Internal documents passed to Sunday Standard indicate that a senior partner at law firm, Collins Newman &Co, Parks Tafa played a pivotal role in the ultimate decision to postpone the IPO (Initial Public Offer) of government owned telephone company, BTCL.
In an email to the Minister of Transport and Communication, Tshenolo Mabeo, Tafa argued for the postponement.
Tafa said that the date as set by Government for the IPO was setting Government for failure.
He said that together with his Partner, Rizwan Desai, he was concerned cabinet had set the date “without our knowledge or consent, as Collins Newman & Co.”
“The date in question is impossible to meet and quite frankly is setting up the Government of Botswana for a spectacular failure, insofar as the delivery of a successful BTCL IPO is concerned. While we circulate the revised Possession & Use Agreement in the course of tomorrow, for finalization and signing this week, this on its own or its signing cannot be a substitute or compensate for the state of the unreadiness,” wrote Tafa.
Tafa’s position ultimately prevailed, as the IPO was postponed.
“A number of considerations have necessitated that the IPO, which was scheduled to be opened by the end of 2014, be extended into 2015. The Project Team has been working around the clock to bring this listing to Batswana. What has always been apparent is that the complexities and the sheer magnitude of privatizing BTCL is a challenging task. It was thus always an ambitious timeline to conclude before year-end, one that all in the Project nevertheless believed was achievable. However, a number of material steps, including securing the necessary underwriting arrangements, remain to be concluded,” said a press release from the Ministry.
The press release however did not make reference to the upheavals that were happening behind the scenes.
This notwithstanding complaints from Government officials including the Permanent Secretary at the Ministry and also the Chief Executive of BTCL, all of whom felt everything was set for the IPO to go ahead.
BTCL and the Ministry officials all expressed irritation that it was taking too long to sign the Possession and Use agreement. They felt that the agreement addressed all the necessary points.
This much was understood by Desai who had written an email to one of the lawyers at the firm, Angelica Bojosi, also copied to Tafa on the matter.
In it Desai urged Tafa to close the issue of P&U Agreement.
“..Tempers are getting frayed. Parks, please see Angie’s email and note again that we really need to close the P and U immediately or else we are truly going to get the full blame for the delay.”
As it turns out, Desai’s fears proved prescient.
Things came to a head when one Ministry official, a certain Cecil started to question how lawyers from one law firm ÔÇô Collins Newman & Co were allowed to act for BTCL and also BOFINET on such a big transaction.
At that meeting, a senior associate from Collins Newman &CO, Angelica Bojosi tried to allay the fears.
She said even though Tafa and Desai were from one firm they were working independently.
“I tried to explain that though you [Rizwan Desai] and Parks [Tafa] are from the same law firm you are maintaining independence in the preparation of the agreement so as to ensure the clients’ best interests are protected.”
Curiously, Minister Mabeo told Parliament this week that the two lawyers who advised BoFiNet and BTCL during their separation are from the same law firm of Monthe Marumo and Company incorporating Molatlhegi & Associates, he however withheld information that Tafa and Disai both from Collins Newman & Company represented BoFinet and BTCL although they are from the same company.
Minister Mabeo said Wednesday that Monthe Marumo, legal advisors of BTCL failed to declare that it was engaged by BoFiNet to review and advise them on the draft Possession and Use Agreement when the two companies were being separated.
BTCL is said to have engaged Month Marumo on March 6 last year for total fee of close to P2 million and at the same time the same law firm incorporating Molatlhegi & Associates also doubles as advisors to BoFiNet which was previously a subsidiary of BTCL.
Monthe Marumo and Company incorporating Molatlhegi & Associates are said to have been appointed directly by both BTCL and BoFiNet from their approved panel of legal firms which were selected through selective tendering.
“The onus on declaring conflict of interest lies with the law firm. In this case, no conflict of interest was declared by Monthe Marumo and Company incorporating Molatlhegi and Associates”, Mabeo said Wednesday.
In an interview with Sunday Standard, Mabeo said although the law firm failed to declare conflict of interest, there is nothing that government can do, adding that it is up to the Law Society Botswana to act on the matter. He added that the failure to declare conflict of interest by Monthe Marumo and Company will not affect the pending BTCL Initial Public Offering process.
Mabeo, however was silent on the conflict of interest by the two senior partners at Collins Newman & Company who represented both BoFinet and BTCL and how this may affect the integrity of the BTCL public offering process.
The Public Enterprise Evaluation and Privatization (PEEPA) has also engaged private law firm, Collins Newman & Company and Deloitte as advisors for the privatization of BTCL for a legal fee amounting to P2.9 million, Parliament was told this week. The total amount of the consortium is said to be P9.5 million.
PEEPA is responsible for advising Government on privatization strategies as well as implementation of privatization, which includes commercialization, restructuring, outsourcing and divesture interventions for the effectiveness and efficiency of PEs and Ministries as well as promoting good corporate governance.
The 49 percent shares in BTCL are expected to be listed on the BSE with the government retaining a 51 percent majority stake. Of this 49 percent, 5 percent will be reserved for staff as part of an Employee Share Ownership Plan (ESOP). BTCL was formed ahead of the separation of the incumbent operator, Botswana Telecommunications Corporation (BTC) into two entities incorporated under the Companies Act, these being: BTCL and Botswana Fibre Networks (BoFiNet).
The BTC privatisation process first stumbled in 2007 when PEEPA was forced to cancel the privatisation tender it had advertised in the local media, in a bid to avert possible court action.
This followed a decision by the PEEPA board to disqualify a joint bid by Collins Newman & Company, Standard Bank (known as Stanbic in Botswana) and Rothschild, one of the world’s leading independent banking organizations, to buy into BTC.
The PEEPA board disqualified the tender bid citing conflict of interest. One of the then board members, Parks Tafa, is a senior partner at Collins and Newman and was a board member at Stanbic. PEEPA withdraw the initial invitation tender to avoid possible lawsuits by the disqualified consortium. Tafa argued that he was unfairly discriminated against and that the other competing consortium, featuring Barclays Bank Botswana and ABSA Bank, should also be disqualified because the then chairperson of Barclay Bank Botswana, Blackie Marole was also chairperson of PEEPA.