Monday, February 26, 2024

BCL financials being kept under wraps

From the way Minister of Mineral Resources, Green Technology and Energy Security, Sadique Kebonang described the situation, BCL books of accounts are easily accessible because they are in the public domain.

“In terms of the financial request made by Honourable Gaolathe, I can only follow up whether he did or did not get the financial statements. Those are matters of public records anyway. I think he should be able to have had them,” Kebonang said in parliament when the Mogoditshane MP, Sedirwa Kgoroba, raised concern about the government not acceding to a request by the President of the Botswana Movement for Democracy and Gaborone Bonnington South MP, Ndaba Gaolathe, to inspect the accounts.

Contrary to what Kebonang said, Gaolathe gave Sunday Standard an account that suggests that it is not easy to gain access to such information.   

“The accounts are hardly in the public domain. I never got the accounts and I am still keen to study the official financials,” the MP says.

When he asked for the accounts was a really long time ago ÔÇô last year, when parliament debated a bill to fund the ailing BCL by P1 billion. Gaolathe told Sunday Standard that having failed to get the books of accounts from the government, he sought assistance from trade unions who told him that even they didn’t have them. BMD’s concern, as expressed by Kgoroba, is how P3 billion that was invested in a period of three years could have failed to get BCL back on track. A financial economist, Gaolathe was keen to study such accounts and diagnose the problem.

Two years ago, the MP perused the accounts of a mining company that was shutting down because it claimed poor financial returns. He was horrified by what he discovered. The company, Discovery Metals Boseto Copper Mine, which was based in Toteng was leaving some 400 workers jobless. Gaolathe analysed the company’s accounts “and I can assure you I am not all that bad when it comes to studying very analytically the financials of any company.” What he made of Boseto’s financials was that while they gave the impression that the mine was doing poorly, the opposite was actually the case. He attributed this to “creative accounting” which masked the fact that Boseto had a lot of potential. 

“It is a type of mine that I would buy if I was a businessman. I would buy and I would do well,” said the MP, adding that over the next few years Botswana would see “an influx of people coming into this country not so much to mine for the long term, but an influx of people coming into this country to do what is called mining arbitrage.”

The latter refers to a situation where businesspeople come into a country knowing that they have no intention to develop mines. Rather, they want to make a “quick, once-off profit” by establishing a mining business and selling it when conditions are favourable for them to do so. In expounding on the modus operandi of mining arbitrage, Gaolathe stated the following: “Companies adopt accounting practices to achieve different objectives. In some cases, companies seek to overstate their financial position in order to be in a state to find new investors more easily or secure additional funding with little effort. At times, companies may creatively account to minimise tax obligations or even to minimise potential demands from internal stakeholders such as workers or minority shareholders.” What is even more worrisome, the MP added, is that there is a possibility that some companies (other than Boseto) may have seized “the opportunity to start and exit almost immediately once it is possible to sell the company at a much higher price than set-up costs.”

Gaolathe said that he had developed interest in Boseto’s financials when he learnt of the company’s intention to retrench its workers. He wanted to understand the company’s financial situation and sought to develop an insight as to what could be done to avert the bleak possibility of mine workers losing their jobs.


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