Saturday, December 2, 2023

AG asks court to throw out Spanish Defence Company

The Attorney General has taken a stick-and-carrot approach with the Spanish Defence company that is demanding more than P90 million over a fraud scandal.

The Attorney General has proposed an arbitration to resolve the issue and that should the Spanish company insist on continuing with its court case, the High Court should throw them out.

The Public Procurement Asset Disposal Board (PPADB) has also been named into the ugly case in which Suyfa Defence is demanding over P90 million from Botswana Defence Force (BDF) and Ministry of Investment, Trade and Industry over the alleged fraudulent contract.

The Ministry is cited as the First Defendant while the BDF is cited as the Second Defendant and the Attorney General is the Third Respondent. An employee of the ministry, Kutlo Kalanke is the 4th Defendant while businessman Benedict Molefe and his company Outtope Sonke Holdings are cited as 6th and 5th Defendant respectively.

Through its lawyers, Gobhoza Legal Practice, the Spanish company insists that it was made to sign a fraudulent contract by the Ministry of Trade,  Kalanke who identified herself as Trade and Investment Officer within the Department of International Trade and responsible for facilitating investment and trade deals during a during 2015 BITC expo.

According to the lawyers, Kalanke recommended Molefe, a Director of a locally incorporated company, Outtoppe Sonke Holdings (PYT) Ltd who entered into the fraudulent contract with the company.

But in its latest bid, the Attorney General is asking the High Court to dismiss the case (should it come before court) arguing that the Spanish company has conceded that the same contract it relies on to seek remedy is fraudulent. Alternatively, the Attorney General’s lawyer, Neo Sharp, says Suyfa Defence should consider going for arbitration with Molefe and Outtoppe Sonke Holdings.

The Attorney General intends to argue in court that “Can a party rely on the provisions of a contract that is challenged as fraudulent?  In the declaration we should claim nullity of the contract.”

The State also asserted that the “agreement that the Plaintiff (Suyfa Defence) intends to rely on is in law voidable by virtue of the individual who signed it, purportedly on behalf of the Ministry of Investment, Trade and Industry.”   

“It is our position that the appointing officer in these instances, is the Botswana Defence Force and thus this agreement ought to have been signed by the relevant person in that office and not any other,” says Sharp.

She advised the company to consider withdrawing the suit arguing that that the matter was wrongly placed before the court as it should be referred for arbitration.

“Clause 38 of the said agreement speaks to settlement of Disputes.  It states that : No dispute maybe submitted to arbitrative remedies have been exhausted and that in the event that the Parties have exhausted all administrative remedies, either party may refer the matter to arbitration to be decided in accordance with the Arbitration Act of Botswana,” argues Sharp.

She further states that “By its own admission the Plaintiff repeatedly admits that it was misled to enter into the agreement which has formed the subject matter of this dispute. It admits that it has brought a claim against the 1st, 2nd and 3rd Defendants based on an illegality: an illegality that it states that it has had knowledge of.”

Sharp says, the question becomes, where then does “the Plaintiff get locus standi to bring these proceedings, particularly against the first three (3) Defendants (BDF, Ministry and Attorney General)?”

Moreover,  Sharp says, “noteworthy is that any claim arising out of or relating to the contract between the 5th the 5th and 6th defendants and the Plaintiff, similarly shall be referred to arbitration as per clause 5.0(b) of the agreement.”

Citing the Public Procurement and Asset Disposal Board (PPADB), Sharp argues that the parastatal did not adjudicate and award the tender.

“Further, the transaction that took place in this matter is illegal by virtue of statute in that it violates Section 37 of the Public Procurement and Asset Disposal Act, CAP 42:08. This section states that ‘Board shall adjudicate bid recommendation submitted to the Board by competent bodies and award those bids,’” says Sharp.

In addition, she says, regulation 2 of the Public Procurement and Asset Disposal Asset Board Regulations stipulate that an award means a decision of a procuring entity to which the Board may delegate powers of adjudication and award   within specific financial ceilings, to determine the successful bidder.

“In the present case the foregoing processes were never followed,” she argues further.

While the Attorney General confirmed that during the Trade Expo in 2015, Sharp says Kalanke was an employee of the Department of International Trade under the Ministry, her mandate during the trade expo was not to facilitate international investment and trade deal.

“The mandate of Kalanke during the trade expo was only limited to her telling the attendants of the expo about the Department’s mandate and not direct the attendants to various investment bodies,” says Sharp.

According to the Attorney General, Kalanke was not working within the course and scope of employment, even though “we acknowledge that she might have been doing these activities within the work place and during working hours.”

“We can confirm though that the 4th Defendant had access to the department’s official stamp which she was mandated to use only when issuing import permits. In regard the correspondence that she stamped using the stamp in question, we can confirm that she was not authorised to use the official stamp in the manner that it was used,” the Attorney General says. 

On the other hand, the Spanish defence company argues that after receiving the documents which the company believed were from the Ministry of Trade and Industry (on behalf of BDF), Suyfa Defence decided to pay upfront 50 percent of the 10 percent that they had agreed with the agent pending the delivery of the goods and payment from the ministry and BDF.  The company paid the agent(Benedict Tebogo)  P7.8 million.

The contract which has been passed to the Sunday Standard bears the stamp of the Ministry of Trade. The alleged fraudulent contract was signed by Kalanke on behalf of the ministry while Suyfa Defence General Manager Juan Antonio Martin signed on behalf of the company.

Observers are crossing their fingers that the case should be decided by the High Court where details of BBDF’s ‘secretive’ procurement deals are expected to be revealed.


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