Wednesday, May 12, 2021

BDP bigwigs in diamond deal controversy

Botswana Democratic Party (BDP) Treasure and businessman, Satar Dada and specially elected Gaborone City Councillor and well known BDP activist, MacDonald Peloetletse are embroiled in a bitter war of words after a multi million Pula diamond deal went awry. 

Sunday Standard has turned up information indicating that Dada has reported Peloetletse and his businesses partner Daniel Motsumi to the Police for obtaining by false pretence. According to documents passed to Sunday Standard, the duo, who are directors of a company called Capital Diamonds, had signed a memorandum of understanding with Dada’s company, Associated Investments and Development Corporation to buy rough diamonds. Peloetletse and Motsumi had borrowed P78 million from Dada to purchase rough diamonds from Boteti Diamond Company and Lucara Diamonds. The documents state that the primary role of Associated Investments and Development Corporation was “to provide finance for the purchase of rough diamonds amounting to U$ 6.2 million for the sale of rough diamonds.”

Dada is accusing the two men of breaching the memorandum of understanding after they failed to refund his company P6 million that was claimed from Botswana Unified Revenue Service (BURS) after the diamond sales.  According to the memorandum of understanding all sales proceeds were to be deposited into the bank account of Associated Investments and Development Corporation. The company was to hold back its capital investment of U$6 231 025 (roughly P78 million) plus 40 percent of the profit after deducting tax, insurance and storage charges.  Capital Diamonds was to get the remainder of the sales proceeds. 

The documents also show that diamonds were to “be held in the custody of Brinks and ceded to Associated Investments and Development Corporation as security.” Since Associated Investments and Development Corporation was paying the cost of the diamonds plus VAT, Capital Diamonds was to claim the VAT from Botswana Unified Revenue Service (BURS) and refund it in total to Dada’s company. But after the diamonds were sold, Capital Diamonds did not refund Associated Investments and Development Corporation the P6 million (tax refund from BURS) as agreed. It is understood that Dada inquired from Peloetletse and Motsumi about the money and “his business partners were not forthcoming with information.”

He is said to have made his own investigations, which led him to Standard Chartered Bank where the account for Capital Diamonds is held. According to information gathered thus far, only money amounting to P8 was found in the account. In the end, Dada took up the matter with the police accusing Peloetletse and Motsumi of obtaining by false pretence. A letter from Capital Diamonds lawyer, Unoda Mack of Mack and Bahuma Attorneys, to Dada, dated 29 April 2015 states that the agreement (memorandum of understanding) entered into on 19th March 2013 between the parties was varied on or about the 16th May 2013.  

“In particular, clause 3 was varied to the extent that the VAT money was to be paid or deducted from client’s profit after sale of the diamonds. Such variation was done through a letter signed by the parties and a breakdown of payments which were to be made after sale of the diamonds. These documents were prepared by your client (Dada),” reads the letter in part.  

Peloetletse and Motsumi’s lawyers also informed Dada that “the VAT alluded to in your letter was to be deducted from client’s (Capital Diamonds) profit after sale of the diamonds.” The lawyers also argued that Peloetletse and Motsumi cannot be in breach of the agreement as alleged. A source who is close to the three men said that initially Peloetletse and Motsumi had approached banks seeking a loan within 24 hours. The banks turned them down and one of the bank officials recommended that they approach Dada. It was then that the memorandum of understanding between the parties was signed.

Sunday Standard has also turned up information indicating that an American businessman had wanted to purchase the rough diamonds from Peloetletse and Motsumi for U$12 million. They are also reported to have travelled to as far as Dubai to look for buyers of the said diamonds.

“As we speak there is no money in the account. It is believed that they used it to invest in property,” said a source.

Information also indicates that Dada has since informed President Ian Khama about the matter. Dada confirmed to Sunday Standard that he has since reported the matter to the police who are currently investigating the matter. 

“I am sorry I wouldn’t want to go in to the details but the matter is with the police,” he said.   

Officer commanding for Broadhurst Police Station Senior Superintendent Bonnie Bareki said “it is true that Mr Dada lodged a complaint with the police a few weeks ago. But the police have to establish first whether this is a criminal or civil case.” Bareki said if it turns out that the matter is a criminal one it will be investigated and if it is a civil matter, the complaint can take up the matter with the courts. For his part, Peloetletse indicated that he was summoned by Central Police Station and he wrote a police statement. He claimed that the police informed him recently that he has no case to answer and the investigations have since been stopped. Peloetletse added that the standoff has now affected the sale of the diamonds as they are still scouting for the potential buyer. He said he was not happy about the manner in which Dada handled the matter adding that lodging a complaint with the police amounts to defamation.

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