How Debswana lost P110 million suit against Infotrac
Debswana Diamond Company, has been ordered to pay business intelligence consultancy company, Infotrac (Pty) Ltd, P110 million plus 10 percent interest tempora morae for the role it played in ensuring that the late Albert Milton becomes the Managing Director of the company.
Debswana found itself in court with its erstwhile preferred covert services partner, Infotrac (Pty) Ltd, after refusing to settle P110 million debt as demanded by the latter. The High Court was informed in March this year that, as part of its scope, Infotrac was expected to reach out to key figures in echelons of power to lobby for the appointment of Milton as the Managing Director of Debswana.
Though Milton was already earmarked for the post, it has been revealed that his ascendency faced sabotage from various quarters, including the then outgoing Debswana MD, Balisi Bonyongo, who did not see eye-to-eye with his would-be successor. Bonyongo, however, later in court stated that he supported and recommended the appointment of Milton as his successor.
Infotrac Managing Director, Mompoloki Motshidi indicated that among the people he lobbied by guiding Milton in his scope of work was then Vice President (and later President) Mokgweetsi Masisi. Masisi and Milton reportedly had existing good rapport, which made the lobbying easy. Infotrac capitalised on this relationship by guiding Milton on how to lobby Masisi.
Then chief of intelligence; Isaac Kgosi, and former Governor of Bank of Botswana, the late Linah Mohohlo were also lobbied. Later, after Masisi became President, Milton succeeded Bonyongo as Debswana MD in December 2018. Infotrac contends that, this transition, adds to the success of the work that was carried out by the company.
Meanwhile, Debswana in court, argued that the work was not commissioned by the company, and that the amount involved, P110 million, could only have been authorised by the Board, not company executives. Judge Abednego Tafa ruled on Thursday this week, that testimony given by former Permanent Secretary to the President and Debswana Board Chairman, Carter Morupisi was compelling enough to rule in Infotracs favour.
Morupisi had informed the court that, he was in August 2019 approached by Managing Director of Infotrac, in his capacity as the Board Vice Chairman of Debswana, asking him to intervene as Debswana was delaying payment for work carried out. Morupisi said he then called Milton in presence of Infotrac MD, and the then Debswana MD acknowledged the existence such issue, promising to settle it once he is back in the country.
The witness impressed me as a witness of truth. He did not show any tendency to embellish his evidence in anyway. He answered all questions put to him with admirable spontaneity (some of which suggesting that he may have acted in an unethical manner) and in a calm and collected manner typical of a former head of the civil service, said Judge Tafa.
What came out clearly from his evidence was that details of security matters and services were the preserve of management and security personnel. Judge Tafa said the cross-examination of the MD of Infotrac, Motshidi, by the defendant was aimed at discrediting his evidence, without necessarily placing before the court, the defendants version.
Judge Tafa said the approach was not a surprise taking into account the fact that the defendant was, throughout, denying the existence of the alleged contract, therefore having no version to proffer.
According to the Judge Tafa, the cross-examination brought to the fore some perceived and real contradictions between the letter of demand addressed to the defendant by the plaintiffs erstwhile attorneys and the evidence of the witness.
The judge said, strictly speaking, the plaintiffs case is to be found in the Declaration, but indicated that, it is perfectly in order, to cross-examine the plaintiff on any discrepancies between the Declaration and the letter of demand as the assumption is that the attorneys acting for and on behalf of the plaintiff had obtained instructions from the plaintiff or the plaintiffs representative as appropriate.
He said indeed, the Declaration as drafted was not perfect, but it did set out the plaintiffs Cause of Action with sufficient clarity. The plaintiffs Director [Mompoloki Motshidi] came out unscathed after careful and painstaking cross-eamination by a very experienced legal practitioner, Judge Tafa said.
I found his evidence to be truthful and compelling. He remained calm throughout the proceedings although there were times when he seemed slightly agitated when it was suggested to him that there never was a contract between the defendant and his company. This is understandable.
Judge Tafa said during cross examination, it was put to Motshidi that the other candidate for the position of Managing Director had withdrawn her candidacy thus making Milton the only candidate, in which case there would have been no need to lobby for the appointment of Milton.
The suggestion in my view neglects the naked reality that in a situation where there are two shareholders, each with its own constituency, there is always need for lobbying. The fact that Milton at one stage, became the only candidate did not render his appointment automatic, said Judge Tafa.
In mounting defence against, Infotrac, Debswana dismissed the claim on the basis that it does not meet the procurement procedures of Debswana. It was argued that Debswana large expenditure requires Tender Process or a Purchase Order. The procurement of goods or services with a cost of more than P100 million had to be approved by ExCo (Executive Committee), and the Managing Director and then be ratified by the Board of Directors of Debswana.
During cross examination, Debswana Senior Commercial Manager, Mokwadi Koloka admitted that non-compliance with procurement procedures is something the defendant [Debswana] appreciates may happen hence a provision for remedial measures.
It was established that Debswana previously flouted its procurement procedures when it was purchasing spy equipment, by concealing the nature of the equipment acquired. It was revealed that previously, when it purchased spying equipment through Infotrac for the purpose of spying and acquiring intelligence on Mine Workers Union, there was no tender carried out. The quotation was doctored and referred to as boardroom equipment or interview equipment.
It was also contended that the personalities involved in the commissioning the work, were senior officials from Debswana whom ordinarily, one would believe had authority to carry out the work they requested. The officials were; the Head of Security- Headquarters, Head of Security- Jwaneng and Head Human Resource and Jwaneng.
The defendants, said Infotracs failed to call the officials involved in the said transaction to testify its favour, but the court established otherwise. It is unfair in my view, unreasonable to expect the plaintiff to call the very people who are refusing to pay it, to testify in its favour. In the eyes of the plaintiff and as found and held by this court, the three people mentioned above are part of the defendant, said Judge Tafa.
Although no onus lies on the defendant to prove the negative, it would have made everybodys life easier if the defendant had called these gentlemen to deny that they ever entered into the alleged agreement with the plaintiff.
Judge ruled that he was satisfied that the plaintiff was entitled to assume, that the officers of the defendant, who are part of the Executive were authorised to conclude a contract of this nature. He ordered that; there shall be a judgment in favour of the plaintiff in the sum of P110 million; interest at 10 percent per annum a tempora morae and cost of suits.
Business
PROTECT YOUR FINANCES THIS HOLIDAY SEASON: A GUIDE TO FRAUD PREVENTION
November marks Fraud Awareness Month across the world and Bank Gaborone has a dedicated mission to inform the public of evolving threats. The holiday season is a time for celebration, togetherness, and giving. However, it’s also a time when the risk of financial fraud increases.
Common Types of Financial Fraud During the Holidays
- Online Shopping Scams: With the rise of online shopping, scammers often create fake e-commerce websites to steal your money and personal information.
- Sim Swap: Fraudsters may try to gain control of your phone number by swapping your SIM card, which can lead to unauthorized access to your accounts.
- Application Fraud: Be cautious when downloading apps, as some may be malicious and designed to steal your data.
- Travel Scams: Planning a holiday trip? Watch out for fake travel deals and websites that can lead to disappointment and financial loss.
- Identity Theft: Protect your personal information, as identity theft can have far-reaching consequences, both financially and emotionally.
- Phishing and Email Scams: Scammers often send deceptive emails and messages, trying to trick you into revealing sensitive information or making payments.
- Mobile Network Fraud: Be cautious about unsolicited calls or messages requesting personal information or payments.
How You Can Identify Potential Fraud
To protect yourself from financial fraud, keep an eye out for the following signs:
- Unexpected Transactions: Check your account statements regularly for any transactions, withdrawals, or purchases that you didn’t initiate.
- Unauthorized Account Activity: Pay attention to notifications of login attempts or changes to your account details that you didn’t initiate.
- Phishing Attempts: Be cautious about emails, calls, or messages requesting sensitive information or payments, especially from unknown or suspicious sources.
Security Measures
At Bank Gaborone, we are committed to ensuring the security of your finances. Our Bank Gaborone 360 initiative encompasses several security features:
- 3D Secure Cards: All our cards are equipped with 3D secure technology, which means that an OTP (One-Time Password) is sent with every purchase for your approval, adding an extra layer of security.
- 24/7 Call Centre: Our round-the-clock customer centre is ready to assist you at any time. If you have questions, concerns, or need assistance related to your account’s security, simply give us a call 3158681 at any hour of the day.
- Secure Online Mobile app: To enhance security and ease of access, you can use your biometric authentication to log in to the app and authenticate transaction. An additional layer of protection is provided through two-factor authentication.
Security tips for customers
- Avoid sharing personal information – the Bank will never ask for login credentials, personal details, card numbers, or OTPs.
- Exercise caution when receiving unexpected links or messages.
- Ensure your device is protected with a screen lock and refrain from storing passwords on the device or in the cloud.
- Promptly report lost or stolen devices to the bank for immediate action.
What to Do If You Fall Victim to Fraud
If you suspect that you have fallen victim to a fraud attempt, it’s essential to act quickly:
- Report the incident to the bank immediately.
- Block your card.
- Contact the customer centre at 3158681 for assistance and guidance.
As you enjoy the holiday season, we urge you to stay vigilant and prioritise the security of your finances. Safeguarding your assets is a shared responsibility, and Bank Gaborone is committed to supporting you in this effort. Remember that you are not alone in this journey. Your bank is here to protect your financial interests and guide you through any challenges you may face. By being proactive and following the tips and security measures outlined in this article, you can ensure that your holidays are joyful, secure, and free from financial fraud.
Business
Challenging times as GROWTH IS EXPECTED TO SLOW DOWN IN 2023
The third quarter of 2023 has been characterised by a worsening of global economic conditions, with global growth forecasts revised downwards by the IMF, rising fuel prices, and the expectation that interest rates will remain “high for longer”. This has impacted on the global diamond market, which has experienced a persistent weakening of demand through the year. Domestically, annual GDP growth has fallen, but remains in line with expectations. Inflation has risen, also as expected, and is likely to rise further in the coming months, driven mainly by global factors.
Economic Growth
The IMF released its new World Economic Outlook (WEO) in early October, just after the end of the quarter. The IMF predicts a slowdown in global growth to 3.0% in 2023, down from 3.5% in 2022. Growth is projected to fall slightly further, to 2.9%, in 2024. Current and projected global GDP growth rates remain well below historical averages. The IMF notes that three factors are driving the slowdown in growth.
One is the tailing off of the post-COVID economic recovery, particularly following the very strong 2022 recovery in travel and tourism. The second is the consequence of the tighter monetary policy implemented in most countries to bring inflation down, with tightening of credit conditions impacting on aggregate demand. Third, the impact of the commodity price shock following Russia’s invasion of Ukraine persists, notably through higher energy prices, reducing real incomes in energy importing countries and of consumers generally. To what extent have these factors had an impact on Botswana? Certainly economic growth is tailing off, with annual GDP growth down to 5.0% in Q2 2023, with a projected further decline to 3.8% for the year as a whole.
However, the slowdown appears to be having a greater impact on sectors that have a domestic focus (such as agriculture, food manufacturing, wholesale and retail, and other domestic services). The main outward-facing sector that has experienced a severe slowdown is diamond trading (discussed more below). With regard to monetary policy tightening, Botswana is feeling the impact of global developments, but there has been no real domestic impact given that the Bank of Botswana has hardly tightened monetary policy while many other central banks have raised policy rates significantly. But Botswana has felt the impact of higher energy prices, which remain elevated despite some easing earlier in 2023, and there has been a squeeze on real incomes and living standards as a result.
Diamond Market
The major impact of adverse global conditions has been experienced in the diamond market. This has not yet fed through to diamond mining which, perhaps surprisingly, was up 7.1% in the 12 months to June 2023. This may just be “the calm before the storm”, however. Diamond sales through DBGSS are down 31% over the first eight sales cycles of 2023 compared to the same period last year, and Okavango Diamond Company is experiencing similar pressures. It will not be possible to continue expanding mining with sales contracting, as the required stockpiling becomes increasingly expensive. The global diamond market has been buffeted by multiple adverse factors during the year. Restrained consumer demand in the US, notwithstanding some resilience in the US economy, has been one factor, compounded by weak post-COVID recovery in China. Recent demand may have been impacted by a sharp increase in diamond prices in 2022, when demand was strong, but the industry is now paying the price. Synthetic diamonds are taking increasing market share, at much lower prices than natural diamonds. With slowing demand, downstream participants in the diamond value chain (cutters and polishers, traders, jewellery manufacturers and retailers) have all cut back on purchases as their stocks have risen, impacting rough diamond demand. As a result, De Beers have announced that sightholders would be permitted to defer up to 100% of their contracted purchases for the remainder of 2023 while Okavango Diamond Company cancelled its planned November auction.
Inflation and interest rates
After the sharp drop in inflation from its peak of 14.6% in August 2022 to 1.2% a year later, the increase to 3,2% in September was not unexpected. Fuel prices have been the main driver of changes in inflation over the past two years, in part because international oil prices have been so volatile, combined with their very high weight in the Botswana Consumer Price Index (CPI) basket. After the upsurge in oil prices caused by Russia’s invasion of Ukraine, to over US$110 per barrel in June 2022, prices fell to just over $70 a barrel in March this year. The decline enabled pump prices to be reduced, leading to the dramatic fall inflation as the previous year’s increases dropped out of the annual inflation calculation. In recent months, however, the deliberate actions by OPEC+ member states to restrict production and supply have pushed prices back over $90 per barrel, a selfish move seemingly calculated to put further pressure on households across the world who have already been badly impacted by the cost-of living crisis. In Botswana, regulated pump prices – which are determined under a highly politicised adjustment mechanism – have lagged the increase in global prices. For instance, the price increase in late October came about a month after the relevant increases in global prices. Following this increase, we expect inflation to continue to rise through to the end of 2023 and into 2024, when it is likely to temporarily go above the upper end of the BoB’s 3-6% inflation objective range. This means that there is unlikely to be any reduction in the BoB’s monetary policy rate (MoPR) in the near future.
Fiscal Developments
The Ministry of Finance’s draft Budget Strategy Paper (BSP) was released in September, and provided updated information on the outturn of the 2022-23 budget, revisions to the current year (2023-24) budget, and the medium-term fiscal framework out to 2026-27. The fiscal data shows a continuation of recent trends, with an (unplanned) balanced budget for 2022-23; a (planned) deficit budget for 2023-24 and 2024-25, and a (planned) balanced or surplus budget for the outer years of the projections, which would mark the beginning of the NDP 12 period. There is a consistent story in the BSP which relates to the need for fiscal consolidation (discussed further in our special feature). In a parallel with Saint Augustine’s famous prayer (“Lord, make me chaste, but not yet”), fiscal consolidation – in the form of a balanced or surplus budget – is always a year or two away. For instance, the BSP released in September 2022 projected a balanced budget from 2023/24 onwards. However, the September 2023 BSP now indicates a balanced budget two years later, from 2025/26 onwards. This largely reflects the dramatic increase in development spending first proposed in the 2023 Budget for 2023/24 and set to be continued in subsequent years. That relates to planned budgets. Outturns are quite different. In both 2021/22 and 2022/23 large projected deficits did not materialise, and in both years, budgets were broadly balanced, due mainly to significant underspending on the development budget, along with higher-than-expected mineral revenues. Notwithstanding a large (47%) planned increase in development spending in the current fiscal year, it seems quite possible that, as in the last two years, the development budget will be underspent and the budget will end up being broadly balanced – although there may be risks on the revenue side if the diamond market continues to deteriorate. Even though the outcomes are good (balanced budgets), the fact that these are unplanned reflects negatively on the quality of fiscal planning and budgetary control.
Outlook
The rest of 2023 and early 2024 looks likely to be an uncertain and somewhat challenging time for the economy. The main concern is the depressed state of the global diamond market, and the potential impact on economic growth, exports and government revenues – although it is important to note that no negative impact on these important economic indicators has yet been realised. The likelihood that inflation will rise in the coming months means that domestic interest rates are likely to be maintained – at levels that are low by international standards – for the foreseeable future. Projections of adverse climatic conditions in the coming months – with forecasts of higher temperatures and lower rainfall – are likely to have a negative impact on agriculture, water supplies and tourism, and illustrate the longer-term challenges posed by global climate change. Fortunately, Botswana’s critical financial buffers – in the form of the Government Investment Account at the BoB and the foreign exchange reserves – have been rising, assisting the ability of the economy to withstand possible shocks, at least in the short term.
(Adopted from Econsult Economic Review Q3)
Business
Thamane Launches AADFI Working Group on Climate Change to Support African DFIs
The Association of African Development Finance Institutions (AADFI) has taken a significant step towards addressing the pressing issue of climate change by launching a working group dedicated to this cause. The working group aims to support AADFI member institutions and the wider African DFI community in tackling the challenges posed by climate change.
The launch of the working group occurred on November 9, 2023, immediately following the opening ceremony of the AADFI 2023 Annual General Assembly in Egypt. The theme of the assembly was “The Role of African DFIs in Achieving Just Energy Transition,” highlighting the importance of sustainable energy practices in combating climate change.
Thabo Thamane, Chairman of AADFI and CEO of Citizen Entrepreneurial Development Agency (CEDA), announced the launch of the working group and introduced its members and objectives. The group was approved by the AADFI Board of Directors on August 28, 2023, following a resolution made at the previous annual general assembly.
The working group is chaired by the Development Bank of Southern Africa (DBSA), with Boitumelo Mosako, CEO of DBSA, leading the efforts. Mr. Olymous Manthata, Head of Climate Finance at DBSA, will coordinate the working group’s activities.
Comprised of member institutions dedicated to driving the climate agenda within their organizations and communities, the working group plays a crucial role in supporting AADFI member institutions and the wider African DFI community in addressing climate challenges. It serves as a strategic platform for generating ideas and actions that will enable the association and its members to remain relevant in the climate change agenda.
The working group has several key responsibilities. Firstly, it will support efforts to create a roadmap for African DFIs to accelerate their involvement in addressing climate challenges. This includes leading the effort in attracting technical assistance and support to build the skills and capacity of member DFIs in dealing with climate change.
Additionally, the working group will guide African national DFIs in mobilizing finance and identifying funding opportunities for green projects. It will also play a crucial role in raising green bonds and collaborating with the African Financial Alliance on Climate Change (AFAC) to represent the interests of AADFI members in the alliance. Furthermore, the working group will leverage support from partners such as the African Development Bank (AfDB), the Global Center on Adaptation, and the Green Climate Fund (GCF) to facilitate member DFIs’ actions on climate change.
The working group’s ultimate goal is to drive meaningful change and accelerate Africa’s just energy transition by collaborating with various stakeholders and partners. Thamane urged all member institutions to actively support the working group and participate in its activities. He expressed his gratitude to the DBSA for taking the lead role in the working group and expressed confidence in its ability to deliver on its mandate.
In conclusion, the launch of the AADFI working group on climate change marks a significant step towards addressing the challenges posed by climate change in Africa. By supporting member institutions and the wider African DFI community, the working group aims to drive meaningful change and accelerate Africa’s just energy transition. With the support of various stakeholders and partners, the working group has the potential to make a significant impact in combating climate change and ensuring a sustainable future for Africa.