by way of a remittal, Israel says: “Significantly the Reserve Bank does not state that it did not authorize the release of the funds, but rather it could not find any record of the transaction referred to as well as the authority. It is my averment that the results of our request will bear fruit.”

Davis said for Israel cast doubt on the SARB’s response to the allegation that sums of money being remitted into SA is disingenuous at best and have no place in a court of law. It is an attempt to use hermeneutics to counter the obvious-no such money came into the country.

“Similarly, Advocate Israel suggests that the respondents (Botswana Government), through their investigations, have established that the names Fire Files and Blue Files (companies whose accounts the money was transferred) “are code names, the actual bank account names are still to be established.” Davis found that later Israel suggests that these two are actual companies, a passage that seems to have been drafted in ignorance of the code name argument.

“The contention that companies like Fire Files and Blue Files are code names is an attempt designed to explain away the evidence of the SA Banks regarding the absence of accounts in these names. It means that Advocate Israel is alleging these banks to process somehow money that is below the SARB radar into secret accounts known by code but not by real corporate entities,” said Davis.
He said, “while these points do not apply directly to Avante and the allegations related to it, they go directly to clear lack of credibility on both Advocate Israel and Mr. Hubona.”

Davis said the problem facing Afriforum concerning Avante and the allegations related thereto is the following. In the light of the manifest difficulties concerning the overall case of money laundering, it is confronted with these improbable references: that the relevant consultancy agreement entered into between Avante and Mmakau was but a sham, that SARB was led astray in the permitting money to be paid out for security services plus expenses and that the entire structure and hence the payments made to Avante were in truth for the benefit of former President Khama.

There is nothing in papers made available to justify this level of inference, particularly in that the recipient is a company that provides security services to mining enterprises. There is nothing to suggest otherwise in the documents made available to me.

He said there is a further implication of the strategy adopted to allege South African complicity with money laundering in Botswana as described in both this opinion and my opinion relating to the Bank of Botswana matter. The only evidence, said Davis, is that no such money entered South Africa nor any plausible cash was paid into bank accounts of South African entities.

He warned that “To persist with these allegations is to suggest that both the South African Reserve Bank and a range of South African banks were either party to a conspiracy, have misrepresented the true position of or have all been grossly incompetent. This only has to be stated to illustrate that the course of action of Advocate Israel assisted by Afriforum seriously calls into question the very integrity of the South African banking system and the key regulatory institution.”

“Without any evidence to the contrary which has never been produced or plausibly offered, this course of conduct has been adopted for reasons which absent any evidence, allows only for any reasonable inference to be drawn, namely that political considerations have overridden any legal justification for pursuing this application should thus be treated as unsubstantiated on the country’s banking system,” he further warned.

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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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