Tuesday, June 2, 2020

7 years later, CEDA forensic audit still a top secret

By Bonnie Modiakgotla

Citizen Entrepreneurial Development Agency’s forensic report will not be released to the public because it is highly confidential, revealed the funding agency’s parent ministry.

Moiseraela Goya ÔÇô junior minister at Investment, Trade and Industry Ministry on Monday told parliament that a forensic audit on the agency was completed in January 2012.

Goya further said the findings were investigated by Directorate on Corruption and Economic Crimes (DCEC) which found that the allegations contained in the forensic report were “unsubstantiated”.

“It should be noted the forensic audit by its nature is strictly confidential to those necessary for acting on its findings. Therefore, by making findings of the report public it may prejudice investigations. In this regard, the ministry is not in a position to make the CEDA forensic report public,” said Goya in a seemly contradictory stance, considering that he said investigations were complete.

Goya’s response to making the report public was exactly the same response Sadique Kebonang gave in 2015 when still minister of Investment, Trade and Industry (MITI).

CEDA’s forensic audit report has been a hot issue since its completion – shrouded in secrecy, and sparking fears that there is more to the report than what it appears. The then minister of MITI in 2012, Dorcus Makgatho, told parliament that the report was finished and she has to consult cabinet then brief parliament about the report. It never happened.

“The minister who was in the office at the time promised this house that they are still assessing the report at cabinet level, and they will brief parliament. Why are you now changing statements?” asked Shaun Nthaile, the Jwaneng-Mabutswane legislator who had asked what steps the ministry is taking to ensure that the long awaited CEDA forensic audit report is released to the public

“Can you please explain what is actually happening because many people are complaining about CEDA,” he said.

In response, Goya said CEDA even though CEDA was a public entity, not every public institution’s reports are made public, adding that there are regulations that prevent those reports being made public. In another similar contradictory statement, the minister said the public can go to CEDA and demand the report.

“Those with interest to peruse the forensic report, they have the power and rights to approach CEDA for the report. But as I explained, we cannot make it public,” said Goya.

The forensic report is once more thrust in the spotlight at a time the funding agency was accused of sleazy operations by one of its former business partner. Deepak Verma, the founder of the mothballed Pula Steel, last week held a press conference in which he blasted CEDA for sidelining him in a business he started.

CEDA had injected P7 million in Pula Steel in exchange for 35 percent shares, and this stake was later reduced to 26 percent after BCL – which is under liquidation ÔÇô bought shares from existing shareholders. CEDA received P3.5 million for the shares sold, and Verma says they were told not to talk to the media about the hush deal and payments.

BCL which then had major shareholding at 64.5 percent was liquidated in October 2016, and took Pula Steel down with it. However, attempts were made to rescue Pula Steel, with shareholders injecting more capital, and in the process CEDA’s shareholding rose to 49 percent, the Verma family had 23.5 percent shareholding, while BCL’s stake dropped to 22 percent and the remainder was held by a citizen-owned company.

With CEDA as main shareholders, the company took control of Pula Steel, and appointed consultants to refine the company’s business model. Nevertheless, this was not to last long. In a shareholder meeting that CEDA missed, its shareholding was diluted and reduced to 5.5 percent as they had not injected capital. BCL once more became a major shareholder. This led again to the collapse of Pula Steel.

Verma has since derided the CEDA management for poor decision making ÔÇô citing the P13 million invested, only for CEDA to end up as a creditor, a situation he says could have been avoided.

“I asked for more equity based on the shareholders’ agreement because it guided the principle that it would be sold on pro-rata ratio and we were the second highest shareholders of Pula Steel at that time which allowed us to go up to 70 percent…which CEDA never wanted,” said Verma in a 2018 interview with Sunday Standard newspaper in October 2018.

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