Wednesday, July 28, 2021

BCL’s hard rock: Liquidation taking longer than Gov’t thought

The Botswana government has no idea how long the BCL Group liquidation process will take to conclude, and has expressed concerns over how the whole matter is being handled.

This comes after the government was informed by the liquidator at the second meeting of creditors last month that it is not clear when the liquidation process will conclude.

The court appointed liquidator, Nigel Dixon-Warren, also a senior partner of KPMG Botswana, might be headed for a showdown with the government over the liquidation process, signalling a major shift since the liquidation was announced. At the time, Dixon Warren in a statement said as the liquidator, together with the support of the Botswana government, they are seeking to dispose of the BCL Group preferably as a whole to an interested party who is able to recommence operations and return BCL Group to profitability.

However it now appears that the government’s patience is running thin after pumping millions in the liquidation process. The latest remarks by the liquidator concerning the duration to wind up BCL Group has rattled the government which has been on a back foot to justify and account for its huge expenditure on the liquidation process, considering that the government itself is the BCL Group’s biggest creditor.

“This is the area of great concern to my ministry and the government. We are engaging the liquidator through the Registrar and Master of the High Court to deal with these matters. We have made our concern known to the High Court at the last creditors’ meeting,” said Eric Molale, minister of Mineral Resources, Green Technology and Energy Security.

Molale told legislators on the last sitting of the winter meeting that almost two years since BCL was placed under provisional liquidation, a number of parties have expressed interest to buy the assets but to date no firm offer has been made. With no definite timeframe for winding up the liquidation process, the government has spent over P1.1 billion towards BCL since its closure, with a larger proportion of the funds paying former employees’ benefits, and the rest towards the care and maintenance of the mines.

The liquidator has so far pocketed over P42.3 million in over twenty months, averaging P2.2 million monthly in fees. Molale has previously defended the government’s decision to pay the liquidator, explaining that the payments are in the form of advances, of which the government will be paid back after the liquidation process wounds up. While the government did not have to pay for the liquidation process, Molale said the government as the main shareholder of BCL mines had to step up to protect its interests. Chiefly amongst these was to ensure that assets are safely secured and that the mines be put under care and maintenance so they remain attractive to potential buyers. Other fees that have been paid out include the P9 million covering legal fees.

At the centre of what is perhaps the last straw that broke the camel’s back regarding the relations between government and the liquidator, is the deal entered between the government and Norilsk Nickel Group. In March, the Ministry of Finance and Economic Development put in an urgent request to get parliament’s buy in to settle its huge Norilsk debt out of court. Minister Kenneth Matambo had sought for parliament to approve the negotiated fee of $45 million to be paid to Norilsk as an out of court settlement. The proposed fee would see the government only paying a fraction of what was initially demanded by Norilsk which was suing the Botswana government to recover close to P3 billion after a deal gone sour.

However all that seems to be undone after the liquidator poured water over Norilsk’s demands, arguing that the Russian miner has no legitimate claim on the P400 million. “He then went to court at South Africa and recently lost the case. That is why I’m saying that my hands are tied because this liquidator is a court official,” said Molale. “To try and tell him what to do, i will be regarded as interfering in the judicial process. That is the conundrum I am facing.”

In another new revelation, the minister said he does not know how much the liquidator spent on the legal costs of taking the case to court in South Africa, revealing that he had just received the judgement from someone else instead of the liquidator.

The under pressure Molale related to members of parliament that he has his own serious problems with the whole liquidation process as he has been told that the liquidation may take up to seven years. “We cannot elongate this because it is a cost to this nation,” he said.

“Next week I am meeting up with the liquidator. I want him to know my thoughts about what he is doing and nobody should say that I’m interfering in the judicial process because this matter is a serious problem that has to be dealt with as a matter of urgency,” Molale said.

BCL Group, made of BCL limited and Tati Nickel Mining Company, were placed in provisional liquidation by order of the High Court of Botswana on 9 October 2016. The Botswana government owns 100 percent of shares in BCL, and BCL’s wholly owned subsidiary, BCL Investments Pty Ltd, holds an 85 percent stake in Tati. The remainder of the shares in Tati are directly held by the Botswana government.

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